District Not Recorded

A Louisiana doctor pleaded guilty to federal health care fraud charges today, admitting that he wrote false home health care certifications that were used in a multi-million dollar 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 Anderson of the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Regional Office and Louisiana Attorney General James D. “Buddy” Caldwell made the announcement.

Winston Murray, M.D., 62, of Hammond, Louisiana, pleaded guilty before Chief U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana to all three charges against him, including one count of conspiracy to commit health care fraud and two counts of health care fraud.  He is scheduled to be sentenced on Aug. 12, 2015.  Murray is the ninth defendant to plead guilty in this case.  The trial for the remaining four defendants is scheduled to begin on May 6, 2015.

At his plea hearing, Murray admitted that he operated a clinic in Hammond, Louisiana, from which he wrote home health care referrals for Medicare beneficiaries he knew were not confined to their homes.  Murray further admitted that his referrals were used by home health companies Interlink Health Care Services Inc. (Interlink) and Lakeland Health Care Services Inc. (Lakeland), among others, to fraudulently bill Medicare for home health services supposedly rendered to hundreds of Medicare beneficiaries living in and around Hammond and New Orleans.

Medicare records reveal that Murray’s certifications were used by Interlink and Lakeland to bill Medicare for more than $2.2 million in home health services that were not medically needed or were not provided.  From 2007 through 2014, these companies and other companies involved in this scheme submitted more than $56 million in claims to Medicare, a vast majority of which were fraudulent.  Medicare paid approximately $50.7 million on these claims.

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 for 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.

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that JOHNNY J.S. QUENGA, age 38, of Agat, was sentenced today to 12 months imprisonment, two years supervised release and 200 hours community service before Chief Judge Frances Tydingco-Gatewood, in the District Court of Guam.

     Defendant pled guilty to an Information charging him with Conspiracy to Distribute Ice. QUENGA is a co-defendant in U.S. v. Francisco Arias, et.al.  The case involved Defendant Arias and Defendant Cortez-Zelaya sending ice to various individuals in Guam.  QUENGA received a reduced sentence because he cooperated with the Government.

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

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

An executive of Hitachi Automotive Systems Ltd. pleaded guilty today and was sentenced to serve 15 months in a U.S. prison for his role in a global conspiracy to suppress and eliminate competition for certain automotive parts sold in the United States, the Department of Justice announced today.  

Takashi Toyokuni, a former manager and director with responsibility over alternators and starters at Hitachi Automotive Systems Ltd. pleaded guilty today in the U.S. District Court of the Eastern District of Michigan to a one count charge of bid rigging and price fixing.  As part of his plea agreement, Toyokuni also agreed to cooperate with the department’s ongoing investigation and pay a $20,000 criminal fine.

On Sept. 18, 2014, a federal grand jury in Detroit, Michigan, returned an indictment against Toyokuni, charging him with conspiring to allocate the supply of, rig bids for, and fix, stabilize and maintain the prices of, various automotive parts, including starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils and inverters and/or motor generators, sold to automobile manufacturers in the United States and elsewhere.  The automotive manufacturers included, depending on the product, Ford Motor Co., General Motors LLC, Nissan Motor Co. Ltd., Toyota Motor Corp. and Honda Motor Co. Ltd., and certain of their subsidiaries.

According to the indictment, Toyokuni and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to the automobile manufacturers.  The indictment charged Toyokuni with participating in the conspiracy beginning at least as early as January 2000 until at least February 2010. 

“The defendant today accepted responsibility for his role in creating anticompetitive agreements in the automotive industry that undermined the marketplace and harmed U.S. businesses and consumers,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s criminal enforcement program.  “As a result of the many companies and individuals who have accepted responsibility during this investigation, we are transforming a critical industry into a competitive marketplace, which will greatly benefit U.S. consumers.”

Hitachi Automotive Systems Ltd. is a manufacturer of starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils, inverters and motor generators and was engaged in the sale of these products in the United States and elsewhere.  On Nov. 6, 2013, Hitachi Automotive Systems Ltd., pleaded guilty for its involvement in the conspiracy and was sentenced to pay a criminal fine of $195 million. 

Toyokuni 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.

Including Toyokuni, 52 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing, and bid rigging in the auto parts industry.  Additionally, 34 companies pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.  

Today’s guilty plea arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s pleas are the result of the work of the Division’s Washington Criminal I Section, and special agents of the FBI’s Detroit Field Office.  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.

Toyokuni Plea Agreement

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that EUGENE JESUS MENO SUNEGA, age 33, of Sinajana, Guam pled guilty on April 23, 2015, in the U.S. District Court, before Chief Judge Frances Tydingco-Gatewood, to one count of Providing Contraband in Prison.  SUNEGA was charged on March 4, 2015 by a federal grand jury in a four-count indictment with Conspiracy to Distribute Methamphetamine, Possession with Intent to Distribute Methamphetamine, Providing Contraband in Prison, and False Statement or Representation.  Sentencing for SUNEGA is scheduled for July 27, 2015.  The offense of Providing Contraband in Prison carries a statutory maximum sentence of 20 years in prison.

     According to court documents, SUNEGA abused his position of trust as a Guam Department of Corrections Officer by attempting to smuggle contraband methamphetamine to prison inmate Gregorio Cruz.  The methamphetamine weighed approximately 3.9 grams and was approximately 95.3% pure, according to forensic analysis.  SUNEGA also lied to federal agents investigating the incident when he claimed to have never personally smoked methamphetamine.

     This incident was discovered by Guam Department of Corrections officials.  The federal case is the result of an investigation conducted by the DEA Guam Resident Office and the FBI Guam Resident Agency.  Credit is also given to GPD’s Special Investigation Section and to the ATF.  The prosecution was handled by Assistant U.S. Attorney Mohammad Khatib.

The U.S. District Court for the Northern District of Illinois entered a consent decree for permanent injunction against Wholesome Soy Products Inc., Julia Trinh and Paul Trinh to prevent them from distributing adulterated mung bean and soybean sprouts, the Department of Justice announced today.

The department filed a complaint in the U.S. District Court for the Northern District of Illinois on April 3, at the request of the U.S. Food and Drug Administration (FDA).  According to the complaint, Wholesome Soy received, processed, manufactured, prepared, packed, held and distributed ready-to-eat mung bean and soybean sprouts.  Wholesome Soy operated at 1150 West 40th Street in Chicago.

“We must work to ensure that the food we buy from store shelves is safe and produced under sanitary conditions,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Department of Justice will continue to work with our partners at FDA to accomplish that goal.”

The complaint alleged that Julia Trinh is the owner and president of Wholesome Soy, and that until recently, she was responsible for purchasing supplies and equipment, managing contracts and agreements with contractors, handling customer service, hiring, firing, scheduling training, implementing procedures and maintaining quality assurance.  The complaint also alleged that Paul Trinh was a manager at Wholesome Soy, and that until recently, he was responsible for production operations, sprout processing and training new hires.

The complaint alleged that the company’s food was prepared, packed and/or held under insanitary conditions and that the defendants failed to institute practices and procedures necessary to ensure that the company can receive, process, manufacture, prepare, pack, hold and distribute food under sanitary conditions.

According to the complaint, the FDA conducted inspections of the company’s facility from Aug. 12, 2014 through Sept. 3, 2014, and in October 2014.  As described in the complaint, FDA found insanitary conditions and significant sanitary deficiencies in the October inspection that were repeat observations from the previous inspection.  The repeated deficiencies included employee practices that allowed for potential contamination of food contact surfaces and food products; cleaning practices that were inadequate; pest control measures that were ineffective; equipment and utensils that were not properly maintained; and a sprout production environment that was not properly maintained.

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree for permanent injunction.  Under the permanent injunction, Wholesome Soy, Julia Trinh and Paul Trinh are permanently restrained from directly or indirectly receiving, processing, manufacturing, preparing, packing, holding and/or distributing at the facility at 1150 West 40th Street any article of food, unless the defendants make several changes to their facility, including remedial measures and an implementation of a Listeria monitoring program.   

The government is represented by the Civil Division’s Consumer Protection Branch with the assistance of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division. 

DB Group Services (UK) Limited, a wholly owned subsidiary of Deutsche Bank AG (Deutsche Bank), has agreed to plead guilty to wire fraud for its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark interest rate used in financial products and transactions around the world.  In addition, Deutsche Bank entered into a deferred prosecution agreement to resolve wire fraud and antitrust charges in connection with its role in both manipulating U.S. Dollar LIBOR and engaging in a price-fixing conspiracy to rig Yen LIBOR.  Together, Deutsche Bank and its subsidiary will pay $775 million in criminal penalties to the Justice Department.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement. 

DB Group Services (UK) Limited has agreed to plead guilty to one count of wire fraud, and to pay a $150 million fine, for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating U.S. Dollar LIBOR contributions. 

In addition, Deutsche Bank entered into a deferred prosecution agreement today and admitted its role in manipulating LIBOR and participating in a price-fixing conspiracy in violation of the Sherman Act by rigging Yen LIBOR contributions with other banks.  The agreement requires the bank to continue cooperating with the Justice Department in its ongoing investigation, to pay a $625 million penalty beyond the fine imposed upon DB Group Services (UK) Limited and to retain a corporate monitor for the three-year term of the agreement.

Together with approximately $1.744 billion in regulatory penalties and disgorgement—$800 million as a result of a Commodity Futures Trading Commission (CFTC) action, $600 million as a result of a New York Department of Financial Services (DFS) action, and $344 million as a result of a U.K. Financial Conduct Authority (FCA) action—the Justice Department’s criminal penalties bring the total amount of penalties to approximately $2.519 billion.

“For years, employees at Deutsche Bank illegally manipulated interest rates around the globe – including LIBORs for U.S. Dollar, Yen, Swiss Franc and Pound Sterling, as well as EURIBOR – in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank’s counterparties,” said Assistant Attorney General Caldwell.  “Deutsche Bank is the sixth major financial institution that has admitted its misconduct in this wide-ranging criminal investigation, and today’s criminal resolution represents the largest penalty to date in the LIBOR investigation.”

“Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system,” said Assistant Attorney General Baer.  “Deutsche Bank’s misconduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere.”

“Deutsche Bank admitted to manipulating benchmark interest rates in currencies around the globe in order to benefit trading positions,” said Assistant Director in Charge McCabe.  “This wide reaching investigation represents yet another step in the FBI’s ongoing effort to find and stop those who deliberately participate in complex financial crimes to further their own bottom line.”

Deutsche Bank was a member of the panel of banks whose submissions were used to calculate the LIBORs for a number of currencies, including U.S. Dollar, Yen, Pound Sterling and Swiss Franc LIBOR, as well as EURIBOR (the Euro Interbank Offered Rate).

According to the agreements, from at least 2003 through early 2011, numerous Deutsche Bank derivatives traders—whose compensation was directly connected to their success in trading financial products tied to LIBOR—engaged in efforts to move these benchmark rates in a direction favorable to their trading positions.  Specifically, the derivatives traders requested that LIBOR submitters at Deutsche Bank and other banks submit contributions favorable to trading positions, rather than rates that complied with the definition of LIBOR.  Through these schemes, Deutsche Bank defrauded counterparties who were unaware of the manipulation.  Deutsche Bank admitted that the conduct affected the resulting LIBOR fix on various occasions.   

Deutsche Bank further admitted that its employees engaged in this misconduct through face-to-face requests, electronic communications, which included both emails and electronic chats, and telephone calls.  For example, in an electronic chat on March 22, 2005, a Deutsche Bank U.S. Dollar LIBOR submitter explained how he would manipulate the rate for a trader in New York, stating, “if you need something in particular in the libors i.e. you have an interest in a high or a low fix let me know and there’s a high chance i’ll be able to go in a different level.  Just give me a shout the day before or send an email from your blackberry first thing.”

In another example described in the statement of facts, on May 17, 2006, the supervisor of LIBOR submissions in London received a request from a trader in New York asking, “If you can help we can use a high 3m fix tom.”  The supervisor replied to the trader and a U.S. Dollar LIBOR submitter, “I’m off but [submitter] is your libor man [] [submitter] could you take a look at 3s libor in the morning for [trader].”  The submitter agreed to accommodate the request, replying, “Will do chaps.”  The following morning, after he submitted the bank’s contribution, the submitter wrote to the trader, “I went in at 19+ for the 3m libor, as you’ll see it almost manage to reach 19.”

In an example from March 2007, a trader thanked one of Deutsche Bank’s EURIBOR submitters for his help in successfully manipulating EURIBOR, saying in an electronic chat: “Great job on this [Submitter], we can do more of this stuff,” to which the submitter replied, “WE CAN MY FRIEND. WE CAN….”  Later that day, the submitter bragged about Deutsche Bank’s manipulation by offices in Frankfurt and London in an email to the head of Deutsche Bank’s Global Finance Unit: “HAVE U SEEN THE 3MK FIXING TODAY? THAT WAS AN EXCELLENT CONCERTED ACTION FFT/LDN. CHEERS.”

Deutsche Bank also admitted to working with other banks to manipulate LIBOR contributions.  For instance, in a May 2009 electronic chat exchange, a UBS trader asked a Deutsche Bank trader, “cld you do me a favour would you mind moving you 6m libor up a bit today, i have a gigantic fix. . .”  The Deutsche Bank trader agreed.  The next day, the Deutsche Bank trader confirmed that the Yen LIBOR submission had been beneficial to the UBS trader, asking “u happy with me yesterday?”  The UBS trader acknowledged, “thx.”

By entering into a deferred prosecution agreement with Deutsche Bank, the Justice Department took several factors into consideration, including that Deutsche Bank’s cooperation with the government’s investigation was often helpful but also fell short in some important respects.  The department also considered the extensive remedial measures undertaken by Deutsche Bank’s management and its enhanced compliance program.  Deutsche Bank has agreed to continue cooperating with the government’s investigation, and the agreement does not prevent the Justice Department from prosecuting culpable individuals for related misconduct.  The documents will be filed in federal court in the District of Connecticut.

The Justice Department has previously announced resolutions with five other banks for their roles in manipulation of benchmark interest rates, including Barclays Bank PLC, UBS AG, The Royal Bank of Scotland plc, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) and Lloyds Banking Group plc.  The department has also charged 12 individuals as a result of this investigation, and three of those individuals have pleaded guilty.  The pending charges are merely accusations, and the defendants are considered innocent unless and until proven guilty.

This ongoing investigation is being conducted by special agents, forensic accountants and intelligence analysts of the FBI’s Washington Field Office.  The prosecution of Deutsche Bank is being handled by Assistant Chief Jennifer L. Saulino and Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section and Trial Attorney Richard A. Powers of the Antitrust Division’s New York Field Office.  Deputy Chief Benjamin D. Singer and Assistant Chief Sandra Moser of the Criminal Division’s Fraud Section, Trial Attorney Daniel Tracer of the Antitrust Division’s New York Office, Assistant U.S. Attorneys Liam Brennan and Christopher Mattei of the District of Connecticut and the Criminal Division’s Office of International Affairs have also provided valuable assistance in this matter.

The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the CFTC’s Division of Enforcement referred this matter to the department and, along with the FCA, has played a major role in the investigation.  The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations.  Various agencies and enforcement authorities in the United States and from other nations, including the United Kingdom’s Serious Fraud Office, BaFIN and the European Central Bank, are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.

Deutsche Bank Group Services Statement of Facts

Deutsche Bank Group Services Plea Agreement

Deutsche Bank AG Statement of Facts

Deutsche Bank AG Deferred Prosecution Agreement

This afternoon, a federal judge in the District of New Mexico sentenced two Chinese nationals for conspiring to violate the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) by scheming to illegally export defense articles with military application to the People’s Republic of China, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Damon P. Martinez of the District of New Mexico.

Bo Cai, 29, of Nanjing, China, was sentenced to 24 months in prison and his cousin Wentong Cai, 30, of Chifeng, China, was sentenced to 18 months in federal prison.  Both will be deported after completing their prison sentences.  The two men were charged in three-count superseding indictment with a scheme to illegally export sensors primarily manufactured for sale to the U.S. Department of Defense for use in high-level applications, such as line-of-sight stabilization and precision motion control systems.  The Arms Export Control Act and the ITAR prohibit the export of defense-related materials from the United States without obtaining a license or written approval from the U.S. Department of State.

Bo Cai entered a guilty plea to all three counts of the superseding indictment in July 2014, and Wentong Cai pleaded guilty to Count 3 of the superseding indictment in December 2014.  In entering the guilty pleas, each admitted that from March 2012 to December 2013, they conspired with each other to illegally export sensors from the United States to China without first obtaining the required export license.  Bo Cai admitted that in March 2012, while he was employed by a technology company in China, he embarked on an illegal scheme to smuggle sensors out of the United States to China for one of his customers despite knowledge that the sensors could not be exported without a license and that the United States did not issue licenses to export the sensors to China.  Wentong Cai admitted that while he was in the United States on a student visa, Bo Cai enlisted him to acquire the sensors under the ruse that he planned to use the sensors at Iowa State University where he was a graduate microbiology student.

Court filings indicate that the investigation of this case began in October 2013, when an undercover U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI) agent responded to Wentong Cai’s overtures.  After negotiations by telephone and email, in December 2013, Bo Cai and Wentong Cai traveled to New Mexico, where they obtained a sensor from undercover HSI agents and developed a plan for smuggling the sensor out of the United States to China.  On Dec. 11, 2013, Bo Cai was arrested at an airport in Los Angeles, as he was preparing to board a flight to China, after the sensor was discovered concealed in a computer speaker in his luggage.  Wentong Cai subsequently was arrested on Jan. 22, 2014, in Ames, Iowa.

The HSI Albuquerque, New Mexico, office led the investigation of this case with assistance from the U.S. Air Force Office of Special Investigations, the Defense Security Service, HSI in Iowa and Los Angeles and the FBI.  Iowa State University cooperated throughout with HSI’s investigation.  Assistant U.S. Attorneys Dean S. Tuckman and Fred J. Federici of the District of New Mexico prosecuted the case with assistance from Deputy Chief Deborah Curtis and Trial Attorneys David Recker and Brian Fleming of the Justice Department’s National Security Division.  The U.S. Attorney’s Office of the Central District of California and the U.S. Attorney’s Office of the Southern District of Iowa also assisted in the prosecution.

Today, a settlement with Houston-based Noble Energy, Inc. resolving alleged Clean Air Act violations stemming from the company’s oil and gas exploration and production activities in the Denver-Julesburg Basin, north of Denver, Colorado.  The settlement resolves claims that Noble failed to adequately design, size, operate and maintain vapor control systems on its controlled condensate storage tanks, resulting in emissions of volatile organic compounds (VOCs).  VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis, announced the Department of Justice’s Environment and Natural Resources Division, the Environmental Protection Agency (EPA) and the state of Colorado.

As part of the settlement, Noble will spend an estimated $60 million on system upgrades, monitoring and inspections to reduce emissions, in addition to $4.5 million to fund environmental mitigation projects, $4 million on supplemental environmental projects and a $4.95 million civil penalty.

The case arose from a joint EPA and Colorado investigation that found significant VOC emissions coming from storage tanks, primarily due to undersized vapor control systems. Noble has agreed to evaluate vapor control system designs, significantly reduce VOC emissions, and provide reports to the public. These reports will give other companies the opportunity to learn and apply this information to emissions estimates and vapor control system designs. Using advanced monitoring technologies, Noble will be better able to detect air pollution problems in real time and ensure proper operation and maintenance of pollution control equipment.

“This first-of-its-kind settlement takes a basin-wide, systematic approach to address oil and gas emissions,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division.  “Our nation’s energy security and independence requires that oil and gas production be done safely, responsibly and lawfully.  We look forward to continuing to work with states and the oil and gas industry to ensure that oil and gas emissions are minimized nationwide.”

“Today’s settlement shows what can happen when federal and state governments work together to find innovative solutions to today’s complex pollution challenges,” said Cynthia Giles, assistant administrator for enforcement and compliance assurance at EPA. “This agreement highlights how air pollution can be addressed from a significant sector in a commonsense way, and helps spur development of advanced pollution control technologies that will be available to the entire industry. As domestic energy development grows, we all have a stake in making sure it’s done responsibly.”

Under the settlement lodged today in Colorado, Noble will perform engineering evaluations and make modifications to ensure that its vapor control systems are properly designed and sized to capture and control VOC emissions.  Noble will use an infrared camera to inspect these systems, both initially to confirm capture and control of VOCs and periodically to verify proper upkeep and operation.  These activities will be audited by a third-party and Noble will develop and post reports summarizing its engineering evaluations and modifications online.  Additionally, Noble will install monitors at certain storage tanks to detect tank pressure increases that may indicate possible emission releases.  Noble has also committed to evaluate the condition of pressure relief valves, thief hatches and mountings and gaskets on each storage tank and address any evidence of VOC emissions from those devices.

EPA estimates that modifications to the vapor control systems will reduce VOC emissions by at least 2,400 tons per year and that significant additional reductions will be achieved with operational and maintenance improvements.

The settlement covers all of Noble’s controlled condensate storage tanks in the Denver eight-hour ozone marginal nonattainment area that have vapor control systems operating pursuant to the Colorado State Implementation Plan – more than 3,400 tank batteries, which are multiple storage tanks located together.  Noble must survey all of its controlled condensate storage tanks in the area and implement any needed design changes to minimize emissions and ensure compliance with state regulations.  Noble already has begun this work, having focused first on its largest storage tank batteries.

In addition to system upgrades, monitoring and inspections, Noble will spend at least $4.5 million on mitigation projects to reduce and prevent harmful emissions.  These projects include: offloading condensate from storage tanks into tanker trucks in a closed system to prevent vapors from being emitted to the atmosphere, retrofitting diesel engines on drilling rigs and pumps used in fracturing operations to lower emissions of nitrogen oxide or ozone precursors and replacing high-emitting two-stroke gas-fired lawnmowers being used by residents with electric lawnmowers.  These projects are expected to reduce VOC and nitrogen oxide emissions by a combined 800 tons or more per year.  Additionally, Noble will require its tank truck contractors to implement an alternative oil measurement standard once it is approved by relevant authorities.  This would substantially reduce or eliminate VOC emissions associated with opening storage tanks’ thief hatches.

Noble will also complete supplemental environmental projects costing a total of $4 million.  One of the projects will provide financial incentives to residents in the ozone non-attainment area to replace or retrofit inefficient, higher-polluting wood-burning or coal appliances with cleaner burning, more efficient heating appliances and technologies.  This project is expected to achieve emission reductions of 450 tons per year of carbon monoxide, 130 tons per year of VOCs, 60 tons per year of fine particulates known as PM2.5 and 10 tons per year of hazardous air pollutants.  A second project will consist of a study – portions of which will be reported publicly – evaluating the reliability of various pressurized hydrocarbon liquids sampling and laboratory analysis techniques.  The study is expected to result in more accurate data to estimate emissions associated with condensate storage tanks.  Noble will spend $2 million on additional State-approved supplemental environmental projects.  Noble will propose projects for state approval after the court concludes its review of the settlement.

This settlement is part of EPA’s national enforcement initiative to reduce public health and environmental impacts from energy extraction activities.  For more information about EPA’s enforcement initiative, click here: http://www2.epa.gov/enforcement/national-enforcement-initiative-ensuring-energy-extraction-activities-comply

The state of Colorado will receive $1.475 million of the total $4.95 million civil penalty in this case.

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

The United States filed a complaint to bar a San Francisco enrolled agent and tax return preparer from implementing, facilitating and promoting allegedly abusive tax shelters and tax avoidance schemes, the Justice Department announced today.

According to the complaint, which was filed in the U.S. District Court for the Northern District of California, one of the abusive tax avoidance schemes that Timothy Conn Vu promoted was a scheme that illegally avoided corporate income taxes on gains received from the sale of corporate assets, a so-called intermediary transaction tax shelter.  Additionally, Vu promoted a scheme that illegally avoided taxes on the gains from selling transferrable state tax credits (the State Tax Credit tax shelter), which real estate project owners typically sell to raise money to develop real estate projects, according to the suit.

According to the complaint, in many instances Vu served as the sole officer, director and/or manager of the five companies that were used to carry out these schemes and he signed many of the documents on behalf of those companies.

In one version of the intermediary transaction described in the complaint, a company that Vu managed allegedly bought all of the stock of a closely held corporation shortly after that corporation had sold its assets to a third party.  The asset sale generated capital gains tax.  The complaint alleges that, once it owned the stock, the company that Vu managed allegedly offset the tax liability from the asset sale using a purported bad debt deduction based on bogus losses from a distressed asset debt (DAD) and/or distressed asset trust (DAT) tax shelter. 

According to the suit, Vu, as an officer of the companies perpetrating these schemes, also signed and then filed with the Internal Revenue Service (IRS) many of the corporate income tax returns that claimed bogus losses to offset the income on which the corporations should have paid substantial federal taxes.

The complaint alleges that Vu’s participation in these abusive tax schemes has generated more than $515 million in bogus tax deductions that have led to federal income tax deficiencies of at least $129 million.  For his role in the abusive transactions, Vu allegedly earned $3 million in compensation, according to the complaint.  The lawsuit seeks to stop Vu from promoting these schemes in the future and to permanently bar him from preparing tax returns for others.

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

The Justice Department today filed a lawsuit against the city of Fort Worth, Texas, alleging violations of the Fair Housing Act and the Americans with Disabilities Act.  The lawsuit, filed in U.S. District Court for the Northern District of Texas, charges that Fort Worth discriminated against persons with disabilities based on its treatment of a group home for persons recovering from drug and alcohol addiction, including the city’s failure to grant a reasonable accommodation to the owner of the group home.

The suit seeks a court order prohibiting future discrimination by Fort Worth and requiring Fort Worth to make a reasonable accommodation to permit the continued operation of “Ebby’s Place” as a group home for up to eight individuals with disabilities.  It also seeks monetary damages to compensate victims, as well as payment of a civil penalty.

This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by Ben Patterson, who through Ebby’s Place LLC, owns and operates the group home known as Ebby’s Place. 

“The Fair Housing Act and the Americans with Disabilities Act seek to ensure that individuals with disabilities can live in communities of their choice without facing discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We will continue our vigorous enforcement efforts to make certain that persons with disabilities are granted their rights under federal law.”

“While we appreciate the City’s cooperation with this investigation, its refusal, as a governmental entity, to consider those recovering from drug or alcohol addiction as persons with disabilities is at odds with federal law,” said Acting U.S. Attorney John Parker of the Northern District of Texas.  “Simply put, the residents of Ebby’s Place are deserving of the same protections as persons with any other disability.”

“Through our Office of Fair Housing and Equal Opportunity, HUD is working to ensure that housing options for persons with disabilities are not limited by restrictive zoning rules,” said Assistant Secretary Gustavo Velasquez of HUD’s Fair Housing and Equal Opportunity Office.

Fighting illegal housing discrimination is a top priority of the Justice Department.  The Federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  Title II of the Americans with Disabilities Act prohibits discrimination on the basis of disability by public entities.  Visit www.usdoj.gov/crt for more information about the Civil Rights Division and the laws it enforces.  Additional information about the Fair Housing Act is available at www.HUD.gov.  Additional information about the Americans with Disabilities Act is available at www.ADA.gov.

Marking National Crime Victims’ Rights Week this week, Attorney General Eric Holder and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division announced that the Justice Department’s Asset Forfeiture Program has returned more than $4 billion in civilly and criminally forfeited funds to crime victims since fiscal year 2002, with $723 million paid to over 150,000 crime victims in the last three years alone.  The funds were distributed through the victim compensation program managed by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS).

“The Justice Department’s victim compensation program is an integral part of the asset forfeiture program and our efforts to take the profits out of crime, to restore assets to their rightful owners, and to provide real and meaningful justice to the victims of wrongdoing,” said Attorney General Holder.  “The scale and scope of the returns made to victims under the program in recent years have been especially impressive.  And going forward, as we continue our ongoing review of our asset forfeiture practices, we are committed to taking all appropriate measures to use this tool fairly, effectively, and with the greatest possible benefit to the American people.”

“The return of forfeited funds to crime victims is a priority of the civil and criminal forfeiture actions brought under the Asset Forfeiture Program,” said Assistant Attorney General Caldwell.  “Success such as this would not be achievable without the efforts of prosecutors in the Criminal Division and U.S. Attorneys’ Offices around the country, as well as the many federal, state and local law enforcement agents contributing time and resources to these investigations.  Make no mistake: forfeiture not only takes the money out of crime, but it’s among our most powerful tools to make victims whole.”

AFMLS partners with U.S. Attorneys’ Offices, federal law enforcement agencies, federal regulatory agencies, court-appointed receivers, private claim administrators, and private class action attorneys to return forfeited assets to crime victims. 

Recent noteworthy cases in which victims were compensated for their losses with forfeited assets include:

$62.2 Million to Victims of MoneyGram Fraud

United States v. MoneyGram International Inc. (Middle District of Pennsylvania)

On Nov. 9, 2012, MoneyGram International Inc., a global money services business, entered into a deferred prosecution agreement (DPA) with the Justice Department.  In doing so, MoneyGram admitted that corrupt MoneyGram agents across the country engaged in various consumer fraud schemes, including “grandparent” schemes in which a caller pretended to be the victim’s grandchild requesting money, and “advance fee” schemes requiring payment of fees to receive purported lottery winnings.  These schemes resulted in victims sending over $100 million via MoneyGram to the criminals, and that amount was administratively forfeited as part of the DPA by the U.S. Postal Inspection Service.  Over 22,000 victims who were fraudulently enticed to send money through corrupt agents have received a total of $62.2 million and been fully compensated for their losses.

$25.5 Million to Victims of Scott W. Rothstein

United States v. Scott W. Rothstein (Southern District of Florida)

From 2005 through 2009, attorney Scott W. Rothstein operated a massive Ponzi scheme through his now-defunct Fort Lauderdale law firm.  Over 400 victims attempted to invest more than $1 billion in purported confidential civil settlement agreements upon Rothstein’s promise of substantial future payouts.  In reality, the settlement agreements did not exist, but were part of an elaborate scam in which Rothstein either retained the funds or used them to pay earlier investors.  Prosecutors forfeited more than $28 million in bank accounts, real property, vehicles, jewelry and investment accounts as proceeds of the fraud.  Through a combination of the forfeiture proceeds, and other legal efforts, qualifying victims have received over $500 million in recoveries to date.

$14.6 Million to Victims of Allen Hilly

United States v. $7,599,358.09 (District of New Jersey)

In 2007, Allen Hilly was indicted on charges that he fraudulently obtained more than $18 million in federal tax and workers’ compensation withholdings.  When Hilly died before his case could proceed to trial, prosecutors initiated civil forfeiture proceedings to pursue the fraud proceeds.  As a result of the successful civil forfeiture, in 2014, over $14.6 million was returned to nine victims, including the Internal Revenue Service and the Illinois Department of Insurance, which paid out claims to injured employees who otherwise would not have received payments due to Hilly’s fraud. 

$11.7 Million to the Centers for Medicare and Medicaid Services

United States v. One Helicopter and United States v. One Parcel (Southern District of Florida)

Brothers Luis, Carlos and Jose Benitez were indicted in May 2008 for their alleged involvement in a $110 million scheme to defraud Medicare through the use of 11 South Florida clinics they owned and operated.  According to papers filed in court, the Benitez Brothers filed false claims and caused others to pay kickbacks to Medicare recipients who fraudulently claimed they received HIV infusion services at the clinics in order to obtain Medicare benefits in excess of $84 million.  After being charged with health care fraud and money laundering, the brothers fled to Cuba and remain fugitives.  The department filed three civil forfeiture actions that, to date, have resulted in the recovery of property, including a helicopter, hotel, a water park, 30 vehicles, a car rental agency, houses, condos, and apartments.  Thus far, $11.7 million is available to return to Medicare as compensation for losses resulting from the fraud.

$10 Million to Victims of Traders International Return Network Fraud

United States v. David Merrick (Middle District of Florida)

Between 2008 and 2009, David Merrick operated a Panamanian-based corporation called Traders International Return Network (TIRN), which claimed to be a legitimate private investment club with offices located in Dubai, Kuala Lumpur, Malaysia and Switzerland.  Court filings detail how Merrick created shell corporations, disseminated false monthly dividend reports, and recruited investors through a website and in person.  Over 770 victims suffered $12 million in losses as a result of Merrick’s scheme.  Approximately $10 million in forfeited funds have been returned to date to the victims.

$9.2 Million to the City of Dixon, Illinois

United States v. Rita A. Crundwell (Northern District of Illinois); United States v. Have Faith in Money, et al. (Northern District of Illinois)

For over 20 years, Rita Crundwell used her position as comptroller for the City of Dixon, Illinois to embezzle more than $53 million from the city.  An investigation revealed that Crundwell used the embezzled funds to pay for numerous personal and business expenses, including the establishment of a large horse farming and showing operation.  Crundwell was convicted of wire fraud and forfeited over 500 assets, including more than 300 horses and associated show items.  The U.S. Marshals Service assumed responsibility for the care of the horses seized in 13 states, which included overseeing the births of more than 80 foals.  Ultimately, liquidation of the forfeited assets generated $9.2 million, which has been paid to the City of Dixon.

$8.8 Million to Victims of Zaveri Oil and Gas Fraud

United States v. Ashvin Zaveri (Western District of New York)

Ashvin Zaveri was charged with orchestrating a Ponzi scheme that enticed investors to invest in sham oil and natural gas explorations in Tennessee and Kentucky.   Due to his untimely death, the criminal case against Zaveri was dismissed.  However, the U.S. Attorney’s Office commenced a civil forfeiture action against the proceeds of Zaveri’s life insurance policy.  Approximately $8.8 million obtained through civil forfeiture was returned to more than 100 victims of the scheme.

$4.5 Million to Victims of Xybernaut Fraud

United States v. Zev Saltsman (Eastern District New York)

Xybernaut Corporation, headquartered in Northern Virginia, was a provider of wearable mobile computing hardware, software and services.  In October 2007, Xybernaut’s founders were indicted for securities fraud and money laundering in connection with a kickback scheme.  Hundreds of millions of Xybernaut shares were issued at below market prices to several purchasers in exchange for kickbacks paid to the founders.  Approximately $4.5 million in assets forfeited from various defendants has been distributed to over 12,000 victims.

$4.5 Million to South Dakota Health Care Provider

United States v. Gerald Lloyd Larson (District of South Dakota)

Gerald Larson was convicted of embezzling funds from his employer, a South Dakota health care provider.  During the course of his scheme, he embezzled almost $5 million.  Shortly after his conviction in January 2015, the U.S. Attorney for the District of South Dakota requested a transfer of approximately $4.5 million in forfeited assets to the Clerk of Court to compensate the victim.

Priceless Artifact Returned to Harvard

United States v. One Qing Dynasty Jadeite Lobed Censer & Cover (District of Massachusetts)

In 1979, an 18th Century Qing Dynasty jade incense holder was stolen from the Harvard Art Museums.  In 2009, the artifact resurfaced at a Hong Kong auction house, which ran a search in the Art Loss Register database and discovered that the jade censer being offered for sale matched the censer stolen from Harvard.  The Art Loss Register then notified U.S. Immigration and Customs Enforcement officials of the censer’s reappearance.  Thereafter, the U.S. Attorney’s Office commenced a civil forfeiture action and obtained a civil warrant to seize the artifact.  After successful civil proceedings, the United States returned the stolen artifact to the Harvard Art Museums in January 2014, over 30 years after the original theft.

For additional information about the Department of Justice’s victim compensation program, please visit http://www.justice.gov/criminal/afmls/victims/.

The Department of Justice today announced an agreement with Madison County, New York, to remedy accessibility issues that violate the Americans with Disabilities Act (ADA).  This year marks the 25th anniversary of the ADA, which the Civil Rights Division plays a critical role in enforcing. 

Madison County and the department reached an agreement under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the ADA.  Under the agreement, Madison County is required to, among other things, ensure its communications with people with disabilities are as effective as its communications with people without disabilities.  This includes making documents available in alternate accessible formats such as Braille, large print, recordings and accessible electronic format.  Under the agreement, Madison County is also required to reasonably modify its policies, practices and procedures to ensure equal access to its programs, services and activities.  County employees will also receive training on the requirements of the ADA and appropriate ways of serving people with disabilities. 

“No one should be in fear of going hungry and or being unable to take their child to the doctor because their disability prevented them from applying for benefits for which they may be eligible,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Many people with disabilities are low-income and are eligible for public benefits.  The ADA requires state and local governments to make their communications and services accessible to all people, including those with disabilities.”

The agreement with Madison County will provide people with disabilities with accessible documents they need to complete to receive benefits.  Chris Rifendifer, who is legally blind, is one of the people who will benefit from this agreement.  Rifendifer relies on Medicaid and food stamps to help take care of himself and his family.  However, the county provided him with forms he could neither read nor complete in order to receive his benefits.  When he asked county staff for help filling out the forms, Rifendifer was denied any assistance and told to ask someone else to do it for him.

Experiences like Rifendifer’s, however, will become a thing of the past over the next three years under the PCA agreement.  Rifendifer shared his story on the Justice Department blog today, where each month of 2015, the department is highlighting how PCA agreements have an impact on the everyday lives of people with disabilities.

In addition to addressing the issues faced by Rifendifer, the settlement agreement entered into by the department and Madison County requires the county to comply with the ADA’s architectural accessibility requirements by remediating existing buildings, when it builds new buildings and when it alters its buildings.  Additionally, it requires the county to publish and distribute ADA information, use the New York telephone relay service as a key means of communicating with individuals who are deaf, hard-of-hearing or have speech impairments, conduct ADA training and submit to monitoring of its compliance with the agreement by the department.    

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

The United States filed a complaint asking a federal court in Detroit to bar a Liberty Tax Service franchise owner and his companies based in Illinois and Michigan from preparing federal tax returns for others, the Justice Department announced today.

The civil complaint against Syed N. Ahmed and his businesses, Nasah Inc., Millinium [sic] Financial Solutions Inc., Mars Inc.-Hamtramck, and Mahad Inc., was filed in the U.S. District Court for the Eastern District of Michigan.  The complaint alleges that Ahmed operates at least 10 Liberty Tax Service franchise locations.

According to the suit, the defendants improperly obtain inflated tax refunds and refundable credits for customers by preparing tax returns that include, among other things, false or inflated Schedule C (Profit or Loss From Business) income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions. 

For example, the complaint alleges that one of defendants’ tax return preparers fabricated a driving business without the customer’s knowledge and reported thousands of dollars of expenses for that business that the customer did not incur.  The false expenses enabled the customer to receive an earned income tax credit that she was not otherwise entitled to receive, according to the suit.

The lawsuit states that the defendants prepared more than 17,000 federal income tax returns between 2010 and 2013.  Based on audit adjustments the Internal Revenue Service (IRS) has made to tax returns prepared and filed by the defendants between 2010 and 2013, the defendants’ conduct has cost the U.S. Treasury approximately $2.8 million, according to the suit. 

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.

The Superior Court of Fulton County, Georgia, signed a consent decree today in N.P. et al. v. State of Georgia, et al., a class action suit asserting that the public defense system in the Cordele Judicial Circuit is so underfunded and poorly staffed that indigent adults and juveniles accused of committing criminal acts are routinely denied their right to legal representation.  In March 2015, the Justice Department filed a statement of interest in the case, reaffirming the department’s commitment to enforcing the due process rights of children generally and, in particular, the need for children to consult with an attorney prior to waiving their Constitutional right to counsel.  One month after the department’s filing, the parties, with the assistance of U.S. Attorney Michael Moore of the Middle District of Georgia, who served as mediator, resolved the case and submitted a joint consent decree to the court. 

The proposed settlement, if implemented, would mark a major step forward in the safeguarding the right to counsel for both juveniles and adults. Specifically, the settlement would, among other things, require:

• the representation of children in juvenile court in the circuit to be by a lawyer who specializes in juvenile law and childhood and adolescent development;

• on notice from the court, a public defender from the juvenile division shall speak to any indigent juvenile who seeks to waive counsel and describe services of counsel available to the juvenile and the benefits of representation;

• all people, including children, arrested in the circuit and detained in its jails to consult with a lawyer in no more than three business days;

• the size of the Cordele Circuit Public Defender Office to nearly double, increasing from two full-time assistant public defenders to four, and from one full-time investigator to two; and

• significant and relevant training requirements for public defenders.

“This settlement recognizes that independent, ethical, and zealous counsel are essential to protecting the due process rights of juveniles,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Civil Rights Division will continue to ensure that juveniles across the nation are provided the vital protection of counsel.” 

“I am pleased to have played some small part in bringing this matter to a resolution that will benefit the people of the Cordele Judicial Circuit for years to come,” said U.S. Attorney Moore.  “As lawyers, all of us, including the named defendants in this case, understand the importance of providing representation to those who have been charged with a criminal or delinquent act.  This agreement puts meat on the bones of that process, and guarantees that individuals who are facing criminal cases in the Cordele Circuit will not only have representation, but truly meaningful representation as they navigate the judicial system.  This resolution is good for the accused, it is good for the court system, and it is good for the people of the state of Georgia.  I want to thank my friends, Attorney General Sam Olens and Solicitor General Britt Grant, for helping all involved reach a consensus in this matter, and I want to acknowledge the courageous filing on behalf of the plaintiffs that brought this to our attention by Steve Bright.”

“We congratulate the parties on coming together and taking the steps necessary to improve justice for both adults and juveniles in the Cordele Judicial Circuit,” said Director Lisa Foster of the Office for Access to Justice.  “The agreement upholds the core principles of the Sixth and Fourteenth Amendments and represents a model for the rest of Georgia and for the country.”

In N.P., the plaintiffs alleged that the public defense system in the Cordele Judicial Circuit had been so underfunded and poorly staffed that indigent adults and juveniles accused of committing criminal acts were routinely denied their right to legal representation.  In its statement of interest, the department focused solely on the due process rights of children accused of delinquency.  The department applied In re Gault and other case law to identify procedural safeguards that must be provided to children who appear before the court.  The Civil Rights Division has worked to expand access to counsel in juvenile delinquency proceedings.  For example, the division is currently enforcing an agreement in Shelby County (Memphis), Tennessee, that, among other remedies, requires the county and the local juvenile court to develop and support a juvenile public defense system.  The division is also engaged in a federal suit against the City of Meridian, Lauderdale County, Mississippi, two youth court judges in Lauderdale County, and the state of Mississippi, alleging that they are violating the due process rights of juveniles in Meridian who are referred for law enforcement action by public schools.

In its statement of interest, the department asserted that children are denied their right to counsel not only when an attorney is entirely absent, but also when an attorney is available in name only.  It provided the court with a framework to assess the plaintiffs’ claim that the defendants are depriving young people accused of delinquency of their right to counsel.  As the department summarized in the statement of interest, “due process requires that every child who faces the loss of liberty should be represented from their first appearance through, at least, the disposition of their case by an attorney with the training, resources and time to effectively advocate the child’s interest.  If a child decides to waive the right to an attorney, courts must ensure that the waiver is knowing, intelligent, and voluntary by requiring consultation with counsel before the court accepts the waiver.”

The case was filed in 2014 and brought by indigent adults and juveniles who faced criminal and delinquency charges in the Cordele Judicial Circuit.

A former loan officer at the Export-Import Bank of the United States (Ex-Im Bank) pleaded guilty in federal court today for accepting more than $78,000 in bribes in return for recommending the approval of unqualified loan applications to the bank, among other misconduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Michael T. McCarthy of the Export-Import Bank of the United States and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.       

Johnny Gutierrez, 50, of Stafford, Virginia, pleaded guilty before U.S. District Judge Gladys Kessler of the District of Columbia to one count of bribery of a public official.  A sentencing hearing is scheduled for July 20, 2015.

“Gutierrez risked both taxpayer dollars and the integrity of the Ex-Im Bank for his personal financial gain,” said Assistant Attorney General Caldwell.  “Those charged with serving the public will be held accountable when they seek personal enrichment at the public’s expense.”

“Gutierrez betrayed the trust and confidence of the hardworking Ex-Im Bank employees and the U.S. taxpayers,” said Acting Inspector General McCarthy.  “The Office of Inspector General will continue to aggressively and diligently investigate all allegations of waste, fraud, and abuse related to Ex-Im Bank programs.”

“In his role as a loan officer, Gutierrez betrayed the trust that was placed in him by fellow citizens and took bribes in exchange for providing favorable action on loan applicants,” said Assistant Director in Charge McCabe.  “The FBI, with our partners, will continue to investigate and expose fraudulent schemes that tarnish the good and ethical work of the U.S. government.”

According to his plea agreement, Gutierrez was a loan officer for the Ex-Im Bank based in Washington, D.C.  The Ex-Im Bank is the federal agency responsible for promoting the export of U.S. goods to foreign countries through the guarantee of domestic loans to foreign buyers.  As an Ex-Im Bank loan officer, Gutierrez was responsible for conducting credit underwriting reviews for companies and lenders submitting financing applications to the Ex-Im Bank.

As part of his guilty plea, Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.

Specifically, Gutierrez admitted that he intentionally ignored the fact that one company had previously defaulted in 10 previous transactions guaranteed by the bank, causing the Ex-Im Bank to lose almost $20 million.  Despite these defaults, Gutierrez accepted bribes to continue to recommend the approval of the company’s loan applications.  Additionally, Gutierrez admitted that he accepted bribes from a financing broker to expedite applications submitted by the broker, and that he privately assisted the broker to improve its applications before submission to the bank.  In exchange, Gutierrez was to receive half of the broker’s profit on the transactions financed by the bank.  Further, Gutierrez disclosed to the broker inside information about financing applications submitted to the Ex-Im Bank, so that the broker could solicit the applicants as clients.

The case was investigated by the Inspector General of the Export-Import Bank of the United States and the FBI, with significant assistance provided by the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Washington Field Office.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section.

ExxonMobil Pipeline Company and Mobil Pipe Line Company (ExxonMobil) have agreed to pay civil penalties, fund an environmental project and implement corrective measures to resolve alleged violations of the Clean Water Act and state environmental laws stemming from a 2013 crude oil spill from the Pegasus Pipeline in Mayflower, Arkansas, the Department of Justice and the Environmental Protection Agency (EPA) announced today. 

Under a consent decree lodged today in federal court, ExxonMobil will pay $3.19 million in federal civil penalties and take steps to address pipeline safety issues and oil spill response capability.  In addition, ExxonMobil will pay $1 million in state civil penalties, $600,000 for a project to improve water quality at Lake Conway, and $280,000 to the Arkansas Attorney General’s Office for the state’s litigation costs. 

The oil spill occurred on March 29, 2013, after the Pegasus Pipeline, carrying Canadian heavy crude oil from Illinois to Texas, ruptured in the Northwoods neighborhood of Mayflower, Arkansas.  Oil flowed through the neighborhood, contaminating homes and yards, before entering a nearby creek, wetlands and a cove of Lake Conway. Some residents were ordered to evacuate their homes after the spill and remained displaced for an extended period of time.  The spill volume has been estimated at approximately 3,190 barrels, or 134,000 gallons.   

“This settlement holds ExxonMobil accountable for this very serious oil spill and its disastrous impact on the Mayflower community and environment,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “This agreement is also an excellent example of federal and state cooperation that will benefit public health and the environment for years to come and most importantly prevent future disasters by requiring better pipeline safety and response measures.”

“Oil spills like this one in Mayflower, Arkansas have real and lasting impacts on clean water for communities,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “Companies need to take the necessary precautions to make sure oil is transported safely and responsibly.  This settlement puts in place essential pipeline safety and response measures that are important to make this industry safer for communities.”  

“The U.S. and the state of Arkansas have worked together since the first barrel of oil was spilled in 2013 to provide relief and assistance to the residents of Mayflower and Faulkner County and to hold ExxonMobil accountable for this serious spill,” said U.S. Attorney Christopher R. Thyer for the Eastern District of Arkansas.  “This settlement does both.  In addition to paying significant civil penalties, ExxonMobil will provide money for safety and water-quality projects to help ensure that the residents of the affected area never have to go through an ordeal like this again.  This resolution to a terrible disaster is a testament to the partnership between our federal and state governments to protect the citizens of Arkansas.”

“Pipeline companies have the responsibility to protect both our water resources and people from oil spills,” said Regional Administrator Ron Curry for EPA.  “Today’s settlement will help protect the environment by preventing the high economic and environmental costs of future oil spills.”   

The penalties owed by ExxonMobil under the consent decree are in addition to the money that the company has already paid to reimburse federal and state response efforts and comply with orders and directives issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA).  The segment of the Pegasus Pipeline that includes the rupture site has not been used since the March 2013 spill, and under the terms of the settlement agreement, ExxonMobil must comply with all PHMSA corrective action requirements before returning the pipeline to operation.  The consent decree also requires ExxonMobil to take other important pipeline safety corrective action to help prevent future ruptures and improve its spill response capabilities by providing additional training to its oil spill first responders.  In addition, ExxonMobil is required to establish caches of spill response equipment and supplies at three strategically-chosen sites along the pipeline, including one location near Mayflower in Faulkner County, Arkansas.   

The Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the U.S. or adjoining shorelines in quantities that may be harmful to the environment or public health.  The penalty paid to the U.S. for this spill will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Funds Center.  Those funds will be available to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to waters of the U.S. or adjoining shorelines.

The joint federal and state complaint in the case, filed June 13, 2013, in the U.S. District Court for the Eastern District of Arkansas, alleges that ExxonMobil discharged crude oil in violation of the Clean Water Act.  The complaint also asserts state claims for civil penalties for improper storage of hazardous waste generated during the cleanup and for water and air pollution violations pursuant to the Arkansas Water and Air Pollution Control Act and the Arkansas Hazardous Waste Management Act. 

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

The U.S. District Court for the Northern District of Alabama has approved a consent order filed by the U.S. Department of Justice and the Huntsville City Schools to reconfigure school attendance zones, improve access to quality course offerings and address racial discrimination in student discipline, among other areas. 

In a 29-page opinion approving the consent order, U.S. District Judge Madeleine Hughes Haikala of the Northern District of Alabama called the plan a “game-changer” in the effort to finally eliminate the effects of state-mandated racial segregation in Huntsville.  As the court noted, “the record demonstrates that full and faithful execution of the proposed consent order will enable the district to eliminate the effects of segregation “root and branch” and will pave the way toward a declaration of unitary status…. Now it is up to the district to act.”

The consent order, which amends the longstanding desegregation order in Hereford v. Huntsville Board of Education, resolves the parties’ dispute over the district’s 2014 plan to redraw student attendance zones.  The department objected to the plan because it did not further desegregation or remedy racial inequalities in students’ access to quality academic offerings.  The consent order was approved by the court after a far-reaching investigation by the department and months of mediation.  It will require the district to provide equal educational opportunities to African-American students by:

• revising attendance zones and growing and strengthening magnet programs to improve diversity at many of its schools;

• expanding access for African-American students to pre-kindergarten, gifted programs, advanced course offerings such as Advanced Placement and International Baccalaureate, academic after-school programs, and college counseling;

• implementing measures to promote faculty and administrator diversity;

• ensuring that all students are aware of and can equally participate in extracurricular activities;

• creating positive, inclusive school climates, and ensuring that student discipline is fair, non-discriminatory and does not unnecessarily remove students from classrooms;

• establishing a desegregation advisory committee of students and parents to advise the district and inform the court about implementation of the consent order;

• providing professional development for teachers on such topics as strategies for teaching students from diverse backgrounds, understanding implicit bias and supporting positive student behavior; and

• continuously monitoring racial disparities to ensure meaningful and sustained improvement in student performance, students’ access to courses and rates of student discipline and other areas.

Judge Haikala’s opinion approving the consent order spoke directly to the students saying, “The consent order begins and ends with the district’s students – all of its students…The district believes in you and in your potential for success.  We all do….  Think about how much the City of Huntsville will benefit from the contributions that you will make in the years ahead as teachers and engineers, as doctors and lawyers, as artists and musicians.  You are an integral part of your community and have so much to offer.” 

“This agreement provides for comprehensive remedies that are long overdue for African-American students in Huntsville,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We at the Civil Rights Division look forward to working with the district, the students and the community to implement the consent decree, instill equity and fairness in Huntsville schools, and strengthen the education provided to all students.”

“All of our children deserve the best possible educational opportunities,” said U.S. Attorney Joyce White Vance of the Northern District of Alabama.  “Our communities and our future are strengthened and improved when parties come together, as the Justice Department and Huntsville City Schools did here, to ensure that all children have equal access to quality education.”

The department will monitor and enforce the district’s compliance.  The school district may seek a declaration of unitary status and dismissal of the case when it can demonstrate sustained compliance with the terms of the consent order.

The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race and other factors in public schools, is a top priority of the department’s Civil Rights Division.  Additional information about the Civil Rights Division of the department is available on its web site at www.justice.gov/crt.

Permanent Injuries Suffered by Consumers

The Department of Justice and the Consumer Product Safety Commission (CPSC) jointly announced today the filing of a complaint against Michaels Stores Inc. and its subsidiary Michaels Stores Procurement Co. Inc. in the U.S. District Court for the Northern District of Texas.

Michaels is a publicly held corporation headquartered in Irving, Texas.  In 2013, Michaels had more than $4.5 billion in sales and 50,600 employees.  It is the largest arts and crafts specialty retailer in North America.

The complaint charges that Michaels knowingly violated the reporting requirements of the Consumer Product Safety Act with respect to glass vases that shattered in consumers’ hands, sometimes as the consumer lifted the vase from the Michaels Stores shelf.  As set forth in the complaint, Michaels imported and sold the vases, which caused serious injuries to consumers, including lacerations requiring stitches, permanent nerve damage and surgery to repair severed tendons.  The complaint, filed by the Department of Justice on behalf of the CPSC, seeks civil penalties and permanent injunctive relief.

“Michaels allegedly failed to report critical information about the safety of one of its products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Department of Justice will continue to protect the public against companies that put profits over safety.”

In addition to failing to notify the CPSC “immediately” as required by law, the government also alleges that when Michaels finally notified the CPSC, it did so in a misleading way.  Michaels’ report conveyed the false impression that Michaels did not import the vases, even though Michaels should have known it was the importer.  The complaint asserts that Michaels’ misrepresentation allowed Michaels to avoid legal responsibility for the recall of the vases as well as any obligation to pay costs and expenses associated with a recall.

“We believe that Michaels chose to profit from selling defective vases that put people at risk, instead of following the law and immediately reporting that their vases were shattering and causing great harm to consumers,” said CPSC Chairman Elliot F. Kaye.  “To protect the public,  companies are required to report potential product hazards and risks to CPSC on a timely basis.  That means within 24 hours, not more than a year as in Michaels’ case.”

Michaels sold the vases in its stores from 2006 to 2010.  According to the complaint, the vases pose a safety hazard because their walls are too thin to withstand the pressure of normal handling and, as a result, they shatter in consumers’ hands.  The complaint alleges that beginning as early as November 2007 and continuing for more than two years, Michaels received numerous consumer complaints that the vases were unsafe because they shattered during normal use and caused serious injuries.  The vases were recalled in September 2010.

The matter is being handled by Trial Attorney Kerala Thie Cowart of the Civil Division’s Consumer Protection Branch, Assistant U.S. Attorney Lisa Hasday of the Northern District of Texas and Patricia Vieira of the CPSC’s Office of the General Counsel.

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

Citizens Medical Center, a county-owned hospital in Victoria, Texas, has agreed to pay the United States $21,750,000 to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“Any type of false claim or improper behavior under our health care fraud laws are serious allegations that will not be taken lightly,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas.  “The settlement announced today represents the effectiveness of our continuing efforts and an example of our priorities in this arena.”

The settlement announced today resolved allegations that the hospital provided compensation to several cardiologists that exceeded the fair market value of their services.  The settlement also resolved allegations that the hospital paid bonuses to emergency room physicians that improperly took into account the value of their cardiology referrals.  The United States contended that these agreements violated the Stark Statute and the False Claims Act.  The Stark Statute restricts the financial relationships that hospitals may have with doctors who refer patients to them.

The allegations settled today arose from a lawsuit filed by three whistleblowers, Dakshesh “Kumar” Parikh, Harish Chandna and Ajay Gaalla, under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The whistleblowers will collectively receive $5,981,250 from the recoveries announced today.

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 case, United States ex rel. Parikh, et al. v. Citizens Medical Center, et al., Case No. 6:10-cv-64 (S.D. Tex.), was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of Texas and the U.S. Department of Health and Human Services’ Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare 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, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims.  Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively.  Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims.  The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.

All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan.  Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks.  Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud.  Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks.  Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.

According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided.  The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased.  Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.   

The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered.  Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided.  The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.

The case was investigated by the FBI, HHS-OIG and the IRS, 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 for the Eastern District of Michigan.  The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged 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.

Attorney General Eric Holder will preside over the National Crime Victims’ Rights Service Awards ceremony at 2:00 p.m. on Tuesday, April 21.  The event honors 12 individuals and programs for their extraordinary actions to bring positive and lasting changes in the lives of crime victims.

“The Department of Justice is proud to recognize the tremendous contributions of dedicated colleagues, passionate advocates and extraordinary partners in the field of victim services,” said Attorney General Eric Holder.  “From safeguarding survivors of sexual violence to assisting victims of mass marketing fraud, the recipients of today’s awards have been instrumental in our nationwide effort to protect the most vulnerable among us, to prevent and combat crime, and to help victims find hope and seek justice.”

The department’s Office for Victims of Crime leads communities across the country in observing National Crime Victims’ Rights Week and hosts an award ceremony each year.  President Reagan proclaimed the first Victims’ Rights Week in 1981, calling for greater sensitivity to the rights and needs of victims.  For 2015, the week is observed from April 19 through 25, with the theme Engaging Communities.  Empowering Victims. 

Following is a list of the award recipients, who were nominated by their colleagues in the field and selected by the Attorney General:

The Allied Professional Award recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field.  Recipients: Mary Kay Inc. of Addison, Texas, and Assistant District Attorney Norman A. Gahnof the Milwaukee County District Attorney’s Office.

The Crime Victims Financial Restoration Award recognizes individuals, programs, organizations or teams that developed innovative ways of funding services for crime victims or instituted innovative approaches for securing financial restoration for crime victims.  Recipient: A team of representatives from the U.S. Attorney’s Office of the Middle District of Pennsylvania, the department’s Asset Forfeiture Money Laundering Section and U.S. Postal Inspection Service for Harrisburg, Pennsylvania.

The National Crime Victim Service Award honors extraordinary efforts in direct service to crime victims.  Recipients: Karen Kalergis, a victim advocate from Austin, Texas, and Executive Director Alecia “Lisa” Thompson-Heth of Wiconia Wawokiya Inc., of the Crow Creek Sioux Indian Reservation, Fort Thompson, South Dakota.

The Crime Victims’ Rights Award honors those whose efforts to advance or enforce crime victims’ rights have benefited crime victims at the state, tribal or national level.  Recipient: Laurel Wemhoff, a survivor and advocate from Washington, D.C.

The Ronald Wilson Reagan Public Policy Award honors leadership, innovation and vision that leads to noteworthy changes in public policy that benefit crime victims.  Recipients: Dr. Marcus Smith and attorney Matthew Smith, of Little Rock, Arkansas, and Director of Victim Services Suzanne Breedlove of the District Attorneys Council in Oklahoma City.

The Professional Innovation in Victim Service Award recognizes a program, organization or individual who has helped to expand the reach of victims’ rights and services.  Recipient: Judge Paul M. Herbert of the Franklin County Municipal Court in Columbus, Ohio.

The Special Courage Award recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim.  Recipients: Ronald Cotton and Jennifer Thompson, of Chapel Hill, North Carolina.

The Vision 21 Crime Victims Research Award recognizes individual researchers or research teams that make a significant contribution to the nation’s understanding of crime victims’ issues.  Recipient: Rebecca Campbell, of Michigan State University in East Lansing, Michigan.

The Volunteer for Victims Award honors individuals for their extraordinary and selfless efforts resulting in positive and lasting changes in the lives of crime victims.  Recipient: LaWanda Hawkins, of San Pedro, California.

Descriptive narratives and videos of the contributions of recipients are available at Office for Victims of Crime’s Gallery.

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.

The Justice Department announced today that it has opened pattern or practice investigations into the use of investigative holds by the Ville Platte Police Department (VPPD) and the Evangeline Parish Sheriff’s Office (EPSO).  The investigations will focus on allegations that VPPD and EPSO officers use “investigative holds” to detain individuals without proper cause, and on the adequacy of VPPD and EPSO’s training, supervision and accountability mechanisms to prevent unlawful seizures.  The Justice Department’s investigations will determine whether VPPD and EPSO officers engage in a pattern or practice of using investigative holds in violation of the Constitution and federal law. 

“No individual should be detained without proper cause or arrested in violation of his or her civil rights,” said Attorney General Eric Holder.”  As these investigations move forward, the Department of Justice will work to ensure that the actions of the Ville Platte Police Department and the Evangeline Parish Sheriff's Office are in service of our shared mission, consistent with our common values, and in accordance with the Constitution that we are sworn to uphold.”

The Justice Department has contacted officials at VPPD, EPSO, the city of Ville Platte and Evangeline Parish, and will continue to work closely with these law enforcement agencies and municipalities as the investigations progress.

“Police officers across the country are called upon regularly to use their law enforcement authority to protect and safeguard members of their communities by investigating criminal activity,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “It is imperative that officers use their authority within the boundaries of the law and the Constitution.  We are eager to work together with the Ville Platte Police Department, Evangeline Parish Sheriff’s Office and the local municipalities to help ensure that their officers are engaged in law enforcement practices that are consistent with the Constitution.”

“All of us who work in law enforcement should be focused on due process every day,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana.  “Each citizen deserves to be treated with respect and in accordance with the Constitution.  We will continue to work with all of our local partners to ensure that arrests and detentions are proper and legal, with the goal of having safeguards in place to make sure that similar violations do not occur in the future.”

The Violent Crime Control and Law Enforcement Act of 1994 prohibits state and local governments from engaging in a pattern or practice of misconduct by law enforcement officers that deprives individuals of federally-protected rights.  The act also allows the Justice Department to remedy such misconduct through civil litigation.  The Justice Department has conducted similar investigations and has obtained important reforms in police departments and law enforcement agencies across the country.  

The Special Litigation Section of the Justice Department’s Civil Rights Division in Washington, D.C. is conducting the investigations.  Individuals with relevant information are encouraged to contact the Justice Department by phone at 1-877-218-5228.

Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.

The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against HCR ManorCare alleging that ManorCare knowingly and routinely submitted false claims to Medicare and Tricare for rehabilitation therapy services that were not medically reasonable and necessary, the Department of Justice announced today.  ManorCare is one of the nation’s largest healthcare providers, operating approximately 281 skilled nursing facilities (SNFs) in 30 states.

“The Department of Justice is committed to ensuring that healthcare providers who pressure their employees to provide medically unnecessary services to Medicare beneficiaries and Tricare recipients solely to increase their own profits are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will not relent in our efforts to stop these false billing schemes and recover funds for federal healthcare programs.”

The government’s complaint alleges that ManorCare, which is owned by The Carlyle Group, exerted pressure on SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients.  ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments.  ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.

“We strive for a system whereby health care providers provide reasonable and necessary services without overbilling Medicare for unreasonable and unnecessary services” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia.  “We will continue our robust investigations of the companies operating in this important sector of our economy.”

“We want to ensure that taxpayer dollars are used to pay for health care for Americans that need it, not to unjustly enrich health care companies,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.  “Medical providers will be held accountable when they exploit patients for profit by subjecting them to therapies they don’t need and then billing Medicare for reimbursement.”

“Today’s action is the result of a robust investigation into alleged false billings submitted to Medicare and Tricare for rehabilitation therapy services that were not necessary for patients,” said Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office.  “Healthcare fraud is a top priority for the FBI and we will continue to work closely with federal, state and local law enforcement partners to address vulnerabilities, fraud and abuse in the healthcare industry.”

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

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

These matters were investigated by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Offices for the Northern and Southern Districts of Iowa, Eastern and Western Districts of Michigan, Northern and Southern Districts of Ohio, Eastern District of Pennsylvania and Eastern District of Virginia; the Department of Health and Human Services’ Office of Inspector General; the Department of Defense’s Office of Inspector General; the Defense Health Agency; the Medicaid Fraud Control Units of the California Attorney General’s Office, Delaware Department of Justice, the Florida Attorney General’s Office, Illinois State Police, Iowa Department of Inspections and Appeals, the Maryland Attorney General’s Office, the Michigan Attorney General’s Office, the Ohio Attorney General’s Office and the Virginia Attorney General’s Office; the National Association of Medicaid Fraud Control Units; and the FBI.

 The cases are captioned United States ex rel. Ribik v. ManorCare, Inc., et al., Case No. 1:09cv13-CMH-HCB (E.D. Va.); United States ex rel. Slough v. HCR ManorCare, et al., Case No. 1:14cv1228  (E.D. Va.); and United States ex rel. Carson v. HCR ManorCare, et al., Case No. 1:11cv1054 (E.D. Va.).

The claims asserted against ManorCare are allegations only, and there has been no determination of liability.

A futures trader was arrested in the United Kingdom today on U.S. wire fraud and commodities fraud and manipulation charges in connection with his alleged role in the May 2010 “Flash Crash,” when the Dow Jones Industrial Average plunged 600 points in five minutes, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Robert J. Holley of the FBI’s Chicago Division.

Navinder Singh Sarao, 36, of Hounslow, United Kingdom, was arrested today in the United Kingdom, and the United States is requesting his extradition.  Sarao was charged in a federal criminal complaint in the Northern District of Illinois on Feb. 11, 2015,  with one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of “spoofing,” a practice of bidding or offering with the intent to cancel the bid or offer before execution.

According to allegations in the complaint, which was unsealed today, Sarao allegedly used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts (E-Minis) on the Chicago Mercantile Exchange (CME).  E-Minis are stock market index futures contracts based on the Standard & Poor’s 500 Index.  Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the U.S. stock market on May 6, 2010, that came to be known as the “Flash Crash.”  On that date, the Dow Jones Industrial Average fell by approximately 600 points in a five-minute span, following a drop in the price of E-Minis.

According to the complaint, Sarao allegedly employed a “dynamic layering” scheme to affect the price of E-Minis.  By allegedly placing multiple, simultaneous, large-volume sell orders at different price points—a technique known as “layering”—Sarao created the appearance of substantial supply in the market.  As part of the scheme, Sarao allegedly modified these orders frequently so that they remained close to the market price, and typically canceled the orders without executing them.  When prices fell as a result of this activity, Sarao allegedly sold futures contracts only to buy them back at a lower price.  Conversely, when the market moved back upward as the market activity ceased, Sarao allegedly bought contracts only to sell them at a higher price.

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

This case is being investigated by the FBI’s Chicago Division.  The case is being prosecuted by Assistant Chief Brent S. Wible and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section, with assistance provided by the U.S. Attorney’s Office for the Northern District of Illinois, the Criminal Division’s Office of International Affairs and the International Assistance Unit of the Metropolitan Police Service of London, United Kingdom.  The Department of Justice appreciates the substantial assistance of the Commodity Futures Trading Commission’s Division of Enforcement, which referred this matter to the department.  

Sarao Criminal Complaint

Family Dermatology P.C. which owns and operates a dermatopathology laboratory in Georgia and a number of dermatology practices throughout the Eastern United States, has agreed to pay the United States $3,247,835 plus interest to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with a number of its employed physicians, the Justice Department announced today.

“The Department of Justice has had longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician's judgment about the patient's true health care needs and drive up health care costs for everybody,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The settlement announced today resolved allegations that financial relationships that Family Dermatology and its affiliates had with a number of their employed physicians violated the Stark Statute and the False Claims Act.  The Stark Statute restricts the financial relationships that health care providers may have with doctors who refer patients to them.  Family Dermatology employs a number of dermatologists as independent contractors and it has routinely required them to use Family Dermatology’s in-house pathology lab, which operated under the name Nelson Dermatopathology, for their pathology services.  The government alleged that Family Dermatology’s financial relationships with a number of these physicians did not comply with the requirements of the Stark Statute, and that Family Dermatology improperly billed Medicare for dermatopathology analyses performed by Nelson Dermatopathology on specimens that were sent to the laboratory by these employed physicians.

“The defendants financed the expansion of their business across the Eastern United States with improper financial arrangements that resulted in illegal referrals and, ultimately, inflated payments from Medicare,” said Acting U.S. Attorney John Horn of the Northern District of Georgia.  “We expect providers to follow the law and will pursue those who do not.”

“Physician self-referrals that violate the Stark Statute undermine medical decision making, jeopardize patient care and cost the taxpayers money,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “Patients need to have confidence that the advice they receive from their physicians is based on sound medical practice, not illegal financial relationships between providers.  We will continue to investigate and pursue these types of violations in our district.”

“This settlement not only demonstrates the need for oversight involving such matters under the False Claims Act, but also the FBI’s commitment toward enforcing this as well as other health care fraud based violations,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.

“Health care companies that make sweetheart deals with physicians to boost profits undercut both the financial integrity of Medicare and the public’s trust in the medical profession,” said Special Agent in Charge Derrick L. Jackson of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to hold those who engage in such improper financial schemes accountable.”

The allegations settled today arose from three separate lawsuits filed by three whistleblowers, Scott M. Ross MD, Mark F. Baucom and Harold Milstein MD under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The whistleblowers will collectively receive more than $584,000 from the recovery announced today.

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 cases, United States ex rel. Ross v. Family Dermatology of Pennsylvania, P.C., et al., Case No. 1:11-cv-2413 (N.D. Ga.); United States ex rel. Baucom v. Family Dermatology of Pennsylvania, P.C., et al., Case No. 1:11-cv-4260 (N.D. Ga.); and United States ex rel. Milstein v. Family Dermatology, P.C., et al., Case No. 1:13-cv-1027 (N.D. Ga.), were handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices of the Northern District of Georgia and the Middle District of Florida, and HHS-OIG.

U.S. ex rel. Milstein was originally filed in the Middle District of Florida and subsequently transferred to the Northern District of Georgia.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

Four Portland, Oregon, residents were sentenced today in the U.S. District Court in Portland for a multi-year stolen identity tax refund scheme to defraud the United States of more than $1 million in tax refunds, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Billy J. Williams of the District of Oregon.

Jheraun Dunlap, Ernest Bagsby, Jermaine Moore and Brandi McCall were collectively sentenced to serve more than 14 years in prison by U.S. District Judge Robert E. Jones.  Dunlap, 32, who was previously convicted of bank robbery, was sentenced to serve five years and five months in prison.  Bagsby, 37, who was previously convicted of delivery of heroin in Clackamas County, Oregon, was sentenced to serve four years and three months in prison.  Moore, 34, was sentenced to serve three years and nine months in prison, and McCall, 27, was sentenced to serve 12 months and one day in prison.  All four defendants were ordered to pay restitution to the Internal Revenue Service (IRS) in the amount of $427,896.

According to the plea agreements and court documents, the scheme involved the filing of 208 false federal income tax returns that included fraudulent claims for tax refunds between $3,000 and $9,000 per return.  Dunlap electronically filed the false tax returns using stolen identities or identities obtained by Bagsby and Moore.  McCall opened stored-value debit cards in her own name to receive the refunds.  The defendants directed the IRS to deposit the tax refunds onto stored-value debit cards and then the proceeds were shared among the participants in the scheme.  In total, as part of the scheme, the defendants requested more than $1 million in tax refunds.

All four defendants were captured on ATM footage withdrawing cash from stored-value debit cards that held the tax refund proceeds.  As part of the investigation, a search warrant was executed on the Facebook accounts of multiple co-conspirators, from which federal agents obtained photographs of stacks of cash, among other things.  The United States seized and forfeited assets traced to proceeds of the scheme, including a two-carat diamond engagement ring, a Mercedes Benz 500 and a 1971 Pontiac Firebird, both of which were purchased with $20 bills.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Williams commended the special agents of IRS-Criminal Investigation, who investigated the case as part of the Stolen Identity Refund Fraud Task Force, and Trial Attorneys Leslie A. Goemaat and Lori A. Hendrickson of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office in the District of Oregon for their substantial assistance.

Attorney General Eric Holder released the following statement on the retirement of Drug Enforcement Administration Administrator Michele Leonhart:

“Michele Leonhart, the Administrator of the Drug Enforcement Administration, informed me today of her decision to retire.  She will depart the agency in mid-May.

“I want to express my appreciation to Michele, not only for her leadership of the DEA since 2007, but also for her 35 years of extraordinary service to the DEA, to the Department of Justice and to the American people.  As a Baltimore City Police Officer shortly after her college graduation, she stood on the front lines of our nation’s fight against crime.  As a career DEA Special Agent, she initiated and contributed to law enforcement actions from major drug investigations to international conspiracy cases.  And as the first woman ever to reach the rank of Special Agent in Charge, she was a trailblazer for equality and an inspiration to countless others.  She has devoted her life and her professional career to the defense of our nation and the protection of our citizens, and for that, I am deeply grateful.  

“The agents and employees of the DEA are some of the finest law enforcement officers in the world.  They are committed to upholding American rights and liberties, dedicated to the rule of law, and devoted to the cause of justice.  Every day, these remarkable men and women put their lives on the line – in communities across the United States and around the world – to safeguard our way of life.  And they do so at a time of increasingly complex challenges and constantly evolving threats.

“Michele has led this distinguished agency with honor, and I have been proud to call her my partner in the work of safeguarding our national security and protecting our citizens from crime, exploitation and abuse.  Over the past decade, under her leadership, there have been innumerable instances of the DEA dismantling the most violent and most significant drug trafficking organizations and holding accountable the largest drug kingpins around the world.  Going forward, I have no doubt that the women and men of the DEA will continue to perform their duties with the utmost integrity, professionalism and skill – and I wish my good friend Michele all the best as she embarks on this next chapter in what is a remarkable life.”

Sex Trafficking Scheme Used Threats, Violence and Coercion to Compel Women into Prostitution in New Orleans and Elsewhere 

Today, three additional defendants pleaded guilty in connection with a sex trafficking scheme operated out of the Riviera Motel in New Orleans, Louisiana, which compelled multiple women to engage in prostitution in New Orleans and elsewhere, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division and U.S. Attorney Kenneth Allen Polite Jr. of the Eastern District of Louisiana.

Defendants Duane Phillips, 29, and Christopher Williams, 30, both of whom are residents of Memphis, Tennessee, each pleaded guilty today to conspiring to commit sex trafficking of adult victims by force, fraud and coercion in New Orleans and elsewhere.  Defendant Anthony Ellis, 26, also of Memphis, pleaded guilty to one count of conspiring to commit sex trafficking of adult victims and one count of transportation for purposes of prostitution.   

“The Department of Justice will not tolerate trafficking in human beings, and will continue to relentlessly pursue justice on behalf of vulnerable members of our society, whether they are migrants from beyond our borders or whether they are young women from our own communities,” said Principal Deputy Assistant Attorney General Gupta.  “We will continue in our steadfast determination to hold accountable those who use force and coercion to exploit other human beings.”

“These defendants recruited vulnerable victims from the New Orleans community and brought other victims to New Orleans to engage in commercial sex trafficking,” said U.S. Attorney Polite.  “These crimes often pass without detection because victims live in fear from physical abuse, threats and other forms of coercion.  My office is committed to prosecuting individuals who manipulate victims into committing commercial sex acts and profit from this illegal conduct.”

“This investigation and prosecution should serve as a clear reminder to all those individuals engaged in the heinous crime of sex trafficking that the full force of federal law enforcement, across geographical boundaries, will bring them to swift justice,” said Special Agent in Charge Michael Anderson of the FBI’s New Orleans Division.

“Human trafficking is a form of modern-day slavery that Homeland Security Investigations fights as one of its highest priorities via a coordinated global effort with the FBI and our state and local law enforcement partners,” said Acting Special Agent in Charge Cindy M. Johnson of Homeland Security Investigations’ (HSI) New Orleans Field Office.  “The results speak for themselves; over the past two years HSI has doubled its number of human trafficking arrests.  HSI will continue to investigate and seek prosecution of these criminals while also ensuring the victims of this terrible crime are rescued and get the care they need.”

Two defendants have previously pleaded guilty in connection with the case.  On June 25, 2014, defendant Zacchaeus Taylor pleaded guilty to sex trafficking conspiracy and to Transportation for Purposes of Prostitution.  On March 4, 2015, Laquentin Brown pleaded guilty to the same charges.  Each face a maximum of five years on the conspiracy count and a maximum of 10 years on the transportation for prostitution count.

On Oct. 3, 2014, a grand jury in the Eastern District of Louisiana returned a Second Superseding Indictment charging defendants Phillips, Williams and Ellis, along with additional defendants Granville Robinson and Laquentin Brown, with sex trafficking conspiracy and varying counts of sex trafficking and transportation for prostitution.  The Second Superseding Indictment also charged defendant Kanubhai Patel, who was the former owner of the Riviera Motel, with benefitting financially from the sex trafficking conspiracy.  Defendant Taylor was charged separately on March 28, 2014.  Of the seven defendants charged in connection with the sex trafficking scheme, five have entered guilty pleas.  An indictment is merely an accusation and defendants are innocent until proven guilty beyond a reasonable doubt.

During their respective plea hearings and in their respective court filings, defendants Phillips, Williams and Ellis admitted that they, along with co-defendants Robinson and Brown, all of whom are from Memphis, conspired to recruit, groom, force, compel and coerce adult women to engage in prostitution, enforcing rules and means of control that included requiring the women to earn a certain amount of money each day, requiring them to turn over the proceeds and prohibiting them from speaking to or looking at other pimps.  Williams admitted intentionally trying to impregnate women to make it harder for them to leave him, while some of the other defendants took the victims’ identification cards and documents.  To enforce the rules, Phillips, Williams and Ellis each admitted that they and their co-conspirators used a variety of punishments, including withholding food, forcing the victims to engage in additional commercial sex acts, as well as physical assaults.  Williams noted that he attempted to avoid visible bruising so that the victims would not draw the attention of the police or scare off prospective customers.  Phillips, Williams and Ellis each admitted that they and their co-conspirators consulted one another on means of furthering their pimping activities, and would monitor each other’s victims when a co-conspirator was incarcerated.  Phillips, Williams, Ellis and the other co-conspirators frequently stayed at the Riviera Motel because they knew that the hotel staff would not stop them from pimping women.

At sentencing, defendant Ellis faces a maximum sentence of 10 years on the transportation for prostitution charge and a maximum sentence of five years on the conspiracy charge.  Defendants Phillips and Williams each face a maximum sentence of life imprisonment for the sex trafficking conspiracy. 

This case was investigated jointly by agents from the New Orleans Field Offices of the Federal Bureau of Investigation (FBI) and Department of Homeland Security (DHS), with assistance from the FBI’s Memphis Field Office.  This case is being prosecuted by Special Litigation Counsel John Cotton Richmond and Trial Attorney Christine M. Siscaretti of the Civil Right Division’s Human Trafficking Prosecution Unit, and Assistant U.S. Attorney Julia K. Evans of the Eastern District of Louisiana.

Four Defendants Arrested in Minneapolis; Two Arrested in San Diego

A criminal complaint was filed today charging six Minnesota men with conspiracy and attempt to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL).  

Zacharia Yusuf Abdurahman, 19, Adnan Farah, 19, Hanad Mustafe Musse, 19, and Guled Ali Omar, 20, were arrested in Minneapolis yesterday.  Abdirahman Yasin Daud, 21, and Mohamed Abdihamid Farah, 21, were arrested yesterday in California after driving from Minneapolis to San Diego.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division made the announcement.

“The six defendants charged in the complaint allegedly planned to travel to Syria as part of their conspiracy to provide material support to ISIL,” said Assistant Attorney General Carlin.  “One of the National Security Division’s highest priorities is to identify, disrupt, and hold accountable those who provide or attempt to provide material support to designated foreign terrorist organizations.  I would like to thank the many agents, analysts, and prosecutors who are responsible for this investigation and the charges in this case.”

“As described in the criminal complaint, these men worked over the course of the last 10 months to join ISIL,” said U.S. Attorney Luger.  “Even when their co-conspirators were caught and charged, they continued to seek new and creative ways to leave Minnesota to fight for a terror group.  I applaud the hard work and tireless efforts of the FBI Minneapolis Division and their colleagues around the country.”

“Preventing acts of terrorism is the FBI's highest priority,” said Special Agent in Charge Thornton.  “Disrupting individuals from traveling to join and fight for ISIL is an important part of our counter terrorism strategy.  As a result of this investigation and arrests, these six Minnesota men who planned to travel and fight for ISIL will answer these charges in U.S. District Court instead of taking up arms in Syria.  The FBI remains committed to ending both recruitment efforts and travel on the part of young people from Minnesota to fight overseas on behalf of terror groups.  These arrests today signify this continued commitment.”

According to the criminal complaint and documents filed in court, the FBI has been conducting an investigation for the last 10 months into a group of individuals who have tried to join – and in some cases succeeded in joining – overseas designated foreign terrorist organizations.  At least nine Minnesotans have now been charged as part of this conspiracy to provide material support to ISIL.  The men are all alleged associates and friends of one another.

This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force, U.S. Attorney’s Office of the District of Minnesota and the Counterterrorism Section of the Department of Justice National Security Division.  Assistant Attorney General Carlin is also grateful to the U.S. Attorney’s Office of the Southern District of California and the FBI’s San Diego Division for their contributions to the investigation of this case.

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

Farah et al Criminal Complaint

Defendant Attempted to Travel to Yemen to Join al-Qaeda Affiliate, Assist Co-Conspirator’s Efforts to Join The Terrorist Group and Destroy Evidence of Terrorism Offenses

Earlier today at the federal courthouse in Central Islip, New York, Marcos Alonso Zea, also known as “Ali Zea,” an American citizen and resident of Brentwood, New York, was sentenced to 25 years in prison following his Sept. 9, 2014, guilty plea to attempting to provide material support to a foreign terrorist organization, al-Qaeda in the Arabian Peninsula, also known as Ansar al-Sharia (collectively AQAP), and obstruction of justice.

The sentencing was announced by U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York Police Department (NYPD).

Beginning in the fall of 2011, Zea planned to travel overseas in order to wage violent jihad against the perceived enemies of Islam, which included the government of Yemen and its allies.  In furtherance of his plot, on Jan. 4, 2012, Zea boarded a flight at John F. Kennedy Airport (JFK) in Queens, New York, to London, en route to Yemen.  Zea was not permitted to travel onward from London, however, and was returned to the United States by British authorities.  Zea was interviewed and closely monitored by investigators following his return.  Despite being prevented from traveling to Yemen, Zea continued to plot, including by encouraging and supporting his co-conspirator, Justin Kaliebe, who also was planning to travel to fight jihad.  In January 2013, Kaliebe was arrested at JFK while attempting to travel to Yemen to join AQAP.  Months later, after learning that he too was under investigation, Zea caused electronic media on his computer to be destroyed in an effort to obstruct the investigation.  Notwithstanding his efforts, a forensic examination of Zea’s electronic media subsequently conducted by investigators revealed an assortment of violent Islamic extremist materials, including issues of Inspire magazine, part of AQAP’s English-language media operations.

“Marcos Alonso Zea presents a chilling reminder of the danger presented to the United States by homegrown terrorists,” said U.S. Attorney Lynch.  “Born, raised and schooled in the United States, the defendant nevertheless betrayed his country by attempting to join al-Qaeda in the Arabian Peninsula, assisting a co-conspirator’s attempt to join that terrorist group, and, after learning he was under investigation, attempting to destroy evidence of his guilt.  We will continue to work tirelessly to protect our national security from all enemies, both foreign and domestic.”  U.S. Attorney Lynch expressed her grateful appreciation to all the members of the FBI’s Joint Terrorism Task Force and the NYPD’s Intelligence Division for their work on the investigation.

“One of our highest priorities is to protect our country by identifying, disrupting and holding accountable those who provide or attempt to provide material support to designated foreign terrorist organizations,” said Assistant Attorney General Carlin.  “This sentence serves unambiguous notice that attempting to travel abroad to engage in such conduct has significant consequences.”

“The threat from al-Qaeda is real, look no further than Marcos Zea,” said Assistant Director in Charge Rodriguez.  “Zea betrayed our country, attempting to first join al-Qaeda.  When that failed, he helped others wage jihad.  We continue working relentlessly to disrupt the plans of those who look to do us harm.”

“The New York City Police Department will continue to work closely with our federal counterparts to identify and arrest homegrown terrorists like Marcos Alonso Zea, and ensure all extremists bring no harm to American soil, especially here in New York City,” said Commissioner Bratton.

After being arrested in January 2013, Zea’s co-conspirator Kaliebe subsequently pleaded guilty to one count of attempting to provide material support to terrorists and one count of attempting to provide material support to AQAP.  Kaliebe is pending sentencing by U.S. District Judge Denis R. Hurley of the Eastern District of New York.

The case is being prosecuted by Assistant U.S. Attorneys Seth D. DuCharme, John J. Durham and Michael P. Canty of the Eastern District of New York, with assistance provided by Trial Attorney Kelli Andrews of the National Security Division’s Counterterrorism Section.

Attorney General Eric Holder released the following statement to commemorate the 20th anniversary of the Oklahoma City bombing:

“Twenty years ago, domestic terrorists struck at the heart of all that this country stands for – liberty, democracy and the rule of law.  The toll of their heinous and cowardly act – in lives lost and families shattered – devastated our public servant community and shook the confidence and faith of our nation.  But through the resilience of Oklahomans and the strength of the American people, we recommitted ourselves to the fundamental values that make this country a beacon of freedom, fairness and opportunity.  In the years since, the Department of Justice has rededicated itself to the fight against homegrown threats and has been aggressive in going after those who would inflict violence on their fellow citizens.  Our measures have been effective and our record is strong, but we must remain vigilant – public servants and citizens alike – in our efforts to identify potential threats before they cause harm.

“To that end, last year, I relaunched the Justice Department’s Domestic Terrorism Executive Committee, which had originally been established by Attorney General Janet Reno in response to the bombing in Oklahoma City.  Through its meetings and ongoing efforts, the committee serves as a vital forum for members of the Justice Department, the FBI and a number of other law enforcement agencies across the federal government to assess and share information about domestic terror threats and developments.  It is a part of the critical progress we have made in the wake of Oklahoma City.  And it is one of the many ways in which we pay tribute to the lives and the legacies of the 168 men, women, and children who were taken from us on that tragic day two decades ago.

“As we mark this somber anniversary and as many gather at what is now a beautiful and inspiring memorial in Oklahoma City, our thoughts and prayers are with those who lost lives and loved ones.  We will continue to honor their memory.  And in the days, months and years ahead, we will continue to uphold the values of this nation – a nation that stands strong, a nation that overcomes and a nation that moves forward, inexorably, toward that more perfect Union our founders imagined for us all.”

Seven Foreign Nationals and Companies Placed on Department of Commerce’s Entity List

A 24-count indictment has been unsealed today charging four corporations and five individuals with facilitating the illegal export of high-tech microelectronics, uninterruptible power supplies and other commodities to Iran in violation of the International Emergency Economic Powers Act (IEEPA). 

The announcement was made by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Assistant Director Randall Coleman of the FBI’s Counterintelligence Division, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Under Secretary of Commerce Eric L. Hirschhorn of the Department of Commerce, Special Agent in Charge Tracy E. Martin of the Department of Commerce’s Office of Export Enforcement’s Dallas Field Office and Special Agent in Charge Lucy Cruz of the IRS’ Houston Field Office. 

“The nine defendants charged in the indictment allegedly circumvented U.S. sanctions and illegally exported controlled microelectronics to Iran,” said Assistant Attorney General Carlin.  “Violations of the International Emergency Economic Powers Act not only can undercut the impact of U.S sanctions, but can also serve to undermine U.S. foreign policy and adversely affect national security.  I want to thank all those in law enforcement whose tireless efforts led to these charges.”

“The prevention, investigation and prosecution of the illegal export of critical electronic system is one of the highest priorities of the Department of Justice,” said U.S. Attorney Magidson.  “This indictment is evidence of our commitment to ensuring that our laws are enforced and our national security is protected.” 

“The proliferation of sensitive U.S. technologies to Iran and the direct support to their military and weapons programs remains a clear threat to U.S. national security,” said Coleman.  “The FBI and our interagency partners will continue to identify, penetrate and neutralize proliferation efforts aimed at circumventing our export control laws and economic sanctions to illegally obtain sensitive technologies.”

“IRS-CI will tenaciously pursue individuals who violate international emergency economic powers statutes,” said Special Agent in Charge Cruz.  “Our role is to unravel the often concealed or disguised financial crimes that threaten our national security.”

“The Office of Export Enforcement and our law enforcement partners will continue to investigate, pursue and dismantle these procurement networks that violate U.S. export control laws whether they operate within our borders or anywhere else in the world,” said Special Agent in Charge Martin.

The indictment alleges Houston-based company Smart Power Systems Inc. (SPS); Bahram Mechanic, 69, and Tooraj Faridi, 46, both of Houston; and Khosrow Afghahi, 71, of Los Angeles, were all members of an Iranian procurement network operating in the United States.  Also charged as part of the scheme are Arthur Shyu, and the Hosoda Taiwan Limited Corporation in Taiwan; Matin Sadeghi, 54, and Golsad Istanbul Trading Ltd. in Turkey; and the Faratel Corporation, co-owned by Mechanic and Afghahi in Iran.

The indictment was returned under seal on April16, 2015, and unsealed as Mechanic and Faridi made their initial appearances before U.S. Magistrate Judge Francis H. Stacy of the Southern District of Texas.  Afghahi was taken into custody and will make an initial appearance in the Central District of California.  Sadeghi and Shyu are believed to be out of the country and warrants remain outstanding for their arrests.  Anyone with information is asked to contact the nearest embassy or local FBI office.  They may also contact the FBI’s Houston Office at 713-693-5000.

In conjunction with the unsealing of these charges, the Department of Commerce is designating seven foreign nationals and companies, adding them to its Bureau of Industry and Security Entity List.  The indictment alleges these individuals and companies received, transshipped or otherwise facilitated the illegal export of controlled commodities by the defendants.  Designation on the Entity List imposes a license requirement before any commodities can be exported from the United States to these persons or companies and establishes a presumption that no such license will be granted. 

The Entity List identifies foreign parties that are prohibited from receiving some or all items subject to the Export Administration Regulations (EAR) unless the exporter secures a license. Those persons present a greater risk of diversion to weapons of mass destruction (WMD) programs, terrorism or other activities contrary to U.S. national security or foreign policy interests. BIS can add to the Entity List a foreign party, such as an individual, business, research institution or government organization, for engaging in activities contrary to U.S. national security and/or foreign policy interests. In most instances, license exceptions are unavailable for the export, re-export or transfer (in-country) to a party on the Entity List of items subject to the EAR. Rather, a prior license is required, usually subject to a policy of denial.

According to the indictment, Mechanic and Afghahi are the co-owners of Iran-based Faratel and its Houston-based sister company SPS.  Faratel designs and builds uninterruptible power supplies for various Iranian entities, including Iranian government agencies such as the Iranian Ministry of Defense, the Atomic Energy Organization of Iran, and the Iranian Centrifuge Technology Company.  SPS designs and manufactures uninterruptible power supplies in cooperation with Faratel.  Faridi currently serves as a vice president of SPS.  Shyu is a senior manager at the Hosoda Tawain Limited Corporation, a trading company located in Taiwan, while Sadeghi is an employee of Golsad Istanbul Trading, a shipping company located in Turkey.

The indictment alleges that between approximately July 2010 and the present, Mechanic and the others engaged in a conspiracy to obtain various commodities, including controlled United States-origin microelectronics.  They then allegedly exported these to Iran, while carefully evading the government licensing system set up to control such exports.  The microelectronics shipped to Iran allegedly included microcontrollers and digital signal processors.  According to the indictment, these commodities have various applications and are frequently used in a wide range of military systems, including surface-air and cruise missiles.  Between July 2010 and the present, Mechanic’s network allegedly sent at least $24 million worth of commodities to Iran.

According to court documents, Mechanic, assisted by Afghahi and Faridi, regularly received lists of commodities, including United States-origin microelectronics, sought by Faratel in Iran.  Mechanic would approve these orders and then send the orders to Shyu in Taiwan, according to the indictment.  Shyu would allegedly purchase the commodities utilizing Hosoda Taiwan Limited and then ship the commodities to Turkey, where Sadeghi would act as a false buyer via his company, Golsad Istanbul Trading Ltd.  The indictment further alleges that Sadeghi would receive the commodities from Shyu and then ship them to Faratel in Iran.  Mechanic required his co-conspirators to notify him and obtain his approval for each of the transactions completed by the network, according to the allegations.

The individual defendants each face up to 20 years in federal prison, while the corporate defendants face fines of up to $1 million for each of the IEEPA counts, upon conviction.

Mechanic, Afghahi and Shyu are also charged with conspiring to commit money laundering and substantive money laundering violations, each charge carries a maximum potential term of imprisonment of 20 years.  Mechanic further faces a charge of willful failure to file foreign bank and financial accounts for which he faces up to five years in federal prison.  The charges also carry the possibility of substantial fines upon conviction.

The government’s case is being prosecuted by Assistant U.S. Attorneys S. Mark Mcintyre and Craig Feazel of the Southern District of Texas, as well as Trial Attorneys Casey Arrowood and Matt Walczewski of the Justice Department’s National Security Division.

In all cases, defendants are presumed innocent until and unless proven guilty.  The indictment merely contains allegations of criminal activity. 

IEEPA Indictment

Former Puerto Rico Police Officer Miguel Negron Vazquez was sentenced today to serve 12 months and one day in prison for making a false statement to a Special Agent of the Federal Bureau of Investigation (FBI) during a federal investigation into civil rights violations related to the fatal beating of Jose Luis Irizarry Perez, 19, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Rosa Emilia Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI San Juan Field Office. 

Negron Vazquez pleaded guilty to falsely telling the FBI that two officers, who later pleaded guilty to unnecessarily striking Irizarry Perez with their batons, never approached or interacted with the victim during the incident.  In total, six Puerto Rico police officers have pleaded guilty for their roles in the beating and subsequent obstruction of the civil rights investigation, and two of those officers are still awaiting sentencing.  According to documents filed in connection with the guilty pleas, two former Puerto Rico police officers violated the constitutional rights of Irizarry Perez by striking him with their police batons while another former police officer physically restrained Irizarry Perez during an election evening celebration at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008.   

U.S. District Court Judge Juan M. Perez Gimenez issued the sentence, which will be followed by two years of supervised release.  During the two-year term, the defendant will be under federal supervision, and risks additional prison time should he violate any terms of his supervised release. 

“Lying to the FBI or concealing information during the course of a federal civil rights investigation undermines the public’s trust in the criminal justice system and will not be tolerated,” said Principal Deputy Assistant Attorney General Gupta.  “The department will aggressively investigate and prosecute those who seek to cover up or obstruct a federal investigation.”

“Today's sentence affirms that law enforcement officers are not above the very laws they are sworn to uphold,” said U.S. Attorney Rodriguez-Vélez.  “The defendant’s conduct undermined law enforcement’s expectation of honesty from public officials and those who desire to serve.”

This case was investigated by the FBI’s San Juan Division and is being prosecuted by Senior Litigation Counsel Gerard Hogan and Trial Attorneys Shan Patel and Olimpia E. Michel of the Civil Rights Division and Assistant U.S. Attorney Jose A. Contreras of the District of Puerto Rico.

The federal court in the Western District of Tennessee has enjoined Stephanie Edmond and her business, the Tax Factory and the Tax Factory Enterprise Inc., from preparing improper federal income tax returns.  The court’s order, which was entered with the consent of the parties, prohibits Stephanie Edmond and her businesses from engaging in any conduct that interferes with administering the tax laws.  Edmond and her businesses are also prohibited from preparing false returns that include schemes such as reporting non-existent businesses or claiming false education credits.  The court also ordered that Edmond and her companies are required to hire a certified public accountant to act as a monitor who can inspect the company’s books and records.  The monitor will then be required to report to the United States on a monthly basis as to whether the plaintiff has complied with the internal revenue laws.

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

An indictment was unsealed today charging a doctor from Valencia, California, with operating a $6.5 million scheme to defraud the Medicare program by billing Medicare for medical services that were not actually provided. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division and 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 made the announcement.

Gary J. Ordog, 60, of Valencia, California, was indicted by a federal grand jury in the Central District of California on March 27, 2015, for nine counts of health care fraud.  The indictment alleges that Ordog billed Medicare for services that were not actually provided to the Medicare beneficiaries. 

According to allegations in the indictment, Ordog was a physician who purportedly assisted beneficiaries with various toxicological symptoms, including those related to mold and chemical exposures.  Ordog would allegedly see a beneficiary at least once in connection with the potential evaluation and management of his or her conditions.  Subsequently, often several years after the last time he saw a particular beneficiary, Ordog would allegedly submit false claims to Medicare for purported additional visits with the same beneficiary, when the visits never actually occurred.  In certain instances, Ordog allegedly billed Medicare for services provided to beneficiaries who were deceased as of the claimed date of service. 

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

This case is being investigated by HHS-OIG and the FBI, 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 for the Central District of California.This case is being prosecuted by Trial Attorney Ritesh Srivastava 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.

Ordog Indictment

Three members of an international synthetic drug-trafficking organization—responsible for selling synthetic drugs with brand names like Twilite, Passion Sense, Stoopid, Black Diamond, and Platinum—were arrested in Los Angeles on Tuesday.  The federal charges were unsealed in the Northern District of New York today.  According to documents also unsealed in the Southern District of Indiana today, a leader of the organization has already pleaded guilty to federal drug-trafficking charges.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Richard S. Hartunian of the Northern District of New York and U.S. Attorney Josh J. Minkler of the Southern District of Indiana made the announcement.

“The manufacture and distribution of synthetic narcotics is a growing problem that is especially dangerous to the young people of our communities,” said Assistant Attorney General Caldwell.  “Drug traffickers peddle these illegal synthetic drugs with harmless sounding names to impressionable youth who are typically unaware of the harmful chemicals they actually are ingesting.  The Criminal Division will continue to partner with local and federal law enforcement around the nation to stem the flow of these unsafe and illegal substances and bring the traffickers to justice.”

“Despite the efforts of these drug traffickers to evade prosecution through the creation of synthetic drugs, these indictments demonstrate the ability of law enforcement to effectively respond to those who market these dangerous substances,” said U.S. Attorney Hartunian.  “We will continue to use all our resources to combat this national problem.”

“Synthetic narcotics are not the harmless product traffickers and users make them out to be,” said U.S. Attorney Minkler.  “They are mind-altering substances that cause psychosis and even death with our nation’s youth.”

Andrew Raymond, 36, Brian Requena, 37, and Zefren Michael, 35, all of Los Angeles, California, were indicted in the Northern District of New York for conspiracy to possess with the intent to distribute and to distribute controlled substance analogues, intending that those analogues be used for human consumption.  Raymond and Requena were also charged with a money laundering conspiracy.

In a related case, Roger Upchurch, 66, of Indianapolis, Indiana, pleaded guilty on March 11, 2015, before Chief U.S. District Judge Richard L. Young in the Southern District of Indiana, to conspiracy to distribute a controlled substance analogue and money laundering.  Upchurch also forfeited over $2 million in cash and other assets obtained from his illegal activities, including a house, two cars and a Sweetwater pontoon boat.  A sentencing date has not yet been scheduled.

As part of his guilty plea, Upchurch admitted that he was a leading member of the international drug-trafficking organization, working in the Los Angeles-area, to produce and distribute thousands of kilograms of smokable synthetic cannabinoids (SSCs) with brand names such as Twilite, Passion Sense, Stoopid, Black Diamond and Platinum.  SSCs, also popularly known as “Spice,” are smokable drugs that are designed to mimic marijuana.  The synthetic chemicals used to produce these SSCs were imported from China, then applied to a plant-like substance and sold like marijuana in a smokable form.

According to allegations in the indictment, Raymond, Requena, Michaels, and others conspired with Upchurch to manufacture SSCs for distribution throughout the United States.  In an effort to avoid detection and prosecution by law enforcement, the drug-trafficking organization allegedly mislabeled and fraudulently labeled packages with “not for human consumption” and other false statements, including falsely marketing their products as potpourri, incense or aroma.

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

This investigation is part of the Organized Crime Drug Enforcement Task Force (OCDETF) program, and these cases were supported under the DEA Special Operations Division’s Project Synergy.  These cases are the result of investigative efforts led by the DEA’s Indianapolis Field Office, with valuable assistance provided by the U.S. Postal Inspection Service and the Indianapolis Metropolitan Police Department. 

The case in the Southern District of Indiana is being prosecuted by Trial Attorney Brian Sardelli of the Criminal Division’s Narcotic and Dangerous Drug Section and Assistant U.S. Attorneys Matthew Brookman and Debra Richards of the Southern District of Indianapolis.  The case pending in the Northern District of New York is being prosecuted by Assistant U.S. Attorney Carla Freedman.

An owner of a Miami home health care company was sentenced today to 113 months in prison in connection with a $32 million Medicare fraud scheme.

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

Felix Gonzalez, 45, of Miami, pleaded guilty on Jan. 9, 2015, to one count of conspiracy to commit health care fraud, and was sentenced today by U.S. District Judge Kathleen M. Williams of the Southern District of Florida.  In addition to the prison sentence, Gonzalez was ordered to pay $21,423,160 in restitution.

Gonzalez was an owner of AA Advanced Care Inc. (AA Advanced), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries.  As part of his guilty plea, Gonzalez admitted that he and his co-conspirators operated AA Advanced for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary or not provided at all.

Gonzalez further admitted that he negotiated and paid kickbacks and bribes to patient recruiters in exchange for patient referrals, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.  Gonzalez admitted that he and his co-conspirators used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services.

From approximately January 2006 through March 2009, AA Advanced submitted approximately $32 million in claims for home health services that were not medically necessary or not provided, and Medicare paid approximately $22 million for these fraudulent claims.

The case was investigated by the FBI and HHS-OIG, 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 Southern District of Florida.  This case is being prosecuted by Assistant Chief Joseph S. Beemsterboer and Trial Attorneys Kelly Graves and Lisa Miller 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 Queens, New York, tax return preparer pleaded guilty today in U.S. District Court in Brooklyn, New York, to 38 counts of aiding and assisting in the preparation of false federal income tax returns and four counts of filing false personal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the allegations in the indictment, Celamour Berus, 61, owned and operated Celamour Enterprises, a tax return preparation business located at his home in Springfield Gardens, New York.  For tax years 2007 through 2011, Berus prepared false individual income tax returns that claimed false charitable contributions, unreimbursed employee expenses and other itemized deductions for clients of Celamour Enterprises.  Berus also falsified his own tax returns for tax years 2007 through 2010 by failing to report all of the gross receipts generated by his tax preparation business and claiming false itemized deductions for unreimbursed employee expenses.

Berus faces a statutory maximum sentence of three years in prison and up to a $250,000 fine for each count at his sentencing set for Aug. 18 before U.S. District Judge Allyne R. Ross of the Eastern District of New York.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-CI, who investigated the case, and Trial Attorneys Jeffrey Bender and Brittney Campbell of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of New York for their substantial assistance.

In separate actions, the United States has asked a federal court in South Carolina to permanently bar two South Carolina men from preparing federal income tax returns for others, the Justice Department announced today.

In 1997, Clinton A. Broomfield, of Lexington, South Carolina, Tony McGill, of Ladson, South Carolina, and Stacy Middleton formed MBM Tax and Accounting Services LLC to prepare tax returns and provide other financial services.  In 2007, Broomfield, McGill and Middleton ended their formal partnership and opened separate tax preparation businesses.  Broomfield currently manages Summerville MBM Tax Service, while McGill manages MBM Accounting and Tax Services LLC in North Charleston, South Carolina.  Though the partnership ended in 2007, McGill, Broomfield and Middleton continue to share advertising expenses.

In July 2013, the U.S. District Court for the District of South Carolina permanently barred Middleton from preparing federal tax returns for others.  He is not a defendant in the current lawsuit.

The complaints allege that, through Summerville MBM Tax Service and MBM Accounting and Tax Services LLC, Broomfield and McGill prepare returns for customers that unlawfully understate income tax liabilities and overstate refunds.  According to the suit, the defendants fabricate bogus deductions on Forms 1040, Schedule A (Itemized Deductions) and Schedule C (Profit or Loss from Business) that report nonexistent business expenses and deductions on their customers’ returns.  These phony business losses offset the customers’ wages and falsely reduce their income tax liability, according to the suit. 

The complaints further allege that Internal Revenue Service (IRS) audited returns prepared by McGill, which revealed tax understatements on 58 of the 61 examined returns, resulting in an average tax deficiency of $5,709 per return.  Of the 147 IRS- examined returns that Broomfield prepared, 123 resulted in an increase of his customer’s tax liability, resulting in an average tax deficiency of $2,817 per return, according to the suit.  Based on the large percentage of audited returns that understate customers’ actual tax liability and the number of returns Bloomfield and McGill prepare, the complaints allege that the U.S. Treasury may have lost millions of dollars in tax revenue as a result of the defendants’ conduct.

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.

U.S. District Judge James L. Robart today approved a department-wide training program developed by the Seattle Police Department (SPD) and endorsed by the Justice Department, the Seattle City Attorney’s Office and the Federal Court Monitor Merrick Bobb, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division and Acting U.S. Attorney Annette L. Hayes of the Western District of Washington.  The training is a key requirement of the 2012 consent decree entered by the city and the Justice Department to address a pattern and practice of excessive use of force by SPD officers.

All 1,300 sworn officers of the SPD will be trained in tactical de-escalation skills and strategies through the newly approved program.  The goal of the training is to teach SPD officers that tactical de-escalation is more than a set of specific skills but also an overarching approach to incident resolution and community policing.  De-escalation more broadly refers to the strategic slowing down of an incident in a manner that allows officers more time, distance, space and tactical flexibility during dynamic situations on the street.  Applying these specific skills increases the potential for resolving the situation with minimized force or no force at all, which reduces the likelihood of injury to the public, increases officer safety and mitigates the immediacy of potential or ongoing threats.  A reduction in use of force incidents also reduces community complaints, promotes the perception of procedural justice and, most importantly, promotes resolution of events with the public’s compliance.

The 2015 tactical de-escalation training builds upon training that officers received for the first time in 2014.  Tactical de-escalation training has and will be woven into every aspect of more specific technical training that SPD officers will receive throughout the year, including firearms, individual and team defensive tactics and more. 

As the Federal Court Monitor Bobb stated in his filing memo with the court:

For some time, many Seattle residents, like others throughout the country, have suggested that officers receive training on how to de-escalate situations in order to reduce the potential for force needing to be contemplated.  However, in many instances, the concept of “de-escalation” has tended to be imprecisely defined and served as a kind of “catch-all” term or approach used to refer to anything that might defuse difficult police encounters.  Clear and precise training on what de-escalation means in Seattle began in earnest last year.  This year’s training will deepen officers’ understandings of how de-escalation is strategic, tactical, and valuable both to officers and the communities that they serve.  By providing clear detail and real-world techniques that officers can apply immediately in the field, it puts substantial “meat on the bones” of what “de-escalation” is in its full scope and how, when, and why such techniques should be used.  This training is a notable step forward.

“De-escalation tactics are essential skills for police officers and departments both to help to ensure constitutional policing and to improve public safety and officer safety,” said Principal Deputy Assistant Attorney General Gupta.  “Force must be both reasonable and necessary, and this training will provide valuable guidance to officers when they make split-second decisions about when and how to use force.  As the Seattle Police Department implements this training, it is taking a vital step forward toward compliance with the consent decree.”

“Tactical de-escalation goes to the heart of the consent decree,” said Acting U.S. Attorney Hayes.  “Training in these skills will give officers the tools they need to avoid, mitigate, or minimize force encounters.  When put to use, these skills keep both officers and the individuals they encounter safer, allowing officers to focus on their primary mission – service to their community.” 

Judge Robart approved the consent decree in August 2012.  The Justice Department and the city of Seattle jointly selected and the court approved the monitor in October 2012. 

The ringleader of a stolen identity tax refund fraud scheme and former nightclub owner was sentenced yesterday in the U.S. District Court in Montgomery, Alabama, for stolen identity refund fraud related crimes, 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.

Tarrish Tellis, 38, of Montgomery, was sentenced to serve 223 months in federal prison, three years of supervised release and ordered to pay $694,366 in restitution.  On Jan. 14, a federal jury convicted Tellis of conspiracy to commit theft of public money, theft of public money and aggravated identity theft.

“As evidenced by today’s sentence, individuals like Mr. Tellis, who commit stolen identity theft crimes and in doing so, victimize innocent American taxpayers and brazenly steal from the U.S. Treasury, face lengthy incarceration and substantial financial penalties,” said Acting Assistant Attorney General Ciraolo.  “The Tax Division and its law enforcement partners stand ready to vigorously pursue and prosecute these offenders to the fullest extent of the law.”

According to evidence presented at trial, Tellis, the former owner of Club Iconz Bar and Grill in Montgomery, masterminded a more than $700,000 stolen identity tax refund scheme.  Tellis’ co-conspirator, Nakia Jackson, obtained approximately 700 names, dates of birth and social security numbers from an employee of the Alabama Medicaid State Agency.  Jackson provided some of the stolen names to Tellis, who in turn used them to file false income tax returns.  In exchange, Tellis taught Jackson how to file false tax returns.

Tellis concealed the origin of the tax refund proceeds by recruiting friends and relatives, including Bobby Joe Means, Delancey Tolliver, Glen Powell Jr. and Tracey Montgomery, to open up bank accounts for the purpose of receiving the tax refunds.  When the refunds were deposited into their bank accounts, Tellis directed them to withdraw the money and provide it to him.  On the false tax returns submitted to the Internal Revenue Service (IRS), Tellis directed more than $300,000 in refunds to be deposited in those accounts.  Tellis also recruited a bank teller, Laquanta Clayton, who used her position to open up bank accounts in the name of fictitious individuals and in the name of her daughter’s father.  On the false tax returns submitted to the IRS, Tellis directed approximately $200,000 in refunds to be deposited into the accounts that Clayton controlled.  Clayton withdrew the refund proceeds in cash and provided the majority of the money to Tellis.  Tellis also took steps to conceal his involvement in the filing of false tax returns, including filing numerous tax returns by accessing another person’s residential wireless router that was not password protected so that it appeared as though the owner of the residence had filed the returns.

In 2014, Tellis’ co-conspirators were sentenced to prison for their involvement in the stolen identity refund fraud scheme.  Jackson was sentenced to serve 87 months in prison, Clayton was sentenced to serve 21 months in prison, Tolliver was sentenced to serve 15 months in prison, Powell Jr. and Means were each sentenced to serve 12 months and one day in prison and Montgomery was sentenced to serve six months in prison.

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

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

The Justice Department announced today that the federal court in Chicago has approved an agreement between the department and Illinois officials to help ensure that military service members, their family members and U.S. citizens living overseas have an opportunity to participate fully in the upcoming special primary election and special election to fill a vacated seat in the state’s 18th Congressional District.  The agreement is necessary to ensure Illinois’ compliance with the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA).

The agreement, filed simultaneously with the complaint on April 6, 2015, requires that the state adopt an election calendar which enables local jurisdictions to transmit ballots to UOCAVA voters at least 45 days before the upcoming special elections as the federal law requires.  The agreement establishes July 7, 2015, as the date for the special primary election and Sept. 10, 2015, as the date for the special election.  These dates were selected to allow the election authorities sufficient time to complete all the pre-election steps necessary to timely transmit ballots to UOCAVA voters as required by the federal law.  The agreement also requires that the state take measures to notify UOCAVA voters of the election dates and relevant deadlines.

“This agreement with Illinois reflects our continued commitment to ensure that members of our armed forces, their families and overseas U.S. citizens are offered a full and meaningful opportunity to vote in all federal elections, including the upcoming special elections for United States Representative from Illinois’ 18th Congressional District, and all future special elections,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Department of Justice will always work to ensure U.S. citizens can exercise their right to vote.”

UOCAVA requires states to allow uniformed service voters, serving both overseas and within the United States, and their families and U.S. citizens overseas to register to vote and to vote absentee for all elections for federal office.  In 2009, Congress enacted the Military and Overseas Voter Empowerment (MOVE) Act, which amended UOCAVA to require that states transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections. 

The complaint and agreement were necessary because Illinois law mandates a truncated election schedule for holding special elections to fill vacancies for U.S. Representative that prevents Illinois from ensuring transmittal of ballots to UOCAVA voters at least 45 days before the special primary election and the subsequent special election.  Under the terms of the agreement, Illinois is also required to take the necessary action to ensure that UOCAVA voters have a fair and reasonable opportunity to participate in future federal special elections for U.S. Representatives in Congress, including pursuing permanent changes to Illinois law governing the state’s special election calendar that will permit compliance with UOCAVA’s ballot transmission requirements.  The agreement also requires that Illinois provide detailed reports to the department concerning the transmission of ballots for the scheduled special elections in the 18th Congressional District.

More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php.  Please report any complaints to the Civil Rights Division’s Voting Section at 1-800-253-3931.

A federal grand jury has charged Abdirahman Sheik Mohamud, 23, of Columbus, Ohio, with one count of attempting to provide and providing material support to terrorists, one count of attempting to provide and providing material support to a designated foreign terrorist organization, and one count of making false statements to the FBI in an indictment returned in the Southern District of Ohio.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division announced the indictment returned today.

According to court documents, Mohamud left the United States in April 2014 for the purpose of training and fighting with terrorists in Syria.

As a naturalized citizen of the United States, he obtained a U.S. passport and purchased a one-way ticket to Greece.  He did not board his connecting flight to Athens, Greece, during his layover in Istanbul, Turkey, and instead completed pre-arranged plans to travel to Syria.

According to the indictment, Mohamud stated that, after arriving in Syria, he obtained training from a group in shooting weapons, breaking into houses, explosives and hand-to-hand combat.  Mohamed also stated that, after completing this training, he was instructed by a cleric in the organization to return to the United States and commit an act of terrorism.

“According to the charges in the indictment, Mohamud allegedly traveled to Syria to train with and fight alongside terrorists” said Assistant Attorney General Carlin.  “Identifying and neutralizing the threat posed by foreign terrorist fighters who return to the United States is one of the National Security Division’s highest priorities.  I want to thank the many agents, analysts, and prosecutors who are responsible for this ongoing investigation and today’s charges.”

“Mohamud sought and obtained terrorist training in Syria,” said U.S. Attorney Stewart.  “Upon his return to the United States, he discussed carrying out acts in the United States.”

“The Joint Terrorism Task Force and our law enforcement partners work tirelessly to protect our community," said Special Agent in Charge Byers.  “Cases like this are tangible reminders of the threats we face each day.”

Providing material support to terrorists and providing material support to a designated foreign terrorist organization – in this case, namely, Jabhat al-Nusrah – are each crimes punishable by up to 15 years in prison.  Making false statements involving international terrorism carries a maximum sentence of eight years in prison.

Mohamud is scheduled to be transferred into federal custody based on today’s indictment.  He was arrested and detained on state charges on Feb. 21, 2015.

Assistant Attorney General Carlin and U.S. Attorney Stewart commended the JTTF for its work on this investigation, and also thanked Franklin County Prosecutor Ron O’Brien and his office for their ongoing efforts in this investigation.  The case is being prosecuted by Assistant U.S. Attorneys Doug Squires, Dana Peters and Salvador Dominguez of the Southern District of Ohio, Special Assistant U.S. Attorney Joseph Gibson with the Franklin County Prosecutor’s office, and Trial Attorney Bridget Behling of the Justice Department’s National Security Division.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

Mohamud Indictment

A lieutenant commander in the U.S. Navy pleaded guilty to bribery charges in federal court today, admitting that he accepted cash, hotel expenses and the services of a prostitute in return for providing classified U.S. Navy ship schedules and other internal Navy information to an executive of a defense contracting firm. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS), Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of the Defense Contract Audit Agency (DCAA) made the announcement.

“Another Navy officer has now pleaded guilty and admitted to taking bribes to reveal classified military information to a major supplier,” said Assistant Attorney General Caldwell.  “It is both troubling and disappointing how many Navy officers we have exposed as willingly falling prey to GDMA’s corruption, and our investigation remains active and ongoing.  Those who serve in our nation’s military must uphold the public’s trust or pay the consequences for their crimes.”

“The receipt of envelopes of cash and lavish hotel stays by our public officials at whatever level erodes the public’s trust in our institutions and our government,” said U.S. Attorney Duffy.  “Today’s guilty plea reflects the next step in our ongoing effort to regain that public trust.”

Todd Dale Malaki, 44, of San Diego, pleaded guilty before U.S. Magistrate Judge Mitchell D. Dembin of the Southern District of California to one count of conspiracy to commit bribery.  A sentencing hearing is scheduled for July 6, 2015.

As part of his guilty plea, Malaki admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, he began a corrupt relationship with Leonard Glenn Francis, the former president and chief executive officer of Glenn Defense Marine Asia (GDMA), a company that provided services to the U.S. Navy.  As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors.  In exchange, Malaki admitted that Francis provided him with luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.  Malaki admitted that the total value of the benefits he received was approximately $15,000. 

Malaki is the eighth individual to plead guilty in this expanding probe into corruption and fraud in the U.S. Navy.  GDMA pleaded guilty in January.  Two other individuals, Paul Simpkins, formerly a Department of Defense (DOD) contracting officer, and Michael Misiewicz, a Captain-select in the U.S. Navy, have been charged and entered pleas of not guilty. 

The ongoing investigation is being conducted by NCIS and DCIS, with substantial assistance from the DCAA.  The case is being prosecuted by Senior Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line awww.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

Two Detroit residents were sentenced yesterday after pleading guilty to charges of wire fraud and aiding and abetting in identity theft, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Acting Special Agent in Charge Jarod Koopman of Internal Revenue Service-Criminal Investigation (IRS-CI) announced today.

U.S. District Court Judge Avern Cohn of the Eastern District of Michigan sentenced Brenda Knight to serve 24 months in prison and Adreann Turnage to serve 18 months in prison.  Willie Watkins, Knight’s husband, was sentenced on April 29, 2014, to serve 30 months in prison and ordered to pay $410,949 in restitution for wire fraud and identity theft.  

“The Tax Division has zero tolerance for stealing the identities of the deceased and other vulnerable members of our communities,” said Acting Assistant Attorney General Ciraolo.  “The individuals perpetrating these egregious tax crimes will be identified, their criminal operations will be dismantled and they will be prosecuted and punished to the fullest extent of the law.”

According to court records, Knight and Turnage participated in a scheme with Watkins and others to defraud the United States by using the stolen names and social security numbers of recently deceased individuals to prepare fraudulent income tax returns.  The defendants electronically filed more than 700 fraudulent 2010 tax returns falsely claiming the Earned Income Credit, Education Credits and the Making America Work Credit, resulting in refund claims of more than $1.8 million.  The returns were transmitted utilizing public access internet connections from various locations including Starbucks and Red Roof Inns.  A Comcast Communications account registered to Turnage transmitted 46 fraudulent returns.  The refunds were directed to bank accounts, many of which were controlled by Watkins, established for the sole purpose of receiving the refunds.  Knight helped recruit individuals to whom Watkins would issue checks written on the accounts, cash them and bring the proceeds back to Watkins for distribution to participants in the scheme.  

“Using the identities of deceased individuals to commit crimes for financial gain is particularly egregious,” said Acting Special Agent in Charge Koopman.  “Identity theft is a top priority for the IRS-Criminal Investigation and we will continue to detect and investigate these types of cases in order to protect taxpayers from being victimized.” 

Acting Assistant Attorney General Ciraolo and U.S. Attorney McQuade thanked the special agents of IRS-CI, who investigated the case, and Assistant U.S. Attorney Ross I. MacKenzie of the Eastern District of Michigan and Trial Attorney Kenneth C. Vert of the Tax Division, who prosecuted the case.

Joseph Furando, 49, of Montvale, New Jersey, together with two companies he operated in New Jersey, pleaded guilty today for their parts in an Indiana-centered scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel incentives, announced Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Josh J. Minker for the Southern District of Indiana.

From 2007 through 2012, e‑biofuels owned a biodiesel manufacturing plant in Middletown, Indiana.  Biodiesel is a fuel that can be used in diesel engines and that is made from renewable resources, including soybean oil and waste grease from restaurants.  Under the Energy Independence and Security Act, properly manufactured biodiesel was be eligible for a dollar per gallon tax credit as well as a another valuable credit, called a RIN, that petroleum refiners and importers could use to demonstrate compliance with federal renewable fuel obligations.

“Incentives for the production of biodiesel help promote energy independence, drive innovation in the fuel and agriculture sectors and have positive impacts on our environment,” said Assistant Attorney General Cruden.  “Furando engaged in extensive criminal activity to gain advantage, all at the expense of the biofuels program and its benefits to our nation, and for that he has been vigorously prosecuted and convicted.” 

“This plea represents a step along the way to closing the book on one of the largest fraud schemes in Indiana history,” U.S. Attorney Minker.  “All told, this case involves nearly a dozen defendants and daunting investigative work.  The intense, high-quality work of all of the law enforcement agents and prosecutors involved should make those who seek personal profit at taxpayer’s expense think twice before attempting such schemes.”

Furando has admitted that sometime in late 2009, he and his companies, defendants Caravan Trading Company and CIMA Green, began supplying e‑biofuels with biodiesel that had already been used to claim tax credits and RINs.  Because these incentives had already been claimed, Furando could purchase the biodiesel at low prices, sometimes for more than two dollars per gallon less than biodiesel that was still eligible for the credits.  Furando knew that once he supplied product, e‑biofuels and his individual co-defendants would illegally re-certify it and sell it at the much higher market price for incentivized biodiesel, known as B100 with RINs.  Within the circle of those he trusted, Furando referred to this program of fraud as “Alchemy.”

Furando, his companies, and his Indiana co-defendants realized huge per gallon profits through this scheme, sometimes in excess of $12,000 per truckload.  Furando realized his profits through the prices he charged e‑biofuels.  Over the course of approximately two years, the defendants fraudulently sold more than 35 million gallons of fuel for a total cost of over $145.5 million.  The defendants realized more than $55 million in gross profits, at the expense of their customers and U.S. taxpayers. 

Today, Furando pleaded guilty to all of the charges against him, which included conspiracy, wire fraud, lying to investigators during a search of his offices and engaging in prohibited financial transactions, money laundering.  He faces up to twenty years of imprisonment on some of the charges, as well as large fines and the requirement that he provide full restitution to the victims of this crime, which include U.S. taxpayers, truck stop companies, fuel traders and others.  Furando has also agreed to forfeit biodiesel-powered motorcycles, sports cars, real estate, jewelry, watches and other luxury goods that he purchased with the proceeds of this fraud.

“The Renewable Fuel Standard was created to reduce the nation’s dependence on foreign oil and achieve important greenhouse gas reductions,” said Assistant Administrator Cynthia Giles of EPA for Enforcement and Compliance Assurance.  “This criminal activity undercuts these benefits and puts businesses that follow the law at an unfair disadvantage.  Today’s guilty plea upholds program integrity and protects companies that play by the rules.”

Today’s plea completes the part of this case involving New Jersey defendants.  Four Indiana defendants remain, who face trial in the Southern District of Indiana on May 11, 2015.

The case is being prosecuted by Senior Litigation Counsel Steven D. DeBrota of the U.S. Attorney’s Office, Assistant Chief Thomas T. Ballantine of the Environmental Crimes Section in the Department of Justice’s Environment and Natural Resources Division and Special Assistant U.S. Attorney Jake Schmidt of the U.S. Attorney’s Office and Senior Attorney for the Securities and Exchange Commission.

The collaborative investigation that brought this case to fruition is the result of work by EPA’s Criminal Investigation Division, IRS- Criminal Investigation, the FBI and the Securities and Exchange Commission, with assistance during the investigation by the U.S. Secret Service and the U.S. Department of Agriculture.

Other defendants are scheduled for trial pursuant to the indictment in this case.  An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

The owner of a greater Detroit-area home health care agency pleaded guilty today to fraud and money laundering charges in connection with her role in a $2.6 million home health care 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, 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 and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

Rahmat Begum, 49, of Farmington Hills, Michigan, pleaded guilty today – during the second day of her trial – to all charges in a six-count indictment, including one count of conspiracy to commit wire fraud, one count of making false statements relating to health care matters, one count of conspiracy to violate the Anti-Kickback Statute and three counts of money laundering.  A sentencing hearing is scheduled for Aug. 18, 2015, before U.S. District Judge Bernard A. Friedman of the Eastern District of Michigan.

According to admissions made as part of her guilty plea, Begum conspired to submit falsified claims to Medicare where the claims were based upon referrals obtained through illegal kickbacks to patient recruiters and physicians.  Begum also admitted to conspiring to pay illegal kickbacks to patient recruiters and physicians and to making a false statement to Medicare pledging not to pay kickbacks, when in fact she was paying them.  Finally, Begum admitted to laundering the proceeds of the wire fraud conspiracy.

This case was investigated by the FBI, HHS-OIG and IRS-CI 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 Eastern District of Michigan.  This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald 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 Action Team (HEAT), go to: www.stopmedicarefraud.gov.

The United States has filed a complaint seeking to permanently bar a West Palm Beach, Florida, area man and his business from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint against Paul Jean, which was filed in the U.S. District Court for the Southern District of Florida, alleges that Jean prepares federal income tax returns for customers that understate their correct tax liabilities.  The complaint alleges that Jean has operated under the business names Whiz Tax and Rejoice Tax Services. 

According to the complaint, Jean intentionally misreports the information he receives from customers in order to fabricate or inflate tax credits, including claiming improper earned income tax credits, education credits or fuel credits.  Because some of these credits are refundable, the improper claims often result in larger tax refunds than the customer would otherwise be entitled to, according to the suit.

The complaint alleges that Jean also prepares returns that report false or inflated deductions, such as mortgage interest deduction or contributions to charity, or business expense deductions reported on a Schedule C (Profit or Loss From Business), such as expenditures for supplies or office expenses.

According to the suit, the Internal Revenue Service (IRS) interviewed several of Jean’s customers who stated that they had not provided Jean with information to support a claim for a credit and that they were not aware that the improper credit was claimed on their tax return. 

The suit also alleges that in some instances, Jean has prepared two returns for one customer.  One return is shown to the customer but is not filed with the IRS, while the other return is filed with the IRS but not shown to the customer.  The filed return claims a larger refund than the return shown to the customer by using at least one of the schemes described.  Jean then allegedly keeps the fraudulent excess refund reported on the filed return.

The IRS estimates that Jean, directly or indirectly, has prepared and filed more than 3,000 tax returns since 2012, and that Jean’s conduct has potentially caused millions of dollars of harm to the U.S. Treasury, according to the complaint.

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

The Department of Justice’s Antitrust Division today issued the 2015 edition of its annual newsletter.  The newsletter highlights the Antitrust Division’s civil and criminal enforcement actions, international cooperation efforts and competition guidance and advocacy over the last year.

The newsletter includes a message from Assistant Attorney General Bill Baer discussing the division’s recent litigation successes, prosecution of domestic and international cartels, efforts to provide antitrust guidance as new business models and technologies emerge, and continued competition advocacy, both in the U.S. and abroad.  Assistant Attorney General Baer emphasized that the division’s ability to enforce antitrust laws across many different industries requires adherence to certain core principles: “We do not pick winners and losers; we focus on removing obstacles to competitive markets and protecting market structures that encourage competition.  We want innovators to innovate and disrupters to disrupt, and for American consumers to benefit from dynamic markets.”

This year’s newsletter describes the division’s criminal enforcement efforts, which included obtaining approximately $1.3 billion in criminal fines and penalties – the largest amount ever secured by the division in a single fiscal year – and the incarceration of 21 executives for criminal violations of U.S. antitrust laws.  The division also brought its first prosecution against a conspiracy specifically targeting e-commerce, in which pricing algorithms were manipulated to fix prices on the internet.

The civil enforcement update in the newsletter discusses the successful challenge, after a seven-week trial, to American Express’s antisteering rules.  The newsletter refers to the decision of National CineMedia and Screenvision to abandon their proposed merger to monopoly after the division sued to enjoin the deal, and details the division’s successful effort to unwind a consummated merger to monopoly in the New York City “hop-on, hop-off” tour bus market.   The newsletter also reports on the division’s recent use of disgorgement to ensure that defendants do not profit from unlawful conduct.

Finally, the newsletter includes profiles on division attorneys and economists, as well as an article on the division’s diversity initiatives. 

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Two Georgia residents were sentenced today in U.S. District Court in Atlanta for their involvement in a stolen identity tax refund fraud scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney John A. Horn of the Northern District of Georgia.

Obi Emelogu, 51, of Woodstock, Georgia, was sentenced to serve 45 months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $719,872.  Oloh Samuel, 33, of Acworth, Georgia, was sentenced to serve 18 months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $146,179.  On Oct. 10, 2014, Emelogu pleaded guilty to conspiracy to defraud the United States and aggravated identity theft.  On Dec. 2, 2014, Samuel pleaded guilty to conspiracy to defraud the United States. 

“One of the Tax Division’s highest priorities is prosecuting individuals who use stolen identities to file fictitious income tax returns and claim fraudulent refunds,” said Acting Assistant Attorney General Ciraolo.  “This street crime threatens the very fabric of tax administration and often victimizes the most vulnerable members of our communities.  The Tax Division is committed to working with our partners in law enforcement to identify these schemes, dismantle the criminal operations and seek to incarcerate the offenders who view the Federal Treasury as their own personal bank account.”

“These defendants brazenly stole money from the American taxpayers with little regard for whom they affect,” said Acting U.S. Attorney Horn.  “We have committed resources to combat this kind of theft, and will aggressively pursue and prosecute those who believe they can file false tax returns.”

“IRS-Criminal Investigation will remain proactive in the investigation of individuals and groups especially return preparers, who engage in stealing the identities of innocent people,” said Special Agent in Charge Veronica F. Hyman-Pillot of Internal Revenue Service-Criminal Investigation (IRS-CI).  “We will continue to utilize every tool available to investigate those who conspire with each other to victimize members of our community for their own personal gain.”

“These sentences send a clear message that the federal government will aggressively investigate and prosecute the crime of identity theft involving stolen tax refunds,” said J. Russell George, Treasury Inspector General for Tax Administration (TIGTA).  “While criminals may find it easy to steal someone’s identity using their personal information, they need to know that the punishment for committing this crime will be commensurate with the devastating toll identity theft takes on its victims.”

According to court documents other information presented in court, Samuel and Emelogu participated in a scheme using stolen identities to file fraudulent federal income tax returns, including tax returns filed using stolen identities.  The scheme involved businesses located in Georgia, including S & O Accounting Services LLC, which was controlled by Samuel, and Xpress Auto Parts & Towing LLC and O.B. Consulting & Tax Services LLC., which were controlled by Emelogu.  In 2012, Emelogu filed hundreds of false federal income tax returns with the IRS that included fraudulent claims for tax refunds directed to be paid into his business bank accounts and into a bank account controlled by Samuel.  Electronic evidence established that additional false tax returns were also filed from overseas and the refunds were deposited into Samuel’s bank account.   At sentencing, the court found that the intended loss amount attributable to Emelogu was more than $400,000 and that the intended loss amount attributable to Samuel was more than $1 million.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Horn commended the special agents of IRS-CI and the TIGTA, who investigated the case, and Assistant U.S. Attorney Thomas J. Krepp of the Northern District of Georgia and Trial Attorney Jason H. Poole of the Tax Division, who prosecuted the case.