District Not Recorded

Attached is the motion to expedite the preliminary injunction appeal in the Fifth Circuit Court of Appeals in the case State of Texas, et al v. United States of America.

Appellants’ Motion for Expedited Appeal and for Leave to Use Appendix on Appeal

Attached is the Justice Department’s emergency motion for a stay in the Fifth Circuit Court of Appeals in the case State of Texas, et al v. United States of America.

Attachments to Appellants’ Emergency Motion for Stay Pending Appeal 

Appellants’ Emergency Motion for Stay Pending Appeal

The United States filed a complaint seeking to bar a Doral, Florida, man and his businesses from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint against Eleuterio Almanzar, Almanzar Tax Accounting & Consulting Corp. and Almanzar Financial Services Corp., filed in U.S. District Court in the Southern District of Florida, alleges that Almanzar prepares federal income tax returns for customers that understate the tax that is due or seek refunds larger than are appropriate. 

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

The complaint also seeks to enjoin Almanzar from using a false or fictitious federally issued identification number — including social security numbers, Electronic Filing Identification Numbers, Employer Identification Numbers, Taxpayer Identification Numbers and Preparer Tax Identification Numbers — to file or remit federal income tax returns.  The suit also seeks to prevent Almanzar from using any federally issued identification number that belongs to another person to file or remit federal income tax returns.  The government is also asking to have Almanzar provide a list of customers that identifies by name, social security number, address, e-mail address, telephone number and tax periods all persons for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2009.

According to the complaint, the average tax deficiency for the returns the IRS examined since 2009 was $3,249 per return.  Given the number of returns Almanzar has prepared since 2009, the harm to the United States caused by his practices could be in the millions of dollars.  

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.

The United States filed a civil complaint in the U.S. District Court for the Central District of California today against Plaza Bank of Irvine, California, for knowingly facilitating consumer fraud by permitting a third-party payment processor to make millions of dollars of unauthorized withdrawals from consumer bank accounts on behalf of fraudulent merchants.  To resolve the case, Plaza Bank has agreed to pay $1.225 million and enter into a permanent injunction that reforms the bank’s practices to prevent such fraud in the future.  The proposed consent decree has been filed with the court, which will determine whether to enter the order. 

“Today’s complaint alleges that, in exchange for fee income, the bank ignored its responsibilities and looked the other way while a third-party payment processor and its merchants defrauded unsuspecting victims of millions of dollars,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “A part of our responsibility at the Justice Department is to stop those who knowingly facilitate consumer fraud, and those in the financial industry are no exception.”

The complaint alleges that from July 2007 to mid-2010, Plaza Bank knowingly permitted fraudulent merchants, acting through an intermediary called a third-party payment processor, to illegally withdraw millions of dollars from consumers’ bank accounts.  The complaint further alleges that these unauthorized withdrawals resulted in: abnormally high rate of rejected transactions, which hovered between 50 and 55 percent; hundreds of consumer complaints each month in which consumers stated, by sworn affidavit, that withdrawals from their accounts were unauthorized; and inquiries from other banks and law enforcement, both of which expressed their belief that the payment processor’s transactions were fraudulent. 

According to the complaint, when Plaza’s chief compliance official raised concerns about these numerous warning signs of fraud, she was brushed aside by Plaza’s chief operating officer—who, unknown to the compliance officer, was one of two corporate officials who also happened to be a part-owner of the payment processor.  Plaza thus continued to give fraudsters unfettered access to the bank accounts of tens of thousands of consumers. 

Eventually, in June 2009, Plaza was sold to a third-party equity firm, which brought in new bank management.  According to the complaint, while new management soon recognized the problematic nature of the bank’s relationship with the payment processor, it did not immediately terminate the processor’s banking capabilities.  Instead, the complaint alleges that months passed while Plaza officials debated whether the revenues generated by the payment processor relationship outweighed the possible risk to the bank.  Meanwhile, the payment-processor significantly increased the number of fraudulent withdrawals from consumers’ bank accounts, according to the complaint.  The complaint further alleges that only after more than a thousand consumer complaints about unauthorized withdrawals reached Plaza, hundreds of thousands of transactions were returned, and tens of millions of additional dollars had been withdrawn from consumer accounts did Plaza finally terminate the relationship.

“Plaza Bank turned a blind eye while consumers lost tens of millions of dollars as unscrupulous merchants reached into accounts and stole hard-earned money,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California.  “Because of its flagrant failure to protect consumers and the integrity of our banking system, Plaza Bank is now subject to a significant penalty and court oversight to ensure it behaves as a lawful corporate citizen.”

According to the terms of the proposed consent decree, Plaza Bank will be required to pay $1 million to the U.S. Treasury as a civil monetary penalty and to forfeit $225,000 to the U.S. Postal Inspection Service’s (USPIS) Consumer Fraud Fund.  Plaza will also be required to implement a strict regime of underwriting and monitoring designed to prevent future consumer fraud by third-party payment processors.  The bank must also implement and enforce policies regarding disclosure of conflicts of interest by its senior executives and board members.  The bank also will be required to cooperate fully in other civil and criminal investigations.

The Justice Department’s case is being handled by Trial Attorney Sang Lee of the Civil Division’s Consumer Protection Branch in coordination with the U.S. Attorney’s Office for the Central District of California.

A federal jury in Houston yesterday convicted the owner of two Texas medical equipment companies for his role in a $3.4 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Mike Fields of the U.S. Department of Health & Human Services-Office of the Inspector General (HHS-OIG) Dallas Regional Office, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit made the announcement.

Huey P. Williams Jr., 45, who owned and operated Hermann Medical Supply of Katy, Texas, and Hermann Medical Supplies II of Houston, was convicted of one count of health care fraud, as charged in a Jan. 15, 2014, indictment.  Sentencing will be scheduled at a later date, and will take place before U.S. District Judge Melinda Harmon of the Southern District of Texas.

According to the evidence submitted at trial, Williams submitted claims to Medicare through his two companies for durable medical equipment, including orthotic devices, which were medically unnecessary or never provided to the patients.  Many of the orthotic devices were components of an “arthritis kit,” and were purported to be for the treatment of arthritis-related conditions.  The evidence demonstrated that, from December 2006 through July 2010, Williams submitted approximately $3.4 million in fraudulent claims to Medicare, and Medicare paid approximately $1.9 million on those claims.

The case was investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.  The case is being prosecuted by Trial Attorneys Ashlee Caligone McFarlane and Jason Knutson 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.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney James L. Santelle of the Eastern District of Wisconsin announced today that Kyle Allen Smith, 21, of Oshkosh, Wisconsin, has entered a guilty plea to possession of ricin.  At sentencing, Smith faces a maximum of 10 years imprisonment and fine of $250,000.

According to the plea agreement, Smith admitted growing castor bean plants and extracting ricin from the beans.  A substance found in Smith’s residence was sent to the Department of Homeland Security’s National Bioforensics Analysis Center at Fort Detrick, Maryland, and tested positive for the toxin ricin.  Ricin is a toxin that infects human cells and blocks their ability to synthesize their own protein.  Small doses of ricin may be lethal to human beings if ingested, inhaled or injected.  Symptoms of ricin poisoning can include difficulty breathing, nausea, vomiting and diarrhea, with possible death occurring within 36 to 72 hours.  According to information posted on the website of the Centers for Disease Control and Prevention (CDC), there are no known antidotes for ricin poisoning.

Smith admitted having homicidal thoughts and that his homicidal thoughts might have sparked his curiosity about the production of ricin.  He stated he would not use or test the ricin on any human because too many people knew what he was doing and would turn him in.

Smith was arrested on Oct. 31, 2014, after two professors at the University of Wisconsin at Oshkosh reported to campus authorities that Smith was making unusual inquiries about chemical processes, including extracting ribosomal inhibiting proteins.  Assistant Attorney General Carlin joins U.S. Attorney Santelle in praising the actions of the professors and the university administration in bringing Smith to the prompt attention of law enforcement authorities.  Assistant Attorney General Carlin is also very grateful to the Wisconsin National Guard, 54th Civil Support Team, for the critical assistance they provided in the safe recovery of the ricin.

The case was investigated by the Oshkosh Police Department and the FBI.  The case was prosecuted by Assistant U.S. Attorney Paul L. Kanter of the Eastern District of Wisconsin and the Justice Department’s National Security Division.

A former specialist with the U.S. Army has been indicted for accepting bribes from Afghan truck drivers at Forward Operating Base (FOB) in Gardez, Afghanistan, in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia made the announcement after the indictment was unsealed today.

Anthony Don Tran, 28, of Stockton, California, was indicted on March 10, 2015, in the Middle District of Georgia for one count of conspiracy to commit bribery of a public official and one count of bribery of a public official.  Tran was arrested in Santa Clara, California, on March 11, 2015.

According to allegations in the indictment, from December 2012 to May 2013, Tran conspired with James Norris and Seneca Hampton, both sergeants in Tran’s unit, to solicit and accept cash bribes from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base.  The indictment specifically alleges that on Jan. 26, 2013, Tran accepted $20,000 in exchange for permitting an Afghan driver to leave FOB Gardez with nearly 13,000 gallons of fuel purchased by the U.S. government.   

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

Norris and Hampton each pleaded guilty to one count of conspiracy to commit bribery of a public official and one count of money laundering on Feb. 11, 2015, and are scheduled to be sentenced on May 21, 2015.     

The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division.  The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section. 

Commerzbank AG, a global financial institution headquartered in Frankfurt, Germany, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York), have agreed to forfeit $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA).  The bank has also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Board of Governors of the Federal Reserve System. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.

In entering the deferred prosecution agreement, Commerzbank admitted and accepted responsibility for its criminal conduct in violation of IEEPA, and Commerz New York admitted its criminal conduct in violation of the BSA.  Commerzbank further agreed to pay $263 million in forfeiture and a fine of $79 million for the IEEPA violations, and to pay $300 million in forfeiture in connection with the BSA violations, which will be remitted to the victims of a multi-billion dollar securities fraud scheme that was permitted to operate through Commerzbank.  Commerzbank also agreed to implement rigorous internal controls and to cooperate fully with the Justice Department, including by reporting any criminal conduct by an employee.

A four-count felony criminal information was filed today in the District of Columbia charging Commerzbank with knowingly and willfully conspiring to commit violations of IEEPA and Commerz New York with three violations of the BSA for willfully failing to have an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent accounts, and willfully failing to file suspicious activity reports.  Assuming the bank’s continued compliance with the deferred prosecution agreement, the government has agreed to defer prosecution for a period of three years, after which time, the government would seek to dismiss the charges. 

The New York County District Attorney’s Office is also announcing today that Commerzbank has entered into a deferred prosecution agreement, and in the corresponding factual statement, Commerzbank admitted that it violated New York State law by falsifying the records of New York financial institutions.  In addition, the Board of Governors of the Federal Reserve System is announcing that Commerzbank has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $200 million.  The New York State Department of Financial Services (DFS) is announcing Commerzbank has agreed to, among other things, pay a monetary penalty to DFS of $610 million.  The OFAC has also levied a fine of $258.6 million, which will be satisfied by payments made to the Justice Department.  In total, Commerzbank will pay $1.45 billion in penalties.

“Commerzbank concealed hundreds of millions of dollars in transactions prohibited by U.S. sanctions laws on behalf of Iranian and Sudanese businesses,” said Assistant Attorney General Caldwell.  “Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices.  Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”

“Sanctions laws are designed to protect the national security of the United States and promote our foreign policy interests,” said U.S. Attorney Machen.  “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan.  The bank tried to skirt our laws by hiding its illegal business with Iranian banks from its own employees in the United States.  Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws.”

“Today, Commerz New York stands charged with Bank Secrecy Act criminal offenses for its acute, institutional anti-money laundering deficiencies that made it a conduit for over a billion dollars of the Olympus fraud,” said U.S. Attorney Bharara.  “These criminal charges follow a multi-year investigation and a guilty plea by a former Commerzbank Singapore employee who helped set up the structure that allowed for the Olympus fraud.  Institutions, not just individuals, have an obligation to follow the law, and anti-money laundering laws in particular are critical for financial institutions to follow.  With today’s resolution, the bank, as part of a deferred prosecution agreement, has accepted responsibility in a detailed statement of facts, agreed to continue reforming its anti-money laundering practices, and will pay $300 million that will go to victims of the Olympus fraud.”

“Today’s deferred prosecution agreement is a significant milestone – on an international stage – that reaffirms our clear message to other global financial institutions,” said Chief Weber.  “IRS-CI’s work in this investigation – as well as the prior sanction cases – has resulted in fundamental changes in the way banks operate worldwide.  IRS-CI and our partners will continue to hold financial institutions accountable for international criminal violations.”

“Today, we announce more charges against yet another bank,” said Assistant Director in Charge Rodriguez.  “Commerzbank violated the Bank Secrecy Act designed to prevent the movement of money, often with nefarious intent.  Commerzbank enabled Olympus to evade detection for years.  And worse yet, failed to create a process to prevent this criminal behavior.  Management at banks and financial institutions should heed this warming: This behavior will be investigated, vigorously.”

“We have sanctions in place to prevent rogue nations and terrorists from accessing the U.S. financial system,” said District Attorney Vance.  “In order to have teeth, sanctions need to be enforced and Manhattan financial institutions need to be protected from being unwittingly used by bad actors.  Over the course of eight settlements, my office and our partners have sent a strong message of enforcement that has led to the transformation of compliance in this area.”

IEEPA Violations

According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions.  Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.

For example, in the deferred prosecution agreement, Commerzbank acknowledged that it used non-transparent payment messages, known as cover payments, to conceal the involvement of sanctioned entities, and also removed information identifying sanctioned entities from payment messages, in transactions processed through Commerz New York and other financial institutions in the United States.  Specifically, in 2003, Commerzbank designated a group of employees in the Frankfurt back office to review and amend Iranian payments so that the payments would not be stopped by U.S. sanctions filters.  In doing so, Commerzbank ensured that Iranian payment messages did not mention the Iranian entity, as transactions may have otherwise been stopped pursuant to the U.S. sanctions.

Commerzbank admitted that it hid these practices from Commerz New York.  For example, in 2003, when two state-owned Iranian banks wanted to begin routing their U.S. dollar clearing business through Commerzbank, a Commerzbank back office employee emailed other Commerzbank employees directing: “If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”  

Commerzbank admitted that this conduct continued even though its senior management was warned that the bank’s practices for Iranian clients “raised concerns.”  For example, in October 2003, the head of Commerzbank’s internal audit division stated in an email to a member of Commerzbank’s senior management that Iranian bank names in payment messages going to the United States were being “neutralized” and warned: “it raises concerns if we consciously reference the suppression of the ordering party in our work procedures in order to avoid difficulties in the processing of payments with the U.S.A.” 

In another scheme designed to avoid U.S. sanctions, Commerzbank admitted that, in 2004, it agreed with an Iranian bank client that, rather than sending direct wire payments to the United States, the Iranian bank would pay U.S. beneficiaries with Commerzbank-issued checks listing only the Iranian bank’s account number and address in London with no mention of the Iranian bank’s name. 

Additionally, Commerzbank admitted that in 2005, it created a “safe payment solution” for an Iranian shipping company client, which allowed the client to conduct transactions using the U.S. financial system.  The safe payment solution involved routing payments through special purpose entities controlled by the Iranian company, which were incorporated outside of Iran and bore no obvious connection to the Iranian client.  Commerzbank and its client switched use of such special purpose entities when Commerz New York’s sanctions compliance filters were updated to detect the use of a particular special purpose entity.  Commerzbank continued to process payments on behalf the Iranian client even after the client had been designated by OFAC as an entity subject to U.S. sanctions for its involvement in weapons of mass destruction proliferation.    

In addition, Commerzbank admitted that, from 2002 to 2007, it provided Sudanese sanctioned entities with access to the U.S. financial system by engaging in similar schemes to remove reference to Sudanese companies from the transaction records.    

Olympus Accounting Fraud

Since 2008, and continuing until at least 2013, Commerz New York violated the BSA and its implementing regulations.  Specifically, Commerz New York failed to maintain adequate policies, procedures and practices to ensure its compliance with U.S. law, including its obligation to detect and report suspicious activity.  As a result of the wilful failure of Commerz New York to comply with U.S. law, a multibillion-dollar securities fraud was operated through Commerzbank and Commerz New York.

Olympus was a Japanese-based manufacturer of medical devices and cameras.  Its common stock is listed on the Tokyo Stock Exchange, and its American Depository Receipts trade in the United States.  From at least the late 1990s through 2011, Olympus perpetrated a massive accounting fraud designed to conceal from its auditors and investors hundreds of millions of dollars in losses.  In September 2012, Olympus and three of its senior executives pleaded guilty in Japan to inflating the company’s net worth by approximately $1.7 billion.

Olympus used Commerzbank and Commerz New York to perpetrate its fraud.  Commerzbank, through its branch and affiliates in Singapore, both loaned money to off-balance-sheet entities created by or for Olympus to perpetrate its fraud, and transacted more than $1.6 billion through Commerz New York in furtherance of the fraud.

Commerzbank and Commerz New York were used in furtherance of the Olympus fraud during two different time periods.  From approximately 1999 through 2000, Olympus perpetrated its fraud primarily through Commerzbank and its Singapore branch and affiliates.  Among other things, Olympus used special purpose vehicles to facilitate the fraud, some of which were created by Commerzbank – including several executives based in Singapore – at Olympus’s direction, using funding from Commerzbank.  One of those Singapore-based executives, Chan Ming Fon, was involved in creating the Olympus structure in 1999 while at Commerzbank (Southeast Asia) Ltd., and later managed an Olympus-related entity in 2005-2010 on behalf of which he submitted false confirmations to Olympus’s auditors.  In September 2013, Chan pleaded guilty in Manhattan federal court to conspiracy to commit wire fraud.

From 1999 through 2000, Olympus executives asked Commerzbank executives to provide certain false documents to Olympus’s auditors, which would have failed to disclose that certain Olympus assets were pledged as collateral for loans from a Commerzbank affiliate.  Commerzbank obtained a legal opinion, which, in the words of one Commerzbank executive written to an Olympus executive, “ma[de] clear that our bank could be subject to both civil and criminal penalties if we are seen to be assisting or facilitating you in the non-disclosure.”  Although Commerzbank ultimately declined to provide the false documents, its executives suggested a variety of ways Olympus could nonetheless fail to disclose the pledge.

In 2000, Olympus took its business away from Commerzbank and transferred it to another bank.  In 2005, however, Olympus – and its fraud – returned to Commerzbank.  From that point until at least 2010, Commerzbank executives expressed strong suspicions about the Olympus transactions and structure.  One senior executive worried that Olympus would have to “write off [the] full amount” of the relevant transactions, and wondered about the effects on Commerzbank if “any negative news is splash[ed] on the front page.”  A senior legal and compliance officer responsible for Commerzbank’s Singapore branch and affiliates wrote at the time that he was “concerned” about fraud, asset stripping, market manipulation and tax offenses, and that “[i]f the [Olympus] structure and transactions can not [be] explained we must file Suspicious Transaction report as a matter of law and [Commerzbank] policy.”             

In March 2010, two wire transfers in the amounts of approximately $455 million and $67 million, respectively, related to the Olympus scheme were processed by Commerz New York through the correspondent account for the Singapore branch of Commerzbank.  Those wires caused Commerz New York’s automated AML monitoring software to “alert.” 

At the time, Commerz New York had conducted no due diligence on the Singapore branch and affiliates of Commerz, consistent with Commerz's policy of not conducting due diligence on its own branches.  In response to the alerts, however, Commerz New York sent a request for information to Commerz in Frankfurt and Commerz's Singapore branch, inquiring about the transactions.  The Singapore branch responded in a brief e-mail, dated April 20, 2010, referring to the Olympus-related entities involved in the wires:

GPA Investments Ltd. ist [sic] a Caymen Islands SPV, Creative Dragons SPC-Sub Fund E is a CITS administered fund both of which are part of an SPC structure to manage securities investments for an FATF country based MNC.

According to the Relationship Manager the payment reflects the proceeds from such securities investments to be reinvested.

Commerzbank’s Singapore branch did not relay any of the concerns about the Olympus-sponsored structures and transactions. 

Based on its response, Commerz New York closed the alert without taking any further action other than to note that in March 2010 alone, GPA Investments had been involved in six transactions through Commerz New York totalling more than $522 million.  In fact, between 1999 and 2010, a total of more than $1.6 billion in furtherance of the Olympus fraud was cleared through Commerz New York.  Commerz New York failed to file a SAR in the United States concerning Olympus or any of the Olympus-related entities until November 2013 – more than two years after the Olympus accounting fraud was revealed. 

Commerz New York had the same designated BSA Officer continuously from approximately 2003 until early 2014.  Over those years, she raised concerns about AML compliance, both to her superiors at Commerz New York and with Commerz Frankfurt.

Under the BSA, a financial institution is required to detect and report suspicious activity.  This is accomplished, in part, through conducting due diligence, and enhanced due diligence where appropriate, of the correspondent relationship – which Commerz New York failed to do – and by sending requests for further information to the correspondent bank when potentially suspicious transactions are detected.  Commerz New York frequently had difficulties getting responses to requests for information generated in connection with automated transaction monitoring “alerts.”  Because requests for information went unanswered for as much as eight months without SARs being filed, alerts were often closed without any response to the pending request.  As a result of these deficiencies, Commerz New York cleared numerous AML “alerts” based on its own perfunctory Internet searches and searches of public source databases but without ever receiving responses to its requests for information.

On June 24, 2010, a Commerz New York-based compliance officer who had primary responsibility for automated transaction monitoring wrote in an e‑mail to the BSA Officer and the Head of Compliance in New York (who had previously served as the Head of Compliance in Asia) that “we currently have 90 alerts a day,” with “808 alerts outstanding,” which “could lead to a possible back log.”  He continued, “I also wanted to make you aware that we have currently over 130 Frankfurt RFIs [i.e., requests for information] outstanding,” noting “a decrease in response to the RFIs” from Frankfurt.  The following day, the Head of Compliance in New York forwarded the e‑mail to Commerz’s Global Head of Compliance, adding that “things are not getting better with regards to th[ose] findings. (see below).  I will forward you the DRAFT memo on potential revision of staffing needs.”  Although the Global Head of Compliance thereafter instituted new procedures designed to increase the speed of responses to RFIs from New York, problems persisted with the timely flow of information from business units outside the United States to compliance officers in New York.

Commerzbank and Commerz New York also failed to conduct adequate due diligence or to obtain “know your customer” information with respect to correspondent bank accounts for Commerzbank’s own foreign branches and affiliates.  These systemic deficiencies reflected a failure to maintain adequate policies, procedures and controls to ensure compliance with the BSA and regulations prescribed thereunder and to guard against money laundering.

This case was investigated by the IRS-Criminal Investigation’s Washington D.C. Field Division and FBI’s New York Field Office.  This case is being prosecuted by Trial Attorney Sarah Devlin of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Matt Graves, Maia Miller, Crystal Boodoo and Zia Faruqui of the District of Columbia, and Assistant U.S. Attorney Bonnie Jonas of the Southern District of New York.

The New York County District Attorney’s Office also conducted its own investigation in conjunction with the Justice Department.  The Federal Reserve Bank of New York, DFS and OFAC provided substantial assistance with this investigation.

Commerzbank Deferred Prosecution Agreement 

Commerzbank Information

Attorney General Eric Holder released the following statement Thursday on the overnight shooting of two officers in Ferguson, Missouri:

“This heinous assault on two brave law enforcement officers was inexcusable and repugnant.  I condemn violence against any public safety officials in the strongest terms, and the Department of Justice will never accept any threats or violence directed at those who serve and protect our communities—from this cowardly action, to the killing of an officer in Philadelphia last week while he was buying a game for his son, to the tragic loss of a Deputy U.S. Marshal in the line of duty in Louisiana earlier this week.  Such senseless acts of violence threaten the very reforms that nonviolent protesters in Ferguson and around the country have been working towards for the past several months.  We wish these injured officers a full and speedy recovery.  We stand ready to offer any possible aid to an investigation into this incident, including the department's full range of investigative resources.  And we will continue to stand unequivocally against all acts of violence against cops whenever and wherever they occur.”

As part of the Department of Justice’s ongoing commitment to strengthening the relationship between law enforcement and the communities they serve and protect, Attorney General Eric Holder on Thursday announced the first six cities to host pilot sites for the National Initiative for Building Community Trust and Justice.  This $4.75 million initiative will seek to assess the police-community relationship in each of the six pilot sites, as well as develop a detailed site-specific plan that will enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded.

The six pilot sites announced Thursday are Birmingham, Alabama; Ft. Worth, Texas; Gary, Indiana; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; and Stockton, California.

“The Department of Justice is committed to using innovative strategies to enhance procedural justice, reduce bias and support reconciliation in communities where trust has been eroded,” said Attorney General Holder.  “By helping to develop programs that serve their own diverse experiences and environments, these selected cities will serve on the leading edge of our effort to confront pressing issues in communities around the country.”

Attorney General Holder also announced that the Department of Justice is providing additional training and technical assistance to police departments and communities that are not pilot sites.  Through the Office of Justice Program’s Diagnostic Center (www.OJPDiagnosticCenter.org), police departments and community groups can request training, peer mentoring, expert consultation and other types of assistance on implicit bias, procedural justice and racial reconciliation.  Additionally, the initiative launched a new online clearinghouse that includes up-to-date information about what works to build trust between citizens and law enforcement.  The clearinghouse can be found at www.trustandjustice.org.

“Restoring trust where it has eroded is one of the defining public safety challenges of our day,” said Assistant Attorney General Karol V. Mason of the Office of Justice Programs.  “Trust-building is the responsibility of the police and the community, and the National Initiative’s goal is to build the bridge that will define a new era in public safety.”

The Justice Department established the National Initiative for Building Community Trust and Justice as part President Obama’s groundbreaking launch of the My Brother’s Keeper initiative, which seeks to create opportunities for all young people in this country—regardless of their background—to improve their lives and reach their full potential.

The three-year grant has been awarded to a consortium of national law enforcement experts from John Jay College of Criminal Justice, Yale Law School, the Center for Policing Equity at UCLA and the Urban Institute.  The initiative is guided by a board of advisors which includes national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates.  In a holistic approach, the initiative simultaneously addresses the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation.  The initiative complements and is advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Office on Violence Against Women, the Civil Rights Division and the Community Relations Service.

Attorney General Eric Holder released the following statement Wednesday regarding the fatal shooting of Deputy U.S. Marshal Josie Wells:

“Deputy Marshal Josie Wells was a dedicated law enforcement officer, a remarkable patriot and a courageous public servant.  Though he was taken from us far too suddenly and far too soon, he leaves behind an indelible legacy that will live on in the lives he touched; in the work that the U.S. Marshals Service continues to perform; and in a world that is safer because of his devoted service.  His loss is a deeply tragic reminder that the work of our law enforcement officers around the nation is extremely serious, profoundly heroic and deserving of our most emphatic support.  The thoughts and prayers of the law enforcement community will be with the family and loved ones of Deputy Marshal Wells throughout this difficult time.  And as we go forward, the Department of Justice intends to honor his service and his sacrifice by continuing to fight for the values he protected every day, and to defend the American people for whom he gave his life.”

 

Acting Assistant Attorney General for the Civil Rights Division Vanita Gupta released the following statement Wednesday regarding developments in Ferguson, Missouri:

“The results of the Civil Rights Division’s investigation into the practices of Ferguson Police Department remain a top concern and priority.  The division will continue to work with Ferguson Police and city leadership, regardless of whomever is in those positions, to reach a court enforceable agreement that will address their unconstitutional practices in a comprehensive manner.  As part of this ongoing commitment, in the coming weeks the Civil Rights Division staff will travel to Ferguson, Missouri, to discuss the findings and next steps with community members and Ferguson city leadership.”

On Feb. 27, 2015, the Director of National Intelligence declassified and disclosed publicly that the U.S. government had filed an application with the Foreign Intelligence Surveillance Court seeking renewal of the authority to collect telephony metadata in bulk, and that the FISC renewed that authority.

The FISC's Feb. 26, 2015, Primary Order renewing the collection expires on June 1, 2015.  The DNI also announced that the Administration was undertaking a declassification review of the Feb. 26, 2015, Primary Order.  Following this review by the Executive Branch, the ODNI has released in redacted form the Feb. 26, 2015, Primary Order, signed by Judge James E. Boasberg.

This order is now publicly available at the ODNI website, dni.gov, and the ODNI's public website dedicated to fostering greater public visibility into the intelligence activities of the Government, www.icontherecord.tumblr.com.

Primary Order Renewing Collection

A former Captain in the U.S. Air Force (USAF) who served in 2010 as a U.S. military contracting officer in Afghanistan, pleaded guilty yesterday to violating restrictions on post-government employment and making a false statement to law enforcement agents, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kevin W. Techau of the Northern District of Iowa.

Adam J.J. Pudenz, 35, of Carroll, Iowa, pleaded guilty to willfully violating federal conflict-of-interest laws stemming from his post-government employment with an Afghan company that contracted with the U.S. military and to making a false statement to federal law enforcement agents.  The guilty plea was entered before U.S. Magistrate Judge Leonard T. Strand of the Northern District of Iowa.  In addition to his guilty plea, Pudenz agreed in a separate civil action to surrender his Iowa residence, which he purchased with money received from his unlawful employment, to the United States. 

According to his plea agreement, Pudenz served as a contracting official at Camp Eggers, near Kabul, Afghanistan, in 2010.  In that capacity, Pudenz admitted that he administered at least three major U.S. government contracts, all held by the same Afghan company, for the purchase of clothing and footwear for Afghan National Security Forces (ANSF). 

Pudenz admitted that prior to departing Afghanistan in December 2010, he began negotiating his future employment with the same Afghan company that held the contracts he administered, a fact that he later lied about during a subsequent law enforcement investigation.  In his new position with the Afghan company, Pudenz admitted that he violated the conflict of interest laws by returning to Afghanistan and lobbying U.S. government officials on matters directly related to the same contracts he had previously administered.    

This case is being and investigated by the FBI, the Defense Criminal Investigative Service, the Special Inspector General for Afghanistan Reconstruction and U.S. Army Criminal Investigation Command (CID).  The case is being prosecuted by Trial Attorney Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Richard L. Murphy of the Northern District of Iowa.

Raymond A. Barnes, 44, and Christopher A. Brown, 33, the former jail superintendent and assistant jail superintendent, respectively, of the Muskogee County Jail (MCJ) were sentenced in federal court today on multiple counts of civil rights offenses related to allegations of excessive force on inmates at MCJ on or between August 2009 and May 2011.  Brown was also convicted of making material false statements to the FBI.  Barnes was sentenced to one year and one day imprisonment followed by two years supervised release, and Brown was sentenced to six months imprisonment followed by three years supervised release.

On Feb. 25, 2014, a federal jury convicted both Barnes and Brown of conspiring to violate the rights of inmates housed at MCJ by assaulting inmates themselves or by directing other jailers employed by MCJ to do so.  Specifically, the defendants did or caused the following to be done: unjustifiably strike, assault, harm and physically punish inmates at MCJ who were restrained, compliant and not posing a physical threat; organize “meet and greets,” whereby jailers would scare, punish and harm incoming inmates from neighboring counties by throwing and slamming the handcuffed inmates to the ground upon their arrival at MCJ; threaten to fire MCJ employees if they reported abusive behavior directly to the sheriff or to outside law enforcement authorities; require and encourage MCJ jailers to write incident reports that falsely justified uses of force and contained misleading or inaccurate accounts of what had occurred when force was used; and perpetuate an environment within MCJ that allowed unlawful beatings and assaults against inmates to continue indefinitely and without consequence.

Both defendants were also found guilty of violating the rights of an inmate identified as J.R. when both defendants slammed and threw J.R. head-first to the ground while he was handcuffed.  Barnes was additionally convicted of violating the rights of a second inmate, G.T., for similar conduct.  Brown was acquitted of violating the rights of G.T.

In addition, Brown was convicted of one count of making material false statements to the FBI.  Brown falsely claimed that, during meet and greets, the incoming inmate was ordered out of the transport vehicle and then “gently placed” on the ground.  But in fact, Brown knew at the time of his statement to the FBI that during these meet and greets the MCJ jailers routinely threw and slammed inmates to the ground even though the inmates were restrained and posed no physical threat.

“The Department of Justice will not hesitate to prosecute corrections officers who violate their oath and abuse those who are entrusted to their custody,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The convictions and sentences in this case make clear that the department will vigorously enforce the civil rights laws.”

This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and prosecuted by Trial Attorneys Fara Gold and Dana Mulhauser of the Civil Rights Division.

Court Orders More than $35 Million in Restitution

A former casino owner from Henderson, Nevada, a former businessman from Las Vegas and a former NFL punter from Upland, California, were sentenced yesterday in U.S. District Court in Las Vegas to serve prison time and ordered to pay more than $35 million in restitution for conspiracy and fraud related to their promotion of a fraudulent tax product through the now-defunct National Audit Defense Network (NADN), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Alan Rodrigues, NADN’s former general manager and executive vice president, was sentenced to serve 72 months in prison to be followed by three years of supervised release and to pay a $2,000 special assessment by U.S. District Court Judge Miranda Du of the District of Nevada.  Rodrigues was ordered to pay restitution of more than $35 million to customers of NADN who purchased the fraudulent tax product.  Weston Coolidge, a businessman who previously served as NADN’s president, was sentenced by Judge Du to serve 70 months in prison followed by three years of supervised release, and to pay a $2,000 special assessment for his part in the fraud.  Coolidge was also ordered to pay restitution of more than $35 million to victims of the fraud.  Joseph Prokop, who previously served as the National Marketing Director for Oryan Management and Financial Services, a company affiliated with NADN, was sentenced to serve 18 months in prison to be followed by 30 months home confinement and three years of supervised release.  Prokop was also ordered to pay a $1,800 special assessment and restitution to victims of more than $35 million.  At sentencing, Judge Du found that the defendants were responsible for fraud losses of more than $36 million and an intended tax loss of more than $60 million.

On May 27, 2014, after a six-week jury trial, the three defendants were convicted of one count of conspiracy to defraud the United States, 13 counts of aiding and assisting in the preparation of false income tax returns and four counts of mail fraud.  Rodrigues and Coolidge were each convicted of an additional two counts of aiding and assisting in the preparation of false income tax returns.

“Business professionals who design, market and sell fraudulent tax products by criminally exploiting select provisions of the tax code will be prosecuted to the full extent of the law,” said Acting Assistant Attorney General Ciraolo.  “The prison sentences handed down yesterday against the defendants demonstrate that the Department of Justice is committed to holding individuals responsible for their criminal conduct.”

The evidence at trial established that through NADN, the defendants promoted and sold a product called Tax Break 2000 to customers throughout the United States.  NADN began to promote and sell Tax Break 2000 in early 2001.  Tax Break 2000 purported to be an online shopping website.  The defendants falsely and fraudulently told customers that buying the product would allow them to claim legitimate income tax credits and deductions under the Americans with Disabilities Act (ADA) by modifying the website each customer was provided to make it accessible to the disabled.  NADN charged $10,475 for the product to maximize the fraudulent income tax credits and deductions that individuals would claim on their tax returns.  Although the price of the product that was claimed on the tax returns was $10,475, the customers only paid between $2,000 and $2,695 out-of-pocket.  The remainder of the cost was covered by a promissory note that customers were not expected to repay. 

The defendants knew that the websites provided to customers made little, if any, money from sales commissions and that they did not entitle the purchaser to either a tax credit or any deductions.  The defendants nonetheless taught and directed the tax return preparers working for NADN to prepare thousands of tax returns for customers that claimed the fraudulent tax credit and deductions.  When special agents of the Internal Revenue Service (IRS) began to investigate Tax Break 2000 and NADN, the evidence showed that the defendants sought to cover up the fraud by creating false IRS Forms 1099 that reported fictitious income to make it appear that the websites were in fact earning money.

From 2001 through approximately May 2004, NADN sold the Tax Break 2000 product more than 18,000 times to thousands of customers located throughout the United States.  As a result of the defendants’ fraud, thousands of NADN customers were audited by the IRS.  On April 13, 2004, the Tax Division filed a civil complaint seeking to enjoin, among others, NADN, Rodrigues, Coolidge and Prokop from selling fraudulent tax schemes, including Tax Break 2000.  NADN ceased operations in May 2004.

“We view schemes like Tax Break 2000 as organized tax evasion” said Special Agent in Charge John Collins of IRS Criminal-Investigation (IRS-CI).  “It is a top priority for the IRS to stop promoters of these harmful schemes.  The public should remember the old saying ‘if it sounds too good to be true, it probably is.’  Instead of being a tax break this fraudulent product cost the victims much more in the end with interest and penalties.”

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-CI who investigated the case.  She also commended the substantial efforts of former Trial Attorneys Timothy J. Stockwell and Katherine L. Wong, and Paralegal Larry Garland of the Tax Division, who prosecuted the case, and Trial Attorney Mark L. Williams of the Tax Division, who assisted with sentencing.  Acting Assistant Attorney General Ciraolo thanked the U.S. Attorney’s Office of the District of Nevada in Las Vegas for their substantial assistance.

The U.S. District Court for the Western District of Texas entered a consent decree of permanent injunction against Specialty Compounding LLC, Raymond L. Solano III and William L. Swail to prevent the distribution of adulterated and misbranded drugs, the Department of Justice announced today. 

The department filed a complaint in the U.S. District Court for the Western District of Texas on Feb. 23, at the request of the U.S. Food and Drug Administration (FDA).  According to the complaint, Specialty Compounding manufactured both sterile and non-sterile drugs at a facility in Cedar Park, Texas, and distributed the company’s drugs to hospitals, surgery centers and health clinics in Texas and throughout the United States.  As noted in the complaint, Solano is Specialty Compounding’s pharmacist-in-charge and co-owner, and Swail is Specialty Compounding’s Managing Partner and co-owner. 

The complaint alleges that Specialty Compounding manufactured a sterile injectable drug product that tested positive for bacterial growth.  In addition, according to the complaint, in August 2013, FDA received reports from two Texas hospitals that 17 patients had developed bacterial infections caused by Rhodococcus equi after receiving infusions of calcium gluconate manufactured by Specialty Compounding.  Specialty Compounding ceased sterile drug manufacturing operations in August 2013, and recalled all lots of its unexpired sterile drug products distributed since Feb. 1, 2013.

“Specialty Compounding’s manufacturing practices posed a serious risk to the public health,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The American public needs to have the confidence that pharmaceutical drugs on the market are safe and effective.”

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a permanent injunction.  As part of the settlement, the company and its owners have committed to implementing corrective actions before resuming production of sterile drugs.  Specifically, the injunction prohibits Specialty Compounding and its owners from manufacturing, holding or distributing sterile drugs until they comply with the federal Food, Drug, and Cosmetic Act and its regulations.  The permanent injunction also provides the defendants cannot resume distribution of sterile drug products until they receive written approval from the FDA that they are in compliance with the remedial provisions of the permanent injunction.  

As described in the complaint, the FDA inspected Specialty Compounding’s Cedar Park facility in August and September 2013, and found insanitary conditions and numerous violations of the current good manufacturing practice requirements for drug products.  Among other observations, the FDA found that the company was distributing some of their drugs without receiving a valid prescription for an identified individual patient and was introducing into interstate commerce unapproved new drugs and misbranded drugs.  In addition, as alleged in the complaint, analyses of samples of a drug product collected by the FDA found bacterial contamination in one of the company’s drugs.  The company initiated a recall of all injectable drugs on Aug. 9, 2013. 

The government is represented by Trial Attorney Jessica Gunder of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Melissa Mendoza of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.

A Kaysville, Utah, man was sentenced yesterday in the U.S. District Court for the District of Utah to serve 27 months in prison to be followed by three years of supervised release, and ordered to pay $174,684 in restitution.

On Sept. 19, 2014, Jon T. McBride was convicted following a jury trial of three counts of tax evasion and one count of filing a false federal income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

The evidence at trial established that McBride prepared and filed a false individual federal income tax return for the year 2005.  He failed to report approximately $109,785 in gross income that he received during the 2005 tax year.  McBride also willfully attempted to evade his federal income taxes for the 2006, 2007 and 2009 tax years by failing to file an individual federal income tax return, filing a false tax return where he underreported his income by more than $300,000, and filing a false tax return that reported zero income.  McBride also used several nominees to hide and conceal his ownership in property and partnerships to keep those assets out of the reach of the Internal Revenue Service (IRS).

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Brent Ward of the Justice Department’s Criminal Division and Andrea Kafka of the Tax Division, who prosecuted the case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the District of Utah for their substantial assistance.

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

An employee of Japan-based Nippon Yusen Kabushiki Kaisha (NYK) pleaded guilty today and was sentenced to 15 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today. 

According to the one-count felony charge filed in U.S. District Court for the District of Maryland in Baltimore on Jan. 16, 2015, Susumu Tanaka, who was a manager, deputy general manager and general manager in NYK’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  Tanaka participated in the conspiracy from at least as early as April 2004 until at least September 2012. 

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

“Today’s sentence is another step toward bringing to justice the perpetrators of this long-running cartel and restoring competition to the ocean shipping industry,” said Bill Baer, Assistant Attorney General for the Antitrust Division.  “But this investigation is far from over.  We are continuing our efforts to hold accountable the companies and executives who seek to maximize profits through illegal, anticompetitive means.” 

Pursuant to the plea agreement, which the court accepted today, Tanaka was sentenced to serve a 15-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy.  In addition, Tanaka has agreed to assist the department in its ongoing investigation into the ocean shipping industry.

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

Today’s sentence is the third against an individual in the division’s ocean shipping investigation, and the first against an individual from NYK.  Three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including NYK, which has agreed to pay a criminal fine of $59.4 million, pending court approval. 

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

Also Convicted of Narcotics Trafficking and Firearms Offenses

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York announced that Dino Bouterse, a citizen of Suriname who assisted in the formation of that country’s Counter-Terrorism Unit, was sentenced today in federal court in New York City to 195 months in prison for attempting to provide material support and resources to Hezbollah, a designated terrorist organization, along with narcotics trafficking and firearms offenses.  Bouterse, who was arrested in Panama on Aug. 29, 2013, and arrived in the United States on Aug. 30, 2013, pleaded guilty before U.S. District Judge Shira A. Scheindlin, who also imposed today’s sentence.

“Dino Bouterse was supposed to oppose terrorism,” said U.S. Attorney Bharara.  “Instead, Bouterse betrayed his official position and tried to support and aid Hezbollah, including his agreement to assist Hezbollah in acquiring weapons, and conspiring to import cocaine to the U.S.  Today he has been sentenced to a lengthy prison term for those odious crimes.”

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

In 2013, Bouterse used his position within the government of Suriname to assist individuals he believed were members of Hezbollah, who informed Bouterse that they intended to conduct terrorist attacks against American interests.  In exchange for a multimillion-dollar payment, Bouterse agreed to allow large numbers of purported Hezbollah operatives to use Suriname as a permanent base for, among other things, attacks on American targets.  In furtherance of his efforts to assist Hezbollah, Bouterse supplied a false Surinamese passport to a purported Hezbollah operative for the purpose of clandestine travel, including travel to the United States; discussed heavy weapons that he could provide to Hezbollah; and instructed the purported Hezbollah members about how Hezbollah operatives, supplied with a Surinamese cover story, could enter the United States.

In June 2013, Bouterse and a co-defendant, Edmund Quincy Muntslag, met in Bouterse’s office in Suriname with confidential sources (the CSs) working with the Drug Enforcement Administration (DEA) to discuss importing cocaine into the United States using commercial airline flights.  During the meeting, Bouterse showed the CSs a rocket launcher and a kilogram of cocaine.

Approximately one month later, Bouterse and Muntslag worked to provide transportation and security for cocaine being sent through Suriname to the United States.  As a test run, Bouterse and Muntslag sent 10 kilograms of cocaine on a commercial flight departing from Suriname.  Bouterse personally verified the arrangements for the 10-kilogram cocaine shipment in a text message.  The cocaine was intercepted by law enforcement officials after it departed Suriname.

In July 2013, Bouterse met with one of the CSs to discuss opening Suriname to the CSs’ purported Hezbollah associates.

Later that month, Bouterse met in Europe with one of the CSs and with two other men who purported to be associated with Hezbollah.  During this meeting, Bouterse discussed initially hosting 30 to 60 Hezbollah members in Suriname for training and operations.  He also indicated that he wanted a Hezbollah cell in Suriname to act, in part, as a personal armed force.  Bouterse confirmed his understanding that the purported Hezbollah operatives would operate in South America against American targets, and he agreed to supply Surinamese passports to the operatives and to assist with their applications for visas to travel from South America into the United States.  In addition, in response to a request for surface-to-air missiles and rocket-propelled grenades, Bouterse stated that he would need “two months” and that he would provide a list of what he could supply.  Finally, at the July 2013 meeting in Europe, Bouterse agreed to create a false Surinamese passport for one of the purported Hezbollah operatives so that Bouterse and the Hezbollah operative could travel to Suriname to inspect the facilities that Bouterse had agreed to prepare for the Hezbollah contingent.

At a subsequent meeting in August 2013, Bouterse delivered a Surinamese passport with false identifying information to a purported Hezbollah operative.  As had been discussed at the July 2013 meeting in Europe, the purported Hezbollah operative was to use the fraudulent passport to travel to Suriname.  Bouterse indicated that everything was ready in Suriname for the arrival of the purported Hezbollah members, and that some “toys” – a code-word for weapons – would be available for inspection.

Following this meeting, Bouterse was arrested by Panamanian law enforcement and transferred to the custody of the DEA.

* * *

On Aug. 29, 2014, Bouterse pleaded guilty to attempting to provide material support to Hezbollah, a foreign terrorist organization; conspiring to import five kilograms or more of cocaine into the United States; and using and carrying, or aiding and abetting the use and carrying of, a firearm during and in relation to a drug-trafficking crime.  In addition to his prison term, Bouterse, 42, a citizen of Suriname, was ordered to pay a $300 special assessment fee.

Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the outstanding efforts of the DEA’s Special Operations Division.  Assistant Attorney General Carlin and U.S. Attorney Bharara also thanked the DEA’s Miami Field Division, Panama City Country Office, Port-of-Spain Country Office and Bogota Country Office; the Government of the Republic of Panama; and the U.S. Department of Justice’s Office of International Affairs

This case is being prosecuted by Assistant U.S. Attorneys Michael D. Lockard, Adam Fee, Michael Ferrara and Edward Y. Kim of the Southern District of New York and Trial Attorney Andrew Sigler of the Justice Department’s National Security Division.

McNeil-PPC Inc. entered a guilty plea in Federal District Court in Philadelphia today to one count of an information charging the company with delivering for introduction into interstate commerce adulterated infants’ and children’s over-the-counter (OTC) liquid medicines, the Department of Justice announced today.  As part of the criminal resolution, McNeil, a wholly owned subsidiary of Johnson & Johnson, agreed to pay a criminal fine of $20 million and forfeit $5 million.

Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division and First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania today announced the filing of a criminal Information against McNeil for delivering for introduction into interstate commerce infants’ and children’s liquid OTC drugs that were adulterated.  According to the criminal charge, the infants’ and children’s liquid medicines were adulterated because they were not manufactured, processed, packed or held in conformance with current Good Manufacturing Practices (cGMP), in violation of the federal Food, Drug and Cosmetic Act (FDCA). 

The U.S. District Court for the Eastern District of Pennsylvania accepted McNeil’s guilty plea. 

In addition to McNeil’s guilty plea, McNeil remains subject to a permanent injunction entered by the U.S. District Court in 2011, requiring the company, among other things, to make remedial measures before reopening its manufacturing facility in Fort Washington, Pennsylvania. 

“McNeil’s failure to comply with current good manufacturing practices is seriously troubling,” said Acting Assistant Attorney General Mizer.  “The Department of Justice will continue to be aggressive in pursuing and punishing companies such as McNeil that disregard a process designed to assure quality medicines, especially OTC drugs for infants and children.”

“The law requires that drugs be produced under the most rigorous of quality standards,” said First Assistant U.S. Attorney Lappen.  “When companies fail to exercise the vigilance that the law demands, they will held be accountable.  Drug companies should be aware that failing to adhere to good manufacturing practices subjects them to penalties and prosecution.”

According to the information, the OTC liquid drugs manufactured by McNeil at its Fort Washington facility, including Infants’ and Children’s Tylenol and Infants’ and Children’s Motrin, were bottled on four lines of machinery dedicated to liquid formulations.  As alleged in the information, on or about May 1, 2009, McNeil received a complaint from a consumer regarding the presence of “black specks in the liquid on the bottom of the bottle” of Infants’ Tylenol.  According to the information, the foreign material was later identified as including nickel/chromium-rich inclusions, which were not intended ingredients in this OTC liquid drug.  In connection with receiving this consumer complaint, McNeil did not initiate or complete a Corrective Action Preventive Action (CAPA) plan, as alleged in the charging document. 

The information alleges numerous other instances in which McNeil found metal particles in bottles of Infants’ Tylenol at its Fort Washington facility but failed to initiate or complete a CAPA.  According to the information, during a 2010 Inspection of McNeil’s Fort Washington facility, the U.S. Food and Drug Administration (FDA) asked McNeil for a list with all non-conformances for particles and the associated OTC drug batches that had occurred since an FDA inspection in 2009.  As noted in the information, this document revealed 30 batches of OTC liquid drugs, including Infants’ Tylenol, Children’s Tylenol, and Children’s Motrin.  During the 2010 inspection, the FDA asked McNeil for the CAPA plan covering the particles and foreign material found in the Infants’ and Children’s OTC drugs, and a McNeil employee confirmed that McNeil did not have such a CAPA plan.

On or about April 30, 2010, McNeil Consumer Health Care, a division of McNeil, in consultation with the FDA, announced that the company was recalling all lots of certain unexpired Infants’ and Children’s OTC drugs manufactured at McNeil’s Fort Washington facility and distributed in the United States and other countries around the world.  McNeil’s recall included, but was not limited to, Infants’ and Children’s Tylenol and Infants’ and Children’s Motrin.  According to a press release issued by McNeil on April 30, 2010, some of the recalled OTC drugs “may contain tiny particles.” 

The FDCA prohibits causing the introduction or delivery for introduction into interstate commerce of any adulterated drug.  Under the law, a drug is adulterated if the methods used in, or the facilities and controls used for, the manufacture, processing, packing, labeling, holding and distribution of drugs and components were not in conformance with cGMP requirements for drugs.  Drugs not manufactured, processed, packed, labeled, held and distributed in conformance with cGMP requirements are adulterated as a matter of federal law, without any showing of actual defect. 

“Drug quality – and especially with the medicines we give our children – is of paramount concern to the FDA,” said Commissioner Margaret A. Hamburg M.D. of the FDA.  “The FDA expects manufacturers to have systems in place that will quickly discover and correct problems with medical products before they enter the U.S. marketplace.  Today’s guilty plea holds accountable those corporations who risk jeopardizing the public health by not adhering to the high standards set for drug manufacturers.”

Acting Assistant Attorney General Mizer and First Assistant U.S. Attorney Lappen commended the investigative efforts of the FDA’s Office of Criminal Investigations.  The government is represented in this case by Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Mary Beth Leahy of the Eastern District of Pennsylvania, with the assistance of Associate Chief Counsel for Enforcement Laura Pawloski of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.

Today, the Justice Department filed a joint motion to extend a settlement under the Americans with Disabilities Act (ADA) with the city of Jackson, Mississippi.  The original lawsuit challenged inaccessibility in Jackson’s public transportation system, and was filed by 11 residents of Jackson with disabilities and two non-profit organizations that work on behalf of people with disabilities.

The Department of Justice has monitored the city under the terms of the five-year consent decree, filed in federal court in Jackson in March 2010.  That agreement required the city to keep the wheelchair lifts working on the city’s fixed route bus system, known as JATRAN; train staff to properly help riders with disabilities; and meet its required level of service to passengers of Handilift, the ADA complementary paratransit service.

Today, the parties agree that while the city has improved its accessible bus services, the city has not yet fully complied with the consent decree.  Therefore, the city will continue to make improvements and will report progress to the department on a monthly basis.

"Today’s action by the parties shows our vigilant commitment to remain engaged with the city of Jackson until the city has fixed any problems with the level of accessible public transportation provided to it its citizens," said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  "The department is grateful for the city of Jackson’s continued cooperation in resolving this matter and their commitment to reaching full accessibility of JATRAN."

“We remain committed to the rights of all citizens to have accessible transportation services in the Capital City of Jackson,” said U. S. Attorney Gregory K. Davis of the Southern District of Mississippi.  “The U.S. Attorney’s Office is also grateful for the cooperative relationship between the city of Jackson and the Department of Justice in working towards fulfilment of the terms of the consent decree.” 

Those interested in finding out more about this agreement or public transportation’s obligations under the ADA can call the Justice Department's toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), access its ADA Web site at http://www.ada.gov, or access the Federal Transit Administration’s ADA Web site at http://www.fta.dot.gov/ada.

The Justice Department announced today that it has agreed to a $4.9 million civil and criminal resolution with CommerceWest Bank, of Irvine, California, arising out of the department’s investigation into consumer fraud schemes facilitated by the bank.  Today the United States filed a criminal charge and a civil complaint in the U.S. District Court for the Central District of California. 

The criminal information charges the bank with a felony violation of the Bank Secrecy Act in connection with the bank’s relationship with a third-party payment processor.  The civil complaint alleges that CommerceWest Bank knowingly facilitated consumer fraud by permitting the payment processor to make millions of dollars of unauthorized withdrawals from consumer bank accounts on behalf of fraudulent merchants.  To resolve the department’s criminal and civil allegations, CommerceWest Bank has agreed to a total monetary resolution of more than $4.9 million, a deferred prosecution agreement and a permanent injunction that reforms the bank’s practices to prevent such fraud in the future.

“CommerceWest Bank ignored a parade of red flags indicating that a third-party payment processor was defrauding hundreds of thousands of innocent victims,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “As the civil and criminal actions filed against CommerceWest Bank today demonstrate, we will hold financial institutions accountable when they choose unlawfully to look the other way while fraudsters use the bank’s accounts to steal millions of dollars from American consumers.”

According to the civil complaint, from December 2011 through July 2013, CommerceWest Bank worked with V Internet Corp LLC, a third-party payment processor based in Las Vegas.  V Internet processed transactions for fraudulent merchants that withdrew money from consumers’ bank accounts without authorization.  These merchants included a fraudulent telemarketing company and a company that charged hundreds of thousands of victims for a payday loan referral fee they had never authorized.  In early 2013, V Internet took over the payday loan referral scheme, operating as the payment processor and sole merchant from January 2013 through July 2013. 

The complaint alleges that CommerceWest ignored clear warning signs indicating that V Internet and its merchants were defrauding consumers.  V Internet’s debit transactions resulted in an abnormally high rate of rejected transactions.  Approximately 50 percent of the transactions were returned by consumers and their banks.  Many of those returned transactions included sworn affidavits, in which victims stated, under penalty of perjury, that the withdrawals on their accounts were unauthorized. 

CommerceWest also received complaints and inquiries from other banks, which expressed their belief that V Internet’s transactions were fraudulent.  Even in the face of these explicit warnings from other banks, CommerceWest did not terminate V Internet or file a Suspicious Activity Report, an alert banks are required to file with the government indicating the presence of suspicious illegal activity.  Instead, CommerceWest and V Internet developed a practice of blocking transactions against accounts at those banks that complained, but allowing the transactions to continue against accounts at all other banks.  

The complaint alleges that, by May 29, 2013, a CommerceWest official had determined that all of V Internet’s transactions appeared to be fraudulent and unauthorized.  However, CommerceWest Bank did not make the decision to terminate V Internet until early July 2013.  Even at that point, CommerceWest planned to allow V Internet an additional 30 days to wind down its processing activity.  Only when the department notified CommerceWest that it intended to seek an emergency injunction did CommerceWest immediately terminate V Internet’s ability to access victims’ checking accounts.  

The U.S. Postal Inspection Service (USPIS) seized more than $2.9 million from V Internet’s accounts at CommerceWest Bank.  Postal inspectors additionally seized property purchased by V Internet’s owner with the proceeds of his fraudulent activity, including five airplanes, a Land Rover, a Dodge Charger, multiple tractors, five all-terrain vehicles and a fire truck.   

“CommerceWest ignored warning signs and numerous complaints stemming from unauthorized withdrawals, and now it must pay the price for allowing innocent consumers to be ripped-off by fraudsters,” said Acting U.S. Attorney Stephanie Yonekura of the Central District of California. 

“CommerceWest Bank not only failed to comply with its statutory obligation to notify the government of suspicious illegal activity involving consumer fraud,” said Inspector in Charge Gary Barksdale of the USPIS.  “The bank also allowed fraudulent activity to continue through its accounts to the detriment of the American consumer.”

The criminal information filed today charges CommerceWest with willfully failing to file Suspicious Activity Reports, as required by the Bank Secrecy Act.  The criminal charge will be deferred for two years under an agreement that requires CommerceWest Bank to admit to its wrongdoing, give up any claim to more than $2.9 million previously seized from V Internet’s bank accounts at CommerceWest, and cooperate fully in other civil and criminal investigations.

The department’s civil complaint alleges conduct that violates the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), a law enacted by Congress in 1989 as part of a comprehensive legislative plan to reform and strengthen the banking system and the federal deposit insurance system that protects the public from bank failures and that provides for the United States to recover civil monetary penalties.  The department also alleges that CommerceWest Bank violated the civil anti-fraud injunction statute, which allows the government to seek a court order barring continued illegal conduct.  According to the terms of the proposed civil consent decree, CommerceWest Bank will be required to pay $1 million to the U.S. Treasury as a civil monetary penalty and to forfeit $1 million to the USPIS Consumer Fraud Fund.  CommerceWest Bank will also be required to implement a strict regime of underwriting and monitoring designed to prevent future consumer fraud by third-party payment processors.

The Justice Department’s case is being handled by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch in coordination with the U.S. Attorney’s Office for the Central District of California and with substantial investigative support from USPIS.

A settlement announced today between the U.S. and Total Petroleum Puerto Rico Corp. (Total Puerto Rico) resolves Resource Conservation Recovery Act (RCRA) violations alleged at 31 gas stations in Puerto Rico and four gas stations in the U.S. Virgin Islands that contain underground storage tanks (USTs) owned by Total Puerto Rico.  These USTs typically hold large quantities of gasoline and can cause significant environmental damage if allowed to leak.  Total Puerto Rico has agreed to pay a $426,000 civil penalty, implement compliance measures valued at approximately $1 million and undertake a supplemental environmental project (SEP) consisting of a centralized monitoring system estimated to cost approximately $600,000. 

In the complaint filed simultaneously with the lodging of the consent decree, the U.S. alleged that Total Puerto Rico, as an owner of the USTs at the gas stations, violated RCRA and the Puerto Rico Underground Storage Tank Control Regulations (PRUSTR) by failing to report and investigate suspected leaks, monitor for leaks; provide adequate protection against corrosion and overflows, adequately secure dispensers and lines against tampering when facilities were temporarily closed, adequately secure monitoring wells against tampering and maintain records of release detection monitoring.

This settlement incorporates provisions consistent with the U.S. Environmental Protection Agency’s Next Generation enforcement efforts, which focus on increasing compliance with environmental regulations by combining the use of advanced technologies, such as pollution detection systems and information technologies, with traditional compliance measures.  The centralized monitoring component of today’s agreement is a Next Generation technology that will enable Total Puerto Rico to rapidly identify and respond to actual or potential gas leaks at its gas stations with actively operating USTs, each of which will be equipped with on-site electronic release detection monitoring equipment that will be enhanced with the Next Generation capability to transmit monitoring data to one central location on a 24/7/365 basis.

“This settlement will require Total Puerto Rico to address the risk of gas leaks comprehensively by installing advanced electronic release detection monitoring equipment in all gas stations at which Total owns actively operating USTs,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division.  “The settlement also obligates Total Puerto Rico to install state-of-the art centralized monitoring technology, a Next Generation tool that will enable the company to provide around-the-clock surveillance from a single location for over one hundred gas stations.”

“Leaking underground petroleum tanks are a serious problem because they can contaminate groundwater with pollutants such as benzene, which is known to cause cancer,” said Regional Administrator Judith Enck for EPA.  “This agreement includes an innovative centralized monitoring system, which will protect the environment by helping to ensure that the underground tanks at many gas stations across Puerto Rico and in the U.S. Virgin Islands will now be properly monitored and maintained.”

Total Puerto Rico will install, or upgrade to, a fully automated electronic release detection monitoring system at 137 facilities with Total-owned USTs in active operation and will operate the systems for at least three years.  This compliance measure, valued at approximately $1 million, will connect lines with probing sensors within the USTs to an on-site computer console unit that has audible and visible alarms capable of alerting nearby gas station personnel of gas leaks and other potentially dangerous events.  The obligation to install automated release detection monitoring systems will extend to any additional facilities with actively operating USTs acquired by Total Puerto Rico after the date of lodging of the consent decree.  In addition, Total Puerto Rico’s voluntary undertaking of a SEP – the implementation, operation and maintenance of a centralized monitoring capability estimated to cost approximately $600,000 – will connect at least 125 of the facilities with electronic release detection monitoring systems to a central location.  Total Puerto Rico will also provide quarterly reports to EPA regarding its operation of these systems and will be required to provide information regarding their operation upon EPA’s request.

This is the second judicial settlement in Puerto Rico requiring a defendant to implement company-wide automated electronic release detection with a centralized monitoring capability.  A settlement in 2011 with Chevron Puerto Rico covered over 140 gas stations for a period of five years.  With today’s proposed settlement with Total Puerto Rico, more than 250 gas stations throughout Puerto Rico will have electronic release detection equipment and centralized monitoring.

The settlement is subject to a 30-day public comment period and is conditioned upon approval by the U.S. District Court before becoming final.

The Justice Department announced today that it reached a settlement with Hilton Worldwide (Hilton), an international hotel chain, to resolve allegations that Hilton discriminated against a foreign-born worker.  Specifically, the department found that a Hilton-owned hotel in Naples, Florida, discriminated against an asylee by improperly rejecting his Social Security card when the hotel reverified his employment authorization. 

Under the anti-discrimination provision of the Immigration and Nationality Act (INA), employers cannot reject an employee’s work-authorization documents because of the employee’s citizenship, immigration status or national origin.  When verifying or re-verifying an employee’s work authorization, employers must allow workers to choose which documents to present from the lists of acceptable documents, and employers cannot reject documents that reasonably appear to be genuine and relate to the worker. 

This matter first came to the department’s attention through the worker hotline of the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC).  By the time the parties reached a settlement, Hilton had rehired the worker who was harmed by the company’s practices.  Under the settlement agreement, Hilton will pay the worker $12,600 for lost wages, pay a $550 civil penalty to the United States, change its employment policies and be subject to two years of monitoring by the Justice Department.

“Employers must ensure that they have non-discriminatory Form I-9 practices,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Justice Department will continue to work with employers to help implement best practices that comply with federal law.” 

The department recently issued a document, How Employers Can Avoid Discrimination in the Form I-9 and E-Verify Processes, to help employers implement best practices that comply with federal law.  OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation; and intimidation. 

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

Applicants or employees who believe they were subjected to (1) different documentary requirements based on their citizenship, immigration status, or national origin, or (2) discrimination based on their citizenship, immigration status or national origin in hiring, firing, or recruitment or referral for a fee, should contact OSC’s worker hotline for assistance.

The United States has asked a federal court in Sacramento, California, to bar a Ripon, California, man from preparing tax returns for others, the Justice Department announced today. 

According to the government’s complaint, Sarad Chand has repeatedly prepared federal tax returns that understate his customers’ federal tax liabilities.

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

The suit also notes that on May 15, 2014, Chand pleaded guilty to aiding and assisting in the preparation and presentation of a false and fraudulent tax return in United States v. Chand, et al., Case No.1:12-CR-00425 (E.D. Cal.).  As part of his plea agreement, Chand agreed to the entry of a permanent civil injunction, according to the complaint.

The suit alleges that the IRS has completed examinations of 919 of the approximately 8155 tax returns Chand prepared from 2008 to 2012, and that nearly all of  the examined returns resulted in a finding of deficiency or denial of a refund claim.  The total tax understatement from the 886 returns found to be inaccurate totaled more than $2.7 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.

An Iranian man was sentenced today in Houston to serve 27 months in prison for using personally identifying information stolen from a U.S. pilot to fraudulently obtain a U.S. Federal Aviation Administration (FAA) Airline Transport Pilot (ATP) certificate and flight instructor certificate.  At today’s sentencing hearing, the government indicated that the defendant sought the FAA credentials to allow him to fly aircraft for profit, and that there was no evidence that he was engaged in any terrorism-related activity.

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

Nader Ali Sabouri Haghighi, 41, of Iran, pleaded guilty on Nov. 3, 2014, to four counts of identity theft related to his use of the victim pilot’s passport and personally identifying information to fraudulently obtain the FAA credentials at issue.  U.S. District Judge Kenneth M. Hoyt of the Southern District of Texas imposed the sentence.  

An ATP certificate is the highest grade of certificate issued by the FAA.  It authorizes the holder to pilot multi-engine aircraft under U.S. aviation regulations. 

At his plea hearing, Haghighi admitted that he stole the identity of the victim pilot, which he used to obtain certain FAA credentials.  These credentials permit a pilot to fly multi-engine aircraft, and have strict requirements for training, knowledge and experience.  Haghighi had never been issued these specific credentials, and a general pilot’s license he had previously been issued had been revoked by the FAA.

Haghighi admitted that he used the victim pilot’s information to log onto the Airman Services Records System, an on-line database used by the FAA to monitor and regulate persons authorized to fly aircraft, posing as the victim pilot.  He then changed the contact information associated with the victim pilot’s profile and requested a replacement ATP certificate and flight instructor certificate.   

Haghighi also admitted that he fraudulently obtained a credit card in the victim pilot’s name and used the credit card to pay for the replacement FAA credentials.

According to court records, on Sept. 15, 2012, Haghighi crashed an airplane in Bornholm, Denmark, while in possession of the victim’s ATP certificate.  After facing criminal charges in Denmark and Germany, Haghighi returned to Iran, only to later resurface in Indonesia.  He was finally arrested in Panama, where he waived extradition to the United States in August 2014.

The case was investigated by the Office of Inspector General of the U.S. Department of Transportation, with significant assistance from the Federal Aviation Administration, the Diplomatic Security Service of the State Department and the Department of Homeland Security’s U.S. Immigration and Customs Enforcement, Homeland Security Investigations.  The Criminal Division’s Office of International Affairs and the FBI also provided significant assistance in Haghighi’s apprehension and extradition.  Assistance was also provided by the Bornholms Politi (Denmark Police).  The case was prosecuted by Senior Trial Attorney William A. Hall Jr. of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Craig Feazel of the Southern District of Texas.

Recovery Home Care Inc., Recovery Home Care Services Inc. (collectively Recovery Home Care) and National Home Care Holdings LLC have agreed to pay $1.1 million to resolve allegations that the Recovery Home Care entities violated the False Claims Act by improperly paying doctors for referrals of home health care services provided to Medicare patients, the Department of Justice announced today.  The Recovery Home Care entities provide home health care services to Medicare beneficiaries and were purchased by National Home Care Holdings LLC in 2012, after the conduct addressed by the settlement occurred.

“Health care providers that attempt to profit by providing illegal inducements will be held accountable,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

From 2009 through 2012, Recovery Home Care, headquartered in West Palm Beach, Florida, allegedly paid dozens of physicians thousands of dollars per month to perform patient chart reviews.  According to the government’s lawsuit, the physicians were over-compensated for any actual work they performed and, in reality, payments to the physicians were used to induce them to refer their patients to Recovery Home Care, in violation of the Anti-Kickback Statute and the Stark Law.

“Inducements of this kind are designed to improperly influence a physician’s independent medical judgment,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “This lawsuit and today’s settlement attests to our office’s on-going commitment to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.

The settlement partially resolves allegations made in a lawsuit filed in federal court in Tampa, Florida, by Gregory Simony, a former employee of Recovery Home Care.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  Simony will receive $198,000 of the recovered funds.  The government continues to litigate this case against Recovery Home Care’s previous owner, Mark Conklin. 

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.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG.     

The case is captioned United States ex rel. Simony v. Recovery Home Care, et al., Case No. 8-12-cv-2495-T-36TBM (M.D. Fla.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

One Of The Defendants Has Already Pleaded Guilty

An indictment was unsealed yesterday against two Vietnamese citizens who resided in the Netherlands, for their roles in hacking email service providers throughout the United States.  The guilty plea of one of the defendants was also unsealed at the same time.  In addition, a federal grand jury returned an indictment this week against a Canadian citizen for conspiring to launder the proceeds obtained as a result of the massive data breach.

Assistant Attorney General Leslie R. Caldwell of the Criminal Division, Acting U.S. Attorney John A. Horn of the Northern District of Georgia, Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office, Special Agent in Charge Reginald Moore of the United States Secret Service’s (USSS) Atlanta Field Office and Special Agent in Charge Veronica F. Hyman-Pillot with the Internal Revenue Service-Criminal Investigation’s (IRS-CI) made the announcement.

“These men — operating from Vietnam, the Netherlands, and Canada — are accused of carrying out the largest data breach of names and email addresses in the history of the Internet,” said Assistant Attorney General Caldwell.   “The defendants allegedly made millions of dollars by stealing over a billion email addresses from email service providers.  This case again demonstrates the resolve of the Department of Justice to bring accused cyber hackers from overseas to face justice in the United States.” 

“This case reflects the cutting-edge problems posed by today’s cybercrime cases, where the hackers didn’t target just a single company; they infiltrated most of the country’s email distribution firms,” said Acting U.S. Attorney Horn.  “And the scope of the intrusion is unnerving, in that the hackers didn’t stop after stealing the companies’ proprietary data—they then hijacked the companies’ own distribution platforms to send out bulk emails and reaped the profits from email traffic directed to specific websites.”

“Large scale and sophisticated international cyber hacking rings are becoming more problematic for both the law enforcement community that is faced with the challenges of identifying them and laying hands on them, but also the fortune 500 companies that are so often their targets,” said Special Agent in Charge Johnson.  “The federal indictments, apprehensions and extraditions in this case represents several years of hard work as the FBI and its cadre of cyber trained agents and technical experts acted quickly to stop the ongoing damage to the numerous victim companies as a result of these individuals’ hacking activities.  In August 2012, the FBI, with the assistance of its legal attaches stationed abroad and in conjunction with Dutch law enforcement officials, executed a search warrant in the Netherlands that disrupted continued compromises of those companies while allowing U.S. authorities to advance its investigation.  That investigation targeted not only the hackers but the businesses that helped monetize the data that was stolen from those victim companies.  This case further reflects the productive partnership of the FBI and the U.S. Secret Service in aggressively addressing this 21st century crime problem.”

“Our success in this case and other similar investigations is a result of our close work with our law enforcement partners,” said Special Agent in Charge Moore.  “The Secret Service worked closely with the Department of Justice and the FBI to share information and resources that ultimately brought these cyber criminals to justice.  This case demonstrates there is no such thing as anonymity for those engaging in data theft and fraudulent schemes.”

“Those individuals who line their pockets with money gained through deceiving others should know they will not go undetected and will be held accountable,” said Special Agent in Charge Hyman-Pillot.  “IRS Criminal Investigation is committed to unraveling financial transactions to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice.”

According to allegations in the indictments, between February 2009 and June 2012, Viet Quoc Nguyen, 28, a citizen of Vietnam, allegedly hacked into at least eight email service providers (ESPs) throughout the United States and stole confidential information, including proprietary marketing data containing over one billion email addresses.  Nguyen, along with Giang Hoang Vu, 25, also a citizen of Vietnam, then allegedly used the data to send “spam” to tens of millions of email recipients.  The data breach was the largest in U.S. history and was the subject of a Congressional inquiry in June 2011.

David-Manuel Santos Da Silva, 33, of Montreal, Canada, was also indicted by a federal grand jury on March 4, 2015, for conspiracy to commit money laundering for helping Nguyen and Vu to generate revenue from the “spam” and launder the proceeds.

According to allegations in the indictments, Da Silva, the co-owner, president and a director of 21 Celsius Inc., a Canadian corporation that ran Marketbay.com, entered into an affiliate marketing arrangement with Nguyen that allowed the defendants to generate revenue from the computer intrusions and data thefts. 

As an affiliate marketer, Nguyen allegedly received a commission on sales generated from Internet traffic that he directed to websites promoting specific products.  Nguyen allegedly used the information stolen from the ESPs to send “spam” emails to tens of millions of customers and provided hyperlinks to allow the purchase of the products.  These products were marketed by Da Silva’s Marketbay.com.

Between approximately May 2009 and October 2011, Nguyen and Da Silva received approximately $2 million for the sale of products derived from Nguyen’s affiliate marketing activities.

Vu was arrested by Dutch law enforcement in Deventer, Netherlands, in 2012 and extradited to the United States in March 2014.  On Feb. 5, 2015, Vu pleaded guilty to conspiracy to commit computer fraud.  He is scheduled to be sentenced on April 21, 2015, before U.S. District Judge Timothy C. Batten Sr. of the Northern District of Georgia.  Nguyen is a fugitive.

Da Silva was arrested based upon charges set forth in a criminal complaint at Ft. Lauderdale International Airport on Feb. 12, 2015, and is scheduled to be arraigned today in Atlanta before Magistrate Judge E. Clayton Scofield III.

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

This case is being investigated by the FBI with the assistance of the USSS and IRS-CI.  Law enforcement in the Netherlands and the Criminal Division’s Office of International Affairs also provided valuable assistance.  This case is being prosecuted by Trial Attorney Peter Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Steven D. Grimberg of the Northern District of Georgia.

Da Silva Indictment

Nguyen Indictment

 

SUMMARY - The Executive Office for Immigration Review (EOIR) invites interested parties to participate in a teleconference and webinar providing a general overview of EOIR’s recognition and accreditation program. This event is intended to educate interested parties about the process for obtaining recognition for an organization and accreditation for individuals.

DATE: Friday, March 20, 2015, at 2 p.m.

RSVP: To RSVP for the meeting, please contact Lauren Alder Reid, Counsel for Legislative and Public Affairs at 703-305-0289 or email PAO.EOIR@usdoj.gov, by noon on Wednesday, March 18, 2015. Please note that there will be no in-person attendance for this event. EOIR will send call-in and Web access information on Wednesday, March 18th, to those who RSVP. To attend the meeting via conference call and Web, please RSVP with the name(s) of the attendee(s), the attendee’s organization, and an email address where instructions may be sent for accessing the conference call and Web meeting.

 

- 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.

A New York doctor pleaded guilty today for his involvement in a scheme to fraudulently bill Medicare for $14.2 million in claims for medically unnecessary treatments. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) New York Field Office made the announcement.

Roman Johnson, 40, formerly of Buffalo, New York, pleaded guilty before U.S. Magistrate Judge Marilyn D. Go in the Eastern District of New York to one count of conspiracy to commit health care fraud.  Sentencing will be scheduled at a later date.  As part of the plea, Johnson agreed to pay $5,386,363 in restitution to the Medicare program, which represents the total amount of money Medicare paid as the result of the fraudulent claims.

In connection with his guilty plea, Johnson admitted that he and other medical providers at the clinic submitted approximately $14.2 million in false and fraudulent claims to Medicare for medically unnecessary vitamin infusions, physical therapy, and occupational therapy that did not qualify for reimbursement by Medicare.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  The case was prosecuted by Trial Attorney Bryan D. Fields of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Erin E. Argo of the Eastern District of New York. 

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’ 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 Team (HEAT), go to: www.stopmedicarefraud.gov.

A Monmouth County, New Jersey, doctor was sentenced today in U.S. District Court in Trenton, New Jersey, to serve 46 months in prison for structuring cash transactions in order to avoid reporting requirements and for aiding and assisting in the filing of his own false tax returns, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

Paul DiLorenzo of Ocean Township, New Jersey, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to two counts of a second superseding indictment charging him with structuring financial transactions and aiding and assisting in the filing of false tax returns.  In addition to the prison term, Judge Wolfson sentenced DiLorenzo to three years of supervised release, ordered DiLorenzo to pay restitution to the IRS of $304,293, and ordered DiLorenzo to forfeit nearly $1,000,000 in illegally derived proceeds.

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

Between 2009 and June 27, 2012, DiLorenzo received more than $2 million in cash payments from his patients.  The medical office received payments exceeding $10,000 in a single day on at least 35 occasions.  Between May 28, 2009, and Nov. 2, 2011, DiLorenzo deposited $1 million in cash into banks accounts in his name and in the name of his business.  The deposits included 150 separate transactions, and all transactions but one were for less than $10,000.  Certain currency transactions of more than $10,000 trigger financial institutions to comply with Currency Transaction Report requirements.  DiLorenzo admitted that he made the deposits for less than $10,000 in order to evade the reporting requirements.

On March 29, 2011, DiLorenzo aided and assisted in the filing of a false federal income tax return for the 2010 tax year that reported gross receipts of $444,331.  His actual gross receipts, however, were more than $1 million.  In May 2012, DiLorenzo aided and assisted in the filing of a false tax return for the 2011 tax year in which he reported gross receipts of $537,236, when in fact his actual gross receipts were in excess of $800,000.

U.S. Attorney Fishman and Acting Assistant Attorney General Ciraolo commended special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey; special agents of IRS-Criminal Investigations, under the direction of Special Agent in Charge Jonathan D. Larsen; and special agents and task force officers from the Drug Enforcement Administration’s Tactical Diversion Squad, under the direction of Special Agent in Charge Carl Kotowski, who investigated the case, and Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office for the District of New Jersey located in Trenton, and Trial Attorney Yael Epstein of the Justice Department’s Tax Division who prosecuted the case.

A leader of the Imperial Gangsters street gang was convicted by a federal jury in the Northern District of Indiana of five counts of murder in aid of racketeering, one count of attempted murder in aid of racketeering, one firearms count related to the attempted murder, one count of engaging in a RICO conspiracy, one count of engaging in a conspiracy to distribute narcotics, and related offenses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana made the announcement.

Juan Briseno aka “Tito”, 25, of Hammond, Indiana, was part of a 24-defendant indictment alleging that members of the Imperial Gangsters committed 13 homicides in East Chicago, Hammond and Gary, Indiana.  The indictment also charged a decade-long racketeering conspiracy that involved 19 additional attempted murders and the large scale distribution of cocaine and marijuana.  Sentencing is scheduled for June 15, before Chief Judge Philip P. Simon of the Northern District of Indiana.

According to evidence presented at trial, the Imperial Gangsters had a standing rule to shoot on sight any rival gang member.  They also had a policy to shoot anyone selling drugs in their neighborhood without their permission.  Briseno was convicted of five murders, which the evidence demonstrated were committed pursuant to the gang’s policies and in furtherance of the 149 th Street Imperial Gangsters, a violent clique of the Imperial Gangsters based in East Chicago.  

The evidence further demonstrated that Briseno exercised a leadership role in the gang, in which he supervised the “shorties, or prospective members of the 149th Street Imperial Gangsters.  Briseno expressed no remorse for his participation in various murders, and indeed bragged about killings and encouraged others to do the same.

With regard to the specific murders, the evidence at trial demonstrated that Briseno knocked on Luis Ortiz’s apartment door in Hammond, Indiana, on Sept. 26, 2007, and shot him dead in the doorway to the apartment.  Briseno targeted Ortiz because he was a member of the rival Latin King Street Gang.

Additionally, the evidence demonstrated that Briseno committed the double murder of Miguel Mejias, a Latin King living in Imperial Gangster territory, and Michael Sessum, an associate of Mejias, while they were unarmed and bringing takeout food to their pregnant girlfriends on June 3, 2008.  During that murder, multiple shots fired by Briseno entered Mejias’ residence, striking a female victim in the arm while she was holding her infant child.  Another pregnant female victim and multiple minor victims were also in the apartment at the time of the shooting.  According to testimony at trial, Mejias implored another individual to tell Briseno that he was no longer “gangbanging” and did not want any trouble.  In response to this message, Briseno said, “[explecetive] him, he was going to bring [Latin] Kings into our neighborhood.”

The evidence at trial also demonstrated that Briseno and his associates murdered rival Two-Six gang member, Miguel Colon, on Feb. 7, 2010, as Colon came out of a party.  In this incident, Briseno and Colon exchanged gunfire, endangering numerous innocent individuals who were in the vicinity.

Finally, the evidence at trial demonstrated that Briseno murdered Latroy Howard on June 19, 2010, for selling drugs in an Imperial Gangster-controlled neighborhood without the permission of the gang.  A video introduced at trial showed Briseno circling the block in his car and then walking up on foot and shooting the unarmed Howard twice in the head at point-blank range.

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

Carbofin S.p.A., an Italian domiciled company that owned and operated the M/T Marigola was sentenced to pay an overall criminal penalty of $2.75 million by the Honorable Virginia M. Hernandez Covington for knowingly falsifying the vessel’s oil record book in violation of the Act to Prevent Pollution from Ships (APPS), announced the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Middle District of Florida. 

Out of the $2.75 million criminal penalty, $600,000 will be paid to the National Marine Sanctuary Foundation for the benefit of Florida’s only national marine sanctuary: the Florida Keys National Marine Sanctuary.  The funds are to be used to support the protection and preservation of natural resources located in and adjacent to the sanctuary, including the cleanup and remediation of pollution in the sanctuary; restoration of injured resources, particularly coral reefs and seagrass beds and species dependent on those habitats.  The funds will also support scientific research in, and public education about, the Florida Keys National Marine Sanctuary.

During 2013 and 2014, on numerous international voyages, senior members of the crew of the M/T Marigola directed the installation and use of a so-called “magic hose” to dispose of sludge, waste oil and oil-contaminated bilge water directly into the sea bypassing required pollution prevention equipment.  On April 16, 2014, the vessel called upon the Port of Tampa to load anhydrous ammonia.  Coast Guard inspectors boarded the vessel and were approached by two junior engineering crew members who showed the inspectors a video of the “magic pipe” hooked up between piping leading to the bilge tank and the vessel’s boiler blow down valve.  The boiler blow down valve is a discharge point for the boiler to release hot water and steam.  The inspectors had the valve removed and an oily black substance was discovered.  Oil samples taken from the “magic hose,” the bilge piping and the boiler blow down valve matched.  The Chief Engineer, Carmelo Giano, and the Second Engineer, Alessandro Messore, had previously pleaded guilty and were sentenced for their role in ordering the use of the “magic hose” to illegally discharge oily waste into the sea. 

“We are extremely grateful to the U.S. Department of Justice in supporting the work of the National Marine Sanctuary Foundation on behalf of the nation's marine sanctuaries, including here at the Florida Keys National Marine Sanctuary,” said President and CEO Jason Patlis of the National Marine Sanctuary Foundation.  “These funds will go to critical education, research and restoration activities, including deployment of mooring buoys, coral reef restoration and study and mitigation of invasive species impacts.”

“Marine environmental protection is one of the Coast Guard's primary missions,” said Captain Gregory Case of the Port at Sector St. Petersburg.  “The Coast Guard takes marine pollution seriously and works cohesively with our partner agencies to hold those who violate international law accountable for their actions.  We anticipate the results of this case will deter future illegal oil discharges into the sea.”

Consistent with requirements in the APPS regulations, a vessel like the M/T Marigola, must maintain a record known as an oil record book in which transfer and disposal of all oil-contaminated waste and the discharge overboard and disposal otherwise of such waste, must be fully and accurately recorded by the person or persons in charge of the operations.  Oil-contaminated bilge waste can be discharged overboard if it is processed through on-board pollution prevention equipment known as the oily water separator (OWS).  Waste oil and sludge can only be disposed of using an on-board incinerator or by discharging the waste to a shore-side facility, barge or tanker truck.  Giano and Messore falsified the oil record book by not recording that oily waste was being disposed of through the boiler blow down valve. 

During the course of the investigation, it was revealed that the oil record book for the M/T Marigola was falsified since at least June 16, 2013.  The investigation also revealed that illegal oily waste discharges had occurred from two other vessels owned and operated by Carbofin, the M/T’s Marola and Solaro.  On the M/T Marola, a “magic hose” was used between on or about December 2012 and April 2013 and on the M/T Solaro between on or about February to August 2013.

The case was investigated by U.S. Coast Guard Sector St. Petersburg and the U.S. Coast Guard Investigative Service.  The case was prosecuted by Kenneth E. Nelson of the Environmental Crimes Section of the Department of Justice and Matthew Mueller of the U.S. Attorney’s Office of the Middle District of Florida.

Former Puerto Rico Police Sergeant Erick Rivera Nazario was sentenced today to serve 96 months in prison followed by three years supervised release for violating the civil rights of Jose Luis Irizarry Perez, 19, by striking him with a police baton during a fatal police-involved beating, announced Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Rosa Emilia Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI San Juan Field Office. 

Rivera Nazario pleaded guilty to one count of depriving Irizarry Perez of his civil rights by striking him with a police baton while the young man was injured, restrained, and not posing a threat to others.  Two other former Puerto Rico police officers have already been sentenced for their obstructive conduct during the federal investigation into the incident, while three other former Puerto Rico police officers, who also pleaded guilty, are awaiting sentencing for their roles in the beating and subsequent obstruction of the investigation.  According to documents filed in connection with the guilty pleas, Rivera Nazario and another former Puerto Rico police officer violated the constitutional rights of Irizarry Perez by striking him with their police batons while another former police officer physically restrained Irizarry Perez during an election evening celebration at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008.   

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

“The department remains steadfastly committed to prosecuting excessive force by police officers and today’s sentence reflects the severity of such criminal conduct,” said Acting Assistant Attorney General Gupta.  “Although nothing can replace the tragic loss of life that resulted from the police-involved beating, I hope that this sentence helps to provide some sense of closure for Jose Luis Irizarry Perez’s family.”

“The U.S. Attorney’s Office will continue to defend the civil rights of the people of Puerto Rico,” said U.S. Attorney Rodriguez-Vélez.  “It is appalling that law enforcement officers choose to violate their oath of office and abuse their position to deprive people of their civil liberties.”

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

Charnesha Alexander, a Phenix City, Alabama, resident was sentenced yesterday to serve 111 months in prison for her role in a more than $3 million Stolen Identity Refund Fraud (SIRF) tax scheme.

Alexander was also sentenced to three years of supervised release and order to pay restitution in the amount of $840,692. On Feb. 5, a co-conspirator in the scheme, Robert Walker, of Columbus, Georgia, was sentenced to serve 94 months in prison, three years of supervised release and ordered to pay restitution in the amount of $840,692. Alexander and Walker each previously pleaded guilty to conspiracy to defraud the government and one count of aggravated identity theft, 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.

According to court documents and statements made in court, between January 2011 and December 2013, Alexander, Walker and their co-conspirators used stolen identities to file more than 900 false tax returns that requested approximately $3.4 million in tax refunds. Alexander obtained stolen identities from various sources, including the identities of employees from a company in Columbus. In order to file the false tax returns, Alexander, Walker and their co-conspirators applied for and obtained several Electronic Filing Numbers (EFINs) from the Internal Revenue Service (IRS) in the names of sham tax businesses. The tax refunds claimed on the false returns were paid via U.S. Treasury checks mailed to addresses under the control of participants in the scheme, prepaid debit cards issued by financial institutions, and deposits to financial institutions connected to the business EFINs that allowed participants in the scheme to print refund checks. Walker and his co-conspirators cashed the fraudulent refund checks at several businesses located in Alabama and Walker deposited fraudulent refund checks into a bank account he controlled.

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

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler, Charles M. Edgar Jr. and Gregory P. Bailey of the Tax Division, who prosecuted the case with the assistance of Assistant U.S. Attorney Todd A. Brown of the Middle District of Alabama. Additional information about the Tax Division and its enforcement efforts may be found at the division website.

SACRAMENTO, Calif. — Benjamin B. Wagner, procurador federal del Distrito Oriental de California, informó que el Juez de Distrito Federal de los Estados Unidos, Troy L. Nunley, sentenció a Alan David Tikal de 46 años, anterior residente de Brentwood, California, a cumplir una condena de 24 años de prisión luego de declararlo culpable de once cargos de fraude por correo y un cargo de fraude por correo relacionado con la estafa de rescate de ejecución hipotecaria. Tikal fue hallado culpable mediante juicio sin jurado ante el Juez Nunley el 15 de septiembre de 2014.

Según las pruebas presentadas durante el juicio, entre el 7 de enero de 2010 y el 20 de agosto de 2013, Tikal lideró una empresa conocida como KATN, dirigida a los propietarios de viviendas con problemas financieros y con dificultades para efectuar los pagos mensuales de sus hipotecas. Muchas de sus víctimas no hablaban inglés. Tikal prometió reducir sus deudas hipotecarias pendientes de pago en un 75%, afirmando falsamente ser un banquero privado registrado con acceso a una extensa línea de crédito y con la capacidad de pagar la totalidad de las deudas hipotecarias de los propietarios. Tikal les afirmó a los propietarios de viviendas que, a cambio de diferentes honorarios y pagos, extinguiría las obligaciones relacionadas a sus préstamos vigentes, reduciéndolas a nuevos préstamos con Tikal por montos equivalentes al 25% de su obligación original. Al confiar en las falsas declaraciones efectuadas por Tikal, muchos de estos propietarios dejaron de efectuar los pagos de sus préstamos hipotecarios vigentes y en consecuencia perdieron sus viviendas por ejecución hipotecaria.

De hecho, Tikal, nunca efectuó pago alguno a ninguna institución financiera en representación de los propietarios para cumplir con las obligaciones de sus deudas hipotecarias pre-existentes, sino que sencillamente, el mismo Tikal, sus familiares y asociados gastaron los supuestos pagos del "préstamo" para su uso personal y no hubo ni una sola instancia en la cual se pagara, condonara o extinguiera de otro modo la deuda de los propietarios como resultado del programa de asistencia hipotecaria. En total, Tikal y sus asociados convencieron a màs de 1,000 propietarios de viviendas en California y en otros estados a participar en el programa. Como resultado de su participación, muchos de los propietarios cayeron en mora debido a la falta de pago de sus préstamos y finalmente perdieron sus viviendas por ejecución hipotecaria. Dichos propietarios pagaron màs de $5,800,000 por honorarios y pagos mensuales para el programa. De ese monto, al menos $2,500,000 de los pagos efectuados se depositaron en cuentas que controlaba Tikal y/o su familia.

Al pronunciar la sentencia de Tikal, el Juez Nunley se refirió a las víctimas que, a consecuencia del fraude de Tikal, "no pueden residir en las viviendas que tenían, las cuales en algunos casos, trataron de pagar durante toda la vida."  El Juez Nunley dijo que Tikal es "el cerebro detràs de toda esta conspiración" y que se merece la sentencia que recibió.

"La crisis financiera que golpeó tan fuerte a nuestras comunidades hizo que para muchos fuera muy difícil pagar todas las cuentas," dijo el procurador federal del Distrito Oriental de California, Wagner. "Alan Tikal se aprovechó de forma cínica de la desesperación de estas personas para sacar ganancias, robando los pagos que estaban destinados a preservar los hogares de estas familias. A pesar de que no podemos reparar el daño que Tikal ha ocasionado, la sentencia que se impone hoy brinda una medida de justicia."

"Las acciones de Alan Tikal fueron ilegales y no se toleraràn en California.  Él y sus socios estafaron a cientos de trabajadores diligentes de California que luchaban para conservar sus hogares durante la crisis de las ejecuciones hipotecarias en nuestro estado," dijo la procuradora general del California, Kamela Harris. "Esta conspiración depredadora les robó los ahorros de toda una vida a muchas familias, y en muchos casos, sus viviendas. Le agradezco a nuestra Fuerza de Ataque contra el Fraude Hipotecario de California y al Departamento de Justicia de los Estados Unidos por su trabajo al hacer posible el enjuiciamiento de estos individuos."

"El acusado abusó de los propietarios desesperados y atrapados por la crisis financiera que buscaban una forma de permanecer en sus hogares", dijo José M. Martínez, Agente Especial en Jefe del Departamento de Investigación Delictiva del IRS (IRS-CI, por sus siglas en inglés). "En lugar de efectuar pagos a los bancos, los acusados se quedaban con el dinero. Tikal llevaba un lujoso estilo de vida que incluía automóviles nuevos, vuelos en aviones privados alquilados y un traje de $5,000. Aunque esta sentencia no puede revertir el daño que causó el Sr. Tikal y sus co-acusados, se destaca el constante compromiso del IRS-CI al hacer responsables a los involucrados en este tipo de delitos.

“Hoy se hizo justicia al sentenciar a Tikal a 24 años en la prisión federal por estafar a los propietarios con dificultades financieras por millones de dólares, ocasionando la ejecución hipotecaria de sus viviendas y destruyendo sus vidas," dijo Christy Romero, Inspectora General Especial para TARP (SIGTARP). "La elocuencia de Tikal y sus promesas llamativas atrajeron a las víctimas, muchas de las cuales no hablaban inglés y sencillamente tenían la esperanza de salvar sus hogares de la ejecución hipotecaria, pero las palabras de Tikal eran tan solo mentiras y artimañas disfrazadas de sofisticación financiera. La arrogancia de Tikal fue suprema al darle a su plan el nombre ‘KATN Trust, (Kicking Ass, Taking Names),’ acrónimo en inglés que significa ganarlo todo, tomando nombres; e incluso luego de que se le acusara y arrestara, continuó con su estafa desde su celda en la càrcel con la ayuda de sus conspiradores asociados. La sentencia impuesta hoy es una advertencia para quienquiera que considere la posibilidad de llevar a cabo o que esté involucrado en un plan para estafar a propietarios con dificultades financieras y un recordatorio de la seriedad y gravedad moral de su delito. SIGTARP se mantiene en unión firme con nuestros socios del orden público para llevar ante la justicia ràpidamente a todos aquellos que cometan un fraude relacionado con el Programa de Alivio de Activos en Problemas (TARP, por sus siglas en inglés).”

Este caso es un proceso conjunto de la Procuraduría Federal para el Distrito Oriental de California y la Procuraduría General de California. Es el resultado de una investigación exhaustiva que realizó la Inspectora General Especial para el Programa de Alivio de Activos en Problemas (SIGTARP), el Departamento de Investigación Delictiva del IRS, el Departamento de Justicia de California y la Procuraduría del Distrito del Condado de Stanislaus. El ayudante del procurador federal para el Distrito Oriental de California, Philip Ferrari, y la Procuradora General Adjunta de California, Maggy Krell, estàn a cargo de procesar el caso.

Se programó una audiencia sobre indemnización para el 26 de marzo de 2016. El co-acusado, Ray Kornfeld, fue sentenciado previamente una condena a 5 años de prisión. La co-acusada Tamara Tikal se declaró culpable previamente y se ha programado su pronunciación de sentencia por Juez Nunley para el 23 de abril de 2015.

The Department of Justice has reached a settlement of its civil forfeiture cases against $1.2 million in assets in the United States traceable to corruption proceeds accumulated by Chun Doo Hwan, the former president of the Republic of Korea.  The department also assisted the government of the Republic of Korea in recovering an additional $27.5 million in satisfaction of an outstanding criminal restitution order against former President Chun. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Sarah R. Saldaña of U.S. Immigration and Customs Enforcement (ICE)­­ and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office made the announcement after the settlement was signed and papers requesting that the court execute the agreement were filed with the U.S. District Court for the Central District of California.

“Chun Doo Hwan’s campaign of corruption and bribery while serving as Korea’s president betrayed the trust of the Korean people, deprived Korea’s government of precious resources and undermined the rule of law,” said Assistant Attorney General Caldwell.  “Fighting corruption is a global imperative that demands a coordinated global response.  The close cooperation between the United States and Korea in successfully recovering corruption proceeds stands as a testament to our resolve to battle the scourge of corruption through international collaboration.”       

“Former Korean President Chun violated the trust of the people of Korea,” said Director Saldaña.  “The results in this case reflect the outstanding international cooperation that exists between U.S. law enforcement and the government of Korea.”

"The U.S. will not idly standby and serve as a money laundering haven for foreign officials to hide corrupt activities,” said Assistant Director in Charge David Bowdich.  “The FBI will continue to collaborate with our foreign partners by leveraging its resources in order to identify those engaged in foreign corruption and to recover their ill-gotten gains.”

According to court documents, President Chun was convicted in Korea in 1997 of receiving more than $200 million in bribes from Korean businesses and companies.  President Chun and his relatives laundered some of these corruption proceeds through a web of nominees, trusts and shell companies in both Korea and the United States.

Under the terms of the U.S. settlement, $1,116,951.45 in assets will be forfeited to the United States.  During the joint U.S.-Korean investigation, approximately $27.5 million in additional funds were paid by an associate of former President Chun to the Korean government to partially settle the judgment entered against former President Chun upon his criminal conviction.  Including the settlement announced today, the U.S. and Korean authorities have recovered more than $28.7 million in connection with Korea’s investigation and prosecution of former President Chun.   

The investigation was conducted jointly by the FBI’s West Covina Resident Agency of the Los Angeles Division, ICE’s Homeland Security Investigations’ (HSI) Philadelphia Office, HSI's Attaché in Seoul, South Korea and the FBI Kleptocracy Program of the International Corruption Unit within the Criminal Investigation Division.  The case is being prosecuted by Trial Attorneys Woo S. Lee and Della Sentilles of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Katharine Schonbachler and Steven R. Welk of the Central District of California, and Assistant U.S. Attorneys Joseph Minni and Alvin Stout of the Eastern District of Pennsylvania.  The Criminal Division’s Office of International Affairs provided substantial support.

The department is grateful for the significant assistance provided by the Seoul Central District Public Prosecutor’s Office, Korea’s Supreme Prosecutor’s Office - Anti-Corruption Supervisory Division and the Ministry of Justice’s International Criminal Affairs Division in investigating and forfeiting these corruption proceeds.

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

Chun Executed Agreement

Chun Notice of Settlement

Two Connecticut-area men were sentenced to federal prison today for their roles in a bribery scheme to obtain confidential, internal law enforcement documents and information from a former FBI Special Agent in White Plains, New York.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.  The sentences were imposed by U.S. District Judge Vincent L. Briccetti of the Southern District of New York.

Rizve Ahmed, aka “Caesar,” 36, of Danbury, Connecticut, and Johannes Thaler, 51, of New Fairfield, Connecticut, were sentenced to 42 months in prison and 30 months in prison, respectively.  In October 2014, both defendants pleaded guilty to bribery and conspiracy to commit wire fraud and honest services fraud.

In pleading guilty, Thaler and Ahmed admitted that, from September 2011 through March 2012, Thaler and FBI Special Agent Robert Lustyik solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI Special Agent.  Thaler was Lustyik’s friend, and Ahmed, a native of Bangladesh, was an acquaintance of Thaler.  The confidential documents and information pertained to a prominent citizen of Bangladesh who was affiliated with a political party opposing Ahmed’s views.  Ahmed requested the confidential information to help him locate and harm his political rival and others associated with the intended victim.

As part of the scheme, Lustyik and Thaler exchanged text messages about how to pressure Ahmed to pay them additional money in exchange for confidential information.  For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . .  I will talk us into getting the cash . . . .  I will work my magic . . . .  We r sooooooo close.”  Thaler responded, “I know.  It’s all right there in front of us.  Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .” 

Additionally, in late January 2012, Lustyik learned that Ahmed was considering using a different source to obtain confidential information.  In response, Lustyik sent a text message to Thaler stating, “I want to kill C [Ahmed] . . . .  I hung my ass out the window n we got nothing? . . . .  Tell [Ahmed], I’ve got [the victim’s] number and I’m pissed. . . .  I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to [the victim].”  Lustyik further stated, “So bottom line.  I need ten gs asap.  We gotta squeeze C.”

Lustyik pleaded guilty on Dec. 23, 2014, to all five counts against him in the indictment: conspiracy to engage in a bribery scheme; soliciting bribes by a public official; conspiracy to defraud the citizens of the U.S. and the FBI; theft of government property; and unauthorized disclosure of a Suspicious Activity Report.  He is scheduled to be sentenced by Judge Briccetti on April 30, 2015, at 9:30 a.m.

The case was investigated by the Department of Justice Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.

Scheme Victimized More Than 1,000 Individuals throughout the United States

The Justice Department announced today the unsealing of an indictment charging seven individuals in connection with a vending machine “business opportunity” that defrauded thousands of victims across the country.  The indictment was returned by a federal grand jury in New York City.  The following individuals were named as defendants in the indictment:

• Kenneth Levin, 68, of New York City, Founder and President

• Taylor Levin, 33, of New York City, Manager and Sales Representative

• Sears Hobbs, 51, of New York City, Sales Representative

• James Conley, 58, of Brooklyn, New York, Sales Representative

• Marcel Harris, 51, of Brooklyn, Sales Representative

• Steve Friedman, 78, of New York City, Sales Representative

• Jonathan Campbell, 76, of New York City, Sales Representative

Each of the defendants is charged with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud.  Each charge carries a statutory maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. 

The indictment alleges that Kenneth Levin, Taylor Levin and their sales representatives made material misrepresentations about the profits customers would make from vending machines and the locations customers would receive for vending machines.  As part of the purported business opportunity package, they offered to sell to customers vending machines for which pre-established, high-profit locations were already identified, and to connect customers with experienced “locators,” who would facilitate placing the vending machines in those pre-determined locations.  They further promised to provide training and ongoing customer assistance in how to operate a successful vending machine business and assured customers that they would earn significant profits from the vending machines in a relatively short period of time. 

The defendants are also alleged to have misled prospective customers about the profits customers could earn from the machines.  They assured prospective customers that they would earn significant profits from the vending machines in a relatively short period of time.  Several of the defendants also misled customers into believing that the defendants personally owned vending machines which were profitable.  They made these assertions knowing that there were scores of dissatisfied customers who, rather than making any profit, had lost their entire investment.  Through their scheme, the business opportunity companies obtained nearly $9 million from more than 1,300 customers throughout the United States.

“Business opportunity fraud insidiously targets Americans in search of a better future for their families,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Instead of becoming successful entrepreneurs, customers become victims, and often lose their life’s savings.” 

“As alleged, the defendants preyed on prospective customers by inventing facts and making false promises to make a proposed vending machine ‘business opportunity’ appear more attractive,” said U.S. Attorney Preet Bharara of the Southern District of New York.  “As I have noted before, we are taking a close look at fraud that targets consumers and we will aggressively prosecute such conduct wherever we find it.”

“These arrests occurring during National Consumer Protection Week offer a great opportunity for us to highlight our message of fraud prevention,” said Inspector in Charge Ronald J. Verrochio of the U.S. Postal Inspection Service (USPIS) Miami Office.  “We will continue to investigate these frauds however; consumers need to protect themselves from these frauds by proceeding carefully when investing their money.”

The indictment states that during the conspiracy, the Levins and their sales representatives encouraged prospective customers to contact locating companies to verify that the routes were available.  The operators of locating companies were directed to echo the false statements made to customers and affirm that high-traffic, and therefore profitable, locations had already been found and were waiting in the prospective customers’ respective geographic areas. 

The indictment alleges that, in reality, the locating companies who worked with the business opportunity company did not have high-traffic locations or routes waiting in the prospective customer’s area.  The locating companies had no special skills, tools or expertise in finding locations and generally placed consumers’ machines wherever they could, often in businesses that had not consented to housing the machines or that soon demanded that the machines be removed.  The vending machines generated little business and customers lost nearly all, if not all, of their investments.  

Acting Assistant Attorney General Mizer and U.S. Attorney Bharara praised USPIS for their outstanding work in the investigation.

This matter is being handled by the U.S. Attorney’s Office of the Southern District of New York’s Complex Frauds Unit.  Assistant U.S. Attorneys Janis Echenberg and Jennifer Beidel of the Southern District of New York and Trial Attorney Jessica Gunder of the Civil Division’s Consumer Protection Branch are prosecuting the case.​

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

Assistant Attorney General for National Security John P. Carlin, 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 announced today that an Orange County, California, man who attempted to travel to Syria last year has been indicted on a series of federal offenses, including attempting to provide material support to a designated terrorist organization the Islamic State of Iraq and the Levant (ISIL).

Adam Dandach, 21, of Orange, California, was named in a superseding indictment returned today by a federal grand jury in Santa Ana, California.  Dandach, a U.S. citizen, also known as “Fadi Fadi Dandach,” is charged in the indictment with one count of attempting to provide material support and resources to a designated foreign terrorist organization; two counts of making a false statement on a passport application that was obtained in order to facilitate international terrorism; and one count of obstruction of justice for attempting to destroy records after his arrest last July.

Dandach was arrested on July 3, 2014, and initially charged in a federal criminal complaint with making a false statement on his passport application.  The complaint alleged that Dandach lied in order to replace his passport so that he could travel without being stopped by a family member who possessed his original passport.  At that time, Dandach was attempting to travel from Orange County’s John Wayne Airport to Istanbul with the intention of traveling to Syria.  Dandach told FBI agents that he was traveling to Syria for the purpose of pledging his alliance and assistance to ISIL, and that he believed the killings of American soldiers are justified, according to court documents.

On July 16, 2014, Dandach was indicted by a federal grand jury for making false statements on a passport application.  He entered a plea of not guilty in July 2014 and has been held in federal custody without bond since that time.

According to the first superseding indictment returned today, Dandach knowingly attempted to provide material support and resources, namely himself, to work under the direction and control of ISIL, also known as the Islamic State of Iraq, al-Qa’ida in Iraq, ISIS, and the Islamic State, according to the indictment, which notes that the ISIL has been continuously designated by the U.S. State Department as a foreign terrorist organization since 2004.  The indictment further alleges that Dandach, in order to facilitate an act of international terrorism, lied when applying for a replacement passport and then presented the passport to an airline employee for the purpose of traveling to Istanbul.  The indictment further alleges that Dandach attempted to obstruct the investigation by directing another person to instruct a website administrator to delete his post history on that website.

Dandach is scheduled to be arraigned on the indictment on March 16, 2015.

If convicted of all the charges in the indictment, Dandach would face a statutory maximum sentence of 15 years in federal prison for the material support charge, up to 25 years for each of the two passport fraud charges, and a statutory maximum of 25 years for obstruction of justice offense.

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until and unless proven guilty in court.

This investigation was conducted by the FBI’s Joint Terrorism Task Force in Orange County.  Dandach is being prosecuted by the U.S. Attorney’s Office for the Central District of California, with the assistance of the Counterterrorism Section of the National Security Division.

A New York jeweler pleaded guilty in federal court in Atlanta yesterday to two counts of interstate transportation of stolen property in connection with jewelry he purchased from an armed robbery ring and then sold in New York. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney John A. Horn of the Northern District of Georgia made the announcement.

Carlos Parra, 64, a resident of New Jersey, pleaded guilty before U.S. District Judge Steve C. Jones of the Northern District of Georgia.  Sentencing is scheduled for June 3, 2015. 

Parra admitted in court that he was contacted by a member of an armed robbery crew that stole over $100,000 in jewelry from a courier on Jan. 31, 2013.  Parra flew from New York, where his jewelry business was based, to Atlanta to purchase the jewelry from the robbery crew for approximately $16,000.  Parra admitted that he had dealt with these robbers or their associates in the past and knew the jewelry was stolen.

Parra further admitted to purchasing jewelry from a robbery crew in Houston in August 2012.  In that instance, the robbery crew stole over $500,000 from a jewelry courier during an armed robbery on Aug. 27, 2012.  Parra admitted that he flew to Texas to purchase the stolen jewelry at a discounted rate because it was stolen.  He later sold the jewelry in New York to wholesalers for a profit. 

This case was investigated by the FBI, Immigration and Customs Enforcement and the Gwinnett County Police Department, with assistance from the Dallas Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  This case was prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Kim Dammers of the Northern District of Georgia.

A former general manager of the Platinum Creek Mine in Platinum, Alaska, pleaded guilty today to three felony violations of the federal Clean Water Act, announced Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division and U.S. Attorney Karen L. Loeffler of the District of Alaska.

Robert Pate, 63, of Spokane, Washington, entered his guilty pleas today in federal court in Anchorage, Alaska.  Pate admitted to knowingly discharging wastewater from the Platinum Creek mine into Platinum/Squirrel Creek, without a Clean Water Act Permit, knowingly violating the conditions of XS Platinum Inc.’s Clean Water Act permit for discharges to the Salmon River and falsely reporting to the Alaska Department of Environmental Conservation in the 2010 Annual Report for placer mining at the Platinum Creek Mine that there was “no discharge” during 2010, a statement Pate knew to be false.

Pate was XS Platinum Inc.’s general manager and a senior member of its office staff in Seattle, Washington, from February 2010 to June 2012.  According to the plea agreement, Pate documented unpermitted discharges of turbid effluent process water into the Salmon River beginning on July 3, 2010.  Turbid process water from the placer mining at the Platinum Creek Mine contained pollutants such as suspended particles and sediments and may have also included waste such as dissolved metals that posed a potential threat to aquatic life.  After documenting the first discharges of turbid effluent process water, Pate supervised the construction of a ditch to divert the effluent directly into nearby Squirrel/Platinum Creek, also without a permit.  Turbid discharges, which XS Platinum Inc. never reported to regulators as required, continued into the Salmon River for much of the remaining season.  When Pate filed XSP’s annual water quality report in January 2011, he falsely wrote that the Platinum Creek Mine had experienced no discharges in 2010.  The discharges continued in 2011.

“The defendant had a responsibility to ensure the wastewater at the Platinum Creek Mine was handled safely and responsibly but instead took specific actions that posed serious risks to the environment,” said Assistant Attorney General Cruden.  “By pleading guilty, the defendant has admitted responsibility and will be held accountable under our nation's environmental laws.”

“Enforcement of our environmental laws is a priority for federal law enforcement in Alaska,” said U.S. Attorney Loeffler.  “It is essential to balance the importance of resource extraction to Alaska with the importance of doing it safely and in accordance with the law and regulations.  Mr. Pate’s guilty pleas to federal felonies sends the proper message that there are consequences to illegal actions and we will vigilantly enforce environmental laws.”  

“The wastewater produced at Platinum Creek Mine contained pollutants that posed a potential threat to both aquatic life and human health,” said Acting Special Agent in Charge Jay M. Green of the EPA’s Criminal Enforcement Program in Alaska.  “As general manager of XS Platinum, the defendant knew first-hand about the discharges of mine wastewater into the Salmon River.  Unpermitted discharges of turbidity and suspended solids have a negative impact on the diverse, complex and sensitive ecosystems contained in our Nation’s waters.  Today’s plea demonstrates that if companies and their managers skirt environmental laws, EPA will hold them accountable.” 

“This guilty plea highlights the importance that mining permittees adhere to the regulations that govern their operations, and how important it is for them to be open and transparent in their reporting obligations,” said State Director Bud Cribley of BLM-Alaska.  “BLM continues to support the responsible development of federal public lands where appropriate.  We are working closely with our state and federal partners as well as with the current claim owner to bring the Platinum Creek Mine back into production in a manner that will protect the Salmon River and restore it to a functioning condition.” 

The Honorable Sharon Gleason set sentencing for Sept. 2, 2015, and will ultimately decide what sentence to impose.  According to the plea agreement, the United States will recommend a sentence that will include both imprisonment and home confinement.  Pate also agreed to pay a $10,000 fine.

The investigation is being conducted by the U.S. Department of Interior Bureau of Land Management Office of Law Enforcement and Security and the U.S. Environmental Protection Agency Criminal Investigation Division.  The case is being prosecuted by First Assistant U.S. Attorney Kevin Feldis of the U.S. Attorney’s Office of the District of Alaska, Trial Attorney Todd S. Mikolop of the U.S. Justice Department’s Environmental Crimes Section and U.S. EPA Regional Criminal Enforcement Counsel Dean Ingemanson.

Defendant Engaged in Conspiracy to Use Threats, Violence and Coercion to Compel Women into Prostitution in New Orleans and Elsewhere

Today, Laquentin Brown, aka “Nino,” 32, originally of Memphis, Tennessee, pleaded guilty to conspiring to engage in sex trafficking of adult victims in New Orleans and elsewhere, announced Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division and United States Attorney Kenneth Allen Polite Jr. of the Eastern District of Louisiana.  Brown also pleaded guilty to one count of transportation for purposes of prostitution.   

According to Brown’s admissions in court in the course of his guilty plea hearing and documents filed in the case, Brown—together with co-defendants Granville Robinson, aka “Bear” and “HB”; Duane Phillips, aka  “P-nut”; Anthony Ellis, aka “Anthony Deshun Lloyd,” “Animal,” and “AD”; and Christopher Williams, aka “Gutter,” all of whom are from Memphis, Tennessee—conspired to target adult, U.S. citizen women, whom they recruited, groomed, and forced and coerced to engage in prostitution.  Brown and his co-defendants maintained control over the women by enforcing rules, including requiring the women to earn a certain amount of money each day and requiring the women to turn over the earnings to the conspirators.  

The defendants also enforced rules prohibiting the women from speaking to or looking at another pimp, and some of the co-conspirators took the women’s identification.  In addition to requiring the women to prostitute in New Orleans, the co-conspirators on occasion transported the women to other states to engage in prostitution.  The co-conspirators enforced the rules and compelled the women’s continued engagement in prostitution for the co-conspirators’ profit by using physical beatings, withholding of food and other punishments.

“These defendants preyed on vulnerable women and cruelly exploited them for profit,” said Acting Assistant Attorney General Gupta.  “At the Department of Justice, we will continue to enforce our human trafficking laws to restore the rights, freedom and dignity to victims of this modern-day slavery.”

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

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

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

At sentencing, Brown faces a maximum of ten years for transporting women for purposes of prostitution, and a maximum of five years for conspiracy to engage in sex trafficking.  A sentencing hearing is scheduled for June 17, 2015.

On Oct. 3, 2014, a federal Grand Jury in the Eastern District of Louisiana returned a nine-count indictment charging Robinson, Phillips, Ellis and Williams with conspiring to engage in sex trafficking by force, fraud and coercion.  The indictment also charged Robinson, Phillips and Williams with sex trafficking by force, fraud and coercion and with interstate transportation for prostitution.  The indictment also charged motel owner Kanubhai Patel, age 73, of Kenner, Louisiana, with benefiting financially from participation in the sex trafficking venture.  An indictment is merely a charge and the guilt of the defendants must be proven beyond a reasonable doubt.

On June 25, 2014, Zacchaeus Taylor, aka “Little Z,” “Little Zay,” and “Little 5,” pleaded guilty in connection with the scheme.  Taylor is scheduled for trial on April 20, 2015.

The New Orleans Field Offices of the FBI and Department of Homeland Security-Homeland Security Investigations are investigating the case with assistance from the FBI’s Memphis Field Office.  This case is being prosecuted by Special Litigation Counsel John Cotton Richmond and Trial Attorney Christine M. Siscaretti of the Civil Right Division’s Human Trafficking Prosecution Unit, and Assistant United States Attorney Julia K. Evans of the Eastern District of Louisiana.

Justice Department Finds a Pattern of Civil Rights Violations by the Ferguson Police Department

The Justice Department announced the findings of its two civil rights investigations related to Ferguson, Missouri, today.  The Justice Department found that the Ferguson Police Department (FPD) engaged in a pattern or practice of conduct that violates the First, Fourth, and 14th Amendments of the Constitution.  The Justice Department also announced that the evidence examined in its independent, federal investigation into the fatal shooting of Michael Brown does not support federal civil rights charges against Ferguson Police Officer Darren Wilson.

“As detailed in our report, this investigation found a community that was deeply polarized, and where deep distrust and hostility often characterized interactions between police and area residents,” said Attorney General Eric Holder.  “Our investigation showed that Ferguson police officers routinely violate the Fourth Amendment in stopping people without reasonable suspicion, arresting them without probable cause, and using unreasonable force against them.  Now that our investigation has reached its conclusion, it is time for Ferguson’s leaders to take immediate, wholesale and structural corrective action.  The report we have issued and the steps we have taken are only the beginning of a necessarily resource-intensive and inclusive process to promote reconciliation, to reduce and eliminate bias, and to bridge gaps and build understanding.” 

“While the findings in Ferguson are very serious and the list of needed changes is long, the record of the Civil Rights Division’s work with police departments across the country shows that if the Ferguson Police Department truly commits to community policing, it can restore the trust it has lost,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We look forward to working with City Officials and the many communities that make up Ferguson to develop and institute reforms that will focus the Ferguson Police Department on public safety and constitutional policing instead of revenue.  Real community policing is possible and ensures that all people are equal before the law, and that law enforcement is seen as a part of, rather than distant from, the communities they serve.”

Attorney General Holder first announced the comprehensive pattern or practice investigation into the Ferguson Police Department after visiting that community in August 2014, and hearing directly from residents about police practices and the lack of trust between FPD and those they are sworn to protect.  The investigation focused on the FPD’s use of force, including deadly force; stops, searches and arrests; discriminatory policing; and treatment of detainees inside Ferguson’s city jail by Ferguson police officers.

In the course of its pattern or practice investigation, the Civil Rights Division reviewed more than 35,000 pages of police records; interviewed and met with city, police and court officials, including the FPD’s chief and numerous other officers; conducted hundreds of in-person and telephone interviews, as well as participated in meetings with community members and groups; observed Ferguson Municipal Court sessions, and; analyzed FPD’s data on stops, searches and arrests.  It found that the combination of Ferguson’s focus on generating revenue over public safety, along with racial bias, has a profound effect on the FPD’s police and court practices, resulting in conduct that routinely violates the Constitution and federal law.  The department also found that these patterns created a lack of trust between the FPD and significant portions of Ferguson’s residents, especially African Americans. 

The department found that the FPD has a pattern or practice of:

• Conducting stops without reasonable suspicion and arrests without probable cause in violation of the Fourth Amendment;

• Interfering with the right to free expression in violation of the First Amendment; and

• Using unreasonable force in violation of the Fourth Amendment.

The department found that Ferguson Municipal Court has a pattern or practice of:

• Focusing on revenue over public safety, leading to court practices that violate the 14th Amendment’s due process and equal protection requirements.

• Court practices exacerbating the harm of Ferguson’s unconstitutional police practices and imposing particular hardship upon Ferguson’s most vulnerable residents, especially upon those living in or near poverty.Minor offenses can generate crippling debts, result in jail time because of an inability to pay and result in the loss of a driver’s license, employment, or housing.

The department found a pattern or practice of racial bias in both the FPD and municipal court:

• The harms of Ferguson’s police and court practices are borne disproportionately by African Americans and that this disproportionate impact is avoidable.

• Ferguson’s harmful court and police practices are due, at least in part, to intentional discrimination, as demonstrated by direct evidence of racial bias and stereotyping about African Americans by certain Ferguson police and municipal court officials.

The findings are laid out in a 100-page report that discusses the evidence and what remedies should be implemented to end the pattern or practice. The findings include two sets of recommendations, 26 in total, that the Justice Department believes are necessary to correct the unconstitutional FPD and Ferguson Municipal Court practices.  The recommendations include: changing policing and court practices so that they are based on public safety instead of revenue; improving training and oversight; changing practices to reduce bias, and; ending an overreliance on arrest warrants as a means of collecting fines.

The Justice Department will require that the recommendations and other measures be part of a court-enforceable remedial process that includes involvement from community stakeholders as well as independent oversight.  The Justice Department has provided its investigative report to the FPD and in the coming weeks, the Civil Rights Division will seek to work with the City of Ferguson and the Ferguson community to develop and reach an agreement for reform, using the recommendations in the report as the starting point.      

The federal criminal investigation into the fatal shooting of Michael Brown sought to determine whether the evidence from the events that led to Brown’s death was sufficient to prove, beyond a reasonable doubt, that Wilson’s actions violated federal civil rights laws that make it a federal crime for someone acting with law enforcement authority to willfully violate a person’s civil rights.  As part of the investigation, federal authorities reviewed physical, ballistic, forensic, and crime scene evidence; medical reports and autopsy reports, including an independent autopsy performed by the U.S. Department of Defense Armed Forces Medical Examiner Service; Wilson’s personnel records; audio and video recordings; internet postings, and; the transcripts from the proceedings before the St. Louis County grand jury.  Federal investigators interviewed purported eyewitnesses and other individuals claiming to have relevant information.  Federal prosecutors and agents re-interviewed dozens of witnesses to evaluate their accounts and obtain more detailed information.  FBI agents independently canvassed more than 300 residences to locate and interview additional witnesses.

The standard of proof is the same for all criminal cases: that the defendant committed the crime beyond a reasonable doubt.  However, unlike state laws, federal criminal civil rights statutes do not have the equivalent of manslaughter or a statute that makes negligence a crime.  Federal statutes require the government to prove that Officer Wilson used unreasonable force when he shot Michael Brown and that he did so willfully, that is, he shot Brown knowing it was wrong and against the law to do so.  After a careful and deliberative review of all of the evidence, the department has determined that the evidence does not establish that Darren Wilson violated the applicable federal criminal civil rights statute.  The family of Michael Brown was notified earlier today of the department’s findings. 

Due to the high interest in this case, the department took the rare step of publicly releasing the closing memo in the case.  The report details, in over 80 pages, the evidence, including evidence from witnesses, the autopsies and physical evidence from the analysis of the DNA, blood, shooting scene and ballistics.  The report also explains the law as developed by the federal courts and applies that law to the evidence.

DOJ Report on Shooting of Michael Brown

Ferguson Police Department Report

Pattern and Practice Typography

Pattern and Practice Chart

A Corona, California, woman was sentenced today in the U.S. District Court in the District of Maryland to serve two years in prison to be followed by three years of supervised release after pleading guilty to one count of tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Rod J. Rosenstein of the District of Maryland. 

Yvette Johnson, formerly of Laytonsville, Maryland, was sentenced by U.S. District Judge Deborah K. Chasanow.  As a special condition of Johnson’s supervised release, she is required to cooperate with the Internal Revenue Service (IRS) to determine all taxes owed for tax years 2002 through 2009, and to pay the IRS all additional taxes, interest and penalties.

Johnson’s husband, Shannon Johnson, was sentenced in June 2014 to serve seven years in prison after pleading guilty to an advance fee scheme and tax evasion.  The Johnsons were indicted by a federal grand jury in June 2013 for mail and wire fraud charges, as well as tax fraud charges, in connection with a scheme to defraud investors.  Shannon Johnson admitted that he ran a fraudulent advance fee scheme from 2006 to 2009, wherein Johnson presented himself as a wealthy international investment banker who could provide millions of dollars and euros in financing to businesses and individuals.  In return for substantial advance banking fees, the indictment alleged that the Johnsons promised to provide investors with money which they claimed they held in an overseas bank account.  Shannon Johnson provided these businesses and investors with false documents purporting to be from the overseas bank to authenticate the funds.  The Johnsons developed relationships with pastors, ministers and religious-based organizations to sell themselves as philanthropists on a humanitarian mission.  Shannon Johnson received payments and gifts from pastors and ministers who believed substantial donations would be made to their churches.  Businesses and individuals wired and mailed the advance fees to multiple bank accounts controlled by the Johnsons in different states.  Yvette Johnson opened bank accounts and conducted financial transactions using proceeds obtained from the Johnsons’ business activities.

The Johnsons spent the $3.7 million in advance fees from individuals and businesses to support their lifestyle, which the indictment alleges included: the purchase of Bentley, Mercedes Benz and BMW automobiles; the leasing of a residence in California for $18,000 a month; travel on private jets; and the funding of the mortgage on their Laytonsville residence.  Shannon Johnson admitted that he obtained $3.7 million by victimizing at least 11 individuals and businesses.

The Johnsons also evaded taxes on millions of dollars in income they earned from the advance fee scheme.  They admitted that they filed individual tax returns for tax years 1998 through 2001 using false Forms W-2 to fraudulently generate refund claims, evaded the payment of their 2002 through 2006 corporate and individual taxes totaling $98,220, and evaded the assessment of their 2007 through 2009 taxes.  The Johnsons attempted to conceal their income and assets from the IRS by selling assets in their own names, titling assets in the names of nominees, using multiple bank accounts across three states to disperse and conceal income, using nominees and fraudulent taxpayer identification numbers to open and maintain bank accounts, and using multiple business names to conduct business.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rosenstein commended the special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Assistant Chief John N. Kane of the Tax Division and Assistant U.S. Attorney Thomas Sullivan of the District of Maryland, who prosecuted the case.

MONROE, La. – United States Attorney Stephanie A. Finley announced today that a Bossier City woman pleaded guilty on Tuesday, to filing false tax returns.

Stella Marie Dunlap, 37, of Bastrop, La., entered a conditional guilty plea before U.S. Magistrate Judge Karen L. Hayes, to one count of aiding and subscribing a false tax return. The plea will become final when accepted by U.S. District Judge Robert G. James. According to evidence presented at the guilty plea, Dunlap filed fraudulent Forms 1040 during the 2010 and 2011 tax filing seasons while employed as a tax preparer at Faster Tax Services in Bastrop. The returns contained fraudulent W-2 income information from fictitious companies, and the information was used to file Earned Income Tax Credit withholdings. As a result of the fraud, the IRS issued $104,401 in refunds to which taxpayers where not entitled. Dunlap received kickbacks from some of customers as part of the scheme.

Dunlap faces up to three years in prison, one year of supervised release, a $250,000 fine, and restitution.  A sentencing date of June 15, 2015 was set.

Internal Revenue Service - Criminal Investigations conducted the investigation. Assistant U.S. Attorney Seth D. Reeg is prosecuting the case.

Defendant and Co-Plotters Came Within Days of Bombing a U.K. Shopping Mall

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 (NYPD) announced that earlier today, following a two-week trial, Abid Naseer, 28, a Pakistani national who joined al-Qaeda and plotted to commit a terrorist attack in the United Kingdom, was found guilty by a jury in Brooklyn federal court of providing material support to al-Qaeda, conspiring to provide material support to al-Qaeda, and conspiring to use a destructive device in relation to a crime of violence.  The evidence at trial established that the defendant and his accomplices came within days of executing a plot to conduct an attack on a busy shopping mall located in the city center of Manchester, United Kingdom, in April 2009.  The planned attack, which also targeted the New York City subway system and a newspaper office in Copenhagen, Denmark, had been directed by and coordinated with senior al-Qaeda leaders in Pakistan.  Naseer is the eighth defendant to face charges, and the fourth to be convicted, in Brooklyn federal court related to the al-Qaeda plot, which also involved Adis Medunjanin, Najibullah Zazi, and Zarein Ahmedzay, the three members of the cell that targeted New York City.

“This al-Qaeda plot was intended by the group’s leaders to send a message to the United States and its allies,” said U.S. Attorney Lynch.  “Today’s verdict sends an even more powerful message in response: the United States will stop at nothing in order to hold those who plot to kill and maim in the name of religion accountable for their grievous crimes.”  U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which led the investigation and comprises a large number of federal, state, and local agencies from the region.  U.S. Attorney Lynch also extended her appreciation to the law enforcement authorities in the United Kingdom and Norway, including the Greater Manchester Police, the British Security Service, and the Norwegian Police Security Service, for their outstanding assistance with the case.

“Abid Naseer was part of an al Qaeda conspiracy that targeted Western countries, including the United States and the United Kingdom, for terrorist attack,” said Assistant Attorney General Carlin.  “His conviction reflects our dedication to identifying and holding accountable those who seek to target the United States and its allies.  I want to thank the many agents, analysts, and prosecutors who are responsible for this successful result.”

“Naseer knowingly and willingly conspired with others to carry out a destructive plot on behalf of al-Qaeda,” said FBI Assistant Director in Charge Rodriquez.  “The wheels were set in motion, and he and his accomplices were prepared to execute their plan. Those who pledge allegiance to terrorists and terrorist organizations throughout the world will be brought to justice, and every effort will be made to protect Americans and our interests throughout the world. The FBI will continue to work with our local and international partners to mitigate the threat of global terrorism.”

“The Abid Naseer case demonstrates that terrorists who target the U.S. and its allies will be brought to justice, no matter where they are,” said NYPD Commissioner Bratton.  “This investigation involved leads from the streets of Manchester, England, to New York City, to Usama Bin Laden’s hidden lair in Pakistan.  I want to thank the U.S. Attorney for the Eastern District and the members of the N.Y. FBI-NYPD Joint Terrorism Task Force for the work that led to this successful prosecution.”

In approximately September 2008, al-Qaeda leaders in Pakistan recruited Medunjanin, Zazi, and Ahmedzay, three friends from New York City, to conduct a suicide bombing attack in New York City.  Those al-Qaeda leaders, including Adnan El-Shukrijumah and Saleh al-Somali, communicated with Zazi about the plot through an al-Qaeda facilitator named “Ahmad,” who was located in Peshawar, Pakistan.  In early September 2009, after Medunjanin, Zazi, and Ahmedzay had selected the New York City subway system as their target, Zazi emailed with “Ahmad” in Pakistan about the proper ingredients for the main charge explosive, which included flour and oil.  Zazi pleaded guilty to his role in the plot on Feb. 22, 2010; Ahmedzay pleaded guilty on April 23, 2010; and Medunjanin was convicted after trial on May 1, 2012.

The investigation by authorities in the United States and United Kingdom revealed that “Ahmad” had also been communicating with the defendant earlier in 2009.  The evidence at trial demonstrated that the defendant and his Pakistani accomplices had been dispatched by al-Qaeda to the U.K. in 2006 in order to begin preparations for an attack in that country.  The defendant and his co-conspirators entered the U.K. on student visas but then immediately dropped out of the university in which they had enrolled.  The defendant, like Zazi, returned briefly to Peshawar in November 2008, at the same time Zazi and his co-conspirators were receiving weapons and explosives training from al-Qaeda in that region.  After returning to the U.K., the defendant sent messages back and forth to the same email account that “Ahmad” was also using to communicate with the American-based al-Qaeda cell on behalf of Saleh al-Somali, al-Qaeda’s then-head of external operations.  In the messages, the defendant used coded language to refer to different types of explosives.  At the culmination of the plot, in early April 2009, the defendant told “Ahmad” that he was planning a large “wedding” for numerous guests during the upcoming Easter weekend, and that “Ahmad” – whom he called “Sohaib” – should be ready.  Notably, Zazi testified that Ahmad had instructed him to use the same code of “marriage” to refer to the planned attack on the New York City subway, and that Zazi emailed Ahmad that “the marriage is ready” just before he drove to New York in early September 2009 to conduct the attack.

On April 8, 2009, the defendant and several associates were arrested in the United Kingdom.  In connection with these arrests, U.K. authorities conducted searches of the plotters’ homes as well as an internet café used by the defendant to send his messages to Ahmad, where they seized a large volume of electronic media.  As demonstrated at trial, a forensic review of that electronic media revealed that the defendant had downloaded several jihadi nasheeds, or anthems, calling for “death in large numbers.”  A document recovered from the raid on Usama bin Laden’s compound in May 2011 contained a letter from Saleh al-Somali to Bin Laden, written on April 16, 2009, that discussed the defendant and his accomplices’ arrests in the U.K.

On Jan. 30, 2012, three defendants were also convicted in a Norwegian court of plotting a similar terrorist attack in Denmark as part of the same overall multinational al-Qaeda conspiracy.  During that trial, the United States made available to the Norwegian prosecutors three witnesses who also pleaded guilty to terrorism offenses in the Eastern District of New York: Zazi, Ahmedzay, and Bryant Neal Vinas.  Zazi and Ahmedzay again testified in the trial against Naseer.

The defendant faces up to life imprisonment when he is sentenced at a later date by the Honorable Raymond J. Dearie.

The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad, Celia A. Cohen, and Michael P. Canty, with assistance provided by the Justice Department’s National Security Division and Office of International Affairs.

Settlement Addresses Robo-Signing and Other Improper Practices in Bankruptcy Cases

The Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with JPMorgan Chase Bank N.A. (Chase) requiring Chase to pay more than $50 million, including cash payments, mortgage loan credits and loan forgiveness, to over 25,000 homeowners who are or were in bankruptcy.  Chase will also change internal operations and submit to oversight by an independent compliance reviewer.  The proposed settlement has been filed in the U.S. Bankruptcy Court for the Eastern District of Michigan, where it is subject to court approval.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices.  More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.  The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

Chase also acknowledges that it failed to file timely, accurate notices of mortgage payment changes and failed to provide timely, accurate escrow statements.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery.  “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” said Director Cliff White of the U.S. Trustee Program.  “It should be acknowledged that Chase responded to the U.S. Trustee’s court actions by conducting an internal investigation and taking steps to mitigate harm to homeowners.  But years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems, it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due.  Other servicers should take note that the U.S. Trustee Program will continue to police their practices and will work to ensure that those who do not comply with bankruptcy law protections for homeowners will pay a price, just as Chase has done in this matter.”  

Payments, Credits and Contributions of More Than $50 Million:

In the proposed settlement, Chase agrees to provide payments, credits and contributions totaling more than $50 million:

• Chase will provide $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.

• Chase will pay $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.

• Chase will pay $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements.  This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.

• Chase will pay $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.

• Chase will contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

Changes to Internal Operations: In the proposed settlement Chase also agrees to make necessary changes to its technology, policies, procedures, internal controls and other oversight systems to ensure that the problems identified in the settlement do not recur.

Oversight by Independent Reviewer: Amy Walsh, a partner with the law firm Morvillo LLP, has been selected to serve as independent reviewer to verify that Chase complies with the settlement order.  The independent reviewer will file public reports with the bankruptcy court.

No Effect on Additional Relief by Homeowners: This settlement does not affect the rights of any homeowners to seek any relief against Chase that they may deem appropriate.

Chase Contact Information: Homeowners with questions about the settlement may contact Chase at 866-451-2327.

The settlement is the culmination of actions taken by the U.S. Trustee Program in districts around the country concerning Chase’s improper practices in bankruptcy cases, including robo-signing.  Director White commended the U.S. Trustee Program team in the field and headquarters who expertly identified, investigated, litigated and settled this matter, including Deputy Director and General Counsel Ramona Elliott, National Creditor Enforcement Coordinator Gail Geiger and Trial Attorneys Diarmuid Gorham and Kelley Callard.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.  The U.S. Trustee Program has 21 regions and 93 field office locations.

Settlement Addresses Robo-Signing and Other Improper Practices in Bankruptcy Cases

WASHINGTON – The Department of Justice’s United States Trustee Program (USTP) has entered into a national settlement agreement with JPMorgan Chase Bank, N.A. (Chase) requiring Chase to pay more than $50 million including cash payments, mortgage loan credits and loan forgiveness to over 25,000 homeowners who are or were in bankruptcy. Chase will also change internal operations and submit to oversight by an independent compliance reviewer. The proposed settlement has been filed in the United States Bankruptcy Court for the Eastern District of Michigan, where it is subject to court approval.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices. More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings. The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

Chase also acknowledges that it failed to file timely, accurate notices of mortgage payment changes and failed to provide timely, accurate escrow statements.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery. “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” stated U.S. Trustee Program Director Cliff White. “It should be acknowledged that Chase responded to the U.S. Trustee’s court actions by conducting an internal investigation and taking steps to mitigate harm to homeowners. But years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems, it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due. Other servicers should take note that the U.S. Trustee Program will continue to police their practices and will work to ensure that those who do not comply with bankruptcy law protections for homeowners will pay a price, just as Chase has done in this matter.”

Payments, Credits and Contributions of More Than $50 Million.

In the proposed settlement, Chase agrees to provide payments, credits and contributions totaling more than $50 million:

• Chase will provide $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.
• Chase will pay $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.
• Chase will pay $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements. This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.
• Chase will pay $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.
• Chase will contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

Changes to Internal Operations. In the proposed settlement Chase also agrees to make necessary changes to its technology, policies, procedures, internal controls and other oversight systems to ensure that the problems identified in the settlement do not recur.

Oversight by Independent Reviewer. Amy Walsh, a partner with the law firm Morvillo LLP, has been selected to serve as independent reviewer to verify that Chase complies with the settlement order. The independent reviewer will file public reports with the bankruptcy court.

No Effect on Additional Relief by Homeowners. This settlement does not affect the rights of any homeowners to seek any relief against Chase that they may deem appropriate.

Chase Contact Information. Homeowners with questions about the settlement may contact Chase at 866-451-2327.

The settlement is the culmination of actions taken by the USTP in districts around the country concerning Chase’s improper practices in bankruptcy cases, including robo-signing. Director White commended the USTP team in the field and headquarters who expertly identified, investigated, litigated and settled this matter, including Deputy Director and General Counsel Ramona Elliott, National Creditor Enforcement Coordinator Gail Geiger and Trial Attorneys Diarmuid Gorham and Kelley Callard.

The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 93 field office locations.

Contact:

Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411

Order Approving Settlement [PDF 3.96 MB]