District Not Recorded

All Four Members Charged Have Now Pleaded Guilty

A fourth member of an international computer hacking ring has pleaded guilty to conspiring to break into computer networks of prominent technology companies to steal more than $100 million in intellectual property and other proprietary data. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division made the announcement.

Austin Alcala, 19, of McCordsville, Indiana, pleaded guilty to conspiracy to commit computer intrusions and criminal copyright infringement based on his role in the cyber theft of software and data related to the Xbox One gaming console and Xbox Live online gaming system, and popular games such as the “FIFA” online soccer series; “Call of Duty:  Modern Warfare 3;” and “Gears of War 3.”  A sentencing hearing is set before U.S. District Judge Gregory M. Sleet of the District of Delaware on July 29, 2015.

According to the statement of facts filed in connection with his guilty plea, Alcala was part of the hacking conspiracy between the spring of 2012 and April 2014.  During that period, hacking group members located in the United States and abroad gained unauthorized access to computer networks of various companies, including Microsoft Corporation, Epic Games Inc., Valve Corporation and Zombie Studios.  The conspirators accessed and stole unreleased software, software source code, trade secrets, copyrighted and pre-release works and other confidential and proprietary information.  Members of the conspiracy also stole financial and other sensitive information relating to the companies—but not their customers—and certain employees of such companies. 

Specifically, the data theft targeted software development networks containing source code, technical specifications and related information for Microsoft’s then-unreleased Xbox One gaming console, as well as intellectual property and proprietary data related to Xbox Live and games developed for that online gaming system.

Alcala admitted in court that he was personally involved in hacking into and stealing log-in credentials and intellectual property from victim companies including Microsoft and Zombie Studios.  Alcala further admitted that, on one occasion, he transmitted to co-conspirators a database file containing approximately 11,266 log-in credentials stolen from a victim company. 

The value of the intellectual property and other data stolen by the hacking ring, as well as the costs associated with the victims’ responses to the conduct, is estimated to range between $100 million and $200 million.  To date, the United States has seized over $620,000 in cash and other proceeds related to the charged conduct.

Sanadodeh Nesheiwat, 28, of Washington, New Jersey, and David Pokora, 22, of Mississauga, Ontario, Canada, previously pleaded guilty to the same conspiracy charge on Sept. 30, 2014.  They remain in custody pending their sentencing hearings, which are scheduled for April 2015.  Nathan Leroux, 20, of Bowie, Maryland, pleaded guilty to the same conspiracy charge on Jan. 20, 2015, and remains in custody pending his sentencing hearing scheduled for May 2015.

This case is being investigated by the FBI, with assistance from the Criminal Division’s Office of International Affairs, the U.S. Department of Homeland Security’s Homeland Security Investigations and Customs and Border Protection, the U.S. Postal Inspection Service, the Canada Border Services Agency, the Western Australia Police and the Peel Regional Police of Ontario, Canada.  The case is being prosecuted by Deputy Chief for Litigation James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Paul J. Fishman of the District of New Jersey announced that the former owner of two New Jersey defense contracting businesses today admitted that she conspired to send sensitive military technical data to India.

Hannah Robert, 49, of North Brunswick, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson of the District of New Jersey to count six of a superseding indictment, which charged her with conspiracy to violate the Arms Export Control Act by exporting to India military technical drawings without prior approval from the U.S. Department of State.

“Hannah Robert circumvented the U.S. government and provided defense technical drawings in violation of the Arms Export Control Act,” said Assistant Attorney General Carlin.  “We will continue to pursue and hold accountable those who abuse their access to sensitive defense information.  I would like to thank all of the special agents, prosecutors and other personnel whose work led to the guilty plea in this case.”

“Hannah Robert conspired to send to another country thousands of technical drawings of defense hardware items and sensitive military data,” said U.S. Attorney Fishman.  “She was also charged with manufacturing substandard parts that were not up to spec, in violation of the contracts she signed with the Department of Defense.  Enforcement of the Arms Export Control Act is critical to the defense of our country.” 

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

In June 2010, Robert was the founder, owner and president of One Source USA LLC, a company located at her then-residence in Mount Laurel, New Jersey, that contracted with the U.S. Department of Defense (DoD) to supply defense hardware items and spare parts.  In September 2012, Robert opened another defense company, Caldwell Components Inc., based at the same address.  Along with a resident of India identified only as “P.R.,” Robert owned and operated a third company located in India that manufactured defense hardware items and spare parts.

From June 2010 to December 2012, Robert conspired to export to India defense technical drawings without obtaining the necessary licenses from the U.S. Department of State.  The exported technical drawings include parts used in the torpedo systems for nuclear submarines, military attack helicopters and F-15 fighter aircrafts.

In addition to United States’ sales, Robert and P.R. sold defense hardware items to foreign customers.  Robert transmitted export-controlled technical data to P.R. in India so that Robert and P.R. could submit bids to foreign actors, including those in the United Arab Emirates (UAE), to supply them or their foreign customers with defense hardware items and spare parts.  Neither Robert nor P.R. obtained approval from the U.S. Department of State for this conduct.

On Aug. 23, 2012, P.R. e-mailed Robert requesting the technical drawing for a particular military item.  P.R.’s e-mail forwarded Robert an e-mail from an individual purporting to be “an official contractor of the UAE Ministry of Defence,” and who listed a business address in Abu Dhabi, UAE.  The UAE e-mail requested quotations for a bid for the “blanket assembly” for the CH-47F Chinook military helicopter and listed the “End User” for the hardware item as the UAE Armed Forces.  Later that same day, Robert replied to P.R.’s e-mail, attaching, among other things, the electronic file for an export-controlled technical drawing titled “Installation and Assy Acoustic Blankets, STA 120 CH-47F,” to be used in the Chinook attack helicopter.

In October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, New Jersey, church where she was a volunteer web administrator.  This was done without the knowledge of the church staff.  Robert e-mailed P.R. the username and password to the church website so that P.R. could download the files from India.  Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for P.R. to download in India. 

On June 25, 2012, P.R. e-mailed Robert, stating: “Please send me the church web site username and password.”  The e-mail was in reference to both an invoice to and a quote for a trans-shipper known to Robert as a broker of defense hardware items for an end user in Pakistan.  This individual used a UAE address for shipping purposes.  Later that day, Robert replied to this e-mail, providing a new username and password for the church website so that P.R. could download the particular defense drawings.

On Oct. 5, 2012, Robert e-mailed P.R. with the subject line “Important.”  The e-mail referenced the Pakistan trans-shipper, a separate potential sale to individuals in Indonesia and the church website: “Please quote [the Pakistan trans-shipper] and Indonesia items today[.] [Dr]awings I cannot do now as if the size exceeds then problem, I should be watching what I upload, will do over the weekend[.]  Ask me if you need any drawing . . . . Talk to you tomorrow . . . .”

There were also quality issues with the parts that Robert provided to the DoD.  After the DoD in October 2012 disclosed that certain parts used in the wings of the F-15 fighter aircraft, supplied by one of One Source USA’s U.S. customers failed, Robert and P.R. provided the principal of their customer with false and misleading material certifications and inspection reports for the parts.  These documents, to be transmitted to the DoD, listed only One Source USA’s New Jersey address and not the address of the actual manufacturer in India, One Source India.  As a result of the failed wing pins, the DoD grounded approximately 47 F-15 fighter aircraft for inspection and repair, at a cost estimated to exceed $150,000.

Until November 2012, Robert was an employee of a separate defense contractor in Burlington County, New Jersey, where she worked as a system analyst and had access to thousands of drawings marked with export-control warnings and information on this defense contractor’s bids on DoD contracts.  Robert misrepresented to her employer the nature and extent of her involvement with One Source USA in order to conceal her criminal conduct.

Count six of the superseding indictment – conspiracy to violate the Arms Export Control Act – is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.  As part of her plea agreement, Robert must pay $181,015 to the DoD, which includes the cost of repair for the grounded F-15s.  Robert also consented to a forfeiture money judgment of $77,792, which represents the dollar value of Robert’s fraudulent contracts with DoD. 

The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.

The case was investigated by the special agents of the Defense Criminal Investigative Service’s Northeast Field Office and the special agents of the Department of Homeland Security’s Counter Proliferation Investigations.

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis and L. Judson Welle of the District of New Jersey.  The prosecution received invaluable support from attorneys of the U.S. Department of Justice’s National Security Division.

AMA United Group Admits Violation of Arms Export Control Act; Principals Acknowledge Failure to File Shipping Records with U.S. Government Regarding Munitions Destined for Egypt

U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) New York and Special Agent in Charge Craig W. Rupert of the Defense Criminal Investigative Service’s (DCIS) Northeast Field Office announced that earlier today, AMA United Group, Malak Neseem Swares Boulos and Amged Kamel Yonan Tawdraus pleaded guilty at the federal courthouse in Brooklyn, New York, to violating U.S. export regulations in connection with the attempted shipment of munitions samples from New York City to Egypt.  AMA United Group, an Egyptian procurement agent, entered a guilty plea to violating the Arms Export Control Act.  Boulos and Tawdraus, Egyptian citizens and partners in AMA United Group, pleaded guilty to failing to file required export information relating to the international shipment of a landmine and multiple bomb bodies.  According to court filings and facts presented during the plea proceeding, Boulos and Tawdraus were arrested after attempting to close a deal to acquire and export the items, which were included on the U.S. Munitions List and regulated by the U.S. Department of State.

“These defendants failed to comply with the strict regulations that govern the export of dangerous munitions,” said U.S. Attorney Lynch.  “Today’s convictions should help ensure that those who refuse to follow these obligations should expect to face serious consequences, including individual and corporate penalties.”  Ms. Lynch expressed her grateful appreciation to HSI, DCIS and the U.S. Attorney’s Office of the Southern District of New York for its assistance.

“Boulos, Tawdraus and AMA United Group were involved in the illegal export of components vital to explosives in an aerial warhead,” said Assistant Attorney General Carlin.  “By purposefully evading U.S. law, including the Arms Export Control Act, the defendants could have done great harm to our nation’s security.  I would like to thank the many offices involved in securing this plea agreement.”

“Investigating potential violations of the Arms Export Control Act is a top national security priority for HSI as it ensures military technology such as these landmines do not fall into the wrong hands” said Special Agent in Charge Parmer.  “In this instance, our partnership with DCIS and the U.S. Attorney’s office sends a strong message that violating U.S. export laws will not be tolerated.”

“This investigation demonstrates the ongoing commitment that the Defense Criminal Investigative Service has to pursue individuals who are intent on acquiring and illegally exporting military grade munitions,” said Special Agent in Charge Rupert.  “DCIS will continue to work with its law enforcement partners, such as HSI and the U.S. Attorney’s Office, to methodically and successfully investigate these types of allegations and protect America’s Warfighters.”

Beginning in February 2011, the defendants began trying to obtain munitions items on behalf of AMA United Group’s client, a factory in Cairo.  The items the defendants sought included a land mine as well as bomblet bodies and “trumpet liners,” two components that are integral to manufacturing the housings for explosives in an aerial warhead.  In July 2011, the defendants traveled from Cairo to New York City to inspect the items.  On July 1, 2011, the three principals of AMA United Group attempted to ship samples to its client in Egypt.  Boulos and Tawdraus failed to file any export information in connection with the attempted shipment.  The requirement to file accurate information regarding the contents of international shipments is one layer of regulatory oversight pertaining to protecting the U.S. national security and diplomatic interests.

Today’s pleas took place before U.S. District Judge Eric N. Vitaliano of the Eastern District of New York.  When sentenced, defendants Tawdraus and Boulos face up to five years in prison, as well as criminal forfeiture and fines.  Each of the defendants also faces export sanctions, including the denial of export privileges by the U.S. Department of Commerce, the U.S. Department of the Treasury and the U.S. Department of State.

The government’s case is being prosecuted by Assistant U.S. Attorneys Seth DuCharme and David Pitluck of the Eastern District of New York, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division. 

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that a Final Judgment on the Pleadings was granted in favor of defendants Dennis Jacobs, U.S. Customs and Border Protection (CBP) Officer, and seven "John Doe" and "Jane Doe" CBP officers in Yu Min Zhao v. Dennis Jacobs, et al. , Civil Case No. 13-00028 (D.N. Mar. I.). The plaintiff filed a Bivens lawsuit against the CBP officers, claiming that the officers violated her right to be free from excessive force and her right to equal protection during the immigration inspection process.

     The U.S. Attorney's  Office, on behalf of Officer Dennis Jacobs, filed a motion arguing that Officer Jacobs was entitled to a judgment in his favor because, even though he was named in the lawsuit, he was not accused of any wrong doing. In fact, he was not present during the timeframe of the allegations in the Complaint. Further, CBP's inquiry into an alien's purpose for entering the NMI and the detention and removal of an inadmissible alien (in this case, for indications of an intention to overstay the visa waiver) are part of CBP's duties under immigration laws. On January 12, 2015, the District Court for the NMI granted the judgment on all grounds.  The court held that Officer Jacobs was protected under the law as a federal employee because none of the allegations tied him to any constitutional violations.  The court also found that the relief requested by the plaintiff- an injunction and a declaratory judgment- is barred under Bivens law. Ultimately, the court found that the true nature of the lawsuit was a challenge to CBP's determination of the plaintiff's inadmissibility to enter the NMI rather than constitutional violations, which is also not permitted under Bivens law.

     The court gave the plaintiff an opportunity to amend her complaint, and she failed to do so. On March 20, 2015, the court entered a final judgment on all grounds in favor of Officer Jacobs and the other unnamed officers.

     U.S. Attorney Alicia A.G. Limtiaco stated, "Bivens law permits federal employees to be sued in their personal capacities for actions taken during the course of their official duties. Protection of federal employees for legitimate actions performed in the course of their official duties is critical to the effectiveness of the federal government. As noted by the Supreme Court in Anderson v. Creighton, 483 U.S. 635 (1987), Bivens lawsuits exact substantial social costs, including 'expenses oflitigation, the diversion of official energy from pressing public issues, and the deterrence of able citizens from acceptance of public office.' In cases such as this where the government demonstrates that legitimate actions were taken in the course of one's official duties and that the complaint against the individuals is without merit, dismissal is the appropriate and just remedy."

     This case was defended by Assistant U.S. Attorneys Jessica F. Cruz and Mikel W. Schwab.

A Swiss citizen and former asset manager at a Swiss asset management firm pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars in offshore accounts from the Internal Revenue Service (IRS), and to evade U.S. taxes on the income earned in those accounts, the Justice Department announced. 

Peter Amrein, 53, a Swiss citizen, pleaded guilty before U.S. District Judge Sidney H. Stein of the Southern District of New York pursuant to a plea agreement to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns.  Amrein faces a maximum sentence of five years in prison at his July 1 sentencing before Judge Stein.

“Peter Amrein’s guilty plea today is another example of individuals being held culpable, in addition to institutions, for their criminal violations of U.S. tax laws,” said U.S. Attorney Preet Bharara of the Southern District of New York.  “Regardless of the elaborate scheme you might employ, we will use all of our investigative powers to ensure that all citizens pay their fair share, and that those who assist them in evading our laws are also held responsible.” 

According to the allegations in the superseding Information and the prior indictment, as well as statements made during the plea proceeding and other documents filed in federal court in Manhattan, New York:

Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm).  In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes.  Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names.  Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS. 

In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland.  Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts.  In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers.  Amrein found such a bank (Swiss Bank No. 1).  Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.   

For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts.  For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer.  On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize.  Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers.  For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.         

Mr. Bharara praised the outstanding investigative work of the IRS-Criminal Investigations.  He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.

This case is being handled by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah E. Paul, Jason H. Cowley, and Daniel B. Tehrani are in charge of the prosecution.

Robert Bosch GmbH, the world’s largest independent parts supplier to the automotive industry, based in Gerlingen, Germany, has agreed to plead guilty and to pay a $57.8 million criminal fine for its role in a conspiracy to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold to automobile and internal combustion engine manufacturers in the United States and elsewhere, the Department of Justice announced today.

According to the one-count felony charge filed today in the U.S. District Court of the Eastern District of Michigan, Bosch conspired to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of, spark plugs and oxygen sensors sold to automobile and internal combustion engine manufacturers such as DaimlerChrysler AG, Ford Motor Company, General Motors Company and Andreas Stihl AG & Co., among others, in the United States and elsewhere.  Bosch’s involvement in the conspiracy lasted from at least as early as January 2000 until at least July 2011.  Bosch is also charged with participating in a conspiracy to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of, starter motors sold to Volkswagen AG and certain of its subsidiaries in the United States from at least as early as January 2009 until at least June 2010.  Bosch has agreed to cooperate in the department’s ongoing investigation.  The plea agreement will be subject to court approval.

“The participants in this conspiracy were not located in just one country or region of the world,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “Collusion related to automotive parts was global in nature as are our efforts to hold responsible companies and individuals accountable for the resulting harm to U.S. consumers and businesses.”

According to the charge, Bosch and others participating in the scheme conspired through meetings and conversations in which they discussed and agreed upon bids and price quotations on bids to be submitted to certain automobile and internal combustion engine manufacturers and to allocate the supply of the products to those manufacturers.  Bosch, which manufactures and sells numerous automotive and internal combustion engine parts, sold spark plugs, oxygen sensors and starter motors at non-competitive prices to customers in the United States and elsewhere in furtherance of the agreement.

A spark plug is an internal combustion engine component for delivering high electric voltage from the ignition system to the combustion chamber.  Oxygen sensors are located in the exhaust system and measure the amount of oxygen in the exhaust.  Starter motors are small electric motors used in starting internal combustion engines. 

The charge against Bosch is the latest in the department’s on-going investigation into anticompetitive conduct in the automotive parts industry.  Bosch is the third European-based company charged in this investigation. 

Including Bosch, 34 companies and 29 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of nearly $2.5 billion in criminal fines.

Bosch is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office with the assistance of the FBI Headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

Bosch Information

Robinson Health System Inc. has agreed to pay $10 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today.  Robinson is a nonprofit corporation based in Ohio that operates a number of health care facilities in Portage County, Ohio, including Robinson Memorial Hospital. 

“The Department of Justice has 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 Acting 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.” 

The settlement announced today involved Robinson’s financial relationships with a number of referring physicians that allegedly violated the Anti-Kickback Statute and the Stark Statute, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.  These relationships included management agreements that Robinson had with two physicians groups.  These physicians allegedly failed to provide sufficient bona fide management services to have justified the payments that they received.  Robinson disclosed these issues to the government.

“Referrals should be made to the best qualified physicians, and must be based on what’s best for the patient,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.  “Improper financial relationships between hospitals and referring doctors can lead to clouded judgments, which is why the Department of Justice will continue to police such matters vigorously.”

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, which prohibits false claims for federal funds, including claims submitted in violation of the Anti-Kickback Statute and the Stark Statute.  Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio, and the 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.

A federal grand jury in the Eastern District of New York returned an indictment yesterday against a Staten Island, New York, tax return preparer and business owner, charging him with 31 counts of aiding and assisting in the preparation of false federal income tax returns and three counts of filing false personal federal 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, Alabi Gbangbala was the operator of Broadfield, a tax return preparation business located in Staten Island.  For tax years 2008 and 2009, Gbangbala allegedly prepared false individual income tax returns for Broadfield clients by, among other things, failing to report accurate exemptions, falsifying business receipts and losses on Schedules C and inflating or fabricating charitable contributions and unreimbursed employee expenses.  Gbangbala also filed false individual income tax returns on behalf of himself for tax years 2008 through 2010, in which he failed to disclose his total income for each calendar year.

If convicted, Gbangbala faces a statutory maximum sentence of three years in prison and a fine of $250,000 on each count. 

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Christopher O’Donnell and Mark McDonald 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 assistance. 

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding. 

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

Gbangbala Indictment

The United States filed a complaint seeking to permanently bar a Detroit-area woman, her daughter, and the tax preparation businesses they operate from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint against Denise Pope and Janise Jones, which was filed in the U.S. District Court of the Eastern District of Michigan, alleges that Pope and Jones prepare federal income tax returns for customers that understate their correct tax liabilities.

Denise Pope, also known as Denise Miller, operates CDP Tax Services Inc., CDP Accounting Service, PC, dba CDP Tax and Uneek Business Solutions — each of which was named as a defendant, according to the suit. 

The government’s suit alleges that the understatements are the result of improper earned income tax credits, education credits, charitable deductions, unreimbursed employee business expense deductions and Schedule C (Profit or Loss From Business) expenses and income, which the defendants claim for their customers despite any supporting documentation.  Because some of these credits are refundable, the improper claims often result in larger than appropriate tax refunds, according to the suit.  The complaint alleges that the Internal Revenue Service (IRS) interviewed several of the defendants’ customers, who stated that the improper deductions, credits and Schedule C business expenses and income were not based on information they provided to the defendants. 

According to the complaint, the IRS estimates that the defendants, using these business entities, have prepared more than 3,000 tax returns since 2011.  The complaint alleges that the IRS has completed examinations of 87 of those returns, and the total tax deficiency for those returns alone exceeds $460,000.  Based on the number of returns these defendants prepared, the complaint alleges that the harm to the U.S. Treasury far exceeds $460,000.

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.

Pope Complaint

The former co-owner of R&J Partnership Ltd. doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, has pleaded guilty to conspiracy to operate an illegal gambling business and operating an illegal gambling business, conspiracy to defraud the United States and witness tampering.  The charges were part of an indictment unsealed on Sept. 26, 2014, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

The other defendants charged in the indictment, including Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jennifer Williams and Walter F. Dyer, previously pleaded guilty to illegal gambling and obstruction of justice offenses. 

According to the indictment and the statement of facts as part of the plea agreement, between February 2004 and May 2011, Reece Powers II oversaw the recruitment of local 501(c)(3) non-profit charitable organizations to sponsor poker fundraisers that included casino-like card games.  Powers entered into arrangements with the charitable organizations to control all of the funds generated from the poker fundraisers.

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

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

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

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

U.S. District Judge Timothy Black of the Southern District of Ohio did not schedule a sentencing date.  Powers faces a statutory maximum sentence of 35 years in prison and a fine of $1,000,000.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief Jorge Almonte and Trial Attorneys Christopher P. O’Donnell and Austin F. Furman of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Ohio for their substantial assistance.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.  Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.

The Justice Department announced today that it has opened an investigation of Dallas County, Texas’s Truancy Court and Juvenile District Courts.  The investigation will focus on whether the courts provide constitutionally required due process to all children charged with the criminal offense of failure to attend school, including whether those protections apply to children whom the county charges with contempt.  The investigation will also focus on whether the courts provide meaningful access to the judicial process for children with disabilities. 

“Failure to attend school” is a criminal charge under Texas law that is the equivalent of the juvenile status offense of “truancy.”  Based on the department’s preliminary review, it believes that the county prosecuted approximately 20,000 failure to attend school cases in 2014.

“The Constitution’s guarantee of due process applies to every individual, regardless of age or disability,” said Attorney General Eric Holder.  “This investigation continues the Justice Department’s focus on identifying and eliminating entryways to the school-to-prison pipeline, and illustrates the potential of federal civil rights law to protect the rights of vulnerable children facing life-altering circumstances.  As the investigation moves forward, the Department of Justice will work to ensure that actions of Dallas County’s courts are appropriate; that our constitutional protections are respected; and that the children of Dallas County can receive the meaningful access to justice that all Americans deserve.”

“Ensuring that children’s rights under the Constitution and federal law are protected during the court process is a key step to dismantling the school-to-prison pipeline,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We hope to work cooperatively with the county in determining whether it has taken steps to ensure that its juvenile and criminal courts fully respect the rights of the children who come before them.”

“Ensuring that the children of Dallas County appearing before these courts are afforded the full protections afforded them under our constitution is essential to increasing the public’s confidence in the juvenile justice system,” said Acting U.S. Attorney John Parker of the Northern District of Texas. 

This investigation will include a comprehensive review of policies, procedures, court documents and statistical data, as well as interviews of individuals knowledgeable about the courts’ processes. 

The department will conduct the investigation using its authority under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994 and Title II of the Americans with Disabilities Act.  Section 14141 prohibits a pattern or practice of deprivation of civil rights for juveniles in the administration of juvenile justice.  Title II of the Americans with Disabilities Act prohibits discrimination against a qualified individual with a disability in many contexts, including the administration of justice.  The department has conducted similar investigations in other jurisdictions, and in 2012 obtained important reforms following its investigation of the Juvenile Court of Memphis and Shelby County, Tennessee.

The Special Litigation Section of the Civil Rights Division is conducting this investigation.  Individuals with relevant information are encouraged to contact the department via email at community.dallascounty@usdoj.gov or by phone at 1-855-258-1433.

New Policy Limits Seizing Cash Deposited in a Way to Avoid Triggering Bank Reports to Most Serious Cases

As part of the Department of Justice’s comprehensive, ongoing review of the asset forfeiture program, Attorney General Eric Holder today issued a policy focusing the use of asset forfeiture authorities on the most serious illegal banking transactions, restricting civil or criminal forfeiture seizures for structuring until after a defendant has been criminally charged or has been found to have engaged in additional criminal activity, in most cases.

“With this new policy, the Department of Justice is taking action to ensure that we are allocating our resources to address the most serious offenses,” said Attorney General Holder.  “Appropriate use of asset forfeiture law allows the Justice Department to safeguard the integrity, security and stability of our nation’s financial system while protecting the civil liberties of all Americans.  And as we continue our comprehensive review of the Asset Forfeiture Program, we will stay focused on deterring criminal activity, assisting victims of wrongdoing and defending the rights of our citizens.”

Structuring generally occurs when, instead of conducting a single transaction in currency in an amount that would require a report to be filed or record made by a domestic financial institution, the violator conducts a series of currency transactions, willfully keeping each individual transaction at an amount below applicable thresholds to evade reporting or recording.  In addition to being a stand-alone offense, structuring is a crime that often occurs in connection with other criminal activity.

Under the new policy, in the absence of criminal charges, judicially authorized warrants to seize bank accounts involved in structuring can only be obtained if the prosecutor first develops probable cause of additional federal criminal activity and that determination is approved by a supervisor.  Otherwise, a prosecutor may ask a judge to issue a seizure warrant only if either the U.S. Attorney or the Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section personally determines that seizure would serve a compelling law enforcement interest.

In addition, the new policy imposes important protections after a seizure has taken place.  The policy requires a prosecutor to promptly direct a seizing agency to return funds if the prosecutor determines that there is insufficient admissible evidence to prevail in a criminal or civil trial.  The policy also imposes a 150-day deadline to file a criminal indictment or civil complaint against the seized funds, or otherwise directs a return of the full amount of the seized funds.  Finally, the policy requires a formal, written settlement agreement vetted by a federal prosecutor for settlements of structuring offenses.

This new policy is the most recent result of the department’s ongoing review of the Asset Forfeiture Program to ensure that asset forfeiture – a critical law enforcement tool – can continue to be used to appropriately take the profits out of crime and return assets to victims, all while safeguarding civil liberties. 

The policy was developed by the Asset Forfeiture and Money Laundering Section of the Criminal Division and the Attorney General’s Advisory Committee of U.S. Attorneys.  The policy applies to all Department of Justice attorneys.

Attorney General's Memorandum and the Structuring Policy Directive 

Attorney General Eric Holder announced today the appointment of U.S. Attorney Michael Cotter for the District of Montana and U.S. Attorney Damon P. Martinez for the District of New Mexico as the chair and vice-chair, respectively, of the Native American Issues Subcommittee (NAIS) of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC).  

“Throughout my tenure as Attorney General, the Native American Issues Subcommittee has been a critical source of expertise, guidance, and inspiration in addressing the department’s goals of reducing crime and strengthening communities across Indian country,” said Attorney General Holder.  “As public servants from districts with significant responsibilities related to tribal nations, Mike Cotter and Damon Martinez possess a wealth of knowledge and expertise that will serve to promote the mission of the NAIS and benefit Indian country as a whole.  I am confident that, with their dedication, their vision, and their leadership, we will continue to deliver on this department’s important work and to fulfil this nation’s historic relationship of trust and cooperation with Native American and Alaska Native people.”

U.S. Attorney Cotter was appointed to the NAIS in 2009.  He replaces U.S. Attorney Timothy Q. Purdon of the District of North Dakota.  The District of Montana has served as a successful example of the Attorney General’s 2010 Indian Country Initiative.  Prosecutors are assigned to individual reservations and travel monthly for meetings with tribal and federal partners.  The strategy includes utilizing tribal Special Assistant U.S. Attorneys, tribal prosecutors who focus on domestic violence matters.  Prosecutors also participate in bi-monthly case meetings with tribal prosecutors and law enforcement, as well as develop cross-disciplinary trainings, such as presentations to first responders on the new federal strangulation statutes in Indian Country. 

As part of ongoing Initiative efforts, Assistant U.S. Attorneys facilitated the creation of and continuing work by the Sexual Assault Response Teams (SARTs), which are comprised of prosecutors, law enforcement, as well as medical and social service providers.  The SARTs represent a collaborative, multi-disciplinary approach to responding to sex crimes that occur on reservations. 

U.S. Attorney Martinez, who was appointed to the NAIS in May 2014, has continued and expanded the implementation of the Attorney General’s 2010 Indian Country Initiative and other federal initiatives in New Mexico which is home to 22 Indian pueblos and tribes.  Through the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project, sponsored by the Justice Department’s Office on Violence Against Women, federal prosecutors train tribal prosecutors and officers in federal law, procedure and investigative techniques so that every viable sexual and violent offense against Native women is prosecuted in either federal court or tribal court, or both.  Working with the White House Office of National Drug Control Policy and the BIA’s Office of Justice Services, New Mexico has established one of the first HIDTA drug task forces in Indian Country.  It also supports two Indian Country Project Safe Neighborhood programs that focus on reducing gun violence in tribal communities.  Under the Attorney General’s Smart on Crime Initiative, the District of New Mexico has been working with an interdisciplinary team to develop one of the nation’s Indian Country reentry programs which will be launched in May of this year.  Prosecutors also partner with BIA to train tribal, local and state officers so that they may be commissioned as special federal officers of the BIA and enhance public safety in the District’s tribal communities by enforcing federal law. 

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the Attorney General on policy, management, and operational issues impacting the offices of the U.S. Attorneys.  The NAIS is made up of U.S. Attorneys from across the U.S. whose Districts contain Indian Country or one or more federally recognized tribes.  The NAIS focuses exclusively on Indian Country issues, both criminal and civil and is responsible for making policy recommendations to the Attorney General of the U.S. regarding public safety and legal issues that impact tribal communities.

A Raleigh, North Carolina, man pleaded guilty today in the U.S. District Court in Raleigh to conspiring to file false claims for tax refunds, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina. 

According to court documents and statements in court, from 2010 through at least February 2014, Rodney Wright and others conspired to prepare and file false income tax returns with the Internal Revenue Service (IRS).  Wright obtained the personal identification information of taxpayers and used this information to file false federal income tax returns, which included fictitious information in order to generate false and fraudulent claims for tax refunds.  Wright and others directed the IRS to deposit tax refunds into bank accounts of the taxpayers listed on the tax returns or into accounts controlled by Wright and others involved in the conspiracy. 

Wright faces a statutory maximum sentence of 10 years in prison and a $250,000 fine for the conspiracy charge.  He is scheduled to be sentenced on June 29. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Walker commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Susan Menzer of the Eastern District of North Carolina and Trial Attorneys Lauren Castaldi and Rebecca Perlmutter of the Tax Division, who are prosecuting the case.

The Justice Department announced today the filing of a lawsuit against Southeastern Oklahoma State University (Southeastern) and the Regional University System of Oklahoma (RUSO) for violating Title VII of the Civil Rights Act of 1964 by discriminating against a transgender employee on the basis of her sex and retaliating against her when she complained about the discrimination.  Attorney General Eric Holder announced in December 2014 that the Department of Justice takes the position that Title VII’s prohibition against sex discrimination is best read to extend the statute’s protection to claims based on an individual’s gender identity, including transgender status. 

According to the United States’ complaint, filed in federal district court in Oklahoma City today, Rachel Tudor began working for Southeastern as an Assistant Professor in 2004.  At the time of her hire, Tudor presented as a man.  In 2007, Tudor, consistent with her gender identity, began to present as a woman at work.  Throughout her employment, Tudor performed her job well, and in 2009, she applied for a promotion to the tenured position of Associate Professor.  Southeastern’s administration denied her application, overruling the recommendations of her department chair and other tenured faculty from her department.  The United States’ complaint alleges that Southeastern discriminated against Tudor when it denied her application because of her gender identity, gender transition and non-conformance with gender stereotypes. 

“By standing beside Dr. Tudor, the Department of Justice sends a clear message that we are committed to eliminating discrimination on the basis of sex and gender identity,” said Attorney General Eric Holder.  “We will not allow unfair biases and unjust prejudices to prevent transgender Americans from reaching their full potential as workers and as citizens.  And we will continue to work tirelessly, using every legal tool available, to ensure that transgender individuals are guaranteed the rights and protections that all Americans deserve.”

In 2010, Tudor filed complaints regarding the denial of her application for promotion and tenure.  Shortly after it learned of her complaints, Southeastern refused to let Tudor re-apply for promotion and tenure despite Southeastern’s own policies permitting re-application.  At the end of the 2010-11 academic year, Southeastern and RUSO terminated Tudor’s employment because she had not obtained tenure. 

Tudor filed a charge of discrimination with the Oklahoma City Area Office of the U.S. Equal Employment Opportunity Commission, alleging that Southeastern’s decisions were unlawful.  The EEOC investigated the charge and determined that there was reasonable cause to believe discrimination occurred.  The EEOC’s attempts at conciliation were unsuccessful, and it referred the matter to the Department of Justice.

This lawsuit was brought by the Department of Justice as a result of a joint effort to enhance collaboration between the EEOC and the Justice Department’s Civil Rights Division for vigorous enforcement of Title VII.

“The Department of Justice is committed to protecting the civil rights of all Americans, including transgender Americans,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Discrimination against employees because of their gender identity, gender transition, or because they do not conform to stereotypical notions about how men and women should act or appear violates Title VII.  Retaliating against an employee for complaining about unlawful discrimination, as happened in this case, is also unacceptable under Title VII.”  

“This is a tremendous example of how collaboration between EEOC and the Department of Justice leads to strong and coordinated enforcement of Title VII,” said EEOC Chair Jenny R. Yang.  “This case furthers the EEOC’s Strategic Enforcement Plan, which includes coverage of lesbian, gay, bisexual and transgender individuals under Title VII's sex discrimination provisions as a national enforcement priority.”

“The American workplace must be a level playing field free from discrimination – a place where employees compete based on their merit,” said Director Holly Waldron Cole of the EEOC’s Oklahoma City Area Office.  “Here, the decisions about Dr. Tudor’s employment should have been based on her qualifications, not on impermissible bias and stereotype.”

As alleged in the complaint, Title VII’s prohibition on sex discrimination includes discrimination because of gender identity or because an employee has completed a gender transition or is undertaking a gender transition.  Title VII also prohibits an employer from discriminating against an employee because her behavior or appearance does not conform to traditional gender stereotypes.  In addition, Title VII prohibits employers from retaliating against employees, like Tudor, who lodge complaints about discriminatory treatment.  Through its lawsuit, the United States seeks both monetary and injunctive relief.

Attorney General Eric Holder announced in December 2014 that the Department of Justice takes the position that Title VII’s prohibition against sex discrimination is best read to extend the statute’s protection to claims based on an individual’s gender identity, including transgender status. 

More information about Title VII and other federal employment laws is available on the website of the Employment Litigation Section of the Civil Rights Division (www.justice.gov/crt/about/emp/).

The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division.  Additional information on the Civil Rights Division’s work is available on its website at www.justice.gov/crt/. 

Attached is a brief for the federal government filed in the United States Court of Appeals for the Fifth Circuit in State of Texas, et al. v. United States of America, et al.

Immigration CA5 - US PI Brief

Assistant Attorney General for National Security John Carlin and U.S. Attorney Preet Bharara of the Southern District of New York announced that Haroon Aswat pleaded guilty in the Southern District of New York to terrorism charges related to Aswat’s efforts to establish a terrorist training camp in the United States.  Aswat was arrested in Zambia in July 2005, and in August 2005, Aswat was deported from Zambia to the United Kingdom, where he was arrested pursuant to a provisional arrest warrant that was issued in response to a request by the U.S. government in connection with this case.  Aswat was extradited to the United States from the United Kingdom on Oct. 21, 2014.  Aswat pleaded guilty today to one count of conspiring to provide material support to al Qaeda, and one count of providing material support to al Qaeda.

“With this guilty plea, Haroon Aswat is being held accountable for his provision of material support to al Qaeda and his role in a plot to establish a terrorist training camp on American soil,” said Assistant Attorney General Carlin.  “Aswat was arrested almost 10 years ago, and his guilty plea is a testament to our determination to bring to justice all those who wish to harm the United States, whether at home or abroad, no matter how long it takes.  I would like to extend my gratitude to all of the many agents, analysts and prosecutors whose dedication and persistence made possible the guilty plea in this case.”

“Haroon Aswat fought his extradition to the United States for almost 10 years,” said U.S. Attorney Bharara.  “He then pled guilty to material support charges within just six months of arriving here, showing again our legal system’s capacity for swift justice.  For providing support to al Qaeda, Aswat now comes face-to-face with justice and faces up to 20 years in prison, and after the completion of his term he will be deported.”

According to the allegations contained in the indictment, statements made at related court proceedings including today’s guilty plea, and evidence presented at prior trials:

In late 1999, Aswat, along with co-defendants Mustafa Kamel Mustafa, aka Abu Hamza, Ouassama Kassir and Earnest James Ujaama, attempted to create a terrorist training camp in the United States to support al Qaeda, which has been designated by the U.S. Department of State as a foreign terrorist organization.  Aswat conspired with Abu Hamza, Kassir and Ujaama to establish the terrorist training camp on a rural parcel of property located in Bly, Oregon.  The purpose of the Bly camp was for Muslims to receive various types of training – including military-style jihad training – in preparation to fight jihad in Afghanistan.  As used by the conspirators in this case, the term “jihad” meant defending Islam against purported enemies through violence and armed aggression, including, by using murder to rid Muslim holy lands of non-believers in Islam.

In a letter faxed from Ujaama, who was in the United States, to Abu Hamza in the United Kingdom, the property in Bly was described as a place that “looks just like Afghanistan,” and the letter noted that the men at Bly were “stock-piling weapons and ammunition.”  In late 1999, after transmission of the faxed letter, Abu Hamza directed Aswat and Kassir, both of whom resided in London and attended Abu Hamza’s mosque there, to travel to Oregon to assist in establishing the camp.  On Nov. 26, 1999, Aswat and Kassir arrived in New York, and then traveled to Bly.

Aswat and Kassir traveled to Bly for the purpose of training men to fight jihad.  Kassir told witnesses that he supported Usama Bin Laden and al Qaeda, and that he had previously received jihad training in Pakistan.  Kassir also possessed a compact disc that contained instructions on how to make bombs and poisons.  After leaving Bly, Aswat and Kassir traveled to Seattle, where they resided at a mosque for approximately two months.  While in Seattle, Kassir, in Aswat’s presence, provided men from the mosque with additional terrorist training lessons – including instructions on different types of weapons, how to construct a homemade silencer for a firearm, how to assemble and disassemble an AK-47 and how an AK-47 could be altered to be fully automatic and to launch a grenade.  On another occasion, with Aswat sitting by his side, Kassir announced to the men in Seattle that he had come to the United States for martyrdom and to destroy, and he informed his audience that some of them could die or get hurt.

A ledger recovered in September 2002 from an al Qaeda safe house in Karachi, Pakistan, listed a number of individuals associated with al Qaeda, including ASWAT.  The al Qaeda safe house was used by Khalid Sheikh Mohammed, al Qaeda’s chief operational planner and the alleged planner of the terrorist attacks of Sept. 11, 2001.

*                              *                             *

Aswat pleaded guilty to one count of conspiracy to provide material support to a foreign terrorist organization and one count of providing material support to a foreign terrorist organization, each of which carries a maximum term of 10 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Abu Hamza and Kassir were previously convicted for their roles in attempting to establish a terrorist training camp in the United States.  On May 12, 2009, after a four-week jury trial in the Southern District of New York, Kassir was found guilty of charges relating to his efforts to establish the terrorist training camp in Bly and his operation of several terrorist websites.  On Sept. 15, 2009, U.S. District Judge John F. Keenan of the Southern District of New York sentenced Kassir to life in prison.

On May 19, 2014, after a four-week jury trial in the Southern District of New York, Abu Hamza was found guilty of charges relating to his role in the conspiracy to establish the terrorist training camp in Bly, as well as his role in a hostage-taking in Yemen in 1998 that resulted in four deaths and his support of violent jihad in Afghanistan in 2000 and 2001.  On Jan. 9, 2015, U.S. District Judge Katherine B. Forrest of the Southern District of New York sentenced Abu Hamza to life in prison.

Assistant Attorney General Carlin joins U.S. Attorney Bharara in praising the outstanding efforts of the FBI’s Manhattan-based Joint Terrorism Task Force, which principally consists of agents of the FBI and detectives of the New York City Police Department, the U.S. Marshals Service and the Metropolitan Police Department of London.  Assistant Attorney General Carlin and U.S. Attorney Bharara also thanked the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance.

This case is being prosecuted by Assistant U.S. Attorneys John P. Cronan, Ian McGinley and Shane T. Stansbury of the Southern District of New York, and Trial Attorney Erin Creegan of the Justice Department’s National Security Division.  This prosecution began with the investigation,  arrest and prosecution of James Ujaama in the Western District of Washington.  The FBI-led Joint Terrorism Task Force (JTTF) in Seattle  and the U.S. Attorney’s Office for the Western District of Washington provided substantial assistance with these prosecutions.

A federal grand jury in Oxford, Mississippi, returned a one-count indictment charging former Tate County Sheriff’s Deputy Randy T. Doss, 62, with unlawfully assaulting J.W., a pre-trial detainee at the Tate County Jail, with a dangerous weapon on Jan. 27, 2011.  The indictment charges that Doss’s actions resulted in bodily injury to the victim, J.W.

Doss is charged with violating J.W.’s right not to be deprived of liberty without due process of law.  The indictment alleges that Doss unlawfully assaulted J.W. by deploying a Taser electronic control device into J.W.’s back while he was in the custody of the Tate County Sheriff’s Office. 

If convicted, Doss faces a maximum punishment of 10 years imprisonment.  An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the Jackson Division of the Federal Bureau Investigation.  It is being prosecuted by Assistant U.S. Attorney Robert Coleman of the Northern District of Mississippi and Trial Attorney Dana Mulhauser of the Civil Rights Division of the Department of Justice.   

Agents Were Part of Baltimore’s Silk Road Task Force

Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that allowed users to conduct illegal transactions over the Internet.  The charges are contained in a federal criminal complaint issued on March 25, 2015, in the Northern District of California and unsealed today.

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

Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration (DEA), and Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service (USSS).  Both were assigned to the Baltimore Silk Road Task Force, which investigated illegal activity in the Silk Road marketplace.  Force served as an undercover agent and was tasked with establishing communications with a target of the investigation, Ross Ulbricht, aka “Dread Pirate Roberts.”  Force is charged with wire fraud, theft of government property, money laundering and conflict of interest.  Bridges is charged with wire fraud and money laundering. 

According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace.  During the investigation, Force engaged in certain authorized undercover  operations by, among other things, communicating online with “Dread Pirate Roberts” (Ulbricht), the target of his investigation.  The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain.  In doing so, the complaint alleges, Force used fake online personas, and engaged in complex Bitcoin transactions to steal from the government and the targets of the investigation.  Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account.  In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation.  The complaint also alleges that Force invested in and worked for a digital currency exchange company while still working for the DEA, and that he directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account.  Further, Force allegedly sent an unauthorized Justice Department subpoena to an online payment service directing that it unfreeze his personal account. 

Bridges allegedly diverted to his personal account over $800,000 in digital currency that he gained control of during the Silk Road investigation.  The complaint alleges that Bridges placed the assets into an account at Mt. Gox, the now-defunct digital currency exchange in Japan.  He then allegedly wired funds into one of his personal investment accounts in the United States mere days before he sought a $2.1 million seizure warrant for Mt. Gox’s accounts.     

Bridges self-surrendered today and will appear before Magistrate Judge Maria-Elena James of the Northern District of California at 9:30 a.m. PST this morning.  Force was arrested on Friday, March 27, 2015, in Baltimore and will appear before Magistrate Judge Timothy J. Sullivan of the District of Maryland at 2:30 p.m. EST today. 

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

The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The Treasury Department’s Financial Crimes Enforcement Network also provided assistance with the investigation of this case.  The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.

Criminal Complaint

A former FBI special agent was sentenced today to 10 years in prison and ordered to forfeit $70,000 for soliciting and accepting bribes to obstruct a federal grand jury investigation into an alleged kickback scheme involving a defense contractor, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carlie Christensen of the District of Utah and Justice Department Inspector General Michael E. Horowitz.

“FBI agents—like all federal law enforcement—must be above reproach, but former Special Agent Lustyik sold his badge and position of public trust to the highest bidder,” said Assistant Attorney General Caldwell.  “This sentence serves as a stark reminder that no one is above the law.  Corrupt officials who break the law and breach their oaths will be prosecuted and sent to prison, even if they come from within the ranks of federal law enforcement.”

“These three defendants attempted to thwart a significant criminal investigation in Utah,” said U.S. Attorney Christensen.  “Two of these defendants were entrusted with protecting our citizens and upholding the law.  Their conduct, in particular, stands in stark contrast to the integrity and sacrifice of the men and women in our military and law enforcement ranks and their sentences today send a powerful message that no one is above the law.”

“Today’s sentencings represent important steps toward justice in this case,” said Inspector General Horowitz.  “Department of Justice employees and their associates must be held accountable when they abuse their authority and betray the public’s trust.”

Robert G. Lustyik Jr., 52, of Sleepy Hollow, New York, a 24-year veteran of the FBI, pleaded guilty to all charges in an 11-count indictment on Sept. 29, 2014.  Specifically, Lustyik pleaded guilty to conspiracy to commit bribery and obstruction, eight counts of honest services wire fraud, obstruction of a grand jury investigation and obstruction of an agency proceeding. 

Lustyik’s co-defendants, Michael L. Taylor, 54, of Harvard, Massachusetts, and Johannes W. Thaler, 51, of New Fairfield, Connecticut, were also sentenced today to 24 months in prison and 13 months in prison, respectively, for their roles in this scheme.  Thaler was also ordered to forfeit $70,000, joint and several with Lustyik.  U.S. District Senior Judge Tena Campbell of the District of Utah imposed all three sentences. 

Lustyik and Thaler both pleaded guilty for their involvement in a similar bribery scheme in the Southern District of New York.  Thaler was sentenced to 30 months in prison in that case, and will serve the two sentences consecutively.  Lustyik is scheduled to be sentenced on April 30, 2015, in the Southern District of New York.

According to court documents, from October 2011 to September 2012, Lustyik and Thaler conspired to use Lustyik’s official position as an FBI counterintelligence special agent to obstruct a criminal investigation into Taylor, a businessman who owned and operated American International Security Corporation.  Taylor was under investigation for allegedly paying kickbacks to obtain a series of contracts from the Department of Defense worth approximately $54 million.  Taylor promised Lustyik and Thaler that, in exchange for their help, he would provide them cash and multimillion dollar business contracts.  In an email message, Taylor told the two men, “I’ll make you guys more money than you can believe, provided they don’t think I’m a bad guy and put me in jail.”

According to court documents, Lustyik attempted to obstruct the investigation into Taylor by identifying Taylor as an official FBI confidential source in an effort to persuade the FBI, the Justice Department and the prosecutors and law enforcement agents in Utah that Taylor’s usefulness to the government outweighed the government’s interest in prosecuting him.  Indeed, Lustyik emphasized that indicting Taylor would threaten the nation’s security.  Lustyik also sought to take steps to directly intervene in the investigation by interviewing key witnesses.

According to court documents, the defendants boasted about the success of their scheme.  In one email message, Lustyik wrote to Taylor, “The rate this is going.  I will be indicted way before u ever are !!”  Lustyik wrote separately to Thaler, “I can leave [the FBI] in June.  But I’m afraid to if [Taylor] gets indicted n I’m not an agent I’m no help.  Has he mentioned giving me‐u a salary?” 

Taylor admitted at his plea hearing that, as part of this conspiracy, he offered Lustyik a six-figure salary and a share of the proceeds from various multi-million dollar business deals he was pursuing.  Acknowledging this, Lustyik wrote to Taylor, “Let’s just get Utah over with and get stinking rich,” to which Taylor replied, “Getting stinking rick [sic], we are well on the way with that so I have the ball.” 

The investigation was conducted by the U.S. Department of Justice Office of Inspector General.  The case was prosecuted by Deputy Chief Peter Koski and Trial Attorney Maria Lerner of the Criminal Division’s Public Integrity Section and Trial Attorney Ann Marie Blaylock of the Criminal Division’s Asset Forfeiture and Money Laundering Section.  Trial Attorney Scott Ferber of the National Security Division’s Counterespionage Section also assisted in the prosecution.

The U.S. District Court for the Central District of California entered a consent decree of permanent injunction against L.A. Star Seafood Company Inc. of Los Angeles and its corporate officers Sima Goldring and Sam Goldring to prevent the distribution of adulterated seafood products, the Department of Justice announced today.

The department filed a complaint in the U.S. District Court for the Central District of California on Jan. 5, at the request of the U.S. Food and Drug Administration (FDA), alleging that the company’s seafood products are produced under conditions that are inadequate to ensure the safety of its products.  The complaint alleges that L.A. Star Seafood imports, receives, prepares, processes, packs, holds and distributes ready-to-eat smoked and salt-cured seafood, including cold-smoked mackerel and steelhead trout, and pickled herring and sprats.  The complaint also alleges that Sima Goldring and Sam Goldring are L.A. Star Seafood’s corporate officers with the authority and responsibility for preventing and correcting violations of federal law at the company. 

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from committing violations of the federal Food, Drug, and Cosmetic Act (FDCA).  The consent decree requires L.A. Star Seafood to cease all manufacturing operations and requires that, in order for the defendants to resume distributing seafood products, the FDA first must determine that its manufacturing practices have come into compliance with the law. 

“L.A. Star Seafood was repeatedly informed that the sanitation practices at its facility were deficient,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The failure to actively plan for and control the presence of bacteria and neurotoxins commonly found in seafood processing facilities can pose a serious risk to the public health.”

According to the complaint, FDA inspections in 2013 and 2014 documented a pattern of insanitary conditions resulting in the presence of Listeria monocytogenes (L. mono).  These insanitary conditions were the result of deviations from current good manufacturing practices, such as not adequately cleaning surfaces and utensils used for cutting fish.  Further, the FDA’s most recent inspection in February and March of 2014 documented the defendants’ failure to have and implement adequate Hazard Analysis and Critical Control Point (HACCP) plans that control Clostridium botulinum (C. bot) and L. mono hazards.  L. mono is the bacterium that causes listeriosis, a serious and sometimes fatal infection for vulnerable groups such as newborns, the elderly and those with an impaired immune system.  Ingestion of the neurotoxin C. bot can cause botulism.  Though the incidence of botulism is rare, its effect is severe.  The disease can cause paralysis or death if not promptly treated.

“Companies and their owners who violate food safety regulations endanger public health,” said Associate Commissioner of Regulatory Affairs Melinda K. Plaisier of the FDA.  “The FDA will continue to take every necessary action to assure the food supply is safe.” 

According to the complaint, the FDA documented numerous seafood HACCP and current good manufacturing practice violations when it inspected L.A. Star Seafood’s facility.  The complaint alleges that the company’s products are therefore adulterated within the meaning of the FDCA.  As further alleged, the company was told to take certain precautions while brining fish to control potential C. bot hazards but failed to take appropriate corrective action.  According to the complaint, L.A. Star Seafood failed to adequately clean food-contact surfaces and food manufacturing equipment, utensils and containers to protect against contamination of food, and failed to protect in-process fish products from contamination.  The complaint alleges that the company’s insanitary practices resulted in widespread L. mono contamination and that FDA environmental samples from critical areas of L.A. Star Seafood’s facility, such as the processing-room floor and on food-contact surfaces, tested positive for L. mono.

The government is represented by Trial Attorney Kerala T. Cowart of the Civil Division’s Consumer Protection Branch, with the assistance of Donald Yoo of the U.S. Attorney’s Office for the Central District of California and Associate Chief Counsel for Enforcement Melissa J. Mendoza of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division. 

The Department of Justice announced today that BSI SA, one of the 10 largest private banks in Switzerland, is the first bank to reach a resolution under the Department of Justice’s Swiss Bank Program.

“Because of the department’s continuing efforts to root out offshore tax evasion, Swiss banks are operating much differently today than they did just a few years ago, and the department’s Swiss Banking Program is a big part of that change,” said Acting Deputy Attorney General Sally Quillian Yates.  “When we announced the program, we said that it would enhance our efforts to pursue those who help facilitate tax evasion and those who use secret offshore accounts to evade taxes.  And it has done just that.  We are using the information that we have learned from BSI and other Swiss banks in the program to pursue additional investigations into both banks and individuals.”

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

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;
   
• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
   
• Cooperate in treaty requests for account information;
   
• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
   
• Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
   
• Pay appropriate penalties.

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

According to the terms of the non-prosecution agreement signed today, BSI agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts, and pay a $211 million penalty in return for the department’s agreement not to prosecute BSI for tax-related criminal offenses.

“The department’s Swiss Bank Program is an innovative effort to get the financial institutions that facilitated a massive fraud on the American tax system to come forward with information about their wrongdoing – and to ensure that they are held responsible for it,” said Acting Associate Attorney General Stuart F. Delery.  “Today’s resolution demonstrates that the program is working.  BSI is paying an appropriate penalty for its misconduct and the information and continuing cooperation we have required the banks to provide in order to participate in the program is allowing us to systematically attack offshore tax avoidance schemes.”

BSI helped its U.S. clients create sham corporations and trusts that masked the true identity of its U.S. accountholders.  Many of its U.S. clients also opened “numbered” Swiss bank accounts that shielded their identities, even from employees within the Swiss bank.  BSI acknowledged that in order to help keep identities secret, it issued credit or debit cards to many U.S. accountholders without names visible on the card itself. 

BSI not only helped U.S. clients shield their identity from the Internal Revenue Service (IRS). but helped them repatriate cash as well.  BSI admitted that its relationship managers and their U.S. clients used code words in emails to gain access to funds.  BSI disclosed instances where its U.S. clients would use coded language, such as asking their private bankers, “can you download some tunes for us?” or note that their “gas tank is running empty” when they required additional cash to be loaded to their cards.

From the beginning of the Swiss Bank Program, the department has emphasized the importance of the banks’ helping to identify individuals who facilitate U.S. tax evasion and U.S. accountholders.  BSI provided substantial assistance in this regard. 

“An individual is not culpable simply because he or she is identified by a bank within the program,” said Acting Assistant Attorney General Caroline D. Ciraolo of the department’s Tax Division.  “With that said, the department strongly encourages those individuals and entities currently under indictment, under investigation, or who have concerns regarding their potential criminal liability to contact and fully cooperate with the department to reach a final resolution.”

Since 2009, the department has charged more than 100 offshore bank accountholders, dozens of facilitators, and financial institutions.  The department’s offshore enforcement efforts have reached far beyond Switzerland, as evidenced by publicly announced actions involving banking activities in India, Luxembourg, Liechtenstein, Israel and the Caribbean.

BSI had more than 3,000 active United States-related accounts after 2008, many of which it knew were not disclosed in the United States.  In resolving its criminal liabilities under the program, BSI provided extensive cooperation and encouraged hundreds of U.S. accountholders to come into compliance.  BSI is also assisting with ongoing treaty requests.

“This action under the Swiss Bank Program shows just how far we’ve come in our efforts to stop offshore tax avoidance,” said Deputy Commissioner Douglas O’Donnell of IRS’s Large Business and International Division (LB & I).  “The IRS and DOJ remain committed to aggressively enforce our nation's tax laws regardless of how sophisticated or complicated the schemes may be.”

While BSI’s U.S. accountholders who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS’s offshore voluntary disclosure programs, the price of such disclosure has increased.

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

BSI and other banks in the Swiss Bank Program are also providing detailed information to the department about transfers of money from Switzerland to other countries.  The Tax Division and the IRS intend to follow that money to uncover additional tax evasion schemes.

The department has emphasized the importance of identifying U.S. accountholders who have undeclared foreign bank accounts, and BSI has provided assistance in that task.  Because of the information provided to the department under the program, the Tax Division has already begun the process of identifying noncompliant U.S. accountholders who have maintained accounts at many Swiss banks participating in the Swiss Bank Program. 

“Today’s action sends a clear message to anyone thinking about keeping money offshore in order to evade tax laws,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “Fighting offshore tax evasion continues to be a top priority for IRS-CI and we will trace unreported funds anywhere in the world.  IRS-CI special agents are our nation’s best financial investigators, trained to follow the money and enforce our country’s tax laws to ensure fairness for all.”

Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-CI and LB & I for their substantial assistance, as well as Trial Attorney Kevin F. Sweeney of the Tax Division, who served as lead counsel on this matter, and Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer of the Tax Division. 

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

A registered sex offender was sentenced to 10 years in federal prison today for accessing an Omaha-based child pornography website with the intent to view graphic images and videos depicting child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Deborah R. Gilg of the District of Nebraska and Special Agent in Charge Thomas R. Metz of the FBI’s Omaha Division.

David William Peer, 37, pleaded guilty on  Dec.16, 2014, to accessing with the intent to view child pornography.  Following his prison sentence, Peer will be on supervised release for a period of 15 years, during which he is required to continue to register as a sex offender, is prohibited from having unapproved contact with minors, must submit to computer monitoring and must participate in sex offender treatment.  Senior U.S. District Judge Joseph Bataillon of the District of Nebraska imposed the sentence.

During his plea hearing, Peer admitted that, in December 2012, he intentionally accessed an Omaha-based website containing thousands of images and videos depicting children, including infants and toddlers, being sexually abused. 

In 2002, Peer was convicted in federal court in the District of Utah of receiving and distributing child pornography, and he was a registered sex offender at the time of this offense.

This case is a result of investigative efforts led by the FBI’s Omaha Field Office and the FBI’s Violent Crimes against Children Section, Major Case Coordination Unit, and Digital Analysis and Research Center.  The FBI was assisted in its investigation by Europol, as well as members of the FBI’s Violent Crimes Against Children International Task Force.  This case was prosecuted by Trial Attorneys Keith Becker and Sarah Chang of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Michael P. Norris of the District of Nebraska.

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

Defendants Used Law Enforcement Credentials to Obtain Military-Grade Assault Rifles, Sniper Rifles and Other High-Powered Weapons for Smuggling to the Philippines

U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin,  Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) New York, Special Agent in Charge Craig W. Rupert of the Defense Criminal Investigative Service’s (DCIS) Northeast Field Office, Special Agent in Charge Delano A. Read of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) New York Field Division and Commissioner William J. Bratton of the New York City Police Department (NYPD) announced today that former New York City Police Officer Rex Maralit and his brother Wilfredo Maralit, a Customs and Border Protection Officer assigned to Los Angeles International Airport, were sentenced earlier today at the federal courthouse in the Eastern District of New York to each serve three years in prison to be followed by three years of supervised release for their roles in an illegal scheme to smuggle high-powered assault rifles, sniper rifles, pistols and firearms accessories from the United States to the Philippines.  The defendants pleaded guilty on June 12, 2014, before U.S. District Judge Allyne R. Ross of the Eastern District of New York to violating the Arms Export Control Act.  A third brother, Ariel Maralit, resides in the Philippines and remains a fugitive.

“These defendants violated their sworn duties to uphold the law, abusing their positions of trust to profit from the illegal export of extremely dangerous weapons,” said U.S. Attorney Lynch.  “Today’s sentences send a powerful message that criminal conduct by police officers, federal agents, and their confederates will not be tolerated, and that no one, least of all those entrusted to protect the communities and the country they serve, is above the law.” 

Between January 2009 and September 2013, the defendants exported a variety of military-style firearms, along with high-capacity magazines and accessories for those weapons, from the United States to the Philippines where they were sold to overseas customers.  Both Rex and Wilfredo Maralit used their official credentials and status to obtain and ship the weapons without first obtaining a license from the U.S. State Department.  The firearms included the Barrett .50 caliber long-range semi-automatic rifle, the FN “SCAR” assault rifle, and high-capacity FN 5.7mm semi-automatic carbines and pistols which fire a cartridge that was specifically designed to penetrate body armor.   

The Arms Export Control Act requires exporters of firearms to first obtain the approval of the U.S. State Department before shipping weapons overseas.  Similarly, dealing in firearms is regulated by ATF, which requires gun dealers to first obtain a federal firearms license before engaging in such business.

The case was investigated by HSI, DCIS, ATF and the NYPD’s Internal Affairs Bureau, with assistance provided by the U.S. Attorney’s Office of the Central District of California and the U.S. Attorney’s Office of the District of New Jersey.

The government’s case is being prosecuted by Assistant U.S. Attorneys Seth DuCharme and Sam Nitze of the Eastern District of New York, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division. 

Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division, U.S. Attorney Felicia C. Adams of the Northern District of Mississippi and Special Agent in Charge Donald Alway of the FBI Jackson Office announced today that a man was charged with federal civil rights crimes for engaging in threatening conduct directed at African American students and employees at the University of Mississippi in Oxford, Mississippi.  Graeme Phillip Harris was indicted by a federal grand jury on one count of conspiracy to violate civil rights and one count of using a threat of force to intimidate African American students because of their race or color.

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

“This shameful and ignorant act is an insult to all Americans and a violation of our most strongly-held values,” said Attorney General Eric Holder.  “No one should ever be made to feel threatened or intimidated because of what they look like or who they are.  By taking appropriate action to hold wrongdoers accountable, the Department of Justice is sending a clear message that flagrant infringements of our historic civil rights will not go unnoticed or unpunished.”

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.  The investigation is ongoing.

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

A federal grand jury late Thursday indicted a city of Madison, Alabama, police officer for using unreasonable force against a man he was attempting to question in February 2015, announced Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Joyce White Vance of the Northern District of Alabama and Special Agent in Charge Roger C. Stanton of the FBI.

The one-count indictment filed in U.S. District Court charges that Eric Sloan Parker, 26, while acting in his official capacity as a police officer on Feb. 6 in Limestone County, injured a man by slamming him to the ground.  The indictment identifies the victim only by initials, "S.P."

Parker's actions deprived the man in Madison of his right under the U.S. Constitution to be secure from unreasonable seizures, which includes the right to be free from unreasonable force by someone acting under color of law, according to the indictment.  An indictment is only an allegation and does not constitute evidence of guilt on the part of the defendant.

The FBI investigated the case.  Trial Attorney Henry C. Leventis of the Civil Rights Division and Assistant U.S. Attorneys Robert O. Posey and Russell E. Penfield of the Northern District of Alabama are prosecuting the case.

A former employee of a Las Vegas casino company was sentenced yesterday to serve 12 months and one day in federal prison, three years of supervised release and ordered to pay $351,039 in restitution to the United States for tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.  

According to the plea agreement and other court documents, from about 2005 to 2008, Anthony M. Cirulli was employed as a production manager in the corporate advertising department of Station Casinos, a company that owns several casinos in the Las Vegas area.  Part of his job involved reviewing bids for printing contracts and determining which printing companies would be awarded the contracts.  During the course of his job, Cirulli began soliciting side payments from printing companies.  He instructed the companies to pay him a percentage of the printing contract to guarantee that the companies would continue to be awarded work.  Over the course of four years, Cirulli received side payments of more than $2.1 million from these arrangements.  He concealed the payments in two different nominee bank accounts in the names of sham business entities.

“The Tax Division is committed to holding individuals accountable for their criminal conduct,” said Acting Assistant Attorney General Ciraolo.  “This prosecution and the sentence imposed on Mr. Cirulli sends a clear message that those individuals evading their federal tax obligations do so at their own peril.”

On Sept. 9, 2014, Cirulli pleaded guilty to one count of tax evasion for concealing the payments that he received from printing companies and willfully filing a false federal income tax return for 2007 that omitted the funds.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Bogden commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Christopher Maietta of the Tax Division and Assistant U.S. Attorney Nicholas Dickinson of the District of Nevada, who prosecuted the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.  Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.

Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri announced that a federal grand jury has returned a four-count indictment against former Independence, Missouri, police officer Timothy Runnels for violating the constitutional rights of a minor who was in his custody and obstructing the subsequent investigation into the incident.

According to the indictment, Runnels continuously deployed a Taser against the minor while the minor was on the ground and not posing a threat to Runnels or others.  The indictment also charges that Runnels deliberately dropped the minor headfirst onto the ground while the minor was restrained and not posing a threat to Runnels or others.  The indictment alleges that the minor sustained bodily injury as a result of Runnels’ actions and, with respect to the first count, that the offense involved the use of a dangerous weapon.  The indictment also charges Runnels with two counts of obstruction of justice for filing a false police report concerning the incident and for making a false statement to Independence Police Department investigators regarding the amount of force that he used against the minor.

If convicted, Runnels faces a statutory maximum sentence of 10 years in prison and a fine of $250,000 for each of two charged counts of civil rights violations, and a statutory maximum sentence of 20 years in prison and a fine of $250,000 for one count of obstruction of justice by submitting a false police report and one count of providing misleading information to Independence Police Department investigators.  

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the FBI’s Kansas City Division and is being prosecuted by Trial Attorney Shan Patel of the Civil Rights Division and First Assistant U.S. Attorney David Ketchmark of the Western District of Missouri.

The former chief executive officer and former managing director of a U.S. broker-dealer (the Broker-Dealer), were sentenced to prison today for their roles in a scheme to pay bribes to a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (Bandes), in return for trading business that generated more than $60 million in commissions.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.  The sentences were imposed by U.S. District Judge Denise L. Cote of the Southern District of New York.

Benito Chinea, 48, of Manalapan, New Jersey, and Joseph DeMeneses, 45, of Fairfield, Connecticut, were each sentenced to four years in prison.  They were also ordered to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme.  On Dec. 17, 2014, both defendants pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.

“These Wall Street executives orchestrated a massive bribery scheme with a corrupt official in Venezuela to illegally secure tens of millions of dollars in business for their firm,” said Assistant Attorney General Caldwell.  “The convictions and prison sentences of the CEO and Managing Director of a sophisticated Wall Street broker-dealer demonstrate that the Department of Justice will hold individuals accountable for violations of the FCPA and will pursue executives no matter where they are on the corporate ladder.”

“Benito Chinea and Joseph DeMeneses paid bribes to an officer of a state-run development bank in exchange for lucrative business she steered to their firm,” said U.S. Attorney Bharara.  “Chinea and DeMeneses profited for a time from the corrupt arrangement, but that profit has turned into prison and now they must forfeit their millions of dollars in ill-gotten gains as well as their liberty.”

Chinea, the chief executive officer, and DeMeneses, a managing director in the Broker-Dealer, admitted that they worked with others, to arrange bribe payments to the Bandes official, Maria De Los Angeles Gonzalez, in exchange for her directing Bandes’s financial trading business to the Broker-Dealer.  Previously, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (Clarke) and Jose Alejandro Hurtado (Hurtado), pleaded guilty for their involvement in this bribery scheme.  A managing director of the Broker-Dealer, Ernesto Lujan, also pleaded guilty for his role in the scheme.

Background on the Broker-Dealer and Bandes

According to court documents, and as admitted by Chinea and DeMeneses at their guilty pleas, the Broker-Dealer, which was headquartered in New York City and had offices in Miami, established a group called the Global Markets Group in 2008, which included DeMeneses, Lujan and Clarke, and which offered fixed income trading services to institutional clients.  One of the Broker-Dealer’s clients was Bandes, which operated under the direction of the Venezuelan Ministry of Finance.  The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding.  Gonzalez was an official at Bandes and oversaw the development bank’s overseas trading activity.  At her direction, Bandes conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of Bandes involved fixed income investments for which the Broker-Dealer charged Bandes a mark-up on purchases and a mark-down on sales.

The Bribery Scheme

As alleged in court documents, Chinea and DeMeneses, together with three Miami-based Broker-Dealer employees, Lujan, Clarke and Hurtado, participated in a bribery scheme that ran from late 2008 through 2012, in which Gonzalez directed trading business to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in commissions from trades with Bandes.

As further alleged in court documents, in order to conceal the scheme, payments to Gonzalez, frequently in six-figure amounts, were routed through third-parties posing as “foreign finders” and into offshore bank accounts.  In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account.  Chinea and DeMeneses admitted that they agreed to use Broker-Dealer funds to reimburse DeMeneses and Clarke for the approximately $1.5 million from their personal funds they used to bribe Gonzalez.  To conceal their true nature, Chinea and DeMeneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to DeMeneses and Clarke.

This case is being investigated by the FBI, and prosecuted by Senior Deputy Chief James Koukios and Trial Attorney Kevin R. Gingras of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York.  Assistant U.S. Attorney Carolina Fornos of the Southern District of New York is responsible for the forfeiture aspects of the case.  The U.S. Securities and Exchange Commission also assisted with this investigation.

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

One Man Arrested While Attempting to Travel Abroad; Both Chicago Area Men Spoke of Using Army Uniforms, Military Knowledge and Access to Attack Illinois Military Installation

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois and Special Agent in Charge Robert Holley of the FBI’s Chicago Division announced today that two Aurora, Illinois, men were arrested Wednesday night for allegedly conspiring to provide material support to Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.

Army National Guard Specialist Hasan Edmonds, 22, a U.S. citizen, was arrested without incident at Chicago Midway International Airport by members of the Chicago FBI’s Joint Terrorism Task Force (JTTF) while attempting to fly to Cairo, Egypt.  Jonas Edmonds, 29, a U.S. citizen, was arrested without incident at his home in Aurora.  Both defendants were charged in a criminal complaint filed yesterday in U.S. District Court of the Northern District of Illinois with one count of conspiring to provide material support and resources to a foreign terrorist organization.  The initial appearances of Hasan Edmonds and Jonas Edmonds are scheduled for today before U.S. Magistrate Judge Sheila Finnegan at 3 p.m. CST.

As alleged in the complaint, in late 2014, Hasan Edmonds came to the attention of the FBI.  The investigation subsequently revealed that he and Jonas Edmonds had devised a plan for Hasan Edmonds to travel overseas for the purpose of waging violence on behalf of ISIL.  Hasan Edmonds, a current member of the Illinois Army National Guard, planned to use his military training to fight on behalf of ISIL.  As part of their plans, Hasan Edmonds booked airline travel to depart yesterday from Chicago and arrive in Cairo today, with layovers in Detroit and Amsterdam.

As alleged in the complaint, both defendants also planned for Jonas Edmonds to carry out an act of terrorism in the United States after Hasan Edmonds departed.  In particular, both defendants met with an FBI undercover employee and presented a plan to carry out an armed attack against a U.S. military facility in northern Illinois, an installation where Hasan Edmonds had been training.  Jonas Edmonds asked the FBI undercover employee to assist in the attack and explained that they would use Hasan Edmonds’ uniforms and the information he supplied about how to access the installation and target officers for attack.

“According to the charges filed today, the defendants allegedly conspired to provide material support to ISIL and planned to travel overseas to support the terrorist organization,” said Assistant Attorney General Carlin.  “In addition, they plotted to attack members of our military within the United States.  Disturbingly, one of the defendants currently wears the same uniform of those they allegedly planned to attack.  I want to thank the many agents, analysts, and prosecutors who are responsible for disrupting the threat posed by these defendants.”

“We will pursue and prosecute with vigor those who support ISIL and its agenda of ruthless violence,” said U.S. Attorney Fardon.  “Anyone who threatens to harm our citizens and allies, whether abroad or here at home, will face the full force of justice.”

“The arrests today are the culmination of a successful investigation that involved a great deal of coordination and communication with our law enforcement and military partners,” said Special Agent in Charge Holley.  “Throughout the course of this investigation, the defendants were closely and carefully monitored to ensure the safety of the public and our service men and women.”

Conspiring to provide material support to a foreign terrorist organization carries a maximum penalty of 15 years in prison and a $250,000 fine.  If convicted, the court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The case was investigated by the FBI’s JTTF, which is comprised of special agents of the FBI, officers of the Chicago Police Department and representatives from an additional 20 federal, state and local law enforcement agencies.  Assistant Attorney General Carlin joins U.S. Attorney Fardon in extending his appreciation to the JTTF. 

U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), the Illinois State Police, the Aurora Police Department and the Illinois National Guard also provided significant assistance. 

The government is being represented by Assistant U.S. Attorneys Barry Jonas and John Kness of the Northern District of Illinois, and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.

The public is reminded that a complaint contains only charges and is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Edmonds Complaint

John A. Brommel, 53, a resident of Austin, Texas, and the owner of a taxidermy business, pleaded guilty today to violating the Lacey Act’s false labeling provision by knowingly selling horns from a black rhinoceros to non-Texas residents and falsifying the bill of sale to conceal the fact that the actual purchasers were not residents of Texas.

The guilty plea was announced by Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division of the Department of Justice, Acting U.S. Attorney Richard L. Durbin, Jr. for the Western District of Texas and Director Dan Ashe of the U.S. Fish and Wildlife Service (USFWS). 

Brommel, who has owned and operated a taxidermy shop in Austin, Texas, for more than 25 years, pleaded guilty today before U.S. District Court Judge Walter S. Smith Jr. in Waco, Texas, to a one count information charging him with making a false document in connection with interstate wildlife trafficking in violation of the Lacey Act.   

Brommel was identified as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

In papers filed in federal court, Brommel admitted to selling the horns from the shoulder mount of a black rhinoceros to a group of Irish nationals that included Michael Slattery Jr., who, on Nov. 5, 2013, pleaded guilty to conspiring with others to sell the rhinoceros horns he and his co-conspirators purchased from Brommel.  Slattery was sentenced to serve 14 months in prison on Jan. 10, 2014, in federal district court in Brooklyn, New York.  

The black rhinoceros is a herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under U.S. and international law, including the Endangered Species Act.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.

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

An executive of Japan-based Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty today and was sentenced to 18 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today. 

According to the one-count felony charge filed in U.S. District Court of the District of Maryland in Baltimore on Jan. 22, 2015, Toru Otoda, who was a general manager in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  Otoda participated in the conspiracy from at least as early as November 2010 until at least September 2012. 

Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and off of an ocean-going vessel.  Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.

“Today’s sentence reinforces our commitment to hold executives accountable for colluding to fix ocean freight prices,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “This investigation will continue as we seek to prosecute the executives who conspired and the companies that employed them.” 

“Price fixing and bid rigging are crimes most people don’t see, but they have a direct impact on everyone’s wallet,” said Special Agent in Charge Steve Vogt of the FBI’s Baltimore Field Office.  “Our goal in the FBI is to expose the back room deals and secret handshakes, and to stop the culture in some businesses that allows these crimes to take place.”

Pursuant to the plea agreement, which the court accepted today, Otoda was sentenced to serve an 18-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy.  In addition, Otoda has agreed to assist the department in its ongoing investigation into the ocean shipping industry.

Otoda was charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s sentence is the fourth against an individual in the division’s ocean shipping investigation, and the third against an individual from K-Line.  Three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including K-Line, which was sentenced to pay a criminal fine of $67.7 million. 

Today’s plea agreement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.

Defendant Used Violent Assaults and Physical Restraints to Compel Young Women to Engage in Prostitution for the Defendant’s Profit

Senior U.S. District Judge John G. Heyburn II of the Western District of Kentucky sentenced Cincinnati resident, Christopher Hisle, 45, to serve 180 months in prison and 10 years of supervised release, the Justice Department announced today.  Restitution will be determined at a future date.  Hisle pleaded guilty on Nov. 14, 2014, to sex trafficking by force, fraud and coercion, and to enticing individuals to travel in interstate commerce for prostitution and transporting individuals in interstate commerce for prostitution.

Police arrested Hisle on April 8, 2014, in Louisville, Kentucky, after he drove a young woman from Cincinnati to Louisville to engage in prostitution at a Louisville motel.  Subsequent investigation linked Hisle to the prostitution of multiple additional women in Ohio, Kentucky and elsewhere.

According to the evidence presented in court proceedings and documents filed in the case, Hisle physically assaulted several of the young women he exploited for prostitution, including striking one of the victims in the face when she threatened to run away.  In furtherance of his sex trafficking scheme, Hisle controlled the women he prostituted by various means, including boards and locks which restricted the women’s ability to exit the dwelling where Hisle housed them when he was not transporting them for prostitution.

“This defendant preyed on vulnerable young victims and cruelly exploited them for his profit,” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “This sentence sends a clear message that the United States will not tolerate modern-day slavery and will work tirelessly to restore the rights and dignity of the victims of this crime.”

“The horrors of human trafficking cause unimaginable pain, desperation and despair,” said Acting U.S. Attorney John E. Kuhn Jr. of the Western District of Kentucky.  “And the fear of violence and other reprisals all too often keep victims from reporting this heinous crime.  My office is working hard to train our law enforcement partners so that we can recognize this tragic situation and then bring justice with a solid sentence for the defendants and an order of restitution for victims.” 

“Protecting the civil rights of every individual in our community is one the FBI’s top criminal priorities,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville Office.  “We work closely with community leaders and our law enforcement partners to proactively target predators involved in human trafficking.  These women were exploited as a reusable commodity by men that forced them to participate in the sex trafficking industry.  Our agents and task force officers work tirelessly to address every civil rights allegation we receive; I am proud of the hard work they do to protect and rescue the victims that are unable to defend themselves.”

This case was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Amanda E. Gregory of the Western District of Kentucky and Trial Attorney William Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit.

Parent Company, Schlumberger Ltd., Also Agrees to Continue Cooperation With U.S. Authorities and To Hire an Independent Consultant to Review Its Sanctions Policies, Procedures and Internal Sanctions Audits

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia and Under Secretary Eric L. Hirschhorn of the U.S. Commerce Department’s Bureau of Industry and Security announced today that Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd., has agreed to enter a guilty plea and to pay a $232,708,356 penalty to the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan. 

The plea agreement, which is contingent upon the court’s approval, also requires SOHL to submit to a three-year period of corporate probation and agree to continue to cooperate with the government and not commit any additional felony violations of U.S. federal law.  In addition to SOHL’s commitments, under the plea agreement, SOHL’s parent company, Schlumberger Ltd., has also agreed to the following additional terms during the three-year term of probation, inter alia: (1) maintaining its cessation of all operations in Iran and Sudan, (2) reporting on the parent company’s compliance with sanctions, (3) responding to requests to disclose information and materials related to the parent company’s compliance with U.S. sanctions laws when requested by U.S. authorities, and (4) hiring an independent consultant to review the parent company’s internal sanctions policies and procedures and the parent company’s internal audits focused on sanctions compliance.  The guilty plea concludes a joint investigation commenced in 2009 and led by the Justice Department’s National Security Division, the U.S. Attorney’s Office for the District of Columbia and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) Dallas Field Office.

“Over a period of years, Schlumberger Oilfield Holdings Ltd. conducted business with Iran and Sudan from the United States and took steps to disguise those business dealings, thereby willfully violating the U.S. economic sanctions against those regimes,” said Assistant Attorney General Carlin.  “The International Emergency Economic Powers Act is an essential tool that the United States uses to address foreign threats to national security through the regulation of commerce.  Knowingly circumventing sanctions undermines their efficacy and has the potential to harm both U.S. national security and foreign policy objectives.  The guilty plea and significant financial penalty in this case underscore that skirting sanctions for financial gain is a risk corporations ought not take.”

“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Machen.  “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building.  For years, in a variety of ways, this foreign company facilitated trade with Iran and Sudan from Sugar Land, Texas.  Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”  

“Today's criminal guilty plea demonstrates the Commerce Department’s commitment to aggressively prosecute multinational corporations for violations involving embargoed destinations,” said Under Secretary Hirschhorn.  “We will continue to pursue violators wherever they are located and whatever their size.  I commend the Office of Export Enforcement and the Department of Justice for their outstanding efforts to investigate and prosecute this case.”

A criminal information was filed today in federal court in the District of Columbia charging SOHL with one count of knowingly and willfully conspiring to violate IEEPA.  SOHL waived the requirement of being charged by way of federal Indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees by entering into a plea agreement with the government.  The plea agreement, which is contingent upon the court’s approval, requires that SOHL pay the U.S. government $232,708,356 and enter into a three-year period of corporate probation.  SOHL’s monetary penalty includes a $77,569,452 criminal forfeiture and an additional $155,138,904 criminal fine.  The criminal fine represents the largest criminal fine in connection with an IEEPA prosecution.       

In addition to SOHL’s agreement to continue its cooperation with U.S. authorities throughout the three-year period of probation and not to engage in any felony violation of U.S. federal law, SOHL’s parent company, Schlumberger Ltd., also has agreed to continue its cooperation with U.S. authorities during the three-year period of probation, and hire an independent consultant who will review the parent company’s internal sanctions policies, procedures and company-generated sanctions audit reports.

Summary of the Criminal Conduct

According to court documents, starting on or about early 2004 and continuing through June 2010, Drilling & Measurements (D&M), a United States-based Schlumberger business segment, provided oilfield services to Schlumberger customers in Iran and Sudan through non-U.S. subsidiaries of SOHL.  Although SOHL, as a subsidiary of Schlumberger Ltd., had policies and procedures designed to ensure that D&M did not violate U.S. sanctions, SOHL failed to train its employees adequately to ensure that all U.S. persons, including non-U.S. citizens who resided in the United States while employed at D&M, complied with Schlumberger Ltd.’s sanctions policies and compliance procedures.  As a result of D&M’s lack of adherence to U.S. sanctions combined with SOHL’s failure to train properly U.S. persons and to enforce fully its policies and procedures, D&M, through the acts of employees residing in the United States, violated U.S. sanctions against Iran and Sudan by: (1) approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases; (2) making and implementing business decisions specifically concerning Iran and Sudan; and (3) providing certain technical services and expertise in order to troubleshoot mechanical failures and to sustain expensive drilling tools and related equipment in Iran and Sudan. 

The Illegal Schemes

Illegal U.S. Person Approval of Capital Expenditures.  According to court documents, one of the important functions of D&M management personnel was the supervision of D&M’s capital expenditure (CAPEX) process.  The CAPEX process was a forecasting mechanism enabling oilfield locations to predict what tools and equipment they would need to meet anticipated demand for oilfield services.  Oilfield personnel worldwide made requests through an automated system for the manufacture of new tools and for permission to spend money for certain purchases in order to support oilfield operations.  Once approved by the D&M Global Asset Manager in the United States, a request for new equipment was transmitted to one of three manufacturing centers for the production of new tools and other assets.  The spending of funds for large-scale purchases was authorized once the request was approved by the D&M Global Asset Manager.  Under the CAPEX process in place during the relevant time period, approval by the D&M Global Asset Manager, a U.S. person, was required for every CAPEX request, including requests submitted by or for the benefit of D&M oilfields in Iran and Sudan.

Consequently, D&M’s CAPEX process violated sanctions with Iran and Sudan in a number of ways.  Although CAPEX approvals were ordinarily sought through an automated computer system, D&M personnel outside the United States frequently sent emails to the D&M Global Asset Manager in the United States justifying particular requests, many of which related to requests submitted by or on behalf of Iran and Sudan.  Furthermore, in these email communications, D&M personnel outside the United States referred to Iran as “Northern Gulf” and Sudan as “Southern Egypt” or “South Egypt” in email communications with D&M personnel in the United States.

In addition, D&M personnel outside the United States implemented a process designed to disguise the identities of the embargoed locations in the automated computer system in order to obtain approval from the D&M Global Asset Manager in the United States.  Orders entered into the automated computer system were identified by a series of numbers and letters.  Typically, the alpha-numeric identifier included a two or three-letter code indicating the country that placed the order.  Instead of entering the country code for Iran or Sudan, D&M personnel entered non-embargoed country codes for embargoed location orders.  Specifically, the code “BGM,” which identified a bonded-goods warehouse in Jebel Ali, United Arab Emirates, was used in place of the Iran and Sudan country codes in order to disguise the true locations.  These efforts were deliberately taken and demonstrate the company’s involvement in contriving ways intended to evade restrictions imposed by U.S. sanctions.

D&M Headquarters Involvement in Iran and Sudan.  According to court documents, separate and apart from the illegal CAPEX approval process that violated U.S. sanctions, D&M headquarters personnel made and implemented business decisions involving D&M operations in Iran and Sudan—again, all in violation of U.S. sanctions’ restrictions on the facilitation of trade with Iran and Sudan.  D&M’s illegal involvement in the day-to-day operations in Iran and Sudan, through U.S. persons working at D&M headquarters, occurred with D&M’s knowledge and understanding of the applicability of U.S. sanctions laws to the company. 

Technical Services.  According to court documents, when technical problems arose in oilfield locations related to the operation of drilling tools, D&M personnel would enter relevant information about the technical issue into an automated computer system.  D&M’s automated computer system would generally route the query to a technical expert who could assist the oilfield location in addressing the technical issue.  If the technical issue was sufficiently complex, the query would ordinarily be routed to the technical experts located at the product center that manufactured the tool.  At times, queries entered by, or on behalf of, D&M personnel in Iran and Sudan were addressed by D&M personnel located in the United States.  The technical services provided to Iranian and Sudanese operations, by U.S. persons, violated the prohibitions of trade with Iran and Sudan required by U.S. sanctions.

SOHL and Schlumberger’s Remediation Efforts

In 2009, in consultation with the U.S. Department of State, Schlumberger agreed to no longer pursue new oilfield contracts in Iran.  In 2011, Schlumberger voluntarily decided to cease providing oilfield services in Iran and the Republic of the Sudan (North Sudan).  As of June 30, 2013, Schlumberger ceased providing oilfield services in Iran, and presently, Schlumberger has ceased providing oilfield services in North Sudan as well.

In announcing the plea, Assistant Attorney General Carlin and U.S. Attorney Machen commended the work of Special Agent Troy Shaffer from BIS’s Dallas Field Office.  They also acknowledged the work of those who handled the case from the National Security Division and the U.S. Attorney’s Office, including former Trial Attorney Ryan Fayhee and former Assistant U.S. Attorneys John Borchert and Ann H. Petalas.

The case is being prosecuted by Trial Attorney Casey Arrowood of the National Security Division, Assistant U.S. Attorney Maia L. Miller of the National Security Section and Assistant U.S. Attorney Zia Faruqui of the Asset Forfeiture and Money Laundering Section.

Schlumberger Plea Agreement

Schlumberger Statement of Offense

Schlumberger Information

A federal grand jury in the Eastern District of New York returned an indictment today charging a Brooklyn, New York, tax return preparer with 31 counts of aiding and assisting in the preparation of false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  

According to the indictment, between 2008 and 2010, Phillip Baynes operated a tax preparation business called Small Mans Accounting and Tax Service in Brooklyn.  During that time, Baynes allegedly prepared false individual income tax returns for taxpayer clients.  On the returns, Baynes falsified business expenses and losses, charitable contributions and unreimbursed employee expenses.

If convicted, Baynes faces a statutory maximum sentence of three years in prison and a fine of $250,000 on each count. 

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Mark Kotila and Brittney N. Campbell of the Tax Division, who are prosecuting the case. 

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding. 

A Minnesota National Guardsman was indicted last week for inducing a 14 year-old girl to send him nude photos over the Internet while he was deployed to Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota.

Andrew Schiller, 28, of Lakeville, Minnesota, is charged with one count of production of child pornography.  Schiller was ordered detained pending trial today by U.S. Magistrate Judge Becky R. Thorson of the District of Minnesota. 

According to allegations in the indictment and the government’s request for pretrial detention, between Sep. 23, 2013, and Jan. 12, 2014, Schiller contacted a 14 year-old girl from Minnesota via Skype.  During repeated communications with the girl, Schiller allegedly requested that she send sexually explicit photos of herself to him.  The victim allegedly sent several images in response to Schiller’s requests, including at least one sexually explicit image.  

According to additional allegations in the government’s request for pretrial detention, Schiller used various social media platforms to communicate online with dozens of girls between the ages of 13 and 17.  Among those platforms were MyLOL (“funinlife”), Skype (“thriller_a_schiller3”), Meet Me (“mnfuntimes”) and Facebook.  Schiller also allegedly used KIK, an instant messaging application for mobile devices that allows users to share photographs and other content.  After establishing online contact with the girls, Schiller allegedly directed the conversation to sexual topics and attempted to convince the girls to send sexually explicit videos or images of themselves to him.  Schiller allegedly shared sexually explicit images of himself to encourage the girls to send photographs and videos of themselves, and he sometimes promised money or alcohol in exchange for sexually explicit images or live video chats.

The charges contained in the indictment and the allegations contained in the government’s request for pretrial detention are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Anyone with additional information about this case can call the FBI Minneapolis Field Office at 763-569-8000.  If you know of any child who may have been a victim of exploitation, please call the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.

This case is being investigated by the Army Criminal Investigative Division and the FBI.  This case is being prosecuted by Trial Attorney Jeffrey H. Zeeman of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Katherine T. Buzicky of the District of Minnesota.

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

Schiller Indictment

Schiller Detention Memo

Today, a federal jury convicted a man from Lewis Center, Ohio, and his business partner of Powell, Ohio, of defrauding their company’s investors and diverting investors’ funds for their own personal use.  Preston Harrison and his wife, Lovena E. Harrison, 42, were also both convicted of conspiracy to defraud the United States and filing a false income tax return, and Lovena Harrison was convicted of structuring financial transactions to evade currency reporting requirements.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Kathy Enstrom of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Division announced the verdict reached today, which was returned following a trial that began on March 16 before U.S. District Judge Gregory L. Frost.

According to court testimony, Thomas E. Jackson, 40, of Powell, and Preston J. Harrison, 43, of Lewis Center, operated Westerville, Ohio, based Imperial Integrated Health Research and Development LLC and developed a product called OXYwater, a beverage that promoters claimed was an all-natural, vitamin-enhanced sports drink that contained added oxygen for improved physical performance.

The defendants engaged in a scheme to deceive the investors in their company about the structure, composition, finances, sales and profits of OXYwater in order to make the company appear to be a lucrative and profitable financial investment.  Jackson and Harrison produced and sent false and fraudulent documents intended to deceive investors, the ultimate purpose of such false statements being for Jackson and Preston Harrison to obtain money invested in the company.  They then misappropriated that money for their own personal use and household expenditures including the purchase of jewelry, a Cadillac Escalade, a BMW, weapons, clothing, home improvements and a swimming pool.

“This case was about the millions of dollars that the defendants stole from investors to fuel their lavish lifestyle,” said Assistant U.S. Attorney Jessica Kim in court.

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

Jackson and Preston Harrison were each convicted of one count of conspiracy to commit wire fraud, for which they face a statutory maximum sentence of 20 years in prison, and one count of conspiracy to commit money laundering, for which they face a statutory maximum sentence of 10 years in prison.  Jackson was convicted of eight counts of wire fraud, which carries a statutory maximum sentence of 20 years in prison, and 12 counts of money laundering, which carries a statutory maximum sentence of 10 years in prison.  Harrison was convicted of 12 counts of money laundering, for which he faces a statutory maximum sentence of 10 years in prison.

Preston and Lovena Harrison were both convicted of conspiracy to defraud the United States and with filing a false tax return.  Preston Harrison misappropriated approximately $1.1 million in 2011 from his company, which he and his wife, Lovena Harrison, placed in an account in the name of her daycare business.  They used the money for personal expenses and did not report the money as income on their 2011 income tax return.  Lovena Harrison was also convicted of one count of structuring financial transactions to evade currency reporting requirements.  Conspiracy to defraud the United States and structuring financial transactions to evade currency reporting requirements are each crimes with a statutory maximum sentence of five years in prison, and filing a false tax return carries a statutory maximum sentence of three years in prison.

Preston Harrison and Jackson also face potential forfeiture of $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account.

The three defendants were indicted by a grand jury on May 20, 2014.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended the cooperative investigation by the IRS-CI and FBI, as well as Assistant U.S. Attorney Jessica Kim and Trial Attorneys Andrew Young and Jason Scheff of the Tax Division, who prosecuted the case.

“Wildlife smuggling is a transnational crime that knows no borders and requires an international response,” said Assistant Attorney General Cruden.  “Cooperation between the United States and Canadian law enforcement was crucial to cracking this case.  The United States greatly appreciates the assistance of Environment Canada in bringing Guan to justice.  International law enforcement collaboration is essential if we are to prevent elephant and rhino species from being extinguished in our own lifetime.” 

“Trafficking in rhinoceros horns and elephant ivory poses a literally existential threat to these endangered or vulnerable species, who die a cruel, pointless death due to greed,” said U.S. Attorney Bharara.  “These living creatures are not among us as a source of wanton plunder. Without strict enforcement of international agreements and U.S. laws, these extraordinary animals may disappear from the face of the earth.  Tony Guan has learned the price of putting profit over the prolonged existence of rhinos and elephants.”

“The illegal trade in rhinoceros horns is the number one threat to many populations of African rhinos, and is driving the species towards extinction,” said U.S. Fish and Wildlife Director Dan Ashe.  “The wholesale slaughter of these magnificent animals in the wild is taking place so a few callous individuals can line their own pockets.  But global law enforcement cooperation through avenues such as the Fish and Wildlife Service’s Operation Crash is bringing people like Guan to justice, and we thank our Canadian and other international partners for the critical role they play in cases such as this.  Together we will end the scourge of rhino horn and other wildlife trafficking.”

“The successful outcome of this investigation, and the ongoing success of Operation Crash, is another example of the strong collaboration that exists between Environment Canada’s Enforcement Branch, the U.S. Fish and Wildlife Service, and our partners in conservation enforcement agencies across Canada and the United States,” said Chief Enforcement Officer Gord Owen of Environment Canada.

Calling it “a very serious offense” Judge Swain said that Guan “helped to feed a hot market for these goods" and further stated that the defendant's conduct “feeds demand for the slaughter of rare and already endangered species.”

According to the indictment, other documents filed in federal court and statements made at various proceedings in this case, including today’s sentencing:

Guan was arrested in March 2014, as part of “Operation Crash,” a nationwide crackdown on the illegal trafficking in rhinoceros horns, for Guan’s role in smuggling and attempting to smuggle rhinoceros horns, as well as items carved from elephant ivory and coral, from auction houses throughout the United States to Canada.

Guan, the president and owner of Bao Antiques in Richmond, British Columbia, was arrested after flying from Vancouver, Canada, to New York City and purchasing two endangered black rhinoceros horns from undercover special agents with the U.S. Fish and Wildlife Service at a storage facility in the Bronx, New York.  After purchasing the horns, Guan had the undercover agents drive him and a female accomplice acting as his interpreter to a nearby express mail store where he mailed the horns to an address in Point Roberts, Washington, less than a mile from the Canadian border and 17 miles from his business.  Guan falsely labeled the box of black rhinoceros horns as containing “handicrafts.”  Guan indicated that he had people who could drive the horns across the border and that he had done so many times before.

At the same time Guan was arrested in the United States, Canadian authorities executed a search warrant at his antique business in Richmond.  Canadian law enforcement seized various wildlife objects from the business, nine of which have been positively identified as wildlife objects purchased in the United States via a New York City-based internet auction business.  These items, made from elephant ivory and coral, were smuggled out of the Unites States and into Canada without the required declaration or Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) permits.  Some were shipped directly to Canada and others were sent, at Guan’s direction, to addresses near the U.S./Canadian border in Point Roberts.  Guan also recruited college-age family members and acquaintances to assist him with smuggling the wildlife items.  Photos of some of the smuggled wildlife artifacts are enclosed.  In addition, during the search of Guan’s business, Canadian law enforcement also discovered illegal narcotics, including approximately 50,000 ecstasy pills.        

The rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under U.S. and international law.  Since 1976, trade in rhinoceros horn has been regulated under CITES, a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.  Rhinoceros are also protected under the U.S. Endangered Species Act which further regulates trade and transport.

Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice.  A “crash” is the term for a herd of rhinoceros.  Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Janis M. Echenberg of the Southern District of New York and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.

Acting Deputy Attorney General Sally Quillian Yates released the following statement today at the opening of the U.S. Senate confirmation hearing:

“Chairman Grassley, Ranking Member Leahy and Members of the Committee, it is an honor to appear before you today.  I am very grateful for this opportunity and for President Obama’s nomination.  I would also like to thank Senator Isakson, Senator Perdue and Congressman Lewis for their kind and generous introductions.  They have led remarkable lives of service to Georgia and to our country, and I am humbled by their confidence in me.    

“It is particularly meaningful for me to appear before you today surrounded by my family – my husband Comer, my daughter Kelley and my son Quill.  I am not only grateful to all of them for their love and support, but I am also incredibly proud of each of them.  My husband Comer, a lawyer by training, followed his heart and runs a school for children with learning disabilities and children who are deaf and hard of hearing.  My daughter Kelley is in her first year as a special education teacher.  My son, Quill, is a sophomore in college where he is studying political science and environmental policy.

“My only regret is that my parents, both of whom have passed away, are not here today.  They instilled in me a love of the law and a call to public service.  I come from a long line of lawyers on both sides of my family – lawyers and Methodist preachers.  Even my grandmother was a lawyer; in fact she was one of the earliest women admitted to the Georgia Bar.  And even though she was probably the smartest one in the bunch, law firms didn’t hire many women to practice law in those days, so she was a legal secretary instead.  My father and his father before him were state appellate court judges, and they demonstrated by example that the law is an instrument for ensuring that right is done in the world.  My father died shortly before I graduated from law school, but I vividly recall him counseling me while I was in school to make sure that the work I chose when I graduated was more than just a job or a way to earn a living.  Rather, he believed that we have an obligation to use our legal education for a greater good and he encouraged me to find a path where I could make a real difference in the world.

“That path took me to the Department of Justice.  I joined the U. S. Attorney’s Office in Atlanta in the fall of 1989, and the Department of Justice has been my home ever since.  When I joined the U.S Attorney’s Office, I certainly didn’t expect that I would still be with the Department of Justice 25 years later.  But once I experienced the privilege of representing the people of the United States – of doing what I believed was right, and fair and just in every case – anything else would have felt like just a job.

“Bob Barr, then the U.S. Attorney of the Northern District of Georgia, entrusted me with my first position in the department – that of a line prosecutor.  I began the way all young prosecutors do – by investigating and trying cases; by working with agents and witnesses and victims to keep my fellow citizens safe and to ensure that those who harmed our community were held accountable.  Over time, my cases became more complex and I assumed leadership positions within the office – Chief of the Fraud and Public Corruption Section; First Assistant U.S. Attorney; and eventually the first female United States Attorney for the Northern District of Georgia.  Throughout this time, I carried with me the values instilled by my family – that the law can be an instrument for good, but only when it is applied fairly, thoughtfully and objectively.  I believe it is a credit to the institution I love that I have held leadership positions through Republican and Democratic administrations, and that I have witnessed career men and women of the department consistently following the facts and the law with great distinction and without regard to politics.

“Over the years, I have seen the department from a variety of vantage points.  I personally prosecuted public corruption, regardless of party, and led our team in holding accountable the Olympic bomber, Eric Rudolph.  As a supervisor, I have ensured that our office had the expertise, resources and focus to go after worst of the worst, whether they were international gangs, human trafficking rings or cybercriminals.  As the U.S. Attorney, I was the vice chair of the Attorney General’s Advisory Committee, and gained additional insight into the unique challenges each U.S. Attorney’s Office across the country faces—challenges that I know you each hear about from your constituents.  When the President nominated me, a career prosecutor, to be the Deputy Attorney General, it was the greatest honor that I could imagine.

“I am proud to say that in the brief period during which I have served as the Acting Deputy Attorney General, I have seen on a national scale the same skill, care and dedication in our attorneys that I knew in the Northern District of Georgia.  In taking on the day-to-day operations of the department, its $27 billion budget, and its 114,000 employees, I also understand that we face critical national security and public safety challenges.  I believe that we can work together on these challenges, and in my role as Chief Operating Officer of the department, I will be committed to ensuring that the resources Congress provides to the department are used as effectively as possible to protect public we all serve. 

“I know that several of you have served previously at the department and share my love of this great institution.  As you all know, the Department of Justice is unique among cabinet agencies; it is, and must be, independent and non-partisan.  We don’t represent an ordinary client, and as representatives of the people, we must always be governed by doing what is just.  This has been my life’s work.  And if I am fortunate enough to be confirmed, I can promise you that I will spend each and every moment guided solely by the department’s singular mission to seek justice. 

“Thank you.  I look forward to your questions.”

MTU America Inc. (MTU), a subsidiary of Rolls-Royce Power Systems AG, will implement an auditing program to ensure proper emissions testing and compliance with federal emission standards for its heavy-duty diesel non-road engines as part of a settlement to resolve alleged Clean Air Act violations, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.

The complaint filed with the settlement alleges that MTU violated the Clean Air Act by selling 895 non-road, heavy-duty diesel engines, which are used in mining, marine and power generation vehicles and equipment, without valid certificates of conformity.  EPA voided the certificates of conformity purporting to cover the engines based on improper emissions testing by MTU employees.  Under the settlement, MTU will pay a $1.2 million penalty and perform annual audits of its engine emission testing and certification activities for three years.  The audits will be conducted by an EPA-approved, third-party auditor that will monitor and evaluate compliance with Clean Air Act requirements for testing, certification, record-keeping and reporting.  MTU is also required to initiate corrective actions if the audit reveals non-compliance.

“Certificates of conformity are a critical part of EPA’s program to ensure that vehicles and engines meet Clean Air Act emissions standards,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division.  “Companies that skirt the rules in their certification testing hurt the public and their competitors.  Today’s settlement ensures that the company will adequately monitor the activities of employees involved in the certification process to prevent this kind of conduct from recurring.”

“Engines that aren’t properly certified can emit toxic pollution that aggravates asthma and other respiratory illnesses,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “This agreement requires that MTU take important steps to comply with the law, protect the public and reduce smog in our air.”

Every engine sold in or imported into the U.S. must be covered by a valid EPA-issued certificate of conformity.  When applying for a certificate of conformity, an applicant must certify to EPA that it followed appropriate testing, certification, record-keeping and reporting requirements to ensure its products will meet applicable federal emission standards to control air pollution.  Engines operating without proper emissions controls can emit excess carbon monoxide, hydrocarbons and nitrogen oxides, which can cause respiratory illness, aggravate asthma and contribute to the formation of ground-level ozone or smog.

Through information disclosed by the company, EPA discovered that MTU had obtained EPA certificates of conformity without conducting valid testing.  EPA learned that MTU had installed a catalytic converter onto its prototype engine during testing to reduce emissions of pollutants.  MTU had also performed maintenance during durability testing on the same engine, but had not reported this to EPA, a violation of testing regulations.

Selling or importing engines that are not covered by valid certificates of conformity is a violation of the Clean Air Act.  Based on MTU’s disclosures, EPA voided the certificates of conformity covering these engines on Feb. 23, 2015.  MTU violated the Clean Air Act by selling and importing the engines, which, because of the voiding, were not covered by a valid certificate of conformity as required by law.  MTU has worked with EPA to take steps to prevent these violations from occurring in the future.

This settlement is part of an ongoing effort by EPA to ensure that all vehicles and engines meet federal emission limits for harmful pollution.  The Clean Air Act requires that all vehicles have EPA-issued certificates of conformity prior to being imported or sold in the U.S. to demonstrate that they meet federal emission standards.

MTU America Inc. based in Novi, Michigan, and formerly known as Tognum America Inc. is a wholly-owned subsidiary of Rolls-Royce Power Systems AG, a German corporation. MTU manufactures non-road, off-highway engines for the North American market for locomotive, marine, construction and defense uses.

The consent decree, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and approval by the federal court.  The consent decree can be viewed at www.justice.gov/enrd/Consent_Decrees.html.

More information on the settlement: http://www2.epa.gov/enforcement/mtu-america-inc-clean-air-act-settlement

For a list of certificates of conformity voided by the EPA: http://epa.gov/otaq/motor-void.htm

The Justice Department announced today that Brisben Chimney Hills Limited Partnership and JRK Residential America LLC, the owners and the former manager of the Reserve apartment complex in Lenexa, Kansas, together with their named partner and agents, have agreed to pay $170,000 to settle a lawsuit alleging violations of the Fair Housing Act (FHA).  The lawsuit alleged that defendants instituted policies at the Reserve and at other properties in Kansas and Missouri that discriminated against families with children.  The lawsuit also alleged that a family was forced to leave the Reserve after they complained to management about the overly-restrictive policies. 

Under the proposed consent decree, which must still be approved by the U.S. District Court of Kansas, the defendants will pay $60,000 to the family that initiated the original complaint filed with the U.S. Department of Housing and Urban Development (HUD), $100,000 into a victim fund to compensate other aggrieved families and $10,000 to the United States as a civil penalty.  In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA. 

“For over twenty-five years, the Fair Housing Act has prohibited housing providers from discriminating against families with children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Many parents are already struggling to find affordable housing for their families, and they should not also have to face discrimination because they have children.”

“Kansas families with children deserve the right to live where they choose and to be free from housing discrimination,” said U.S. Attorney Barry R. Grissom of the District of Kansas.

The lawsuit, also filed today, arose from a complaint filed with HUD by a family that was living at the Reserve apartments.  The owners and operators of the Reserve instituted a policy that discriminated against families with children because it unreasonably restricted the activities of children, including a policy that required that anyone under the age of 16 be physically accompanied by an adult at all times.  After the family complained about the policy, their lease was not renewed and they were forced to leave the Reserve.  After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.  The United States’ complaint alleges that the defendants violated the family’s rights, that the restrictive policies discriminated against other families with children and that the defendants engaged in a pattern or practice of discrimination or denied rights protected by the FHA to a group of persons. 

“Overly restrictive housing policies for families with children are illegal, and prevent them from fully enjoying the place they call home,” said HUD Assistant Secretary Gustavo Velasquez of Fair Housing and Equal Opportunity.  “HUD will continue to work with the Department of Justice to take action against property owners and landlords whose policies violate the Fair Housing Act.”

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.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt.  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777.  More information about the Fair Housing Act can also be found at www.usdoj.gov/crt/housing or www.hud.gov/fairhousing.

The Justice Department announced today that it has closed its review of the Hawaii Judiciary’s Language Access Program following the department’s successful provision of technical assistance to the Hawaii Judiciary.  The department’s Federal Coordination and Compliance Section (FCS) of the Civil Rights Division began its work following the receipt of complaints raising concerns about the court system’s provision of language services to limited English proficient (LEP) individuals in state court proceedings and court operations in alleged violation of Title VI of the Civil Rights Act of 1964.  Title VI requires recipients of federal financial assistance, such as courts, to provide competent language services free of charge to LEP individuals in court proceedings and operations.  Nearly 13 percent of Hawaii’s population is LEP.

The department and the Hawaii Judiciary have worked cooperatively to effectuate a number of improvements to language services.  The judiciary’s accomplishments include: 

• Issuing a clear policy stating that all LEP individuals would be provided competent court interpretation free of charge in court proceedings, and that language services would also be provided for other court operations.

• Implementing an awareness campaign to increase the public’s knowledge on how to access the court’s language services, including the creation of multilingual outreach materials in hard copy and on the web.  It also enhanced its website to make it easier to find information about its language assistance services, and created 14 language-specific webpages that contain all of the language-specific translations in one location.

• Beginning to create a language assistance complaint system. 

• Revising its court interpreter assignment system, training interpreters and providing mandatory training for judicial staff on the interpreter assignment process.

• Implementing oversight measures to ensure that the language access program complies with Title VI.

“I commend the Hawaii Judiciary for its proactive efforts to provide all communities with equal access to justice regardless of the language they speak,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The results we are seeing in Hawaii are a testament to what collaboration and cooperation can achieve.  Hawaii knows its work is not done, and we welcome the opportunity to continue to provide assistance whenever needed.” 

The department has worked with courts across the country to improve the provision of language services to LEP individuals.  It also released “Language Access Planning and Technical Assistance Tool for Courts” last year which provides court systems with a series of questions to consider as they develop and implement plans to provide language assistance.

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

WASHINGTON – El Departamento de Justicia anunció hoy que ha finalizado su revisión del Programa de Acceso Idiomático del Poder Judicial de Hawai después de haberle brindado asistencia técnica a dicho Poder Judicial. La Sección de Coordinación  y Cumplimiento Federal [Federal Coordination and Compliance Section (FCS)] de la Sección de Derechos Civiles del departamento comenzó su trabajo después de haber recibido quejas acerca de la provisión de servicios idiomáticos a personas con conocimientos limitados del idioma inglés [Limited English Proficient (LEP)] por el sistema judicial, en procesos jurídicos estatales y procedimientos del tribunal, en supuesta violación del Título VI de la Ley de Derechos Civiles de 1964. El Título VI exige que los beneficiarios de asistencia financiera federal, tales como los tribunales, brinden sin cargo servicios idiomáticos competentes a personas LEP en procedimientos y acciones judiciales. Casi el 13 por ciento de la población de Hawai es LEP.

El departamento y el Poder Judicial de Hawai trabajaron en conjunto en realizar una serie de mejoras en los servicios idiomáticos. Los logros del Poder Judicial incluyen:

• La emisión de una política clara que indica que se les proporcionará a todas las personas LEP interpretación jurídica sin cargo en procedimientos judiciales, y que también se brindarán servicios idiomáticos para otros trámites judiciales.

• La implementación de una campaña de concientización para mejorar los conocimientos del público acerca de cómo acceder a los servicios idiomáticos del tribunal, lo que incluye la creación de materiales de extensión multilingües, tanto impresos como en Internet.  También optimizó su portal de Internet para facilitar la búsqueda de información sobre sus servicios de asistencia idiomática, y creó 14 páginas que contienen todas las traducciones a diferentes idiomas en un solo lugar.

• Comenzar a crear un sistema de quejas acerca de la asistencia idiomática. 

• La revisión de su sistema de asignación de intérpretes judiciales, capacitación de intérpretes y la provisión de capacitación obligatoria al personal judicial sobre el proceso de asignación de intérpretes.

• La implementación de medidas de supervisión para garantizar que el programa de acceso idiomático cumpla con el Título VI.

  “Felicito al Poder Judicial de Hawai por su labor proactiva de brindarles a todas las comunidades acceso a la justicia, independientemente del idioma que hablen”, señaló la Fiscal General Auxiliar (en funciones) Vanita Gupta de la División de Derechos Civiles.  “Los resultados que observamos en Hawai prueban lo que se puede lograr con la colaboración y la cooperación.   Hawai sabe que su trabajo no ha terminado, y nos complacerá tener la oportunidad de seguir brindándoles asistencia siempre que la necesiten”. 

  El departamento viene trabajando con tribunales de todo el país en mejorar el suministro de servicios idiomáticos a personas LEP.  El año pasado, lanzó también Herramienta de planificación del acceso idiomático y asistencia técnica para los Tribunales (en inglés) que les provee a los sistemas judiciales una serie de preguntas para tener en cuenta al desarrollar e implementar planes para brindar asistencia idiomática. 

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

An Anchorage, Alaska, man was convicted yesterday for sexually exploiting children in Cambodia over the course of four years and attempting to arrange a child sex tourism trip for himself and others to Cambodia, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Karen L. Loeffler of the District of Alaska. 

Jason Jayavarman, 45, was convicted of sexual exploitation of children and attempted travel with the intent to engage in illicit sexual conduct in a foreign place.  A sentencing hearing will take place before U.S. District Court Judge Sharon L. Gleason of the District of Alaska, and will be scheduled at a later date.  Jayavarman remains in custody pending sentencing.

The evidence presented at trial established that Jayavarman had produced multiple videos of himself engaging in sexual acts with a child in Cambodia over the course of 12 trips between 2010 and his arrest in 2013.  Jayavarman then transported the recordings back to the United States.

The evidence also detailed a trip that Jayavarman had planned for himself and others to Cambodia for the purpose of engaging in sexual activity with children as young as 12 years old.  Unbeknownst to Jayavarman, one of the individuals was an undercover FBI agent.  According to the evidence presented at trial, Jayavarman explained to the undercover agent how to groom a child for sex, how to avoid law enforcement and how to record high quality “mementos” of the sexual activity. 

Jayavarman’s child exploitation activities came to light following a concerned citizen’s anonymous tip.

The case was investigated by the FBI and the Anchorage Police Department.  The case was prosecuted by Trial Attorney Ravi Sinha of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Audrey J. Renschen of the District of Alaska.

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

The United States has sued a former attorney and certified public accountant to bar him from promoting and implementing tax fraud schemes and preparing tax returns for others, the Justice Department announced today. 

The lawsuit, filed in the U.S. District Court for the Southern District of California, alleges that Lawrence Preston Siegel, aka Larry Lave, Yehuda Lave and Larry Easy, falsely represented that he is a licensed attorney and CPA in order to solicit business for his tax practice. 

According to the civil injunction suit, Siegel pleaded guilty to one count of tax evasion and two counts of subscribing false tax returns in 1994.  He subsequently resigned from the California bar in 1994, lost his CPA license in 1997, and never regained either accreditation, according to the suit.  The complaint alleges that following his release from federal prison in 2001 for additional convictions, Siegel established a tax practice and stated online that he is an “[i]interesting combination of a Tax Lawyer and CPA who is also a Rabbi trained in Spirituality.”  Siegel, the complaint alleges, claimed to others that his “goal as a spiritual Rabbi, Tax Attorney and CPA is to save people money without going to jail … Everybody wants to pay very little tax, I do it legally and morally under the Torah.” 

According to the complaint, among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in Nevada and treat their California home as an out-of-state corporate office.  Siegel falsely claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the suit.  According to the complaint, Siegel boasted about this tax fraud scheme in e-mails, including one where he falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a [] month” because “[t]here is an assumption that corporations don’t waste money.”

In another scheme, Siegel falsely advises his customers to enter into sham license agreements to purportedly lease their professional skills and expertise to the out-of-state companies Siegel established for them, according to the suit.  Under these license agreements, the companies paid royalties to the customers in exchange for use of the customers’ professional skills and expertise, according to the complaint.  Siegel allegedly promoted and implemented this scheme to mischaracterize income customers received from their out-of-state companies, which is subject to employment taxes, as royalty payments, which Siegel falsely claimed as exempt from employment taxes.

The complaint alleges that, in conjunction with his tax fraud schemes, Siegel prepared customer tax returns, and in some instances, filed tax returns without obtaining his customers’ permission to file.  In preparing returns, Siegel falsely claimed customers’ personal purchases as deductible business expenses, including purchases at Tiffany & Company and Louis Vuitton, and with Royal Caribbean Cruise Lines and Princess Cruise Lines, according to the suit.  Siegel attempted to conceal these false deductions from the Internal Revenue Service (IRS) by reporting them as large expenses for “supplies” or “medical records and supplies,” according to the government’s complaint.

According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers.  Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors, and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers, according to the suit.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on their 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.

In a settlement with the United States and the states of Alabama and Oklahoma, Continental Carbon Company has agreed to install pollution control technology that will significantly cut emissions of harmful air pollutants at manufacturing facilities in Alabama, Oklahoma and Texas, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.  The settlement will resolve claims that Houston-based Continental violated the Clean Air Act by modifying their facilities in a way that caused the release of excess sulfur dioxide (SO2) and nitrogen oxide (NOx).

The settlement requires Continental to pay a civil penalty of $650,000, which will be shared with Alabama and Oklahoma, co-plaintiffs in the case.  Continental must also spend $550,000 on environmental projects to help mitigate the harmful effects of air pollution on the environment and to benefit local communities, including at least $25,000 on energy efficiency projects in the communities near each of the three facilities.

“Today’s agreement is good news for residents living near Continental facilities, many of whom were overburdened by air pollution for far too long and whose children, like all Americans, should be able to breath clean air,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division.  “The agreement also reflects our continuing efforts to vigorously enforce the Clean Air Act to protect public health and the environment.  The settlement requires Continental to control large sources of air pollution with advanced technology and requires projects that will have a direct and positive impact on Continental’s neighbors.”  

“This settlement brings another major carbon black company into compliance with a law that protects clean air for American communities,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “By investigating all 15 carbon black manufacturing plants in the U.S., EPA is committed to improving public health and leveling the playing field for companies that follow the law.  By installing the latest pollution control technology and funding environmental projects, Continental is taking steps to reduce emissions of air pollutants that can lead to serious health problems.”

Continental manufactures carbon black, a fine carbonaceous powder used in tires, plastics, rubber, inkjet toner and cosmetics, at facilities in Phenix City, Alabama, Ponca City, Oklahoma, and Sunray, Texas.  Because the oil used to make carbon black is high in sulfur, its production creates large amounts of nitrogen oxide, sulfur dioxide and particulate matter.  This settlement supports EPA’s and the Justice Department's national efforts to advance environmental justice by working to protect communities such as Phenix City and Ponca City that have been disproportionately impacted by pollution.

EPA expects that the actions required by the settlement will reduce harmful emissions by approximately 6,278 tons per year of sulfur dioxide and 1,590 tons per year of nitrogen oxide.  Continental estimates that it will spend about $98 million to implement the required measures.  The pollution reductions will be achieved through the installation, upgrade and operation of state-of-the-art pollution control devices designed to reduce emissions and protect public health.

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

EPA concluded that the modifications made at Continental’s plants violated the Clean Air Act based on information the company submitted in response to an information request from EPA in 2007.  EPA issued notices of violation to Continental for these claims in 2012.

The settlement was filed with the U.S. District Court of the Western District of Oklahoma and is subject to a 30 day public comment period.  The company is required to pay the penalty within 30 days after the court approves the settlement.

The consent decree is available for review at http://www.justice.gov/enrd/Consent_Decrees.html.

This settlement is part of EPA’s National Enforcement Initiative to control harmful emissions from large sources of pollution.  Through the initiative, EPA investigated all 15 of the carbon black plants in the U.S. for violations of the Clean Air Act’s Prevention of Significant Deterioration requirements.  With this settlement, six of the 15 facilities will be covered by consent decrees with EPA.  In 2013, EPA announced the first national carbon black settlement with Boston-based Cabot Corporation, the second largest carbon black manufacturer in the United States.

More on the settlement: http://www2.epa.gov/enforcement/continental-carbon-company-clean-air-act-settlement.

A Detroit-area medical doctor who referred Medicare beneficiaries for home health services in exchange for illegal cash kickbacks as part of a $3.6 million home health care fraud scheme pleaded guilty today for his role in the scheme. 

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

Kutub Mesiwala, 64, of Bloomfield Hills, Michigan, pleaded guilty before U.S. District Judge George Caram Steeh of the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  A sentencing hearing is set for Oct. 5, 2015. 

According to admissions in his plea agreement, Mesiwala referred patients to Detroit-area home health agency Advance Home Health Care Services Inc. (Advance) and other home health care agencies in exchange for cash kickbacks.  Advance’s owner, Amer Ehsan, pleaded guilty on July 24, 2014, to fraudulently billing Medicare for $3.6 million in home health services that were not medically necessary or not provided through Advance.  Ehsan is awaiting sentencing.

Mesiwala admitted that Medicare paid a total of $770,668.31 to Advance and $118,375.81 to other home health care companies for fraudulent claims based on his referrals.

This case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  This case is being prosecuted by Trial Attorney Katharine A. Wagner of the 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.

A former senior derivatives trader at the London desk for Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) pleaded guilty today in U.S. federal court for his role in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR), a benchmark interest rate.

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.

Lee Stewart, 51, of London appeared in the Southern District of New York before United States District Judge Jed S. Rakoff and pleaded guilty to one count of conspiracy to commit wire and bank fraud.  A sentencing hearing is scheduled for June 9, 2017.

At the time relevant to the charges, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believed they would be charged if borrowing from other banks.  It served as the primary benchmark for short-term interest rates globally and was used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  LIBOR was published by the British Bankers’ Association, a trade association based in London, and was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for U.S. Dollar and Yen currency for a specific maturity was the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank. 

According to admissions made in connection with his guilty plea, Stewart worked as a senior derivatives trader at Rabobank’s London desk from 1993 to 2009, and entered into derivative contracts involving interest rate swaps linked to the U.S. Dollar LIBOR rate.  Stewart admitted that from May 2006 through early 2011, he conspired with others at Rabobank to manipulate the LIBOR benchmark interest rate, which was tied to the profitability of interest rate derivative trades entered into by Rabobank traders.

The investigation is being conducted by special agents, forensic accountants and intelligence analysts in the FBI’s Washington Field Office.  The prosecution is being handled by Senior Litigation Counsel Carol L. Sipperly and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antitrust Division.  The Criminal Division’s Office of International Affairs has provided assistance in this matter.

The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad.  The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation.  The Securities and Exchange Commission also has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of conduct at Rabobank.  Various agencies and enforcement authorities from other nations 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.  

The former principal vice president of Bechtel Corporation and general manager of a joint venture operated by Bechtel and an Egyptian utility company was sentenced today to 42 months in prison for accepting $5.2 million in kickbacks to manipulate the competitive bidding process for state-run power contracts in Egypt.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office made the announcement.

Asem Elgawhary, 73, of Potomac, Maryland, pleaded guilty on Dec. 4, 2014, to mail fraud, conspiracy to commit money laundering, and obstruction and interference with the administration of the tax laws.  In imposing sentence today, U.S. District Judge Deborah K. Chasanow of the District of Maryland also ordered Elgawhary to forfeit $5.2 million.

From 1996 to 2011, Elgawhary was assigned by Bechtel—a U.S. corporation engaged in engineering, construction and project management—to be the general manager at Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company, known as EEHC.  PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC.  According to his plea agreement, Elgawhary admitted to accepting a total of $5.2 million from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process.  One of the power companies, Alstom S.A., together with a Swiss subsidiary, pleaded guilty on Dec. 22, 2014, to violations of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay bribes to foreign officials, including Elgawhary, in various countries.  

As Elgawhary admitted in his plea agreement, he attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts, including Swiss bank accounts, under his control.  Elgawhary also sent various documents and “Representation Letters” to Bechtel executives and members of the PGESCo Board of Directors, falsely certifying that he had no knowledge or suspicion of any fraud at PGESCo, and that there were no possible violations of law or regulations that should have been considered for disclosure in PGESCo’s financial statements.  Elgawhary also admitted that, in a further attempt to conceal the scheme, he made misrepresentations to counsel for Bechtel when he was interviewed in April 2011.

Elgawhary further admitted to obstructing and interfering with tax laws by failing to report any of the kickback payments as income for the tax years 2008 through 2011 and providing false information about foreign bank accounts.

Elgawhary, a dual U.S. and Egyptian citizen, was arrested on a criminal complaint when he flew into the United States on Nov. 26, 2013, and was indicted on Feb. 10, 2014.  

The case was investigated by the FBI’s Baltimore Division and IRS-CI’s Washington D.C. Field Office.  Significant assistance was provided by the Criminal Division’s Office of International Affairs, and law enforcement counterparts in Switzerland, Germany, Italy, Saudi Arabia and Cyprus.  The case was prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David I. Salem of the District of Maryland.    

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

Fireman’s Fund Insurance Company has agreed to pay $44 million to settle allegations under the False Claims Act that it knowingly issued insurance policies that were ineligible under the U.S. Department of Agriculture’s (USDA) federal crop insurance program and falsified documents, the Justice Department announced today.  Fireman’s Fund, an Allianz SE subsidiary headquartered in Novato, California, provides personal and commercial property insurance throughout the United States.

“Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters,” said Acting Assistant Attorney General Benjamin C. Mizer of the Department’s Civil Division.  “The Department of Justice will continue aggressively to pursue those who abuse this important program.” 

Between 1999 and 2002, Fireman’s Fund operated a crop insurance business and participated in the federal crop insurance program.  Under the program, Fireman’s Fund sold and serviced crop insurance policies that were reinsured by the USDA for a portion of the risks.

The United States alleged that between Jan. 1, 1999, and Dec. 31, 2002, Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance.  Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines.  The policies were issued by Fireman’s Fund offices in Modesto, California; Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas. 

“Today's announcement shows how working alongside our partners in law enforcement, we will ensure the integrity of the crop insurance program for American taxpayers and producers alike,” said Risk Management Agency Administrator Brandon Willis of the USDA.

The settlement resulted from a coordinated investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office in the Western District of North Carolina and the USDA’s Office of Inspector General, Office of Investigations, Office of General Counsel, and Risk Management Agency, including its Special Investigations Branch.  The claims settled by this agreement are allegations only, and there has been no determination of liability.