District Not Recorded

Two West Bloomfield, Michigan, residents and Detroit-area business owners pleaded guilty today in the U.S. District Court for the Eastern District of Michigan in Detroit to one count of filing a false federal income tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

According to the court filings, Todd and Stephen Schlussel each filed a false 2008 tax return that failed to report a significant amount of income.  The unreported income was from several Detroit-area businesses that they operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Phoenix Office Plaza-II LLC, the Lumber Company and FS Investments LLC.

U.S. District Judge Arthur J. Tarnow scheduled sentencing for Sept. 28.  Both face a statutory maximum sentence of three years in prison and a fine of up to $250,000. 

Acting Assistant Attorney General Ciraolo commended special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of Michigan for their assistance on the case.

Office of Community Oriented Policing Services Releases 48 Findings and 91 Recommendations to Implement Best Practices at the Philadelphia Police Department

Note: The report, Collaborative Reform Initiative—An Assessment of Deadly Force in the Philadelphia Police Department can be found HERE on the COPS Office website.

The Department of Justice’s Office of Community Oriented Policing Services (COPS Office) today announced the release of its initial report on the Philadelphia Police Department’s use of deadly force policies and practices.

In 2013, in response to an increase in officer-involved shootings, Philadelphia Police Commissioner Charles Ramsey requested technical assistance from the COPS Office.  Launched in November 2013, the Collaborative Reform Initiative in Philadelphia focuses on the use of deadly force over a seven-year period.

“I applaud Commissioner Ramsey for stepping forward to take a more critical look at the use of force policies and practices within the Philadelphia Police Department,” said COPS Office Director Ronald Davis.  “Through enhanced training, improved transparency of deadly force investigations, and strengthened use of force review processes, I am confident the Philadelphia Police Department will see great improvement to its law enforcement policies.  The recommendations presented today benefit not only this department, but can serve as a guide for other police agencies across the country facing similar challenges.”  

The COPS Office’s training and technical assistance provider for the assessment, CNA, reviewed hundreds of departmental policies, manuals and training plans; conducted 164 interviews with community members and department civilian and sworn personnel; facilitated focus groups with city and department stakeholders; and directly observed operations, including the use of force review board hearings of 20 officer-involved shooting incidents.

Through its 48 findings, the assessment identifies serious deficiencies in the department’s use of force policies and training, including a failure to maintain a certified field training program; deficient, inconsistent supervision and operational control of officer-involved shooting investigations and crime scenes; and oversight and accountability practices in need of improvement, the most notable being the need for the department to fully cooperate with the Police Advisory Commission.

To address these issues, the report prescribes 91 recommendations to help the department improve with respect to the use of force and implement industry best practices.  The COPS Office will work with the Philadelphia Police Department over the next 18 months to help them implement these recommendations and will provide two progress reports during this time.

The report, Collaborative Reform Initiative—An Assessment of Deadly Force in the Philadelphia Police Department can be found on the COPS Office website.

The assessment was administered as part of the COPS Office's Collaborative Reform Initiative for Technical Assistance, designed to provide technical assistance to agencies facing significant law enforcement-related issues.  Using subject matter experts, interviews and direct observations, as well as conducting extensive research and analysis, the COPS Office assists law enforcement agencies with enhancing and improving their policies and procedures, their operating systems and their professional culture.  The COPS Office can issue a series of recommendations and be instrumental in assisting agencies with the implementation of those recommendations.

The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 126,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about COPS, please visit the COPS Office website.

Attorney General Eric Holder released the following statement on the departure of Director B. Todd Jones of the Bureau of Alcohol, Tobacco, Firearms and Explosives:

“Throughout his tenure as Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Todd Jones has cemented his reputation as an exemplary leader, a consummate professional, and an outstanding public servant.  Since 2011, when I asked Todd to serve as Acting Director of ATF, he has made bold changes, advanced forward-looking policies, and taken innovative steps to strengthen ATF’s investigative capabilities—including ballistic imaging technology that recently played a critical role in the investigation of the shooting of two police officers.  With his guidance, ATF has implemented its Frontline business model—a data-driven approach designed to ensure the agency can focus its resources to achieve maximum impact.  The agency has developed groundbreaking law enforcement initiatives across the country to combat violent crime and bring dangerous criminals to justice.  And as a result of Todd’s leadership, ATF has built a proactive, creative, and effective team that is well-prepared to drive the agency into the future.

“As a former officer in the United States Marine Corps, a highly talented prosecutor, and a proven leader who has been named a U.S. Attorney by two different presidents, Todd Jones has never hesitated to answer the call to serve his community and his country with exceptional integrity and uncommon distinction.  As the first ever Senate-confirmed Director of ATF, his indelible legacy will serve as an inspiring example for all those who follow him.  On behalf of the Department of Justice, I thank him for his extraordinary service and wish him all the best as he takes the next steps in his already remarkable career.”

A jury in federal court in Los Angeles convicted the former owner of a durable medical equipment supply company of health care fraud charges in connection with a $3.5 million Medicare and Medi-Cal fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office, and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Sylvia Walter-Eze, 48, of Stevenson Ranch, California, was convicted of one count of conspiracy to commit health care fraud, four counts of health care fraud, and one count of conspiracy to pay and receive illegal kickbacks.  Sentencing is scheduled for June 15, 2015, before U.S. District Judge R. Gary Klausner of the Central District of California.

The evidence at trial demonstrated that Walter-Eze, the then-owner of Ezcor Medical Supply, paid illegal kickbacks to patient recruiters in exchange for patient referrals.  The evidence further showed that Walter-Eze paid kickbacks to physicians for fraudulent prescriptions, primarily for medically unnecessary—but expensive—power wheelchairs, that she then used to support her fraudulent bills to Medicare and Medi-Cal.

Between 2007 and 2012, Walter-Eze submitted $3,521,786 in claims to Medicare and Medi-Cal, and received $1,939,529 in reimbursement for those claims.

The case was investigated by the FBI, HHS-OIG’s Los Angeles Regional Office and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A federal jury in Los Angeles found the owner of a medical supply company guilty of four counts of health care fraud today in connection with a $3.3 million Medicare fraud scheme.

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

Hakop Gambaryan, 55, of East Hollywood, the owner of Colonial Medical Supply, was convicted of four counts of health care fraud.  A sentencing hearing will take place before U.S. District Judge Otis D. Wright II of the Central District of California, and will be scheduled at a later date.

According to evidence presented at trial, between March 2006 and December 2012, Gambaryan paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive power wheelchairs, which the patients did not need.  Gambaryan then used these prescriptions to bill Medicare for the unnecessary power wheelchairs and other equipment. 

At trial, the evidence established that Gambaryan personally delivered power wheelchairs to many beneficiaries who were able to walk without assistance.  In one instance, Gambaryan carried a power wheelchair up a flight of stairs for a woman who lived in a second floor apartment with no elevator.  In another instance, the power wheelchair would not fit inside the beneficiary’s home so Gambaryan put it in the beneficiary’s garage.

The evidence also demonstrated that Gambaryan generated false documentation to support the fraudulent claims, including fake home assessments that made it appear home assessments had occurred when they had not.  In addition, Gambaryan photocopied beneficiary signatures hundreds of times to create the appearance that the beneficiaries consented to ongoing durable medical equipment rentals, when in reality, at least two of the beneficiaries had passed away prior to the date they supposedly signed the rental agreements.    

The evidence showed that Gambaryan submitted approximately $3.3 million in false and fraudulent claims to Medicare, and received more than $1.7 million on those claims.

The case was investigated by the FBI and HHS-OIG.  The case is being prosecuted by Trial Attorneys Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A federal grand jury in Raleigh, North Carolina, returned a one-count indictment against a real estate investor, charging him with conspiracy to commit mail fraud as part of a scheme related to public real estate foreclosure auctions, the Department of Justice announced today.

The indictment, filed in U.S. District Court of the Eastern District of North Carolina on March 18, 2015, charges real estate investor Rodney S. Daw, of Raleigh, with conspiracy to commit mail fraud affecting a financial institution.  The department alleged that the scheme defrauded homeowners, financial institutions and others with a legal interest in selected foreclosure properties, for the unlawful purpose of obtaining money and property through fraudulent pretenses, representations or promises.

The indictment charges Daw with conspiring with others to, among other things, make and receive payoffs from co-conspirators in exchange for agreements not to compete in public auctions, and to divert money away from homeowners, financial institutions and others with a legal interest in selected properties.  Several financial institutions suffered actual monetary losses as a result of the conspiracy.  According to the indictment, Daw participated in the mail fraud conspiracy beginning at least as early as December 2002 and continuing until at least April 2005.

“This action marks the fourth state in which a defendant has been indicted in our ongoing investigation into illegal conduct at public real estate foreclosure auctions,” said Assistant Attorney General Bill Baer of the Antitrust Division.  “We will continue to vigorously pursue those individuals who sought to capitalize on this nation’s financial crisis by seeking personal gain at the expense of homeowners and financial institutions.”

“This federal indictment illustrates the FBI’s commitment toward assisting the U.S. Department of Justice’s Antitrust Division in ensuring that those who engage in real estate investments and transactions do so on a level playing field,” said Special Agency in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.  “The FBI asks that anyone with information regarding such activities as alleged in this indictment contact their nearest FBI field office.”

To date, two individuals have pleaded guilty in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes in the North Carolina real estate foreclosure auction industry. 

The charge of conspiracy to commit mail fraud affecting a financial institution carries a maximum penalty of 30 years in prison and a $1 million fine.

This charge stems from an ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Field Office, with the assistance of the U.S. Attorney’s Office of the Eastern District of North Carolina.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in North Carolina should contact the Washington Criminal II Section of the Antitrust Division at 202-598-2507, or visit www.justice.gov/atr/contact/newcase.htm.

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

The Department of Justice today announced a settlement agreement between the United States, the Greenbrier Village Homeowner’s Association Inc. (Greenbrier), Gassen Company Inc. (Gassen) and an individual Gassen employee to resolve a lawsuit filed on Nov. 25, 2013.  The lawsuit alleged that Greenbrier and Gassen unlawfully discriminated against residents with children by issuing and enforcing rules regarding the use of common areas at the Condominiums of Greenbrier Village.  The settlement includes a commitment from Greenbrier to establish a new non-discrimination policy in accordance with the Fair Housing Act, pay a $10,000 penalty to the United States and pay $100,000 to six families that suffered as a result of the discrimination.

“The Fair Housing Act prohibits housing providers from discriminating against families with children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “This means more than just allowing those families to live at the property.  It means giving these families fair access to the common areas and amenities.”

“Housing discrimination has no place in Minnesota,” said U.S. Attorney Andrew M. Luger of the District of Minnesota.  “This case reaffirms the long-held principle of our civil rights laws that families come in all shapes and sizes. Arbitrary rules that restrict the rights of children to enjoy the places where they live are not acceptable.”

“Families with children have the right to live in condos that don’t meet federal requirements to qualify as housing for older persons,” said HUD Assistant Secretary Gustavo Velasquez for Fair Housing and Equal Opportunity.  “HUD is sending a clear message to homeowners associations and management companies that they must comply with the Fair Housing Act.”

According to the settlement agreement and documents filed in court, Greenbrier and Gassen allegedly engaged in a pattern of discrimination by creating and enforcing rules in a manner that prevented children from equal enjoyment of common areas and making statements that indicated a preference against families with children.  The United States alleged that the defendants  required children to be supervised at all times when in  a common area, prohibited or unreasonably restricted children from using the common areas and selectively enforced the common area rules by issuing warnings and violation notices to residents with children, but not to adult residents engaging in the same activities.

According to the settlement agreement, at least six families suffered as a result of Greenbrier and Gassen’s alleged discrimination.  Greenbrier agreed to a financial settlement with each of the families, totaling $100,000.  Greenbrier will also adopt and implement a new anti-discrimination policy, its board members and staff will undergo training on the Fair Housing Act, with a specific emphasis on discrimination on the basis of familial status, and Greenbrier will pay a civil penalty to the United States.

Attorneys from the Civil Rights Division and Assistant U.S. Attorneys Bahram Samie and Ana Voss of the District of Minnesota handled this matter for the United States.

U.S. Attorney Luger thanked HUD’s Office of Fair Housing and Equal Opportunity for assisting in the investigation.

The former global head of liquidity and finance for Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) has waived extradition and appeared in U.S. federal court today for an arraignment on charges related to his alleged 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.

Anthony Allen, 43, of Hertsfordshire, England, appeared in the Southern District of New York and pleaded not guilty to a superseding indictment charging him with conspiracy to commit wire and bank fraud and substantive counts of wire fraud.  The court released Allen on a $500,000 bond and set a trial date for Oct. 5, 2015.

According to the superseding indictment, 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 serves as the primary benchmark for short-term interest rates globally and is 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 (BBA), a trade association based in London.  LIBOR 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 allegations in the superseding indictment, Allen, who was Rabobank’s Global Head of Liquidity & Finance and the manager of the company’s money market desk in London, put in place a system in which Rabobank employees who traded in derivative products linked to USD and Yen LIBOR regularly communicated their trading positions to Rabobank’s LIBOR submitters, who submitted Rabobank’s LIBOR contributions to the BBA.  Rabobank traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they allegedly asked others at Rabobank to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions.   

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

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 the Criminal Division’s Fraud Section and 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 Department of Justice today filed a stipulation of settlement resolving civil claims against Washakie Renewable Energy LLC (Washakie) for violations of the Renewable Fuel Program under the Clean Air Act.  The stipulation of settlement was filed in the U.S. District Court of the District of Columbia.  A complaint stating the government’s claims was filed at the same time, announced Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Assistant Administrator Cynthia Giles for the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance.

From January to October of 2010, Washakie generated more than 7.2 million renewable identification numbers (RINs) based upon its production of biodiesel at its Plymouth, Utah, facility.  During that time period, however, Washakie did not produce any biodiesel - at the Plymouth facility or anywhere else.  The biodiesel associated with the 7.2 million RINs would have accounted for a reduction of emissions equivalent to more than 30,000 metric tons of carbon dioxide. 

The stipulation of settlement requires Washakie to pay a civil penalty of $3 million.  In addition to the penalty, Washakie has already retired more than 7.2 million RINs by purchasing RINs from other parties.  By doing this, Washakie tried to correct the problem it created by putting invalid RINs on the market.  In order to protect the program's integrity and maintain a level playing field for regulated companies, EPA is pursuing enforcement actions against renewable fuel producers and importers that generated invalid RINs.  

“The defendant made quite a profit by failing to adhere to the requirements of the Renewable Fuel Program regulations,” said Assistant Attorney General Cruden.  “The penalty here sends the message that renewable fuel producers will be held accountable for meeting all legal requirements.  The Department of Justice remains committed to taking the profit out of illegal activity.”

“This case is another example of the EPA’s commitment to maintain the integrity of the Renewable Fuel Standard program,” said Assistant Administrator Giles.  “Making sure producers are supporting their claims with production of actual renewable fuels is critical to reducing greenhouse gas emissions that are fueling climate change.”

The Energy Independence and Security Act of 2007 expanded and strengthened the Renewable Fuel Program to encourage the blending of renewable fuels into the motor vehicle fuel supply of the U.S. and thereby reduce the nation’s dependence on foreign oil, help grow the renewable energy industry in the United States, and achieve significant greenhouse gas reductions.   Authorized renewable fuels producers and importers could generate and attach credits – known as “renewable identification numbers” or “RINs” – to renewable fuels, such as biodiesel, that they produced or imported.  Fossil fuel refiners and importers are obligated to obtain RINs each year according to the volume of fossil fuels that they put on the market.  These “obligated parties” must purchase RINs or produce them themselves and they are responsible for the acquisition of valid RINs to meet their renewable fuel quotas.  If transferred RINs are invalid, the transferees are liable for failing to satisfy their obligations.  Because certain companies need RINs to comply with regulatory obligations, RINs have market value.  A RIN is invalid if it incorrectly identifies, among other things, the production facility, or the type of fuel produced, or the volume of fuel produced and the regulations prohibit the transfer of invalid RINs. 

Washakie registered with the EPA as a renewable fuel producer under the Renewable Fuel Regulations and identified its facility in Plymouth as a renewable fuel production facility.  EPA initially discovered these violations during an inspection of Washakie’s Plymouth facility in 2010.  EPA uncovered additional information concerning the violations in Washakie’s response to information requests and further investigation.  There is no evidence that Washakie produced any biodiesel anywhere during the period covered by the complaint.

To read the settlement, or for more information about the case, visit: ­­­­­­­­­­­­­­­­­­­­­­­­­ http://www2.epa.gov/enforcement/washakie-renewable-energy-llc-clean-air-act-settlement

For more information on the Renewable Fuel Standards, visit: http://www2.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program

During this tax-filing season, the Justice Department announced today the results of its ongoing efforts to combat fraudulent tax return preparers and promoters of tax fraud schemes.  The department’s Tax Division has an active program to stop fraudulent return preparers and promoters from violating federal tax laws, particularly where the fraudulent activity can harm individual customers or drain the U.S. Treasury.

According to available Internal Revenue Service (IRS) statistics, taxpayers filed approximately 145 million individual income tax returns in 2014, with more than 84 million individuals using a paid tax return preparer.  The division’s civil enforcement efforts have been directed against both large-scale return preparation franchises and smaller, independent return preparers and promoters.  Last year, the Tax Division obtained permanent injunctions against more than 40 preparers, promoters and businesses operating all over the United States.

“In 2014, the Tax Division continued its pursuit of tax return preparers and promoters who violate the tax laws through abusive schemes and scams, and take advantage of their customers,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division.  “The division’s attorneys and staff, along with our colleagues in the IRS, are committed to identifying, enjoining, and where appropriate, prosecuting those individuals who engage in such conduct.”

Preparers

As in past years, the IRS has again designated return preparer fraud as one of the “Dirty Dozen” tax scams to avoid during return filing season.  The Tax Division took action in 2014 against preparers to curb some of the most common types of return preparation fraud:

Your refund should never be deposited directly into a preparer’s bank account.

In United States v. Nevers (E.D. La), the court barred a return preparer from preparing returns after she deposited refunds into her own account and took a cut before remitting the balance to customers, among other things.

Do not use a preparer who is willing to electronically file your return using your last pay stub instead of your W-2.  

In United States v. Instant Tax Service, et al. (S.D. Ohio) the Court of Appeals for the Sixth Circuit affirmed the favorable district court judgment that shut down ITS Financial LLC, because of its pay stub filing and other predatory and fraudulent practices.  Before being shut down, the Instant Tax Service franchise claimed it was the fourth largest tax-return-preparer franchisor in the United States.  In affirming the district court’s relief, the Sixth Circuit noted “that Congress provided a broad grant of authority” to stop predatory and other harmful tax preparation practices.

Do not use a preparer who fabricates business expenses or deductions, or who claims bogus credits you may not be entitled to claim (i.e. Earned Income Tax Credit (EITC), child care, education credits).

The Tax Division secured injunctions in many cases, including United States v. Almanza (E.D. Pa.) in which the preparer claimed bogus additional child tax credit on returns and United States v. Branson (S.D. Miss.) in which the preparer claimed false EITCs and education credits.  In Branson, more than 99 percent of the 2,400 returns prepared sought a refund, and 97 percent of the returns audited understated the customer’s tax liability by an average of $5,000.

Some other fraudulent schemes and practices that have been stopped through injunction orders entered by federal courts throughout the country include:

•           preparing phony tax-return forms with fabricated businesses and income;

•           claiming false education and homebuyer credits;

•           claiming false and inflated deductions;

•           claiming false filing status and false dependents;

•           filing tax returns without customer consent or authorization;

•           preparing bogus W-2 Forms based on information from employee paystubs;

•           falsifying return information to claim inflated EITCs;

•           preparing tax returns but failing to sign them as required; and

•           defrauding customers by charging exorbitant fees.   

Federal courts across the country — in Florida; Pittsburgh; Philadelphia; Memphis, Tennessee; Fresno, California; Waco and San Antonio, Texas; Montgomery, Alabama; New Orleans; Mississippi, and Georgia — have similarly stopped abusive tax return preparers from continuing their harmful conduct.

In September 2014, the division filed eight injunction suits in Florida to bar Walner G. Gachette, the founder of Orlando-based tax preparation company LBS Tax Services, seven LBS Tax Services franchisees and three LBS Tax Services managers from owning, operating or franchising a tax return preparation business and preparing tax returns for others.  These cases also seek disgorgement from the defendants of the tax-preparation fees they charged their customers.  According to the complaints, in 2013, LBS Tax Services operated at least 239 stores (192 owned by the named defendants) in Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina, Tennessee and Texas.  In February 2015, a federal court in Orlando permanently barred two managers from preparing tax returns for others and from owning or operating a tax return preparation business.

Promoters

In addition to combating fraudulent return preparation, the division also filed suits in 2014 to enjoin promoters of fraudulent tax schemes, including Kenneth Elliott and Sea Nine Associates Inc., who promoted a purportedly legal welfare benefit plan.  According to the division’s complaint, Elliott promoted plans that illegally permitted customers to claim substantial tax deductions for their plan contributions, then later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased with plan contributions, costing the U.S. Treasury in the process.  The division obtained injunctions against Elliott and Sea Nine from promoting and selling the welfare benefit scheme.

In July 2014, the division filed suit in Chicago against Victor Crown and his various business entities to enjoin them from promoting false withholding and net-operating-loss tax schemes.  According to the complaint, Crown prepares federal income tax returns and other documents that claim false amounts of income tax withheld from his customers’ earnings, and that they are entitled to claim bogus net-operating-losses because his customers sought, but did not receive, full award amounts for a separate class-action suit.  Crown’s claims lack merit, according to the suit, because an employee is not entitled to claim an income tax withholding credit for more than the amount of income taxes actually withheld from their wages, and because nothing in the Internal Revenue Code permits a taxpayer to deduct the amount of a denied claim as a net operating loss.

In the past decade, the Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters.  Information about these cases is available on the division’s website.

As noted, in addition to the civil enforcement through injunctions that stop their illegal actions, many return preparers and promoters also face prosecution.  Examples of those investigations can be found for fiscal years 2014 and 2015.

The IRS advises taxpayers who may select a tax professional to prepare their return to be careful in their selection.  The IRS offers some basic tips and guidelines to assist taxpayers in choosing a reputable tax professional and is also offering taxpayers a number of instructional YouTube videos to help them prepare their own taxes for the upcoming filing season.  Several options, including free assistance with preparation and electronic filing for the elderly and individuals making $50,000 or less, are available to help taxpayers prepare for the current tax season and receive their refunds as easily as possible.

St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.

The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York;  and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.

If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.  

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.

A former resident of North Bellmore, New York, pleaded guilty today in the U.S. District Court for the Eastern District of New York in Long Island to one count of tax evasion and one count of filing a false federal income tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the indictment, Dominick Pannitti, 38, was head of operations at a securities brokerage firm located in Syosset, New York.  The brokerage firm used an automated system designed to adjust customers’ trading accounts for amounts less than $1,000.  During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts–set up in the name of a corporation that he owned–more than 850 times in increments of less than $1,000.  Pannitti was not entitled to most of these credits, which totaled more than $570,000.  Pannitti failed to report the income on his 2005 and 2006 federal income tax returns.

Pannitti faces a statutory maximum sentence of five years in prison and up to a $250,000 fine for the tax evasion count and a statutory maximum sentence of three years in prison and up to a $250,000 fine for the false return count at his sentencing before U.S. District Judge Arthur D. Spatt.

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

Administration Recovers $7.70 for Every Dollar Spent on Health Care-Related Fraud and Abuse

More than $27.8 billion has been returned to the Medicare Trust Fund over the life of the Health Care Fraud and Abuse Control (HCFAC) Program, Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell announced today.  The government’s health care fraud prevention and enforcement efforts recovered $3.3 billion in taxpayer dollars in Fiscal Year (FY) 2014 from individuals and companies who attempted to defraud federal health programs, including programs serving seniors, persons with disabilities or those with low incomes.  For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70.  This is about $2 higher than the average return on investment in the HCFAC program since it was created in 1997.  It is also the third highest return on investment in the life of the program. 

“As the innovative and collaborative work of the Health Care Fraud and Abuse Control Program proceeds, more taxpayer money is being recovered, more criminals are facing justice, and more fraud is being punished, prevented and deterred,” said Attorney General Eric Holder.  “The extraordinary return on investment we've obtained speaks to the skill, the tenacity, and the inspiring success of the hardworking men and women fighting on behalf of the American people.  And with these outstanding results, we are sending the unmistakable message that we will not waver in our mission to pursue fraud, to protect vulnerable communities, and to preserve the public trust.”

“Eliminating fraud, waste and abuse is a top priority for the Department of Health and Human Services,” said HHS Secretary Sylvia Burwell.  “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse.  New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door.  And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”

The recoveries announced today reflect a two-pronged strategy to combat fraud and abuse.  Under new authorities granted by the Affordable Care Act, the administration continues to implement programs that move away from “pay and chase” to preventing health care fraud and abuse in the first place.  In addition, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), run jointly by the HHS Office of the Inspector General and the Justice Department, is changing how the federal government fights certain types of health care fraud.  These cases are being investigated through "real-time" data analysis in lieu of a prolonged subpoena and account analyses, resulting in significantly shorter periods of time between fraud identification, arrest and prosecution.

Increased funding from the administration and Congress has allowed HHS and the Justice Department to build on early successes of the Medicare Strike Force by expanding into nine geographic territories – Miami, Los Angeles, Detroit, Houston, Brooklyn, New York, Southern Louisiana, Tampa, Florida, Chicago and Dallas.  Since its inception, Strike Force prosecutors filed more than 963 cases charging more than 2,097 defendants who collectively billed the Medicare program more than $6.5 billion; 1,443 defendants pleaded guilty and 191 others were convicted in jury trials; and 1,197 defendants were sentenced to imprisonment for an average term of approximately 47 months.  Through the Strike Force and other efforts, in FY 2014 alone, the Justice Department opened 924 new criminal health care fraud investigations.  Federal prosecutors filed criminal charges in 496 cases involving 805 defendants.  A total of 734 defendants were convicted of health care fraud‑related crimes during the year. 

Another powerful tool in the effort to combat health care fraud is the federal False Claims Act.  In 2014, the Justice Department’s Civil Division and the U.S. Attorneys’ Offices obtained $2.3 billion in settlements and judgments from civil cases involving fraud and false claims against federal health care programs such as Medicare and Medicaid.  Since January 2009, the Justice Department has recovered more than $15.2 billion in cases involving health care fraud.  These amounts reflect federal losses only.  In many of these cases, the department was instrumental in recovering additional billions of dollars for state health care programs.  In FY 2014, the department continued its enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act, and opened 782 new civil health care fraud investigations. 

The Centers for Medicare & Medicaid Services (CMS) is also adopting a number of preventive measures to combat fraud and abuse.  Provider enrollment is the gateway to billing the Medicare program, and CMS has put critical safeguards in place to make sure that only legitimate providers are enrolling in the program.  The Affordable Care Act required a CMS revalidation of all existing 1.5 million Medicare suppliers and providers under new screening requirements.  CMS will have requested revalidations by March 2015.  As a result of this and other proactive initiatives, CMS has deactivated 450,000 enrollments and revoked nearly 27,000 enrollments to prevent certain providers from re-enrolling and billing the Medicare program.  Both of these actions immediately stop billing.  A provider with deactivated billing privileges can reactivate at any time, and a revoked provider is barred from re-entry into Medicare for a period ranging from one to three years.  CMS has also issued a regulation requiring prescribers of Part D drugs to enroll in Medicare and undergo screening.

CMS also continued the fiscal 2014 temporary moratoria on the enrollment of new home health or ambulance service providers in six fraud hot spots: Miami, Chicago, Dallas, Houston, Detroit and Philadelphia (which includes some counties in New Jersey).  This extension will allow CMS to continue its actions to suspend payments or remove providers from the program before allowing new providers into potentially over-supplied markets.

Similar to the technology used by credit card companies, CMS is using its Fraud Prevention System to apply advanced analytics to all Medicare fee-for-service claims on a streaming, national basis.  The Fraud Prevention System identifies aberrant and suspicious billing patterns which in turn trigger actions that can be implemented swiftly to prevent payment of fraudulent claims.  In the second year, the system saved $210.7 million, almost double the amount identified during the first year of the program.

The HCFAC annual report is available at www.oig.hhs.gov/publications/hcfac.asp. 

For more information on the joint Justice Department-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.

For more information on the fraud prevention accomplishments under the Affordable Care Act visit: www.healthcare.gov/news/factsheets/2012/02/medicare-fraud02142012a.html.

BioTelemetry Inc., a heart monitoring company headquartered in Malvern, Pennsylvania, has agreed to pay $6.4 million to resolve allegations made under the False Claims Act (FCA) that its subsidiary, CardioNet, overbilled Medicare and other federal health programs for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary, the Justice Department announced today.

“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”

“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington.  “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”

An MCOT monitor provides real-time, outpatient cardiac monitoring.  MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet’s diagnostic center using cell phone technology.  Traditional, less expensive event monitors only download patient data periodically over a landline.

The government alleges that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive monitors could effectively collect data about those patients’ conditions.  Nonetheless, CardioNet allegedly submitted claims to Medicare for those patients containing the billing code for the more expensive MCOT services along with an inaccurate diagnostic code that misrepresented the true condition of the patients and their need for MCOT services.

“Sticking taxpayers with a hefty bill for unneeded medical care will never be tolerated,” said Special Agent in Charge Ivan Negroni of the U.S. Health and Human Services, Office of Inspector General (HHS-OIG), Regional Office including Washington.  “Working in close coordination with our law enforcement partners we will tirelessly pursue these suspected violators.”

“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management.  “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.8 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.

This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Washington and HHS-OIG.

The claims resolved by this agreement are allegations only and there has been no determination of liability.

Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced today.  Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.         

“Today’s settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “It is critical that health care providers adequately supervise the services they provide to their patients.”

Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel.  The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park.  These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.

“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”

The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  Dr. Montejo will receive $1,082,500 as his share of the recovery. 

“Providing proper supervision of radiation oncology services is an important requirement in federal health care programs such as Medicare,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General.  “Our agency will continue to hold health care providers accountable for meeting the requirements in these taxpayer-funded programs.”

This settlement illustrates the government’s emphasis on combating healthcare 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 on efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.8 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 settlement was the result of a coordinated investigation between the U.S. Attorney’s Office for the Middle District of Florida, the Civil Division’s Commercial Litigation Branch and the U.S. Department of Health and Human Services’ Office of Inspector General.    

The case is captioned United States ex rel. Montejo v. Adventist Health System Sunbelt Healthcare Corp., Case No. 8:13-CV-206-T-23AEP (M.D. Fla.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The owner and operator of a New Orleans-based medical clinic and an accountant pleaded guilty today in federal court in New Orleans for their roles in a $50 million Medicare fraud scheme.  

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

Paige Okpalobi, 58, of Slidell, Louisiana, and Christopher White, 48, of Destrehan, Louisiana, pleaded guilty before Chief U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana to one count of conspiracy to commit health care fraud and one count of conspiracy to falsify records in a federal investigation.  Sentencing hearings for each are scheduled for July 1, 2015.

According to her plea agreement, Okpalobi owned and operated a New Orleans-based medical clinic that employed doctors to certify that Medicare beneficiaries were qualified to receive home health care.  Okpalobi admitted that doctors employed at her clinic falsely certified that certain of their clients—specifically, Medicare beneficiaries—were homebound and in need of home health care services.  Okpalobi further admitted that she and other co-conspirators then used the false certifications to bill Medicare for fraudulent home health care services through home health care companies she jointly operated with another co-conspirator.

According to his plea agreement, White managed financial and accounting services at Okpalobi’s companies and other companies.  White admitted that he coordinated the payment of patient recruiters who illegally sold Medicare beneficiary information to Okpalobi and her co-conspirators.  This information was used by home health companies operated by Okpalobi and others to bill Medicare for home health care services that were not medically necessary and often not delivered at all. 

Okpalobi and White each also admitted that they fabricated tax and employment records in response to a federal grand jury subpoena to conceal the illegal kickbacks paid and mislead the grand jury. 

Okpalobi admitted that between 2007 and 2014, she caused the submission of $49,989,323 in claims to Medicare for home health services that were not medically necessary or not provided.

Thirteen individuals have been indicted in connection with this Medicare fraud scheme, and eight have now pleaded guilty, including two doctors employed at Okpalobi’s medical clinic.

This case was investigated by the FBI, HHS-OIG and the Louisiana Attorney General’s Medicaid Fraud Control Unit (MFCU), and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Louisiana.  This case is being prosecuted by Trial Attorneys William Kanellis and Antonio Pozos and Assistant Chief Benton Curtis 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.

Following a 14-day trial, a federal jury in Las Vegas returned guilty verdicts yesterday in a case against a Las Vegas attorney and three others for their roles in a scheme to fraudulently take control of homeowners’ associations (HOAs) for the purpose of directing the HOAs’ construction defect litigation and repair work to a law firm and construction company owned by other co-conspirators.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office, Special Agent in Charge John Collins of Internal Revenue Service Criminal Investigation’s (IRS-CI) Las Vegas Field Office and Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department made the announcement.

Keith Gregory, 61, of Las Vegas, Salvatore Ruvolo, 86, of Henderson, Nevada, David Ball, 47, of Las Vegas, and Edith Gillespie, 54, of Las Vegas, were found guilty yesterday of conspiracy to commit wire and mail fraud.  Gregory and Ball were also convicted of two counts of wire fraud each, Ruvolo was convicted of three counts of wire fraud, and Gillespie was convicted of one count of wire fraud.  Ruvolo was found not guilty of one count of mail fraud.  Sentencing hearings are scheduled for June 17, 2015, before U.S. District Judge James C. Mahan of the District of Nevada.  

According to the evidence presented at trial, from approximately August 2003 through February 2009, the defendants engaged in a complex scheme to direct construction defect litigation and construction repairs at more than 10 condominium complexes in the Las Vegas area to a law firm operated by a co-conspirator and a construction company, Silver Lining Construction, owned by Leon Benzer.  In order to accomplish the scheme, the defendants and their co-conspirators identified HOAs for condominium complexes that had potential construction issues that could result in construction defect litigation and require repair.  They then sought to take controlling interests on the identified HOAs’ boards by purchasing units in the condominium complexes and running for election to the boards.   

Specifically, the evidence at trial demonstrated that Benzer and others, including Gillespie, enlisted “straw purchasers” to use their names and credit to purchase condominiums in the identified complexes.  Ruvolo, Ball and Gillespie, among others, acted as straw purchasers, and the evidence demonstrated that Gillespie provided false information on her loan application in connection with the purchase of a condominium in furtherance of the scheme. 

According to the evidence, Ruvolo and Ball then sought to be elected to HOA boards in the complexes where they had purchased condominiums.  Other straw purchasers were directed to transfer a partial interest in their condominiums to other co-conspirators to make them look like homeowners who could stand for election to the HOA boards.  To ensure that conspirators won the HOA elections, the defendants employed deceitful tactics, such as submitting fake and forged ballots, and hiring complicit attorneys to run the elections as “special election masters,” who presided over the elections and supervised the counting of ballots. 

The evidence demonstrated that, once elected, the conspiring board members, including Ruvolo and Ball, met with Benzer and other co-conspirators in order to manipulate the selection of property managers, contractors, general counsel and construction defect attorneys to represent the HOAs.  Gregory, an attorney licensed in Nevada, agreed to become the general counsel for two HOAs and to take direction from Benzer.

At trial, the evidence showed that 33 of the 37 condominium units purchased as part of the scheme went into foreclosure.  Over the course of the scheme, more than $7 million in construction contracts were awarded to Benzer’s company from a single HOA.  Several million dollars in legal fees were also directed to another co-conspirator.  Benzer compensated each of the defendants for their participation in the fraud scheme.  For example, the evidence demonstrated that Ruvolo received monthly payments of approximately $2,000, and Ball received $5,000 per year, for acting as straw purchasers and board members.  Benzer also directed approximately $90,000 in HOA-related legal work to Gregory and paid him approximately $12,000 in kickbacks. 

On Jan. 23, 2015, Benzer pleaded guilty to one count of conspiracy to commit mail and wire fraud, fourteen counts of wire fraud, two counts of mail fraud, and two counts of tax evasion.  He is awaiting sentencing.

The case was investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.  The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Thomas B.W. Hall and Alison L. Anderson of the Criminal Division’s Fraud Section. 

This prosecution is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

Gilbane Building Company will pay the United States $1.1 million to resolve allegations that W.G. Mills Incorporated – a company with which Gilbane merged in November 2010 – violated the False Claims Act by creating a front company, Veterans Constructors Incorporated (VCI), in order to be awarded a Coast Guard contract that was designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs), the Justice Department announced today.  The Justice Department also announced that VCI has agreed to pay the United States $50,000 plus five annual contingency payments equal to one percent of VCI’s total annual revenues to resolve these same allegations.

“Those who seek to do business with the government must do so fairly and honestly,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will not tolerate contractors who seek to profit at the expense of our veterans and taxpayers.”

“Those who apply for federal contracts must be honest and forthright in their dealings, especially when seeking contracts set aside for service-disabled veterans,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “Working jointly with DOJ and our agency partners has allowed us to make substantial recoveries in these types of cases in recent months.  Our office remains committed to pursuing these matters vigorously.”

To qualify as a SDVOSB, a company must be operated and managed by service-disabled veterans and must not be affiliated with a large company.  The government alleged that W.G. Mills created VCI merely as a contracting vehicle and that VCI’s affiliation with W.G. Mills rendered it ineligible to be awarded set-aside contracts for SDVOSBs.  The government further alleged that W.G. Mills performed the work that VCI was required to perform under the Coast Guard contract, and alleged that if the Coast Guard and the Small Business Administration (SBA) had known that VCI was nothing but a front company, the Coast Guard would not have awarded it the contract.

“Providing the government false information to gain access to set-aside contracts is unacceptable,” said Inspector General Peggy E. Gustafson of the SBA.  “The OIG will aggressively investigate such misrepresentations to ensure only eligible businesses are awarded these contracts.  I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”

“SBA’s contracting programs, including the Service-Disabled Veteran-Owned Small Business Program, provide eligible small businesses with the opportunity to grow and create jobs,” said General Counsel Melvin F. Williams Jr of the SBA.  “SBA has no tolerance for fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow only to the intended recipients.”

The settlement resolves allegations originally filed in a lawsuit by Michael Jeske and Samuel McIntosh.  The investigation was a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, and the SBA’s Office of Inspector General (OIG).  The lawsuit was filed in the Middle District of Florida and is captioned United States ex rel. Michael Jeske and Samuel McIntosh v. Gilbane Building Company, W.G. Mills, Inc., and Veterans Constructors Inc., Case No. 8:11-cv-1205 (M.D. Fla.).

The claims resolved by the settlement are allegations only; there has been no determination of liability. 

The Justice Department announced that Darren Douglass-Griffin, Kerry Bolden, Emmett McKenzie and Kadarius Thomas—four former members of the Correctional Emergency Response Team (CERT) at Macon State Prison (MSP) in Oglethorpe, Georgia—were sentenced today for federal offenses related to the beating of MSP inmates in 2010 and the cover-up that followed.

U.S. District Judge Marc T. Treadwell sentenced Douglass-Griffin to serve 12 months in prison for conspiracy against rights and for writing a false report.  Bolden was sentenced to serve nine months in prison for conspiracy against rights and conspiracy to obstruct justice.  McKenzie received a sentence of six months in prison for conspiracy against rights.  Thomas was sentenced to serve six months in prison for writing a false report regarding the beating of an inmate. 

In June 2014, a federal jury trial in United States v. Hinton, et al., resulted in the conviction of former CERT Sergeant Christopher Hall and senior CERT officers Ronald Lach and Delton Rushin.  Evidence introduced at trial and in court documents filed in connection with the guilty pleas of Douglass-Griffin, Bolden, McKenzie and Thomas showed that CERT officers conspired to assault handcuffed inmates as punishment for past misconduct.  CERT officers beat multiple inmates, two of whom suffered serious injuries.  One inmate, Terrance Dean, suffered a traumatic brain injury during an assault by CERT officers.  Evidence also showed that CERT officers conspired to cover up their unlawful practice, and that officers turned in false reports and provided misleading statements to investigators.

On Dec. 4, 2014, U.S. District Judge Marc T. Treadwell sentenced the defendants who were convicted at trial to the following terms of incarceration: Lach, 90 months; Hall, 72 months; and Rushin, 60 months. 

Former CERT member Willie Redden is the last defendant to be sentenced in connection with these cases.  A sentencing date has not yet been set for Redden.

“Eight former corrections officials from Macon State Prison now have been sentenced for criminal conduct that ranged from beating inmates to obstructing our investigation,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Department of Justice will continue to vigorously prosecute corrections officers who betray the public trust, assault people in their custody, and otherwise use their power to violate federal law.”

“While our corrections officials have a difficult yet important job, we must insist that they follow the law and not use the authority that comes with a prison guard’s uniform to assault the very people they are charged with supervising,” said U.S. Attorney Michael J. Moore of the Middle District of Georgia.  “In this case, it wasn’t just inmates who were victims, it was also the public who had entrusted these officials with maintaining order while respecting and following the law.”

These cases were investigated by the Macon Resident Agency of the FBI, with the support of the Georgia Bureau of Investigation.  The cases were prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd for the Civil Rights Division, with the assistance of the U.S. Attorney’s Office in Macon.

Defendant, a Former Avionics Specialist, Travelled from Egypt to Turkey in an Attempt to Cross the Border to Syria to Join ISIL

U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department announced that yesterday, a federal grand jury in New York City returned a two-count indictment charging Tairod Nathan Webster Pugh, an American citizen and veteran of the U.S. Air Force, with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization, and obstruction and attempted obstruction of justice.  The defendant will be arraigned on the indictment tomorrow, March 18, at 11 a.m. before U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York.

“Born and raised in the United States, Pugh allegedly turned his back on his country and attempted to travel to Syria in order to join a terrorist organization,” said U.S. Attorney Lynch.  “We will continue to vigorously prosecute extremists, whether based here or abroad, to stop them before they are able to threaten the United States and its allies.”  U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.  U.S. Lynch also thanked U.S. Customs and Border Protection, the U.S. Attorney’s Office of the District of New Jersey, the Asbury Park, New Jersey Police Department and the Neptune, New Jersey, Police Department for their assistance.

“Pugh, an American citizen and former member of our military, allegedly abandoned his allegiance to the United States and sought to provide material support to ISIL,” said Assistant Attorney General Carlin.  “Identifying and bringing to justice individuals who provide or attempt to provide material support to terrorists is a key priority of the National Security Division.” 

“As alleged, Pugh, an American citizen, was willing to travel overseas and fight jihad alongside terrorists seeking to do us harm,” said Assistant Director in Charge Rodriguez.  “U.S. citizens who offer support to terrorist organizations pose a grave threat to our national security and will face serious consequences for their actions.  We will continue to work with our partners, both here and abroad, to prevent acts of terrorism.  This investigation demonstrates the importance of law enforcement coordination and collaboration here and around the world.”

“We thank the members of the NYPD Joint Terrorism Task Force and our Federal law enforcement partners for their work in this case and for their tireless efforts to identify threats of terrorism here and abroad,” said Commissioner Bratton.  “It is this type of collaboration that results in swift investigative work to stop individuals such as this from making any further contribution to terrorist organizations such as ISIL.”

As alleged in the complaint, indictment and other court filings, the defendant served in the Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engine, navigation and weapons systems.  After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an avionics specialist and airplane mechanic.  The defendant lived abroad for over a year before his arrest in this case.

Earlier this year, weeks after being fired from his last job as an airplane mechanic based in the Middle East, the defendant attempted to join ISIL.  On Jan. 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL and fight violent jihad.  Turkish authorities denied the defendant entry, however, and sent him on a return flight to Egypt.  Upon his arrival in Egypt, the defendant was carrying multiple electronic devices, including four USB thumb drives that had been stripped of their plastic casings and an iPod that had been wiped clean of data.  The defendant also had a cellular telephone that contained, among other things, a photograph of a machinegun.  The defendant was soon thereafter deported to the United States.

On Jan. 14, 2015, JTTF agents obtained a search warrant for the defendant’s electronic devices, including his laptop computer.  Subsequent exploitation of the laptop revealed, among other things, the following:

• recent internet searches for “borders controlled by Islamic state”,

• recent internet searches for “who controls kobani,” “kobani border crossing,” and “jarablus border crossing,” all references to Syrian cities under ISIL’s control near the Turkish border,

• a chart of crossing points between Turkey and Syria indicating the areas on the Syrian side of the border controlled by ISIL and other groups, and

• internet searches for “Flames of War,” an ISIL propaganda video, as well as downloaded videos, including one showing ISIL members executing prisoners.

The defendant was arrested pursuant to a federal complaint on Jan. 16, 2015, in Asbury Park, New Jersey, and he has been in custody ever since.  After the defendant’s arrest, JTTF agents seized and later obtained warrants to search two backpacks that the defendant had when he was overseas.  Agents recovered from the backpacks, among other things: two compasses, a solar-powered flashlight, a solar-powered power source, shards of broken USB thumb drives, a fatigue jacket and camping clothes.

If convicted, the defendant faces a maximum sentence of 35 years in prison.  The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant U.S. Attorneys Samuel P. Nitze and Tiana A. Demas, with assistance provided by Trial Attorneys Larry Schneider and Andrew Sigler of the National Security Division.

Pugh Indictment

SAIPAN, CNMI – ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on Tuesday, March 17, 2015, U.S. District Chief Judge Ramona V. Manglona sentenced Wei Lin, age 32, of the People’s Republic of China, to 235 months in prison followed by five years of supervised release for conspiracy to commit sex trafficking.  Judge Manglona also ordered Lin to pay $7,172.39 in restitution to each of the three victims.

     Lin pleaded guilty to the offense on June 8, 2012.  At today’s sentencing hearing, Judge Manglona found the United States had also proven by clear and convincing evidence that Lin was the leader of the sex trafficking organization.

     United States Attorney for the Districts of Guam and the Northern Mariana Islands, Alicia A.G. Limtiaco, stated, “Those who traffic women will find no refuge from law enforcement.   We will aggressively prosecute anyone who tries to profit off the sexual exploitation of women.  Human trafficking is a modern form of slavery, and today’s sentence reflects the seriousness of this heinous crime.  It also sends a clear message that trafficking in persons will not be tolerated in the C.N.M.I.”

     The case was investigated by the Federal Bureau of Investigation, with assistance of the Department  of  Homeland  Security/Homeland  Security  Investigations,  and  prosecuted  by Assistant U.S. Attorney Garth R. Backe.

COPS Office Releases 40 Recommendations to Implement Best Practices at San Diego Police Department

The U.S. Department of Justice’s Office of Community Oriented Policing Services today announced the completion of an assessment of the San Diego Police Department’s policies and practices for preventing, detecting and investigating misconduct.  The San Diego Police Department volunteered to undergo the review by the COPS Office following a series of misconduct incidents over the course of five years.

“Our goal with this report began with identifying deficiencies in policies, practices, or organizational culture that allowed misconduct to occur and to go undetected for years in San Diego,” said COPS Office Director Ronald Davis.  “We see this report as a blueprint for reforms, and for building on the reform efforts already undertaken by former Chief William Lansdowne and Chief Shelley Zimmerman.”

The COPS Office first announced the beginning of the Critical Response Technical Assistance review in March 2014.  The report focuses on 17 cases of misconduct over five years and includes a review of how the cases were handled, and of the department’s policies and accountability system.  During the assessment, the COPS Office’s training and technical assistance provider for the assessment, the Police Executive Research Forum, conducted focus groups and interviews with city and department stakeholders, community outreach and observed operations.

The report identifies a number of deficiencies in recruiting practices, supervision and training of officers, accountability systems, and mechanisms for reviewing citizen complaints and leadership.  The assessment recommends a comprehensive approach to all aspects of policing that can help prevent misconduct.  This includes the training and supervision of officers, the recruitment and selection of new officers, accountability mechanisms, internal investigations and disciplinary practices.

“We requested and welcomed this assessment from the Department of Justice COPS Office," said San Diego Police Chief Shelley Zimmerman.  “The numerous recommendations they have made will only help us improve our department and the proud service we provide to our community.”

The report, Critical Response Technical Assistance Review—Police Accountability: Findings and National Implications of an Assessment of the San Diego Police Department can be found here: https://cops.usdoj.gov/RIC/ric.php?page=detail&id=COPS-W0756.

The assessment was administered as part of the COPS Office’s Critical Response Technical Assistance initiative, designed to provide technical assistance to agencies facing significant law enforcement-related issues.  Using subject matter experts, interviews and direct observations, as well as conducting extensive research and analysis, the COPS Office assists law enforcement agencies with enhancing and improving their policies and procedures, operating systems and professional culture.

The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of more than 126,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.  For additional information about COPS, please visit www.cops.usdoj.gov.

The United States filed a complaint seeking to permanently bar an Indianapolis woman from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint against Jennifer Carolina Gonzalez, doing business as Jenny’s Tax Services, which was filed in the U.S. District Court for the Southern District of Indiana, alleges that Gonzales fraudulently adjusted customers’ income claimed on Schedule C (Profit or Loss From Business) to either increase an Earned Income Tax Credit the customer was not entitled to, or to reduce the customer’s tax liability.  Gonzalez, according to the suit, also frequently prepared returns claiming head of household filing status for customers who were ineligible.  The complaint alleges that Gonzalez frequently prepared returns claiming child tax credits for customers’ relatives who lived in Mexico and had never lived in the United States, even though Gonzalez knew that children living in Mexico cannot be used to support child tax credits and additional child tax credits.

Tax return preparers must provide their Preparer Tax Identification Number (PTIN) on returns they prepare.  As alleged in the complaint, as part of a pattern of non-compliance, Gonzalez failed to provide her own PTIN on returns she prepared until January 2013.  Instead, the complaint alleges that Gonzalez used a PTIN assigned to a person living in New Jersey, who has no connection to Gonzalez and has never authorized Gonzalez or anyone else to use the PTIN. 

The complaint further alleges that, in 2012, Gonzalez sold the use of the third-party PTIN she had appropriated, her own Electronic Filing Identification Number (EFIN) and Jenny’s Tax Services’ Employer Identification Number (EIN) to another tax preparation business, which agreed to pay Gonzalez $20 per return filed containing Gonzalez’s identification numbers.  Despite selling the use of the identification numbers, Gonzalez continued to use the identification numbers when preparing returns for the 2011 tax year, as did the purchaser.

According to the complaint, the Internal Revenue Service (IRS) estimates that Gonzalez, through Jenny’s Tax Service, has prepared more than 2,000 tax returns since 2011.  The suit alleges that the false information she included on her customers’ tax returns generated larger refunds or reduced tax liabilities for Gonzalez’s customers, and that the losses to the U.S. Treasury could exceed $3.9 million.  

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.

Assistant Attorney General for National Security John P. Carlin; U.S. Attorney Zachary T. Fardon of the Northern District of Illinois; Special Agent in Charge Robert J. Holley of the FBI’s Chicago Office; Special Agent in Charge Gary Hartwig of U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI) in Chicago; and Acting Special Agent in Charge David Nardella of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement of the Chicago Field Office announced today that a former resident of Taiwan, who the United States has linked to the supply of weapons manufacturing machinery to North Korea, was sentenced today to serve 24 months in federal prison by U.S. District Court Judge Charles R. Norgle of the Northern District of Illinois. 

The defendant, Hsien Tai Tsai, 69, pleaded guilty in October 2014, admitting that he conspired with others to interfere with and obstruct U.S. regulations that seek to disrupt the proliferation of weapons of mass destruction.  When imposing sentence, Judge Norgle credited Tsai for the substantial assistance he provided, and would continue to provide, to the government in its investigation of weapons of mass destruction proliferators.  Tsai, also known as Alex Tsai, was arrested in May 2013 in Tallinn, Estonia, and was later extradited to the United States, where he remains in federal custody.

“Hsien Tai Tsai violated a critical sanctions regime and undermined and interfered with U.S. efforts to disrupt North Korea's weapons of mass destruction and advanced weapons programs,” said Assistant Attorney General Carlin.  “These sanctions are meant to raise the cost for WMD proliferators to do business and deter others from proliferating by denying them access to our financial and commercial systems.  This prosecution makes clear that we will use all of our tools to identify and arrest WMD proliferators and to disrupt their efforts to undermine our country's security.  I’d like to thank all who helped with this investigation and prosecution.”

“Aggressive enforcement of U.S. laws targeting those who supply goods, services or other support to proliferators of weapons of mass destruction is vital to ensuring global safety,” said U.S. Attorney Fardon.  “As this case demonstrates, companies and individuals who seek to evade these laws will confront an international law enforcement community working cooperatively and effectively to stem these threats.”

According to court documents, Tsai was associated with at least three companies based in Taiwan – Global Interface Company Inc., Trans Merits Co. Ltd., and Trans Multi Mechanics Co. Ltd. – that purchased and then exported, and attempted to purchase and then export, from the United States and other countries machinery used to fabricate metals and other materials with a high degree of precision.

In January 2009, under Executive Order 13382, which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Tsai, Global Interface and Trans Merits as proliferators of weapons of mass destruction, isolating them from the U.S. financial and commercial systems and prohibiting any person or company in the United States from knowingly engaging in any transaction or dealing with them.  At that time, the Treasury Department said that Tsai was designated because he provided, or attempted to provide, financial, technological, or other support for, or goods or services in support of, the Korea Mining Development Trading Corporation, which the Treasury Department has stated is North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.  Additionally, Tsai he had been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program.  After the OFAC designations, Tsai and others continued to conduct business together, but attempted to hide Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics.  Later, in 2013, Trans Multi Mechanics was also designated by OFAC.

In pleading guilty, Tsai admitted that he was involved in multiple commercial and financial transactions to undermine the sanctions against WMD proliferations, including the purchase of a Bryant center hole grinder from a U.S. company based in suburban Chicago, and exported it to Taiwan in 2009 using the company Trans Multi Mechanics.  A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material.  Tsai also admitted having a role in Trans Merits’ transactions involving LED road lights and an oil pump, and using third parties to wire transfer funds to the United States.

The case was investigated by the FBI, ICE-HSI and the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement, with assistance provided by the Justice Department’s Office of International Affairs.  Assistant Attorney General Carlin would like to give special thanks to the Estonian Internal Security Service and the Estonian Prosecutor’s Office who cooperated with the United States.  The case is being prosecuted by Assistant U.S. Attorney Brian Hayes of the Northern District of Illinois and Trial Attorney Brandon L. Van Grack of the Justice Department’s National Security Division.

Attorney General Eric Holder released the following statement on the departure of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia:

“During more than five years as U.S. Attorney of the District of Columbia, Ron Machen Jr. has distinguished himself as a skilled leader, a devoted public servant and a forceful champion of justice on behalf of the American people.  Throughout his remarkable tenure, Ron has applied his boundless talent and consummate judgment to protect the safety and security of all Americans in cases involving violent crime, national security threats and public corruption.  As one of Ron’s predecessors as U.S. Attorney in Washington, I know firsthand the unique demands of leading the nation’s largest U.S. Attorney’s Office.  But Ron has never been deterred by a difficult challenge, nor slowed in his pursuit of a safer, stronger Washington.  I was fortunate to be able to hire Ron as an Assistant U.S. Attorney in the Office in 1997, and I see in him now the exceptional qualities that I saw in him then: unassailable integrity, relentless determination and a passion for law and justice.  I congratulate him on the outstanding results he has achieved as U.S. Attorney of the District of Columbia.  I thank him for his inspiring service.  And I look forward to all that he will accomplish in the next stage of his already extraordinary career.”

Today, a federal jury in Detroit convicted six leaders and members of the violent Phantom Outlaw Motorcycle Club, many of whom were also leaders and members of the Vice Lords street gang, of conspiracy to commit murder and other violent racketeering-related offenses.

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 Steve Bogdalek of the Bureau of Alcohol, Tobacco, Firearms and Explosives’s (ATF) Detroit Field Division and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Division made the announcement.

“The Phantom Motorcycle Club used violence and plotted murder in an effort to prevail in a gang war against rival motorcycle clubs in Michigan and throughout the country, and its leaders and members attempted to kill anyone who stood in their way,” said Assistant Attorney General Caldwell.  “The trial convictions of the gang’s National President, National Enforcer and four other members bring to a close this dangerous organization’s violent reign.  I am thankful for the courageous and diligent efforts of our prosecutors and law enforcement partners who successfully brought this criminal enterprise to justice.”

“The Detroit One partnership has focused on dismantling violent street gangs like this one because they cause intolerable harm to public safety in our neighborhoods,” said U.S. Attorney McQuade.  “We will continue to target and disrupt violent gangs in hopes of restoring peace for residents in our community.”

“The amount of pain, suffering and fear that violent gangs bring to our communities is immeasurable,” said Special Agent in Charge Bogdalek.  “Our goal was to disable the group by targeting its leadership, the convictions today of leaders and members of these illegal motorcycle gangs is an excellent example of success that comes from effective law enforcement cooperation.”

“As part of the Detroit One Initiative, this joint investigation effectively targeted and neutralized violent criminal offenders of the Phantom Outlaw Motorcycle Club,” said Special Agent in Charge Abbate.  “Our efforts to combat violent crime continue to be waged each and every day in cooperation with our local, state, and federal law enforcement partners.  Protecting our communities from offenders such as these is among our highest priorities, and we will continue this fight on behalf of the citizens we serve and protect.”

The jury convicted the defendants of the following offenses:

• Antonio Johnson, aka, “Mister Tony,” “MT,” and “Big Bro,” 40, of Detroit, the National President of the Phantoms and the “Three-Star General” over the Vice Lords street gang in Michigan, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, using and carrying firearms during and in relation to a crime of violence and being a felon in possession of firearms.

• Marvin Nicholson, aka, “Chosen One,” 46, of Detroit, the National Enforcer of the Phantoms and a Vice Lords member, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, assault on federal officers, using and carrying firearms during and in relation to a crime of violence and being a felon in possession of firearms.

• Brian Sorrell, 28, aka, “PC,” of Detroit, a member of the Detroit Chapter of the Phantoms and the Vice Lords, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering and using and carrying firearms during and in relation to a crime of violence.

• Sherman Brown, aka, “Tank,” 43, of Detroit, the Sergeant-at-Arms of the Detroit Chapter of the Phantoms and a Vice Lords member, was convicted of conspiracy to commit murder in aid of racketeering.

• Brian Jackson, aka, “Wood,” 48, of Detroit, the Master Sergeant of the Inkster, Michigan Chapter of the Phantoms, was convicted of conspiracy to commit murder in aid of racketeering.

• Matthew Schamante, aka, “Arsenal,” 32, of Waterford, Michigan, the President of the Pontiac, Michigan Chapter of the Phantoms, was convicted of engaging in a RICO conspiracy and possessing an unregistered short-barrel shotgun.

At trial, evidence showed that the Phantom Outlaw Motorcycle Club is headquartered in northwest Detroit and has chapters throughout Michigan, Ohio, Kentucky, Illinois, New York, New Jersey, Texas, Georgia, Missouri and Tennessee, as well as a chapter of “Nomads” that travel at will.  The evidence showed that the club and its members were involved in a range of criminal activity including conspiracy to commit murder, shootings, robbery, extortion and the possession and sale of stolen vehicles and motorcycles.  

Evidence also showed that the leadership of the Phantoms was heavily involved in the Vice Lords street gang, including Johnson, who was both the National President of the Phantoms and the “Three-Star General” over the Vice Lords street gang in Michigan.  The Vice Lords is a well-known street gang originating from Chicago.  Specifically, the evidence showed that Johnson used the Vice Lords to assist the Phantoms in various criminal endeavors, including to search for and violently attack rivals of the Phantoms.

The evidence specifically demonstrated that, on Sept. 8, 2013, Johnson ordered numerous Phantoms, including Nicholson and Sorrell, to take the vests or “rags” of the Satan Sidekicks Motorcycle Club, a rival motorcycle club.  During the attempted robbery, Sorrell shot the victim in the face. 

Additionally, according to the evidence, Johnson blamed the Hell Lovers Outlaw Motorcycle Club for the murder of a Phantoms member in late September 2013, and ordered a three-phase murder plot against the Hell Lovers in retaliation.  In the first phase, the Phantoms were to murder at least three members of the Hell Lovers in Detroit in order to lure additional Hell Lovers to Michigan for the funeral.  In the second phase, the Phantoms were to murder all members of the Hell Lovers who would be at the Hell Lovers’ Detroit, Michigan clubhouse following the funeral of the three members murdered in the first phase.  In the third phase, the Phantoms were to kill Hell Lovers in other cities throughout the country where the Phantoms had chapters.  The mass murder plot was interrupted before it came to fruition by search warrants executed by the ATF and FBI in October 2013.  At trial, evidence showed that the Phantoms were preparing for the first phase of the murder plot at the time of the search warrants, including stockpiling firearms, hiring a thief to steal a van to be used in the murders, conducting research and surveillance of their intended victims, and assigning Phantom members and Vice Lords members to stalk and murder the intended victims.  Johnson, Nicholson, Sorrell, Brown and Jackson were all convicted of the murder plot. 

Finally, the evidence demonstrated that, on Oct. 4, 2013, while the ATF and FBI attempted to execute a search warrant at his residence in Detroit, Nicholson shot at ATF agents four times as they attempted to enter his residence.  A wall prevented the bullets from hitting the agents.  The firearm that Nicholson used to shoot at the ATF agents was registered to Schamante.

Sentencing hearings will be scheduled at a later date before U.S. District Judge Paul D. Borman of the Eastern District of Michigan.  Five defendants have previously pleaded guilty in the case to charges including RICO conspiracy and assault with a dangerous weapon in aid of racketeering, and await sentencing.

The arrests in this case were made as part of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI.  By working collaboratively, local, state and federal law enforcement are striving to maximize their ability to identify and arrest the persons and groups initiating the violence in Detroit.  These convictions are a tangible and significant result of this joint effort.

The case is being prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section, and Assistant U.S. Attorneys Christopher Graveline and Louis Gabel of the Eastern District of Michigan.

A federal grand jury in the Eastern District of North Carolina has returned an indictment against a Raleigh, North Carolina, resident for one count of conspiracy to defraud the United States, 17 counts of presenting false claims to the Internal Revenue Service (IRS), three counts of wire fraud and two counts of aggravated identity theft, 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.

Christian Rhodes, of Raleigh, was arrested earlier today on the indictment, which alleges that Rhodes and others solicited individuals in order to prepare their federal tax returns that used false information to claim tax refunds that the individuals were not entitled to receive.  The tax returns that Rhodes prepared and filed contained false wages, tax withholdings and deductions.  Rhodes directed the IRS to deposit refunds electronically into bank accounts in his own name and in the names of third-party taxpayers.  Rhodes also used stolen identities in order to file false claims for tax refunds.

If convicted, Rhodes faces a statutory maximum sentence of 10 years in prison for the conspiracy count, five years in prison for each false claims count, 20 years in prison for each wire fraud count, and a maximum fine of $250,000 for each count.  Rhodes also faces a statutory mandatory minimum sentence of two years in prison for the aggravated identity theft count.

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

An indictment is merely a formal charge by the grand jury.  The defendant is presumed innocent unless and until proven guilty in a U.S. District Court.

A pharmacist who owned and operated a pharmacy in Los Angeles pleaded guilty today in connection with a Medicare fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office.

Rouzbeh Javaherian, 34, of Beverly Grove, California, pleaded guilty to health care fraud in connection with a scheme to defraud the Medicare Part D program through a pharmacy called Emoonah Inc., doing business as Westaid Pharmacy and Medical Supply (Westaid).  According to admissions in the plea agreement, Javaherian was a licensed pharmacist and owner of Westaid, which was located in Los Angeles.  From January 2008 to November 2014, Javaherian devised and executed a scheme to defraud the Medicare Part D program by paying illegal cash kickbacks to Medicare beneficiaries to induce them to submit their prescriptions to Westaid.  Javaherian then filled some of those prescriptions, but also submitted false and fraudulent claims to Medicare Part D plan sponsors for prescriptions that he did not actually fill.

From January 2008 to November 2014, Javaherian received approximately $644,060 in overpayments from Medicare as the result of the fraud scheme.

Sentencing is scheduled for June 1, 2015, before U.S. District Judge Stephen V. Wilson of the Central District of California. 

The case was investigated by the FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case is being prosecuted by Trial Attorney Alexander F. Porter of the Criminal Division’s Fraud Section.  

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Department of Justice and New York State Attorney General today announced that they have reached a settlement with Coach USA Inc., City Sights LLC and their joint venture, Twin America LLC, to remedy competitive concerns in the New York City hop-on, hop-off bus tour market.  The settlement requires the defendants to relinquish all of City Sights’ Manhattan bus stop authorizations and disgorge $7.5 million in ill-gotten profits that the defendants obtained by operating Twin America in violation of the antitrust laws.

The settlement resolves a lawsuit filed on Dec. 11, 2012, in the U.S. District Court of the Southern District of New York alleging that the March 2009 formation of Twin America violated the antitrust laws and resulted in higher prices for hop-on, hop-off bus tours in New York City.  Trial had been set for Feb. 23, 2015 before the parties adjourned the trial date to facilitate settlement discussions.  Today’s settlement, if approved by the court, would resolve the claims alleged in the complaint filed in this case.

“The formation of Twin America gave Coach and City Sights an unlawful monopoly over the New York City hop-on, hop-off bus tour market and allowed them to immediately increase prices to consumers,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “As a result of the joint efforts of the Antitrust Division and the New York Attorney General, Coach and City Sights will forfeit key bus stop authorizations throughout Manhattan to restore competition and surrender illegal profits they obtained from violating the antitrust laws.”

“By eliminating the competition between them, the largest operators of New York City’s iconic double-decker tour buses were able to raise prices and deprive city visitors of the benefits of a free and fair market,” said New York Attorney General Eric T. Schneiderman.  “This settlement allows competition to thrive once again, and ensures that these companies did not profit from operating an unlawful and anticompetitive joint venture.  I thank the Justice Department’s Antitrust Division for partnering with my office to achieve this resolution for consumers in New York.”

As alleged in the complaint, prior to the formation of Twin America, Coach, the long-standing market leader through its “Gray Line New York” brand, and City Sights, a firm that launched the “CitySights NY” brand in 2005, accounted for approximately 99 percent of the hop-on, hop-off bus tour market in New York City.  Between 2005 and early 2009, the two companies engaged in vigorous head-to-head competition on price and product offerings that directly benefited consumers. 

The formation of Twin America ended competition between Coach and City Sights and enabled them to increase hop-on, hop-off bus tour prices by approximately 10 percent.  According to the complaint, Coach and its corporate parent, Stagecoach Group PLC, had long assumed that combining with Coach’s only meaningful competitor would allow the merged firm to raise prices and communicated this assumption to City Sights during joint venture negotiations.  In early 2009, over a period of approximately two months, Coach and City Sights implemented the price increases and executed the joint venture.  The joint venture continues to operate both the Gray Line New York and CitySights NY brands today.

For more than three years following Twin America’s formation, there was no new entry or expansion in the market, and Coach and City Sights sustained the 2009 price increases.  Although some firms have entered since 2012, they have been unable to obtain bus stop authorizations from the New York City Department of Transportation (NYCDOT) at or sufficiently close to top attractions and neighborhoods to meaningfully compete with Twin America.  NYCDOT is the city agency in charge of managing bus stop authorizations, which are required for hop-on, hop-off operators to load and unload passengers.  Both Coach and City Sights hold large portfolios of bus stop authorizations covering virtually all of Manhattan’s key attractions that the firms received from the NYCDOT years ago before many locations were at capacity.  The formation of Twin America gave them a dominant share of the competitively-meaningful bus stop authorizations in Manhattan.

The proposed settlement requires Twin America to divest all of City Sights’ Manhattan bus stop authorizations by relinquishing them to the NYCDOT.  The relinquished bus stop authorizations include highly-coveted locations such as the areas surrounding Times Square, the Empire State Building and Battery Park, where rival firms have been chronically unable to obtain competitive bus stop authorizations.  By increasing the NYCDOT’s inventory of bus stops and freeing up capacity at approximately 50 locations throughout Manhattan, the settlement will significantly ease the most intractable barrier to rivals being able to meaningfully compete with Twin America.  The defendants will continue to hold Gray Line New York’s bus stop authorizations for their own hop-on, hop-off service.

The settlement also requires the defendants to disgorge $7.5 million in profits they obtained from the operation of their illegal joint venture.  This amount is in addition to $19 million that the defendants had already agreed to pay to a class of consumers to settle related private litigation brought after the filing of the government’s complaint.  The United States and the New York Attorney General determined that the defendants earned profits in excess of $19 million from their unlawful monopoly and that disgorgement was particularly appropriate on the facts of this case – a consummated merger involving an anticompetitive price increase and deliberate attempts to evade antitrust enforcement.  The payment of $7.5 million in disgorgement will deprive the defendants of ill-gotten profits they retained even after the class settlement and deter future antitrust law violations.

In a separate but related filing, Coach USA has further agreed to reimburse the United States $250,000 in attorney’s fees and costs to resolve claims that the Coach defendants spoliated evidence and failed to meet their document preservation obligations.

The settlement of the lawsuit also requires Coach and Twin America to establish antitrust training programs and that the defendants provide the government with advance notice of any future acquisition in the New York City hop-on hop-off bus tour market that is not otherwise reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act).

Coach USA is a Delaware corporation with its principal place of business in Paramus, New Jersey.  Coach offers scheduled bus routes, motorcoach tours, charters and city sightseeing tours in the United States and Canada.  Coach is a wholly-owned subsidiary of Stagecoach Group PLC, a leading international public transport company based in the United Kingdom.

City Sights is a New York limited liability company with its principal place of business in New York City.  City Sights is part of the New York Airport Service group of companies, one of New York City’s largest operators of ground transportation, tour and sightseeing services for leisure and corporate markets.

Twin America is a Delaware limited liability company with its principal place of business in New York City.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 8000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court of the Southern District of New York may enter the proposed final judgment upon finding that it is in the public interest.

BACKGROUND

The transaction forming Twin America was not required to be reported under the HSR Act, and the department did not learn about the joint venture until after its consummation.  The State of New York was similarly unaware of Twin America at the time of its formation, but began to investigate shortly thereafter and issued subpoenas in the summer of 2009.

After receiving the subpoenas, the defendants delayed the State of New York’s antitrust investigation by belatedly filing the transaction with the federal Surface Transportation Board (STB) and asserting that the STB had exclusive jurisdiction.  The STB rejected the joint venture in early 2011 as not in the “public interest” and affirmed its ruling in early 2012, directing the defendants to either dissolve Twin America or terminate minimal interstate operations that provided the basis for STB jurisdiction.  The defendants chose the latter, which removed the matter from STB jurisdiction but did nothing to address the joint venture’s anticompetitive effects in New York City.  The department and New York State Attorney General’s lawsuit followed in December 2012.

Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division issued the following statement today after National CineMedia Inc. (NCM) abandoned its proposed acquisition of Screenvision LLC, which the department had filed suit to block in November:

“This result is a victory for advertisers, movie theaters and consumers.  Had this merger-to-monopoly gone forward, it would have combined the only two significant cinema advertising networks in the United States, creating an unlawful monopoly in the markets for cinema advertising and preshow services.  The Antitrust Division’s lawsuit, which sought to prevent the companies from merging and preserve their existing head-to-head competition, was filed late last year in the U.S. District Court of the Southern District of New York. 

“Nothing harms competition more than the creation of a monopoly through merger.  In recent years, NCM and Screenvision competed aggressively by offering lower prices to advertisers, a variety of attractive financial incentives to movie theaters and better products and services overall.  This scheme to eliminate competition should never have been considered, much less publicly proposed.  We sued to preserve the significant competition between these competitors, and with the parties’ abandonment, we achieved that result.  Their decision to abandon the transaction less than a month before trial is a testament to the strength of the Antitrust Division’s case and the hard work of our talented litigation team.”

FALLS CHURCH, Va. - The Executive Office for Immigration Review (EOIR) today announced the release of its Fiscal Year (FY) 2014 Statistics Yearbook.

The book is a representation of data that EOIR tracked and compiled during the previous fiscal year. As in previous years, the figures and tables contained within the book examine respondents' cases by nationality, language, and disposition, and provide detailed information surrounding asylum cases.

"The annual publication of the Statistics Yearbook is one way in which EOIR works to provide transparency into the agency's daily work," said EOIR Director Juan P. Osuna. "We believe that providing our stakeholders with this tool allows for an improved understanding about agency policies and procedures."

Hard copies of the publication are not available to the public, but a user-friendly version is available at http://www.justice.gov/eoir/statspub/fy14syb.pdf.

 

- EOIR -

The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR's immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR's Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.

The Department of Justice has filed a lawsuit to recover damages from a storage company that allegedly violated the Servicemembers Civil Relief Act (SCRA) when it sold service members’ personal property without obtaining the necessary court orders.  The defendants in this lawsuit are Daniel E. Homan and Horoy Inc., doing business as Across Town Movers—a San Diego, California, storage company.  Homan is the President and sole owner of Horoy Inc. 

The SCRA protects the rights of service members while on active duty by suspending or modifying certain civil obligations.  The law states that a storage lien may not be enforced against service members during, or 90 days subsequent to, their period of military service without a court order.  The Department of Justice’s complaint alleges that, since 2011, Across Town Movers sold the personal property of 11 service members without obtaining a required court order. 

The complaint further alleges that after illegally selling one of the service member’s personal property, Across Town Movers continued to receive regular payments from the United States for storage of the sold property.  That service member is U.S. Navy Master Chief Petty Officer Thomas E. Ward.

In 2006, Master Chief Ward, a 30-year veteran, was deployed overseas.  He placed his valuable car parts and many household items into storage, and entrusted Across Town Movers to keep his personal property safe until he returned.  Just before he returned home, he learned that Across Town Movers had auctioned all of his stored personal property, including vintage original car parts. 

“Federal law does not allow storage companies to sell the contents of a service member’s storage lot without a court order,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Storage companies should check the Defense Department’s military database and other resources before conducting any auction to see if the customer is protected by the Servicemembers Civil Relief Act.  The Department of Justice is committed to protecting the rights of the men and women who serve in our Armed Forces and we will continue to devote time and resources to make sure that they are given the legal protections they deserve.”

“Service members, especially when deployed overseas, should be able to focus on protecting our county and shouldn’t have to worry about losing their personal property,” said U.S. Attorney Laura E. Duffy of the Southern District of California.  “Congress enacted the SCRA for this purpose, and we will pursue all appropriate remedies to ensure that our service members’ rights are protected.  Whether large or small, businesses will be held accountable for violating those rights.”

In addition to seeking damages for the value of the auctioned goods, the SCRA provides for civil monetary penalties of up to $55,000 for the first offense and $110,000 for each subsequent offense.  The Department of Justice will also seek injunctive relief.

This lawsuit was filed today in the Southern District of California.  This matter resulted from a referral to the Justice Department by the U.S. Navy. 

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

This matter is being handled by Assistant U.S. Attorneys Dylan M. Aste and Leslie M. Gardner of the Southern District of California.

A car salesman was sentenced earlier today in U.S. District Court in Los Angeles to serve one year and one day in prison on charges related to an odometer tampering scheme, the Justice Department announced. 

Jeffrey Levy, 63, of Woodland Hills, California, was also ordered to pay $115,818.80 in restitution to victims who purchased vehicles without knowing the odometers displayed incorrect mileages.  In November 2014, Levy pleaded guilty to one count of conspiracy to tamper with odometers. 

“A car salesman should know better than anyone that odometer tampering is a fraud and a crime,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “As this prosecution demonstrates, criminals with an electronic tool can easily alter electronic vehicle odometers, defrauding future car buyers.”   

Levy was a salesman at Galpin Ford in North Hills, California.  In his guilty plea, Levy admitted that he referred customers and friends to his co-conspirator, Shamai Salpeter, who rolled back odometers in the driveway of his residence in Woodland Hills.  Salpeter was also charged and pleaded guilty to odometer tampering and conspiracy to commit odometer fraud and is scheduled to be sentenced on April 13.

Levy knew that some of his customers had exceeded the maximum allowed mileage under the terms of their leases and wished to avoid fees and penalties.  He knew that other customers wanted to lower the mileage on their odometers to make their vehicles more valuable when they traded in the vehicles.  After Salpeter altered the odometers, Levy’s customers returned or traded in their vehicles with false, lower mileage readings.  Levy accepted the vehicles without alerting Galpin Ford that the odometer readings were false.  Future purchasers of the vehicles were defrauded because they purchased vehicles with false odometer readings.  Galpin Ford cooperated with the government’s investigation.

“Tampering with odometers is a crime that puts consumers’ lives and wallets at risk,” said Administrator Mark Rosekind of the National Highway Traffic Safety Administration (NHTSA).  “Not only do purchasers end up paying more for used cars, but rolling back the mileage on odometers hides necessary information that could ultimately affect a car’s safety and the costs of future repairs to consumers.”

This case is being prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.  The case was investigated by the NHTSA’s Office of Odometer Fraud Investigation and California’s Department of Motor Vehicles. 

NHTSA estimates that odometer fraud in the United States results in consumer losses of more than $1 billion annually and has established a special hotline to handle odometer fraud complaints.  Individuals who have information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761.

More information on odometer fraud is available on the NHTSA website, and tips on detecting and avoiding odometer fraud are available at this page.

Attorney General Eric Holder on Monday hailed the outcome in a lawsuit challenging the lack of funding for public defender programs in five counties in New York State, calling the finalized settlement in the case a “major step forward.”

In September 2014, the Justice Department had filed a statement of interest in the case, known as Hurrell-Harring v. State of New York.  This represented the first time the department addressed the constructive denial of counsel in state courts.  After extensive negotiations, the parties reached a settlement, which Judge Gerald Connolly of the Supreme Court of the State of New York, Albany County, has now signed.  The settlement agreement, which applies to five New York counties, guarantees that indigent criminal defendants will have legal counsel at arraignment, establishes and implements caseload and workload standards for public defenders, provides for effective supervision and training of public defenders and sets new indigency standards for determining whether a defendant is entitled to public counsel.

“This settlement marks a major step forward in the safeguarding of the essential right to effective legal representation, which stands at the core of America’s criminal justice system,” said Attorney General Eric Holder.  “It is simply unacceptable that, today – more than half a century after the Supreme Court’s landmark decision in Gideon v. Wainright affirmed the right to counsel for low-income defendants – America’s indigent defense systems continue to exist in a state of crisis, and inequities remain all too common.  That’s why, especially in recent years, the Department of Justice has fought tirelessly to ensure effective representation for all who are charged with crimes.  With this settlement, we send a clear message that this fight will continue.  And we will never waver in our commitment to ensuring that all Americans receive the rights and protections to which they are entitled.”

“This important settlement agreement is a model, not just for the five counties named in the case, but for all of New York State, and for the country,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The right to counsel is one of the core guarantees of the Bill of Rights, and yet, as countless cases and studies show, indigent defense systems across the county are facing significant challenges in meeting their Sixth Amendment obligations.”

In Hurrell-Harring the plaintiffs alleged that a lack of funding for indigent defense deprives public defenders of the time or resources to prepare cases or meaningfully represent their clients and amounts to the denial of counsel in violation of Gideon v. Wainwright and the Sixth Amendment.  In its statement of interest, the department advised the court that under resourcing public defense may force even otherwise competent and well-intentioned public defenders into a position where they are, in effect, a lawyer in name only.  The statement of interest added that if the court finds that the plaintiffs have been constructively denied the right to counsel on a systemic basis, the court has broad injunctive authority to remedy those constitutional violations. 

The Hurrell-Harring case was filed in 2007 and brought by former indigent defendants who faced criminal charges in Onondaga, Ontario, Schuyler, Suffolk and Washington counties in the state of New York.

U.S. Attorney General Eric Holder released the following statement Sunday regarding the arrest of Jeffrey Williams in the shooting of two law enforcement officers outside the Ferguson, Missouri Police Department on Thursday:

“This arrest sends a clear message that acts of violence against our law enforcement personnel will never be tolerated.  The swiftness of this action is a credit to the significant cooperation between federal authorities and the St. Louis County Police Department.  The ATF’s ballistic imaging technology has played a critical role in the ongoing investigation.  I commend both the ATF and St. Louis police for their tremendous work in identifying this suspect.

“In the days ahead, we will continue to partner with the authorities in St. Louis County to secure justice for all those affected by this heinous and cowardly crime.  And we will continue to stand vigilant in support of public safety officers and the communities they serve.”

The owner of two home health care companies pleaded guilty to Medicare fraud and tax fraud charges in connection with his role in a scheme to fraudulently bill Medicare for $12.6 million in home health services that were not provided or were obtained through illegal kickbacks.  Ten other individuals have been convicted at trial or pleaded guilty in this case.

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

Mohammed Sadiq, 67, of Oakland County, Michigan, pleaded guilty today before U.S. District Judge Denise Page Hood of the Eastern District of Michigan to one count of health care fraud and one count of filing a false tax return.  A sentencing hearing is scheduled for June 18, 2015. 

According to admissions in his plea agreement, Sadiq owned and directed operations at two home health care companies in Detroit.  Sadiq admitted that, working with co-conspirators, he created and operated the companies for the purpose of billing Medicare for home health services that he knew were not provided.  Sadiq also admitted to paying kickbacks to patient recruiters in order to obtain the information of Medicare beneficiaries, which he then used to bill Medicare for services that were not medically necessary or were not provided at all. 

Sadiq further admitted that he created fake patient files to fool a Medicare auditor and make it appear as though home health services were provided and medically necessary. 

Sadiq admitted that, as a result of the scheme, he received $12.6 million from Medicare.

Also according to Sadiq, he received proceeds of the fraud through bank accounts that he controlled, withdrew substantial sums for his personal use and failed to report these proceeds on his individual federal income tax return in 2008.  In total, Sadiq admitted that he currently owes approximately $1.5 million in taxes, interest and penalties for tax years 2008 through 2010.

This case was investigated by the FBI, HHS-OIG and IRS-CI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan.  The case is being prosecuted by Trial Attorneys William Kanellis, Christopher Cestaro, Brooke Harper and Elizabeth Young of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands (NMI), announced that the Regional Organized Crime Drug Enforcement Task Force (OCDETF) coordinators from the Pacific Region made their annual visit to Guam and the NMI and provided training to law enforcement agencies.  The training was conducted by Thomas Colthurst, OCDETF Regional Director, Steve Jensen, OCDETF Regional Coordinator of Internal Revenue Service - Criminal Investigations (IRS-CI), and Deborah Wee, OCDETF Regional Coordinator of the Federal Bureau of Investigations (FBI).  The training was held at the U.S. Attorney’s Office in Guam on March 11, 2015, and was attended by approximately 30 local and federal law enforcement officers from Guam and Saipan, NMI.

          The training topics included “Money Laundering and Financial Analysis,” “OCDETF Airport Security Initiative” and “Searches and Seizure.”

          The OCDETF Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. Today, the OCDETF Program is the centerpiece of the United States Attorney General's drug strategy to reduce the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations and related criminal enterprises.

          OCDETF investigations involve a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

          OCDETF investigations involve federal agents and local law enforcement officers of the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Drug Enforcement Administration (DEA), the FBI, the IRS, the U.S. Coast Guard Criminal Investigative Service (CGIS), the U.S. Department of Homeland Security Investigations (HSI), the U.S. National Oceanic Atmosphere Administration (NOAA), the U.S. Marshal’s Service, the U.S. Postal Inspection Service (USPIS), and numerous local agencies such as the Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA) and others.

 

Assistant U.S. Attorney Thomas Colthurst gives an Overview of Financial Investigations and Money Laundering Laws Steve Jensen, OCDETF Regional Coordinator of IRS-CI presenting on the topic of International Money Laundering U.S. Attorney Alicia Limtiaco with Assistant U.S. Attorney Thomas Colthurst at the OCDETF training for law enforcement

 

Michigan resident Lip Bor Ng, also known as Paul Wu, 52, pleaded guilty before Judge Mark A. Goldsmith to a one-count conspiracy information, which charged him with conspiring with others to knowingly submit false and misleading export information to the United States,  to fraudulently and knowingly export electronic waste in violation of United States law and to export hazardous waste without filing a notification of intent to export with the U.S. Environmental Protection Agency (EPA).

According to the charges in the information, Ng submitted fraudulent export information to the Automated Export System, an electronic database maintained by the U.S. Customs and Border Protection, on two occasions in 2011.  He falsely declared the commodities as plastic and metal scrap, when, in fact, they contained various types of used electronics and computer components, including cathode-ray tube (CRT) monitors.  CRT monitors can be considered hazardous waste under certain conditions and thus their export is regulated by EPA. 

“U.S. law strictly regulates the exportation of hazardous e-waste because we care about what happens to these materials when they leave our shores,” said John C. Cruden, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “We will not allow people to profit from compromising the health and safety of people overseas.  Those who do so will be prosecuted.”

Anyone who exports unusable, hazardous CRT monitors must file a notification of intent to export CRT monitors and must also receive permission from the receiving country, in this case, China and Hong Kong, to allow import into that country.  Ng did not file the appropriate notification, or receive permission from China and Hong Kong to export the CRT monitors.

“The more technology we use, the more electronic waste is created that can seriously impact human health and the environment,” said Special Agent in Charge Randall K. Ashe of EPA’s criminal enforcement program in Michigan.  “Many old, worn-out electronics are exported overseas where people risk their health to retrieve the valuable materials left in them.  As a global leader in the manufacture and use of electronics, America has a responsibility to ensure their proper disposal.” 

“When potentially hazardous e-waste is not properly disposed of, human lives are put at risk,” said Marlon Miller, special agent in charge of Homeland Security Investigations Detroit. “The investigation confirmed that the defendant repeatedly and illegally exported used cathode ray tubes overseas. Homeland Security Investigations stands with our law enforcement partners, committed and ready, to prevent any company from ignoring U.S. laws involving the export of hazardous e-waste."

Ng faces a maximum sentence of five years imprisonment and a $250,000 fine. Sentencing was set for July 14, 2015.

The case is being investigated by the EPA, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Department of Commerce, and U.S. Postal Inspection Service.

The case is being prosecuted by the Department of Justice, Environmental Crimes Section, Trial Attorney Jennifer Leigh Blackwell, the United States Attorney’s Office for the Eastern District of Michigan, Assistant U.S. Attorney Lynn Dodge, as well as EPA Regional Criminal Enforcement Counsel Dave Taliaferro.

The Department of Justice announced today that it will require Waste Management Inc. (WMI) and Deffenbaugh Disposal Inc. (DDI) to divest small container commercial waste service routes, in the Topeka, Kansas, area and in two areas in Northwestern Arkansas – Van Buren/Fort Smith and Springdale – in order for WMI to proceed with its acquisition of DDI.  Without these divestitures, the department said, the transaction would have likely resulted in higher rates for customers in those areas.

The Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed acquisition.  At the same time the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.

“This deal threatened to weaken competition in small container commercial waste service in three cities and surrounding areas,” said Assistant Attorney General Bill Baer of the Antitrust Division.  “Competition between Waste Management and Deffenbaugh historically has resulted in lower prices and better service.  By requiring the divestiture of Deffenbaugh’s small container commercial waste service routes in these cities, today’s proposed settlement will ensure that businesses in Kansas and Arkansas will benefit from continuing competition among waste haulers.”

According to the department’s complaint, WMI’s acquisition of DDI would significantly reduce competition in three local small container commercial waste service markets.  Small container commercial waste service is the collection of municipal solid waste from commercial businesses, such as office and apartment buildings, and retail establishments, such as stores and restaurants.  In and around Topeka and in the Van Buren/Fort Smith, WMI and DDI are currently two of three major providers of these services.  In these areas the combination of WMI and DDI would have resulted in only two major competitors.  In the Springdale area, WMI and DDI are currently two of four major providers.  In this area the combination of WMI and DDI would have resulted in only three competitors.  In each of these areas, the loss of competition would likely result in higher prices and reduced quality in small container waste collection service.

The proposed divestitures address these competitive concerns.  Under the terms of the proposed consent decree, WMI must divest DDI’s small container commercial waste routes in each of these three markets. 

WMI is a Delaware corporation with its headquarters in Houston.  WMI provides collection, transfer, recycling and disposal services throughout the United States.  In 2014, WMI had estimated total revenue of $14 billion.

DDI is a Delaware corporation, with its headquarters in Kansas City, Kansas.  DDI offers collection, transfer, recycling and disposal services in Kansas, Missouri, Arkansas, Nebraska and Iowa.  DDI’s revenues for 2013 were approximately $180 million.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to James Tierney, Chief, Networks and Technology Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

WMI Competitive Impact Statement
WMI Hold Separate
WMI Proposed Final Judgement
WMI Complaint
 

The United States has asked a federal court in Las Vegas to bar a Las Vegas man from preparing federal tax returns that contain or involve foreign earned income, and from promoting to others the exclusion of foreign earned income.

The complaint, which was filed with the U.S. District Court for the District of Nevada, alleges that Harvey L. Cage, who does business as CSN Tax Services, inappropriately attempts to exclude foreign earned income from the calculation of his customers’ federal tax liabilities.  According to the complaint, from 2009 through 2012, Cage personally prepared more than 3,200 tax returns, of which approximately 25 percent contained the foreign earned income exclusion. 

Typically, U.S. citizens may exempt some foreign earned income from the calculation of gross income if they are present in a foreign country for at least 330 full days out of 12 consecutive months.  This period can be waived when the Secretary of the Treasury determines, after consultation with the Secretary of State, that individuals were required to leave a foreign country due to war, civil unrest or other conditions that preclude the normal conduct of business, among other things.  In implementing this waiver provision, each year the Secretary of the Treasury publishes a list of countries that have been determined eligible for waiver requests.  According to the suit, Cage ignored the published list of waiver-eligible countries in filing for his customers’ exclusion of foreign earned income.  According to the government’s complaint, Cage, on behalf of some of these customers, claimed the foreign earned income exclusion for which his customers were not entitled, inappropriately reducing their tax liability. 

According to the complaint, Cage’s activities have resulted in an estimated average tax loss of more than $12,000 per examined return.  The United States alleges that the additional taxes due from Cage’s customers, excluding interest and penalties, is greater than $3.7 million and continues to grow as additional examinations are completed.  After many of his customers had been audited, Cage failed to provide his Preparer Tax Identification Number (PTIN) on the tax returns he prepared, in violation of federal law, 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.

Colin Boone, previously employed as an officer of the Des Moines, Iowa, Police Department, was convicted today on the charge of deprivation of rights under color of law for assaulting a civilian during the course of an arrest on Feb. 19, 2013, announced Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division and U.S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.  The evidence presented at trial showed that Boone ran up to an arrestee and kicked him in the face while he was being held on the ground, face-down, by three other officers.  The evidence also showed that Boone’s kick knocked out the victim’s front teeth and broke his nose.

“The Department of Justice is proud to stand behind the fine law enforcement officers with the Des Moines Police Department who honored their badges by providing truthful information about the defendant’s criminal actions,” said Acting Assistant Attorney General Gupta.  “We are committed to working with our law enforcement partners to hold accountable officers such as former officer Boone, who engage in willful uses of excessive force.”

“This was a violent, criminal action” stated U.S. Attorney Klinefeldt.  “Defendant Colin Boone kicked a defenseless man in the face.  He will now be held responsible in the same way as all of the defendants he has helped put in jail.  This was also a betrayal of trust: former police officer Colin Boone betrayed the trust of the public he served and of the officers with whom he served.”

The charge of deprivation of rights under color of law carries a statutory maximum sentence of ten years in prison and a maximum fine of $250,000.  The sentencing hearing will be determined at a later date and Boone remains out of custody pending sentencing.

Today’s conviction is the result of an investigation conducted by the FBI’s Des Moines Resident Office.  Prosecution of this matter was handled by the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office in the Southern District of Iowa.

The Department of Justice today filed a statement of interest in the Superior Court of Fulton County, Georgia, in N.P. et al. v. The State of Georgia, et al.  The class action asserts that the public defense system in the Cordele Judicial Circuit is so underfunded and poorly staffed that indigent adults and juveniles accused of committing criminal acts are routinely denied their right to legal representation.  The department’s statement of interest focuses solely on the due process rights of children accused of delinquency.  It is the first department filing in a state court action to address the due process right to counsel for children established by the U.S. Supreme Court in In re Gault.   In Gault the court recognized the critical needs of children for guidance and advocacy and the vital role counsel plays in ensuring fairness in delinquency proceedings.  More recent Supreme Court decisions have emphasized the differences between adults and children in the criminal justice system.  Applying this case law, the department’s filing identifies procedural safeguards that must be provided to children who appear before the court.  

“For too long, the Supreme Court’s promise of fairness for young people accused of delinquency has gone unfulfilled in courts across our country,” said Attorney General Eric Holder.  “Every child has the right to a competent attorney who will provide the highest level of professional guidance and advocacy.  It is time for courts to adequately fund indigent defense systems for children and meet their constitutional responsibilities.”

 “Every day, in communities across our country, under-resourced public defense systems fail to meet their constitutional obligation to provide effective representation for children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Children who depend on these failing systems often get the poorest representation, relegating them to second-class status in our courts. The systemic deprivation of counsel for children cannot be tolerated.”

In N.P., the plaintiffs allege that children in juvenile delinquency proceedings in the Cordele Judicial Circuit are denied their right to meaningful representation and are, at best, provided with “assembly-line justice.”  They assert that because public defense counsel are understaffed and under-resourced, they often are not appointed on behalf of children, and that children routinely waive their right to counsel without the waiver being knowing, intelligent and voluntary.  The plaintiffs claim that the denial is so total that it amounts to a systemic violation of the juveniles’ due process right to counsel, as required by Gault and the U.S. Constitution.

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

N.P. et al. v. The State of Georgia et al. was filed in January 2014 and brought by adult defendants and juveniles accused of delinquency in the Cordele Judicial Circuit.  The plaintiffs seek reform to prevent future due process and right to counsel violations.

Two Phenix City, Alabama, women and a Columbus, Georgia, woman pleaded guilty for their roles in a stolen identity refund fraud (SIRF) conspiracy, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama announced today.

Tamaica Hoskins, a resident of Phenix City, pleaded guilty today in U.S. District Court in the Middle District of Alabama to one count of conspiracy to commit wire fraud and one count of aggravated identity theft.  Roberta Pyatt, also of Phenix City, previously pleaded guilty on Feb. 25 to one count of conspiracy to commit wire fraud.  Lashelia Alexander, of Columbus, pleaded guilty to one count of conspiracy to commit wire fraud on Nov. 18, 2014.  According to court documents, between September 2011 and June 2014, Hoskins, Pyatt and others filed more than 1,000 false federal income tax returns using stolen identities and requested more than $4 million in tax refunds.  Hoskins obtained stolen identities from various sources, including the identities of employees from a Columbus company. 

In order to file the false tax returns, Hoskins and Pyatt obtained two Electronic Filing Identification Numbers (EFINs) in the names of sham tax businesses.  The tax refunds claimed on the false returns were paid out via prepaid debit cards, U.S. Treasury checks and deposits to financial institutions connected to the business EFINs that allowed participants in the scheme to print refund checks and obtain prepaid debit cards.  Hoskins and Pyatt cashed fraudulent refund checks at several businesses located in Alabama and Georgia. 

Lashelia Alexander worked for Walmart’s money center located in Columbus.  In January 2014, Alexander was approached about cashing fraudulent tax refund checks that were issued in the names of third parties.  In return for cashing the checks, Alexander would receive payment.  Alexander cashed more than $100,000 in fraudulently obtained third-party refund checks issued based on false tax returns that were filed by Hoskins and Pyatt.

At sentencing, the defendants face a statutory maximum sentence of 20 years in prison and a fine of $250,000 for wire fraud conspiracy.  Hoskins also faces a minimum mandatory consecutive sentence of two years in prison and a statutory maximum fine of $250,000 for aggravated identity theft. 

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

Younger Sibling Plotted to Attack New York City with a Weapon of Mass Destruction

Assistant Attorney General for National Security John Carlin, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Director Stacia A. Hylton of the U.S. Marshals Service, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and members of the South Florida Joint Terrorism Task Force (JTTF) announced today that Raees Alam Qazi and his brother, Sheheryar Alam Qazi, pleaded guilty to terrorism violations and to assaulting two Deputy U.S. Marshals while in custody. 

During the hearing, the Qazi brothers acknowledged that Raees Alam Qazi, the younger brother, was going to initiate an attack using a weapon of mass destruction in New York City and that he had been financially and emotionally supported by his older brother, Sheheryar Alam Qazi, who encouraged him to launch the attack. 

“With today’s guilty pleas, Raees Qazi and his brother Sheheryar Qazi are being held accountable for their roles in a plot to conduct a terrorist attack using a weapon of mass destruction in New York City and their assault on two federal officers during their pretrial detention,” said Assistant Attorney General Carlin.  “This case highlights our commitment to pursue any individuals who would seek to conduct an attack on U.S. soil or to injure law enforcement officials who risk their lives to protect us.  I want to thank the many agents, analysts, and prosecutors who are responsible for this successful result.”

“The plot by Raees Qazi to perform a terrorist attack in New York City – and his older brother’s financial support of that plot – was intended to further Al Qa’ida’s message in the United States,” said U.S. Attorney Ferrer.  “The Qazi brothers later attacked federal law enforcement agents.  As today’s guilty pleas demonstrate, we will respond by holding those who plan terrorist acts on American soil accountable.  This case serves as an example of our commitment to protecting civilians from violent jihadi attacks.”

“Any attempt on the life of a law enforcement official is heinous,” said Director Hylton.  “To attempt to murder two Deputy U.S. Marshals while in a federal cellblock is a total disregard for life and the entire judicial process.”

“The Qazi brothers are a great example why the FBI’s number one priority is counterterrorism,” said Special Agent in Charge Piro.  “We remain committed in our steadfast efforts to detect, deter and disrupt every threat to the United States.” 

Raees Alam Qazi, 22, and his brother, Sheheryar Alam Qazi, 32, were living in Oakland Park, Florida, in November 2012 when they were arrested and charged with conspiracy to provide material support to terrorists and conspiracy to use a weapon of mass destruction (explosives).  In January 2015, a federal grand jury added additional terrorism charges and five counts of conspiracy, assault and attempted murder relating to an attack on two Deputy U.S. Marshals in April 2014 while the Qazis were in federal custody.

Raees Alam Qazi pleaded guilty to one count of conspiring to provide material support and resources to terrorists in preparation for the use of a weapon of mass destruction, one count of attempting to provide material support to a foreign terrorist organization and one count of conspiring to assault a federal employee.  Under the terms of the plea agreement, the parties jointly agreed to recommend a 32-year prison sentence for Raees Qazi.

Sherheyar Alam Qazi pleaded guilty to one count of conspiring to provide material support and resources to terrorists in preparation for the use of a weapon of mass destruction and one count of conspiring to assault a federal employee.  Under the terms of the plea agreement, the parties jointly agree to recommend a 17-year prison sentence for Sheryheyar. 

The sentencing hearing for both brothers is currently set before U.S. District Judge Beth Bloom of the Southern District of Florida on June 5. 

Raees Alam Qazi and Sheheryar Alam Qazi face a potential statutory maximum sentence of 35 years and 20 years, respectively.

The brothers are naturalized U.S. citizens from Pakistan.

The case was investigated by the FBI’s Miami Field Office and the South Florida JTTF.  The case is being prosecuted by Assistant U.S. Attorneys Karen E. Gilbert and Adam S. Fels of the Southern District of Florida, and Trial Attorney Jennifer E. Levy of the Justice Department’s National Security Division.

Raees Alam Qazi Plea Agreement

Sheheryar Alam Qazi Plea Agreement

Raees Alam Qazi et al Factual Proffer

A retired colonel and a former sergeant from the U.S. Army National Guard both pleaded guilty today for their roles in a recruiting fraud scheme that caused approximately $14,000 in losses to the U.S. National Guard Bureau, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

Retired Colonel Isaac Alvarado, 75, and former Sergeant First Class Travis Nau, 41, both of Albuquerque, New Mexico, pleaded guilty today to one count of conspiracy to commit wire fraud and one count of wire fraud before Chief U.S. Magistrate Judge Karen B. Molzen of the District of New Mexico.  Sentencing hearings will be scheduled at a later date, and will take place before U.S. District Judge Judith C. Herrera of the District of New Mexico.

According to court documents, in approximately September 2005, the National Guard Bureau created the Guard Recruiting Assistance Program (G-RAP), which was designed to offer monetary incentives to soldiers who recruited others to join the National Guard.  Through this program, a participating soldier, known as a recruiting assistant, could receive bonus payments for referring another individual to join the National Guard. 

According to the plea agreements entered today, between February 2008 and February 2012, Alvarado served as a recruiting assistant in the G-RAP.  During that time, Nau, who is Alvarado’s son-in-law, worked in a National Guard recruiting office and assisted individuals who were interested in joining the military.  The defendants admitted that Nau provided Alvarado with the personal identifying information of potential soldiers, including their names and Social Security numbers.  Alvarado then used that information to falsely claim that he was responsible for referring the soldiers to join the military, and to fraudulently claim referral bonuses through the G-RAP.  In addition, Alvarado and Nau admitted that Nau advised at least two potential soldiers to falsely report that Alvarado had assisted in their recruitment even though he had not.  As a result, Alvarado received approximately $12,000 in fraudulent recruiting bonuses.

The case is being investigated by the Fort Bliss Army Criminal Investigation Command.  This case is being prosecuted by Trial Attorneys Sean F. Mulryne and Heidi Boutros Gesch of the Criminal Division’s Public Integrity Section. 

Espar Inc., a seller of parking heaters for commercial vehicles, pleaded guilty to participating in a price-fixing scheme, the Department of Justice announced today. 

Espar Inc. pleaded guilty to a one-count felony charge in the U.S. District Court for the Eastern District of New York in Brooklyn.  According to the charge, Espar conspired with others to fix prices for parking heaters in the United States and elsewhere in North America from at least as early as Oct. 1, 2007, until Dec. 31, 2012.  Parking heaters are devices that heat the interior compartment of a motor vehicle independent of the operation of the vehicle’s engine.  In addition to paying a criminal fine, Espar has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval, and Espar is scheduled to be sentenced on June 5, 2015.

“Today’s plea demonstrates the Antitrust Division’s commitment to holding companies accountable for conspiracies that fix prices on parts used in every day products,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “The Antitrust Division will vigorously prosecute companies that engage in schemes that subvert normal competitive processes and defraud American consumers and businesses.”

According to the charge, Espar and its co-conspirators discussed parking heater prices for commercial vehicles, agreed to set a price floor for parking heater kits for commercial vehicles sold to aftermarket customers, and agreed to coordinate the timing and amount of price increases for parking heaters for commercial vehicles sold to aftermarket customers.  The companies carried out the agreement and exchanged information for the purpose of monitoring and enforcing adherence to the agreement.

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

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

American Pallet Recycling, L.L.C. (APR) and its former president and owner, Raymond Viola, have pleaded guilty and been sentenced in U.S. District Court in the Eastern District of New York to criminal violations related to the falsification of certificate stamps in violation of the Plant Protection Act, the Justice Department and the Department of Agriculture announced.  As part of the plea agreement, the company will pay a fine of $100,000. Viola will pay $1,000 and serve three years of probation and has relinquished the business to his son.

APR plead guilty to one felony count of falsifying stamps that certified wood pallets were heat treated to prevent pest infestation, and were suitable for use in international transportation.  Viola pleaded guilty to a similar misdemeanor count.  Viola had the false stamps affixed to wood pallets which were used to carry products from the United States to foreign countries.  The criminal conduct took place from March 2007 through January 2011.

The Department of Agriculture requires the heat treatment of wood pallets used in international transactions.  The requirement is to prevent parasites and plant diseases from potentially entering the United States in wood packaging materials.  The Department of Agriculture began requiring heat treatment of wood packaging material in September 2005.  Wood pallets that carry products transported within the United States are not required to be heat treated. 

APR sold wood pallets to multiple other companies who used the wood pallets to transport products internationally.  The purchasing companies ordered and thought they were purchasing heat treated pallets.  Instead, Viola created copies of stamp certifications utilized by legitimate wood pallet treating companies, which he and his employees applied to pallets APR sold.  The charges against APR and Viola involved the fraudulent stamp certification of hundreds of untreated wood pallets that were sold to other companies for use in product export.

This is the highest monetary penalty assessed for falsified use of a fraudulent mark related to wood packaging materials under the Plant Protection Act.

The investigation was conducted by the U.S. Department of Agriculture.  It was prosecuted by Senior Counsel Rocky Piaggione of the Justice Department’s Environmental Crimes Section.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Special Agent in Charge Marlon Miller of Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Detroit Field Office announced that a naturalized U.S. citizen was sentenced today to serve 18 months in prison for her Nov. 10, 2014, conviction on immigration fraud for failing to disclose that she had been convicted of participating in a terrorist bombing. 

Rasmieh Yousef Odeh, 67, a Chicago-area resident, was found guilty by a jury of procuring her U.S. citizenship unlawfully on Nov. 10, 2014, after a five-day trial.  According to the indictment, Odeh was convicted in Israel for her role in the 1969 bombings of a supermarket and the British Consulate in Jerusalem, which were carried out on behalf of the Popular Front for the Liberation of Palestine (PFLP), a designated terrorist organization.  Odeh and others placed multiple bombs at the British Consulate and in a supermarket.  One of the bombs placed at the supermarket detonated, killing two and injuring others.  A bomb placed at the consulate caused structural damage to the facility.  Odeh was sentenced by Israeli military authorities to life imprisonment, but was released after 10 years as part of a prisoner exchange and she then returned to the West Bank.  

The evidence presented at trial established that in 1995, Odeh immigrated to the United States and was naturalized as a citizen in 2004.  In her immigration documents filed in the United States, Odeh failed to disclose her arrest, conviction and imprisonment overseas, which were material facts for the U.S. government in determining whether to grant her citizenship.

“The United States government is entitled to accurate information about people who are asking permission to enter and stay in the country,” said U.S. Attorney McQuade.  “A prior conviction for committing a terrorist bombing is a very significant fact, and failure to disclose this information is a serious fraud against the United States.”

“Today's sentencing and deportation order against the defendant underscores the severe penalties that await those who attempt to defraud the immigration system by hiding derogatory information from their past,” said Special Agent in Charge Miller.  “When individuals are less than truthful on their immigration documents, the system is severely undermined and the security of our nation is put at risk.  I applaud the HSI special agents and federal prosecutors who worked tirelessly to resolve this lengthy and complex investigation.”

As part of her sentence, the Honorable U.S. District Judge Gershwin A. Drain revoked Odeh’s U.S. citizenship and ordered her removed and deported to Jordan.  Judge Drain stayed the execution of these orders pending her appeal of the conviction.  Judge Drain also granted Odeh’s request to remain on bond pending her appeal. 

This case was investigated by special agents of ICE-HSI and prosecuted by Assistant U.S. Attorney Jonathan Tukel and Special Assistant U.S. Attorney Mark Jebson of the Eastern District of Michigan, and Trial Attorney Elisabeth Poteat of the Justice Department’s National Security Division.

The Justice Department announced today that Hencorp Becstone Capital L.C. (Hencorp) has agreed to pay $3.8 million to resolve allegations under the False Claims Act that it made false statements and claims to the Export-Import Bank of the United States (Ex-Im Bank) in order to obtain loan guarantees.  Hencorp is a Miami-based lender and financial services company that provides financing and other financial services to Latin American businesses.  

“The Ex-Im Bank provides vital support for U.S. manufacturing by enabling foreign businesses to obtain financing to purchase U.S.-made goods and equipment,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will continue to vigorously pursue those who attempt to take advantage of this important program.”  

The Ex-Im Bank guarantees loans made by approved lenders to foreign businesses for the purchase of American-made products.  The lender is responsible for performing a credit review of the transaction to ensure that it meets applicable criteria.  The government alleged that Ricardo Maza, a Peruvian-based former Hencorp business agent, created false documentation to obtain Ex-Im Bank guarantees on fictitious transactions on which no products were sold or exported, and that Hencorp acted recklessly by outsourcing key credit review functions to Maza without adequate supervision or oversight.  The government alleged that Maza then diverted the proceeds of the loans to himself and to his friends and business associates in Peru, and that the transactions resulted in losses to the Ex-Im Bank when the loans were not repaid.  In 2012, Mario Mimbella, 64, of Miami, Florida, the purported U.S.-based exporter on three of the fraudulent transactions, pled guilty to making false records for his participation in the scheme and was later sentenced to prison. 

“Lenders that use Ex-Im programs have an obligation to prevent and detect fraud,” said Acting Inspector General Michael T. McCarthy for the Ex-Im Bank.  “The Office of Inspector General will pursue accountability for all participants involved in schemes that defraud the Ex-Im Bank.”

This settlement resolves allegations made in a whistleblower lawsuit filed under the False Claims Act by Genaro Benites Caballero, the former owner of one of the purported purchasers who stated that he had no part in the scheme and that his signature was forged on key documents without his knowledge, and Patricia Doris Lee Dominguez, a former attorney for the purported purchaser.  Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery.  The whistleblowers will receive $608,000 of the settlement. 

This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Columbia and the Office of Inspector General for the Ex-Im Bank. 

The lawsuit is captioned United States ex rel. Benites Caballero, et al. v. Hencorp Becstone Capital, L.C., et al., cv-13-168 (D.D.C.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability with respect to Hencorp.

The U.S. Justice Department’s Civil Rights Division announced today that a settlement has been reached with the Missouri National Guard (MNG) to resolve allegations that MNG violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by requiring its civilian National Guard dual technician employees to be separated from their civilian positions prior to entering active military duty service with the U.S. Active Guard Reserve (AGR) Program.

According to the complaint, filed in the U.S. District Court of the Western District of Missouri, MNG violated the USERRA rights of Kinata Holt, a civilian National Guard dual technician, by requiring her to give up her civilian employment as a condition of being called to active duty with the AGR.  The Justice Department alleged that MNG’s refusal to place Holt on furlough or leave of absence from her civilian job, by forcing her separation, resulted in the loss of paid military leave to which she would otherwise have been entitled.  Under the terms of the settlement agreement, which is subject to approval by the district court, MNG has agreed to rescind its current policy requiring separation in order to enter the AGR and to compensate Holt by awarding her 30 days of paid military leave.

The settlement agreement also provides that MNG will compensate 137 other civilian National Guard dual technicians who were similarly denied military leave benefits.  As a part of the agreed upon terms of settlement for those employees, each will receive a leave credit of 15 days of paid military leave for the 2014-2015 fiscal year.  Collectively, these employees will receive more than 2,000 days of paid leave for the past year, and be awarded paid military leave in the future as they continue to serve on active duty with AGR.

“This settlement will provide much deserved relief to Kinata Holt and 137 other service members who lost their military benefits because of the actions of MNG,” said Acting Associate Attorney General Stuart Delery.  “The Department of Justice is committed to protecting the rights of the men and women who serve in our Armed Forces and we will continue to devote time and resources to hold bad actors accountable.”

“The Missouri National Guard, like other state employers, has a legal obligation under USERRA to provide the full range of rights and benefits to military service members that are permitted under the statute,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Department of Justice will continue to vigorously enforce the rights of uniformed service members in retaining their civilian employment benefits while on an absence due to military service obligations.”

This case stems from a referral by the U.S. Department of Labor (DOL) following an investigation by the DOL’s Veterans’ Employment and Training Service.  The case was handled by the Employment Litigation Section of the Civil Rights Division with the assistance of the U.S. Attorney’s Office of the Western District of Missouri, both of whom work collaboratively with DOL to protect the jobs and benefits of National Guard and Reserve Servicemembers.

The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA.  Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.