District Not Recorded

Two former civilian employees at the Marine Corps Logistics Base (MCLB) in Albany, Georgia, and one military contractor were convicted by a federal jury today of bribery and fraud charges related to military trucking contracts, announced 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.

Christopher Whitman, 48, co-owner of United Logistics, an Albany-based trucking company and freight transportation broker, was convicted of 43 counts of honest services wire fraud, five counts of bribery, five counts of obstructing justice and one count of theft of government property.  Shawn McCarty, 36, of Albany, Georgia, a former employee at the MCLB-Albany, was convicted of 15 counts of honest services wire fraud, one count of bribery and one count of obstructing justice.  Bradford Newell, 43, of Sylvester, Georgia, also a former employee at the MCLB-Albany, was convicted of 13 counts of honest services wire fraud, one count of bribery and one count of theft of government property. 

According to evidence presented at trial, Whitman paid more than $800,000 in bribes to three former officials of the Defense Logistics Agency (DLA) at the MCLB-Albany, including the head of the DLA Traffic Office and McCarty, to obtain commercial trucking business from the base.  The transportation contracts were loaded with unnecessary premium-priced requirements, including expedited service, expensive trailers and exclusive use, which requires that freight be shipped separately from other equipment, even if that results in a truck not being filled to capacity.  As a result of these contracts, Whitman’s company grossed more than $37 million over less than four years.

The evidence further demonstrated that Whitman paid approximately $200,000 in bribes to the former inventory control manager of the Distribution Management Center at MCLB-Albany, Newell and others, who used their official positions to help Whitman steal more than $1 million in surplus equipment from the base, including bulldozers, cranes and front-end loaders.  In exchange for the bribes, Newell and the inventory control manager removed the surplus items from Marine Corps inventory and arranged to have them transported off the base by Whitman’s company.  Whitman then arranged to improve and paint the stolen equipment, and sell it to private purchasers.   

One former United Logistics employee, a business partner of Whitman’s, two former DLA officials and another MCLB official previously pleaded guilty for their roles in the fraud and corruption scheme.

The case was investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, Defense Criminal Investigative Service, DLA Office of the Inspector General, and the Department of Labor Office of the Inspector General.  The case is being prosecuted by Deputy Chief J.P. Cooney and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The associated forfeiture litigation is being handled by Assistant Deputy Chief Darrin McCullough of the Asset Forfeiture and Money Laundering Section and the Middle District of Georgia.

A federal jury in Oklahoma City convicted three Florida men and a Florida corporation today for their participation in an illegal international gambling and money laundering enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.

“In the age of the internet, what used to be a crime conducted by bookies on street corners is now an international criminal enterprise,” said Assistant Attorney General Caldwell.  “Operating on-line but off-shore, the individuals convicted in this case raked in more than a billion dollars in illegal gambling proceeds.  But as these convictions demonstrate, no matter where or how organized criminals operate, the Criminal Division will bring them to justice.”

“This is a great result in this important case,” said U.S Attorney Coats.   “I applaud the tremendous, collaborative efforts of our law enforcement partners and the prosecution team.”

Paul Francis Tucker, 50, of Mount Dora, Florida, Luis Robles, 50, of St. Pete Beach, Florida, and Zapt Electrical Sales Inc., a corporation registered in Florida and owned by Tucker, were found guilty of engaging in a racketeering conspiracy, conducting an illegal gambling business and conspiracy to commit money laundering.  Christopher Lee Tanner, 58, of Sarasota, Florida, was found guilty of conducting an illegal gambling ring.  A sentencing date will be set by the court in approximately 90 days, and the hearing will take place before U.S. District Judge Stephen P. Friot of the Western District of Oklahoma.

According to evidence presented at trial, from 2003 to 2013, Tanner, Tucker, Robles and Zapt Electrical Sales conspired with others to operate internet and telephone gambling services from Panama City, Panama through an enterprise known as Legendz Sports.  The international gambling enterprise took more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States on American sporting events. 

The evidence demonstrated that Tanner and Tucker worked as bookies in Florida, and illegally solicited and accepted sports wagers and settled gambling debts.  Tucker also used Zapt Electrical Sales and its bank account to launder gambling proceeds collected from losing bettors.   

The evidence showed that Robles worked as a runner for the enterprise, delivering cash to Legendz Sports bookies to make payouts and picking up cash profits from the bookies.  According to the evidence at trial, bookies and runners for Legendz Sports transported millions of dollars of gambling proceeds in cash and checks from the United States to Panama.  The checks were made out to various shell companies created by Legendz Sports all over Central America to launder gambling proceeds.

The case was investigated by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service.  The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Susan Dickerson Cox and Travis D. Smith of the Western District of Oklahoma.

Justice Department Spokesman Marc Raimondi released the following statement Tuesday:

“Three documents – a criminal Information, a plea agreement, and a statement of facts – were filed today in the United States District Court for the Western District of North Carolina’s Charlotte Division in the case of United States v. David Howell Petraeus.  The criminal Information charges the defendant with one count of unauthorized removal and retention of classified material, in violation of 18 U.S.C. § 1924.  The plea agreement and corresponding statement of facts, both signed by the defendant, indicate that he will plead guilty to the one-count criminal Information."

Petraeus Plea Agreement

Petraeus Factual Basis

Petraeus Bill of Information 

After only three months on the U.S. Marshals 15 Most Wanted fugitive list, self-proclaimed pastor and accused sexual predator Victor Arden Barnard was arrested Friday, February 27, in Pipa, Brazil. Barnard, 53, is wanted by the Pine County Sheriff’s Office in Pine City, Minnesota, for 59 felony counts of criminal sexual assault stemming from allegations that he sexually abused young girls while acting as their pastor. The U.S. Marshals joined the manhunt for Barnard in April 2014.

The manhunt for Barnard gained momentum when U.S. Marshals developed significant information leading them to believe he was either in Brazil or receiving assistance from his followers there. After a lengthy and thorough investigation, Barnard was located and arrested by Brazilian law enforcement authorities.

The efforts of the Pine County Sheriff’s Office, U.S. Department of Justice, Office of International Affairs, the U.S. Department of State’s Diplomatic Security Service, Interpol Washington, and U.S. Marshals Service all contributed to the successful arrest of Barnard.

Barnard is being held in Brazil pending extradition back to the U.S.

Bernhard Laufer, 58, a resident of Rego Park, Queens, New York, pleaded guilty yesterday in federal court in the Eastern District of New York, to sending threatening communications from New York to an employee of the Council on American Islamic Relations (CAIR) located in Washington, D.C.  CAIR is a civil rights and advocacy group with offices nationwide. 

According to documents filed with the court and statements made during the guilty plea hearing, Laufer admitted that he sent threatening communications to the employee of CAIR in June 2014.  These communications threatened the employee with significant bodily harm and death. 

"Those who make violent threats to others because of race, religion or national origin must be held accountable,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Justice Department is committed to vigorously prosecuting those who engage in such conduct.”

Laufer faces a maximum sentence of five years imprisonment.

This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Roy Conn of the Justice Department’s Civil Rights Division and Assistant United States Attorney Hiral Mehta for the Eastern District of New York.

The U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Justice’s (DOJ) Civil Rights Division yesterday signed a new Memorandum of Understanding (MOU) to further the goals of Title VII of the Civil Rights Act of 1964 in prohibiting employment discrimination in the state and local government sector.  The signing ceremony took place on Monday, March 2, at DOJ’s headquarters in Washington, D.C., and included remarks from Assistant Attorney General Vanita Gupta of the Civil Rights Division and EEOC Chair Jenny Yang.

EEOC and DOJ share enforcement authority for public sector employers under Title VII.  The EEOC receives, investigates and mediates charges of discrimination against public employers.  Where the EEOC finds reasonable cause to believe an unlawful employment practice has occurred, the agency works with the employer to negotiate a mutually agreeable resolution to the charge.  If conciliation of a charge fails, the EEOC refers the charge and its investigative file to DOJ, which has sole authority within the federal government to file a lawsuit against public employers under Title VII.

The MOU includes provisions for the coordination of the investigation of charges of discrimination on the basis of any characteristic protected by Title VII, while respecting the distinct responsibilities and enforcement priorities of each agency.  Further, the MOU includes provisions for sharing information, as appropriate and to the extent allowable under law.

This MOU codifies a pilot project launched in 2009 by DOJ and EEOC.  The pilot, which began with four of EEOC’s district offices, has been expanded over the years and now includes the Chicago, Indianapolis, Los Angeles, New York, Philadelphia and San Francisco District Offices, as well as the Washington, D.C. Field Office, among others.  Over the years, the pilot has served to enhance the effectiveness of the nation’s equal employment opportunity enforcement program in the public sector, ensuring the efficient use of resources and a consistent enforcement strategy.

“The MOU brings to life our vision to approach our shared Title VII enforcement responsibilities as a partnership,” said Acting Assistant Attorney General Gupta.  “It institutionalizes that partnership and provides a concrete framework for expanding our collaborations and increasing our effectiveness in protecting the employment rights of public sector workers.”

“Our state and local governments provide essential services that affect all of us every day in every part of our lives,” said EEOC Chair Yang.  “One of the greatest tools that our public institutions have for inspiring trust and credibility in our communities is to ensure that all public employees enjoy equal opportunity at work.  That is the significance of the MOU we sign today.”

There have been several successful examples of the existing partnership between EEOC and DOJ, including the settlement of Murphy-Taylor v. State of Maryland, et al., a sexual harassment and retaliation lawsuit involving the Queen Anne’s County Sheriff, in which the United States intervened; the settlement with the Board of Education, Berkeley School District 87, Cook County, Illinois, over religious accommodation discrimination; and a settlement with Clark County, Nevada, for wage discrimination and retaliation against an African-American female manager resulting in $179,000 in monetary relief. 

The MOU is just one example of the enforcement partnership between the EEOC and DOJ.  The agencies collaborate on several interagency taskforces and working groups, including the Federal Interagency Reentry Council, the National Equal Pay Enforcement Taskforce, the Curb Cuts to the Middle Class Initiative, the Task Force to Monitor and Combat Human Trafficking, the Interagency Working Group for the Consistent Enforcement of Federal Labor, Employment and Immigration Laws, and most recently an interagency working group on police force diversity.

The MOU and information about Title VII and other federal employment laws is available on the Employment Litigation Section of the Civil Rights Division’s website or the U.S. Equal Employment Opportunity Commission’s website.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Preet Bharara for the Southern District of New York and Assistant Director-in-Charge Andrew G. McCabe of the FBI’s Washington, D.C. Office announced today the extradition of Minh Quang Pham, aka “Amin,” from the United Kingdom.  Pham, a Vietnamese national, was indicted in 2012 on charges of providing material support to, and receiving military training from, al Qaeda in the Arabian Peninsula (AQAP), a designated foreign terrorist organization, as well as possessing and using a firearm in furtherance of crimes of violence, and other violations.  Pham was presented yesterday before U.S. Magistrate Judge Andrew J. Peck, and will be arraigned tomorrow, March 4, 2015, before U.S. District Judge Alison J. Nathan.

“As alleged, Minh Quang Pham surreptitiously traveled from the UK to Yemen in late 2010 and received terrorist training by AQAP,” said U.S. Attorney Bharara.  “During the half year he spent in Yemen, Pham allegedly vowed to wage jihad, swore bayat, and provided material support to high-level AQAP members, almost always brandishing a Kalashnikov rifle.  Through the vigilance and investigative efforts of our British partners and the FBI, Pham is now in the U.S. to face American justice.”

“Today’s material support charges outline that Minh Quang Pham received military-style training and possessed weapons to commit crimes of violence on behalf of al Qaeda in the Arabian Peninsula,” said Assistant Director in Charge McCabe.  “This investigation and subsequent extradition of Pham from the UK speaks to the level of commitment of the FBI and our national and international law enforcement and intelligence community partners to bring this dangerous terrorist to face justice in the United States."

According to the Indictment and extradition-related filings:

In December 2010, after informing his wife that he planned to travel to Ireland, Pham traveled from the United Kingdom, where he resided, to Yemen, the principal base of operations for AQAP.  AQAP was designated by the U.S. Department of State as a foreign terrorist organization in January 2010 based, in part, on its claims of responsibility for attempted terrorist attacks against the United States.  For example, AQAP claimed responsibility for the attempted Christmas Day bombing of a Detroit-bound passenger plane from Europe in 2009.  Further, AQAP later claimed responsibility for an October 2010 plot to send explosive-laden packages on U.S.-bound cargo flights.

While in Yemen, Pham met a person who later became a cooperating witness for the United States (CW-1).  CW-1 knew Pham as “Amin,” and met face-to-face with him at several AQAP safehouses in Yemen during March and April 2011.  According to CW-1, CW-1 first learned about Pham via email correspondence with a now deceased United States citizen, who was a prominent AQAP member (American CC-1).  CW-1 first met Pham at an AQAP safehouse in Yemen in or about March 2011, where CW-1 observed Pham carrying a Kalashnikov assault rifle.  CW-1 stated that he observed Pham carrying the assault rifle throughout almost all of his interactions with Pham in Yemen.  In conversations with CW-1, Pham told CW-1 that he had been trained in the use of the Kalashnikov assault rifle by AQAP while in Yemen.  Further, Pham told CW-1 that he (Pham) had traveled to Yemen in order to join AQAP, to wage jihad on behalf of AQAP and to martyr himself for AQAP’s cause.  Pham also told CW-1 that he (Pham) had sworn bayat in the presence of an AQAP commander prior to leaving Yemen.

CW-1 also witnessed Pham’s interactions with American CC-1 and a second United States citizen (American CC-2), also now deceased, who was also a prominent AQAP member.  CW-1 observed PHAM working closely with American CC-1, who was responsible for editing and publishing Inspire magazine – an English-language publication used by AQAP to distribute propaganda and recruit individuals from Western cultures to join and/or support AQAP.  In or about October 2010, AQAP released the second issue of Inspire magazine, which included a feature article entitled “I Am Proud to be a Traitor to America,” written by American CC-2.  In addition, Pham told CW-1 that Pham was working with American CC-1 and that he (Pham) had spent time at no fewer than three AQAP safehouses.  During CW-1’s time at the AQAP safehouses where Pham had also been, CW-1 also spoke with American CC-1 and American CC-2 about Pham and understood from them that Pham was providing valuable assistance to American CC-1 in connection with the production and editing of Inspire magazine.

On July 27, 2011, Pham returned to the United Kingdom.  Upon his arrival at London’s Heathrow International Airport, United Kingdom authorities detained and searched Pham.  Materials recovered from Pham at this time corroborate CW-1’s account of CW-1’s interactions with Pham while in Yemen.  For example, CW-1 stated that, while in Yemen, CW-1 personally exchanged various electronic documents with Pham – and Pham was found in possession of various electronic media that contained computer files forensically identical to those possessed by CW-1.  In addition, CW-1 reported that Pham almost always carried a Kalashnikov in Yemen – and upon his arrival in the United Kingdom from Yemen, Pham was found to be in possession of a live round of .762 caliber armor-piercing ammunition, which is consistent with ammunition that is used in a Kalashnikov assault rifle.

*       *       *

The indictment charges Pham with five separate counts: one count of conspiracy to provide material support to AQAP; one count of providing material support to AQAP; one count of conspiracy to receive military-type training from AQAP; one count of receiving military-type training from AQAP; and one count of using, carrying, and possession of a firearm (machine gun) in furtherance of crimes of violence (counts one though four).

If convicted on all counts, Pham faces a maximum sentence of life in prison, with a mandatory minimum sentence of 40 years in prison.  The maximum sentences for each of the charges are reflected in the attached chart.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Pham, 32, was arrested in the United Kingdom on June 29, 2012, pursuant to a provisional arrest warrant issued by U.K. authorities pursuant to a request from the United States.  Since that time, Pham has challenged his extradition to the United States.  On Feb. 3, 2015, a court in the United Kingdom denied Pham’s challenge, and ordered him extradited to the United States.  Pham arrived in the Southern District of New York on Feb. 26, 2015.

Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the extraordinary investigative work of the FBI’s Washington Field Office.  He also expressed his gratitude to the New York Joint Terrorism Task Force – which principally consists of agents from the FBI and detectives from the New York City Police Department – for the critical role it played in the investigation.  In addition, Assistant Attorney General Carlin and U.S. Attorney Bharara thanked the Department of Defense, and the British authorities, including New Scotland Yard and the Crown Prosecution Service, for their cooperation in the investigation.  Finally, he expressed thanks for the invaluable work of the Office of International Affairs in pursuing Pham’s extradition from the United Kingdom.

This case is being handled by the Terrorism and International Narcotics Unit of the U.S. Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorneys Anna M. Skotko, Sean S. Buckley and Ian McGinley are in charge of the prosecution.

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

Dr. Charles Denham, of Laguna Beach, California, has agreed to pay the United States $1 million to settle allegations that he violated the False Claims Act by soliciting and accepting kickbacks, the Justice Department announced today.  Denham is a patient safety consultant who operates the consulting company Health Care Concepts Inc. and the research organization Texas Medical Institute of Technology, both of which are also parties to the settlement.  In 2009 and 2010, Denham was co-chair of the Safe Practices Committee of the National Quality Forum.

“Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Doctors and other health care professionals who accept illegal inducements undermine the public’s trust in federal health care programs and will continue to be the focus of our enforcement efforts.”

The settlement resolves allegations that, under agreements entered into in 2008, Denham received monthly payments from CareFusion Corporation while serving as the co-chair of the Safe Practices Committee, which reviews, endorses and recommends standardized healthcare performance measures and practices.  The United States contended that Denham did not disclose to the committee, or any other individual or component of the National Quality Forum, that he was receiving payments from CareFusion.  The United States further contended that Denham solicited and received these payments in exchange for influencing the recommendations of the National Quality Forum and for recommending, promoting and/or arranging for the purchase of CareFusion’s product, ChloraPrep, in violation of the Federal Anti-Kickback Statute.  The United States alleged that this conduct caused the submission of false or fraudulent claims for ChloraPrep to federal health care programs. 

“Quality and patient safety must drive medical recommendations,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Doctors that put profits ahead of this core value must be held accountable.  Dr. Denham and his two businesses will be excluded from Medicare, Medicaid and all federal health programs as part of this settlement.”  

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 among the Civil Division, the U.S. Attorney’s Office for the District of Kansas and the HHS-OIG. 

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

Attorney General Eric Holder released the following statement Monday after he and Acting Deputy Attorney General Sally Yates met with representatives from the Coalition for Public Safety, a bipartisan organization dedicated to pursuing reform of the nation’s criminal justice system:

“In our ongoing effort to reform our criminal justice system, the formation of a coalition this ideologically diverse represents an important milestone unto itself.  Though different concerns may bring us to the table – whether it be the skyrocketing costs of incarceration, or the unfair disparities seen in our prison population – the important thing is the broad consensus in favor of action on this issue.  The Justice Department has made real gains in reforming our sentencing policies and reducing the federal prison population, but more work remains to be done.  Even at a time of gridlock in Washington, I am actually quite optimistic that criminal justice reform is one issue around which we can unite and make a true difference.”

Sixteen people were resentenced today for crimes arising out of a series of assaults on practitioners of the Amish religion announced Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio and Special Agent in Charge Stephen Anthony of the FBI Cleveland Office.

The defendants all reside in Bergholz, Ohio, unless otherwise noted.  Samuel Mullet, 69, received a prison sentence of 129 months.  Johnny S. Mullet, 41; Lester Mullet, 30, of Hammondsville, Ohio; Levi F. Miller, 56; and Eli M. Miller, 35, received 60 months.  Daniel S. Mullet, 40; Lester Miller, 40; and Emanuel Schrock, 46, received 43 months.  Raymond Miller, 30, of Irondale, Ohio; Linda Shrock, 47; Freeman Burkholder, 34, of Irondale; Anna Miller, 35; Elizabeth A. Miller, 40, of Irondale; Emma J. Miller, 40; Kathryn Miller, 25, of Irondale; and Lovina Miller, 35, all of whom had already completed previously-imposed prison sentences, received time served.

A jury found the defendants guilty in 2012 following a lengthy trial.  All of the defendants were found guilty of conspiracy to obstruct justice.  Eli Miller, Lester Mullet, and Levi Miller were also found guilty of concealing evidence.  Samuel Mulllet Sr., was convicted of concealing evidence and making false statements to federal investigators.  The convictions stem from five separate assaults that occurred in four Ohio counties between September and November 2011 and from the defendants’ efforts to conceal a camera and photographs that documented the assaults The photographs depicted some of the defendants in the act of assaulting one of the victims and depicted the injuries and humiliation of others.  The defendants intended to use the photographs to show other members of the community what they had done to the victims. 

All of the defendants were also convicted of conspiracy to violate the Matthew Shepard-James Byrd Hate Crimes Prevention Act, which prohibits any person from willfully causing bodily injury to any person—or attempting to do so by use of a dangerous weapon—because of the actual or perceived religion of that person, as well as for obstruction of justice by witness tampering and the destruction or concealment of evidence.  

The jury also convicted various groups of defendants with separate assaults.

The appeals court subsequently overturned the conspiracy to violate the Shepard-Byrd Hate Crimes Prevention Act, as well as the convictions for the separate assaults, citing an incorrect jury instruction. The other convictions were not affected by the appeals court decision.

Samuel Mullet Sr. was the Bishop of the Amish community in Bergholz, while the remaining defendants are all members of that community.  Mullet Sr. exerted control over the Bergholz community by taking the wives of other men into his home, and by overseeing various means of disciplining community members, including corporal punishment, according to trial testimony. 

The assaults all entailed using scissors and battery-powered clippers to forcibly cut or shave the beard hair of the male victims and the head hair of the female victims.  During each assault, the defendants restrained and held down the victims.  During some of the assaults, the defendants injured individuals who attempted to intervene to protect or rescue the victims.  Following the attacks, some of the defendants participated in discussions about concealing photographs and other evidence of the assaults, according to evidence presented at trial.  At today’s hearing, the District Court judge found that the assaults were motivated by religion and the defendants’ obstruction was aimed at preventing law enforcement investigators from discovering the true nature the assaults.

“The Justice Department will always fight to hold accountable those who commit religiously-motivated hate crimes,” said Acting Assistant Attorney General Gupta.  “We hope that the prosecution of those responsible for the assaults and the obstruction in this case will help bring closure to those affected by these intolerable crimes.”

“From day one, this case has been about the rule of law and defending the right of people to worship in peace,” said U.S. Attorney Dettelbach.  “This was never about ‘haircuts.’  These were violent, religiously motivated home invasions that left the victims bloody, bruised and beaten.  These defendants struck at two of our nation's bedrock principles – freedom of religion and the sanctity of the court system."

This case was investigated by the Cleveland Division of the FBI and was prosecuted by Deputy Chief Kristy Parker of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorneys Thomas Getz and Bridget M. Brennan of the U.S. Attorney’s Office for the Northern District of Ohio.  The prosecutor’s and sheriff’s offices from Holmes, Carroll, Jefferson and Trumbull counties also provided significant assistance in the investigation and prosecution of this case.

The Justice Department announced today that it has awarded more than $2 billion in compassionate compensation to eligible claimants under the Radiation Exposure Compensation Act (RECA). 

The RECA was enacted in 1990 as a non-adversarial alternative to litigation for individuals who contracted certain illnesses following exposure to radiation as a result of the United States’ atmospheric nuclear testing program and uranium ore processing operations during the Cold War.  Congress expanded the scope of the law’s coverage in 2000.  In its present form, the RECA provides lump sum compensation awards to individuals who contracted specified diseases in three defined populations: uranium miners, millers and ore transporters who are eligible for $100,000 per claim; participants in atmospheric nuclear weapons tests who are eligible for $75,000 per claim; and individuals who lived downwind of the Nevada Test Site (downwinders) who are eligible for $50,000 per claim. 

“RECA claimants worked in hazardous occupations and were subjected to increased risk of disease to serve the national security interests of the United States,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “This extraordinary statute provides partial restitution to these individuals and their families for the sacrifices they made during a critical time in our nation’s history.” 

Compensation has been awarded to individuals residing in every state.  Since 1990, nearly 43,000 claims have been filed and 32,000 claims have been approved.  Residents of the Four Corners Region of the American southwest have filed the majority of RECA claims.  The department has awarded more than 9,400 claims filed by residents of Arizona, valued at more than $500 million.  Approximately 3,800 claims filed by residents of New Mexico have been awarded, valued at nearly $350 million, and approximately 5,800 claims filed by Utah residents have been awarded, valued at approximately $330 million.  Colorado residents have received awards in more than 3,200 claims, valued at more than $213 million.

Awards to Native American claimants total approximately $264 million distributed among members of 17 different tribes.  The department has awarded more than 2,800 claims filed by members of the Navajo Nation, valued at more than $212 million.  In addition, the department has awarded more than $24 million to members of the Laguna Pueblo Tribe and more than $9 million to members of the Apache Tribes.

Since 1990, the department has awarded more than 3,600 claims filed by veterans, civil servants and contractors who participated onsite in atmospheric nuclear tests, valued in excess of $266 million.  Nearly $100 million of this compensation was awarded following a surge in claims filed in 2011 and 2012.

“This benchmark reflects the department’s efforts to help thousands of U.S. citizens reach closure on a unique chapter of our history,” said Deputy Assistant Attorney General Kali N. Bracey of the Civil Division’s Torts Branch.  The RECA is administered by the Radiation Exposure Compensation Program, a component of the Constitutional and Specialized Torts Litigation section within the Torts Branch. 

The Department of Justice is a part of a broad inter-agency network that includes the Departments of Defense, Veterans Affairs, Labor, Health and Human Services, and Energy, comprising the comprehensive federal radiation compensation system.  Eligibility determinations are routinely coordinated with these agencies.

The RECA will expire on July 9, 2022, and claims received after that date will be barred.  Individuals interested in filing a claim may visit the department’s RECA website or contact the Radiation Exposure Compensation Program at 800-729-7327.

The Department of Justice today announced an agreement with Rapid City, South Dakota, to remedy architectural accessibility issues that violate the Americans with Disabilities Act (ADA) at the Rushmore Plaza Civic Center (Civic Center).  This year marks the 25th anniversary of the Americans with Disabilities Act (ADA), which the Civil Rights Division plays a critical role in enforcing. 

Rapid City and the U.S. Department of Justice reached an agreement under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the ADA.  Under the agreement, Rapid City is required to ensure that the 11 parking areas surrounding the Civic Center will comply with the ADA’s 2010 Standards for Accessible Design.

The agreement with Rapid City will allow people with disabilities to access county buildings, such as Connie Whitley and Jim Nelson, who attended the Black Hills Works Gala, a formal event that brings nearly 800 people from the area together to honor people with disabilities.  Upon arriving at the Civic Center, where the gala was taking place, the couples’ driver found a spot that was designated as accessible, but in practice was not.  It lacked the required “access aisle,” leaving Ms. Whitley and Mr. Nelson no room to get out of the car with their wheelchairs.  After finding another spot and maneuvering through the snow, the couple then found that a side entrance at the Civic Center as well as the door to the room where the gala was being held were also not accessible.  The size of their wheelchairs requires both double doors to be held open – a difficult task with only one staff person present.

Experiences like this, however, will become a thing of the past over the next three years thanks to the PCA agreement.  You can learn more about Ms. Whitley and Mr. Nelson’s story by checking out the Justice Department blog, where each month of 2015, the department is highlighting how PCA agreements have an impact on the everyday lives of people with disabilities.

Under the agreement, the Civic Center will have the required number of designated accessible parking spaces, including van-accessible spaces.  Each space will be the appropriate size, have an access aisle and accessible signage, and be on the shortest accessible route to an accessible entrance.

“Connie and Jim’s story reminds us of the kinds of things people with disabilities face every day; the kinds of things that many of us take for granted,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Something as simple as getting in the door should not become a Herculean feat.  Under today’s agreement, in addition to getting in the door, more will be done by Rapid City to make its Civic Center accessible to persons with disabilities.  The agreement addresses companion seating for wheelchair users, public restrooms, interior ramps, drinking fountains and even dressing rooms for performers with disabilities.”

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

Mark Bryan, 59, of New Market, Maryland, and his Delaware-based seafood wholesale business, Harbor House Seafood, were sentenced on Friday in federal court in Camden, New Jersey, for trafficking in illegally possessed oysters, creating false health and safety records, and conspiracy charges.

Bryan was sentenced to serve 26 months in prison followed by three years of supervised release. Bryan was also ordered to pay a $62,500 fine and to pay New Jersey $140,000 for the restoration of oyster beds in Delaware Bay.  Harbor House was ordered to pay a $250,000 fine and was sentenced to five years of probation.  Friday’s sentences, in addition to the previous sentencing of Bryan’s co-conspirators and suppliers, brings the total fines and forfeitures in this matter to over $625,000, along with $194,000 of restoration costs..

Bryan and Harbor House were convicted in 2012 of multiple felony crimes related to dealings in illegal oysters from 2004 to 2007.  The evidence showed that for more than four years, Bryan conspired with New Jersey oystermen Thomas Reeves and Todd Reeves to cover up the Reeves’ overharvest of oysters from the Delaware Bay.  Bryan, through his company, Harbor House Seafood, purchased the illegal oysters from the Reeves, then assisted in covering up the Reeves’ overharvest by maintaining double-books, providing federal agents with false records, and by falsifying his FDA-mandated health and safety logs.  The jury saw numerous instances of late-night faxes between Bryan and the Reeves which were used to coordinate their conspiracy and hide their wrong-doing from investigators. Bryan was also shown to have purchased illegal oysters from oyster harvester Kenneth Bailey of New Jersey.  During the course of his crimes, Bryan moved, purchased and sold over $1.2 million worth of illegal oysters.

The Reeves and Bailey were previously sentenced on Feb. 11, 2015, to 26 months, 16 months, and 12 months in prison, respectively, for their roles.

“The defendants’ actions provided a market for dishonest oystermen who were willing to place natural resources at risk in the name of profit,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division.  “Today’s sentences send the message that those who knowingly deal in illegal natural resources will be held accountable.”

“Today's sentence underscores the value that state partnerships add to NOAA Office of Law Enforcement’s ability to complete its mission,” said Assistant Director Logan Gregory for NOAA Fisheries Office of Law Enforcement.  “In this case, our partnership with New Jersey Division of Fish and Wildlife was crucial in protecting the oyster resource in New Jersey and leveling the playing field across multiple industry sectors throughout the mid-Atlantic Region.”

The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed.  The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect public health and minimize the impact of any oyster-borne outbreak of disease.

The case was investigated by the NOAA Office of Law Enforcement and the New Jersey Department of Environmental Protection’s Division of Fish and Wildlife.  The case was prosecuted by Assistant Chief Wayne D. Hettenbach and Trial Attorney Patrick M. Duggan of the Environment and Natural Resources Division’s Environmental Crimes Section, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.

Attorney General Eric Holder released the following statement Monday after Senator Barbara Mikulski, the longest serving woman in Congress, announced that she would not be seeking re-election in 2016:

“For nearly four decades, Senator Mikulski has distinguished herself in the halls of Congress as a pioneering role model, a principled mentor and an inspiring force for positive change.  She has demonstrated unparalleled leadership, unwavering dedication and vital skill.  And she has exemplified the integrity, intelligence and constructive spirit that define public service at its best.  

“From her days as a community organizer to her service as a city councilwoman to her distinction as the longest-serving woman in the history of the United States Congress, Senator Mikulski has been a fierce advocate for the people of Maryland, a trailblazer for women around the country and a champion on behalf of Americans who are too frequently overlooked and too often underserved.  Her extraordinary contributions have left an indelible mark on her home state and on the nation she loves.  Her commitment to progress has driven real and tangible change -from paycheck fairness to voting access and from domestic violence prevention to civil rights.  And throughout my career at the Department of Justice, she has been a steadfast ally in the mission we share, a strong supporter of the department’s work and employees and a vocal proponent of equal justice under the law. 

“I offer my thanks for her service, for her friendship and for the remarkable legacy she will leave behind.  I wish her well for the remainder of her term in the United States Senate.  And I look forward to all that she will achieve in the next chapter of her extraordinary career.” 

Attorney General Eric Holder today announced that he has named Benjamin C. Mizer as Principal Deputy Assistant Attorney General and Acting Assistant Attorney General for the Civil Division.    

Mizer replaces Joyce R. Branda, who will return to her permanent role as the Deputy Assistant Attorney General for the Commercial Litigation Branch.  Mizer and Branda assumed their positions today.

“Ben Mizer’s unassailable integrity, sound judgment and steadfast commitment to the mission of this department are just a few of the reasons he’s been chosen to serve as the new Principal Deputy Assistant Attorney General and Acting Assistant Attorney General for the Civil Division – a critical and demanding post, and one in which he will undoubtedly thrive,” said Attorney General Holder  “Ben’s work here in Washington and as Solicitor General for the state of Ohio has put him in some of the most challenging and demanding positions a lawyer can encounter.  But in every instance, Ben has repeatedly demonstrated that he is both a gifted lawyer and a capable leader.  I am confident that his stewardship of the Civil Division will build on the exceptional record he has already established – and reflect the high ideals that have animated him from the very beginning of his career.  I congratulate Ben once again on his new role, and I look forward to all that he will achieve as he works to move this department, and this nation, toward an even brighter future.”

Prior to his selection to run the Civil Division, Mizer served as a senior advisor to Attorney General Holder on matters related to constitutional law, national security, civil rights, civil litigation, antitrust law and the Supreme Court.  

Mizer has also served as Deputy Assistant Attorney General in the Office of Legal Counsel.  As a member of OLC’s leadership team, Mizer provided legal advice to the President, the Attorney General and other executive branch agencies on questions of constitutional law and other issues of particular complexity or importance. Before coming to the department, Mizer served as the Solicitor General of Ohio.  As part of those responsibilities, he represented the state as counsel of record in hundreds of appeals.  He argued three cases in the U.S. Supreme Court and many more in the Sixth Circuit Court of Appeals and the Ohio Supreme Court on a broad array of issues, including election law, taxation, civil rights, criminal procedure, gun rights and the death penalty.

Mizer also previously worked as an associate at WilmerHale and as an associate legal officer at the International Criminal Tribunal for the Former Yugoslavia in The Hague. Additionally, Mizer clerked for U.S. Supreme Court Justice John Paul Stevens and D.C. Circuit Judge Judith W. Rogers.

Mizer  received his J.D. from the University of Michigan Law School and his B.A. from the College of Wooster.

Branda has served as Acting Assistant Attorney General for six months after Stuart Delery was named Acting Associate Attorney General in September 2014.

 “I am indebted to Stuart Delery and Joyce Branda for their recent stewardship of the Civil Division,” Mizer said.  “Both are exceptional public servants and even better people, and I am honored to be joining a Division that is stronger than ever because of their leadership.”

Three Miami residents were sentenced for their roles in a tax refund scheme, announced U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Special Agent in Charge Kelly R. Jackson of Internal Revenue Service-Criminal Investigation’s (IRS-CI) Miami Office.

According to the indictment and facts established at his sentencing hearing, Sean Anthony Lopez, 35, of Miami, submitted false personal federal income tax returns claiming $625,320 in fraudulent refunds.  Lopez received this refund in connection with his role as a client of an illicit tax preparation business located at 18710 SW 107th Street in Miami.  Lopez was sentenced today to serve 30 months in prison.  The court also ordered Lopez to pay restitution to the U.S. Treasury in the amount of $695,635.  

Lopez’s co-defendants, Claudia Zuloaga, 43, and Sharon Elizabeth Angulo, 49, both of Miami, operated this South Miami-Dade County tax preparation business under the names Sterling Executive Associates Inc. and Sterling Executive (Sterling), and assisted Lopez in the preparation of his fraudulent tax returns, as well as numerous other similar false tax returns.

Angulo and Zuloaga were each previously sentenced to serve 60 months in prison.  The court also ordered Angulo and Zuloaga to each pay restitution to the U.S. Treasury in the amount of $1,539,873.

According to the indictment and facts established at sentencing, beginning in approximately September 2008 and continuing through September 2012, Zuloaga and Angulo recruited numerous clients, including Lopez, by falsely representing that they could eliminate a substantial portion of their debts by obtaining sizable tax refunds for them.  This would be accomplished through false and fraudulent tax returns prepared by Zuloaga and Angulo in exchange for a fee, usually amounting to 30 percent of the fraudulently obtained tax refund.  Zuloaga and Angulo were responsible for causing the submission of multiple fraudulent tax returns claiming refunds totaling in excess of $5.4 million.  As further established at their sentencing hearings, the IRS was fraudulently induced to issue refund checks in the aggregate amount of $2,305,081, a portion of which was disbursed to Lopez with respect to his fraudulent tax returns.

As further alleged in the indictment and established at their sentencing hearings, the tax returns prepared at Sterling by Zuloaga and Angulo falsely set forth that financial institutions at which the clients maintained accounts withheld sizable amounts of tax from falsely declared interest income, which was falsely claimed as having been earned by the clients.  Through this fraudulent mechanism, each return gave the appearance of entitling the client to a significant tax refund due to over-withholding of tax payments in connection with their claimed interest earnings.  In addition, in order to provide false substantiation for these fraudulent tax refund claims, the defendants caused fictitious IRS Forms 1099-OID to be created, which set forth the false interest and tax withholding amounts fraudulently reported upon their clients’ tax returns.

It was also established at sentencing hearings that Zuloaga and Angulo promoted the fictitious “redemption theory” to their clients as the purported justification for their fraudulent tax refund claims.  Through this promotion, clients were falsely informed that the submission of tax returns in this manner allowed their clients to legitimately access large amounts of money allegedly contained in certain non-existent “straw man” accounts which the defendants claimed were being maintained by the U.S. Treasury for each individual who possessed a social security number. 

U.S. Attorney Ferrer and Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS – Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Peter B. Outerbridge of the Southern District of Florida and Trial Attorney Alexander Effendi of the Tax Division, who prosecuted the case.

A copy of this press release may be found on the U.S. Attorney’s Office for the Southern District of Florida’s website.  Related court documents and information may be found on the U.S. District Court in the Southern District of Florida’s website or on Pacer.

Two Miami residents were sentenced to serve 72 months in prison for their roles in a $62 million Medicare fraud scheme involving intensive mental health treatment programs.

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

Blanca Ruiz, 61, and Alina Fonts, 49, both of Miami, were convicted of conspiracy to commit healthcare fraud following a trial in November 2014.  Fonts was also convicted of two counts of health care fraud.   

According to the evidence presented at trial, both Ruiz and Fonts were employed at Health Care Solutions Network Inc. (HCSN), a now-defunct partial hospitalization program (PHP) that purported to provide intensive treatment for severe mental illness.  The evidence at trial demonstrated, however, that from 2004 through 2011, HCSN billed Medicare and Medicaid for treatment that was not medically necessary and often not provided at all.  In Florida, HCSN operated community mental health centers at two locations. 

Evidence at trial showed that Ruiz and Fonts oversaw the alteration, fabrication and forgery of thousands of documents, including patient medical records, to support the fraudulent claims HCSN submitted to Medicare and Medicaid.  Many of these medical records were created weeks or months after the patients were admitted to HCSN facilities for purported treatment.  The evidence at trial demonstrated that the “therapy” at HCSN oftentimes consisted of nothing more than Disney movies and bingo games, and Ruiz and Fonts removed any references to these recreational activities in the medical records.  Fonts also fabricated medical records for North Carolina-based patients whom she never met.   

According to the evidence presented at trial, Ruiz and Fonts were also aware that HCSN paid illegal kickbacks to owners and operators of Miami-Dade County assisted living facilities in exchange for patient referrals to be used to submit false and fraudulent claims to Medicare and Medicaid.  Ruiz and Fonts knew that many of the referred patients were ineligible for PHP services because they suffered from mental retardation, dementia and Alzheimer’s disease.

From 2004 through 2011, HCSN billed Medicare and the Medicaid program approximately $63 million for purported mental health services.

This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  This case was prosecuted by Trial Attorneys Allan J. Medina, Brendan A. Stewart and Justin Goodyear 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 and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

U.S. District Judge Richard D. Bennett sentenced Michael D. Hayden, 43, of Tilghman Island, Maryland, today to 18 months in prison to be followed by six months of home detention and three years of supervised release for conspiring to violate the Lacey Act and defraud the United States through the illegal harvesting and sale of 185,925 pounds of striped bass. Judge Bennett also ordered that Hayden pay $498,000 in restitution and fined $40,000 to the state of Maryland for the damage caused to the striped bass.   

The sentence was announced by Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division John C. Cruden, U.S. Attorney for the District of Maryland Rod J. Rosenstein, Secretary-designee Mark Belton of the Maryland Department of Natural Resources (DNR) and Regional Special Agent in Charge Honora Gordon for the U.S. Fish and Wildlife Service.

“Mr. Hayden is being held justly accountable for his role at the head of a conspiracy to plunder protected striped bass from the Chesapeake Bay,” said Assistant Attorney General Cruden. “The Justice Department, working closely with our state partners, will continue to protect these shared resources for the law abiding watermen of the Bay with vigorous prosecution of those who do not follow the law.”

“I commend the men and women of the Natural Resources Police who, with our federal partners, are committed to upholding the laws that protect Maryland's fish and wildlife,” said Secretary-designee Belton.  “And I thank the citizens who came forward with tips to aid this extensive investigation.”

According to his plea agreement and court documents, Hayden was a captain on fishing vessels owned by him and his company, d/b/a, Michael D. Hayden, Jr., and Michael D. Hayden, Jr., Inc.  Hayden and co-defendant William J. Lednum, 41, of Tilghman Island, also employed numerous “helpers” as part of this operation, including co-defendants Kent Conley Sadler, 31, of Tilghman Island, and Lawrence “Daniel” Murphy, 37, of St. Michaels, Maryland.

From at least 2007 to 2011, Hayden and his co-conspirators illegally harvested at least 185,925 pounds of striped bass from the Chesapeake Bay in violation of Maryland regulations relating to harvest method, amounts, tagging and reporting.  To conceal their crimes, Hayden and his co-conspirators falsified paperwork submitted to the state of Maryland relating to their harvests.  The state in turn submits such paperwork to federal and interstate agencies responsible for setting harvest levels all along the eastern seaboard.  Hayden and his co-conspirators shipped and sold the illegally harvested striped bass to wholesalers in Maryland, New York, Pennsylvania and Delaware who paid them a total of $498,293. 

The investigation in this case started in February 2011 when the Maryland Department of Natural Resources found tens of thousands of pounds of striped bass snagged in illegal, anchored nets before the season officially reopened.  The conspirators were seen on the water in the vicinity of the illegal nets. The subsequent investigation unveiled a wider criminal enterprise for which Hayden was sentenced today.

Co-defendants Lednum, Murphy, and Sadler previously pleaded guilty to their participation in the conspiracy. Lednum was sentenced to a year and a day in prison and ordered to pay a $40,000 fine and restitution of $489,293, Murphy was sentenced to three years’ probation and ordered to pay a $10,000 fine and $30,000 in restitution and Sadler was sentenced to 30 days in prison to be served on the weekends from Jan. 30, 2015 to May 17, 2015.  Sadler was also ordered to pay a $5,000 fine and $20,000 in restitution. 

Trial attorneys Todd W. Gleason and Shennie Patel of the Department of Justice’s Environmental Crimes Section, and Assistant U.S. Attorney P. Michael Cunningham prosecuted the case.

A former Michigan resident who directed a $3.3 million psychotherapy fraud scheme, was sentenced today to 87 months in prison, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Detroit Office.

Gerald R. Funderburg Jr., 35, of Syracuse, New York, was sentenced by U.S. District Judge Stephen J. Murphy III in the Eastern District of Michigan.  In addition to his prison term, Funderburg was ordered to pay $1,453,064.59 in restitution.

According to admissions made in connection with his guilty plea, from November 2006 through April 2011, Funderburg owned and controlled Funderburg Clinical & Community Services (FCCS), which he used to submit false claims to Medicare for purported psychotherapy services. 

Funderburg admitted that he used the Medicare information and identities of hundreds of Medicare beneficiaries without their consent to submit claims for psychotherapy services that were not actually provided.  Funderburg also admitted that he used personal information of licensed social workers without their consent to obtain Medicare provider numbers in their names, which he then used to submit false claims to Medicare for services purportedly provided by the same social workers.  The social workers, however, did not provide the care for which Funderburg billed Medicare.   

Over the course of the scheme, Funderburg admitted that he caused FCCS to submit over $3.3 million in fraudulent claims, and Medicare paid $1,453,064 for those claims.

This case was investigated by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of Michigan.  The case was prosecuted by Deputy Chief Gejaa T. Gobena, Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen, Dustin M. Davis and William G. Kanellis of the Criminal Division’s Fraud Section. 

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

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

Early last year in a speech at the Department of Justice, President Obama announced a transition that would end the Section 215 bulk telephony metadata program as it previously existed, and that the government would establish a mechanism that preserves the capabilities we need without the government holding this bulk data.

As a first step in that transition, the President directed the Attorney General to work with the Foreign Intelligence Surveillance Court to ensure that, absent a true emergency, telephony metadata can only be queried after a judicial finding that there is a reasonable, articulable suspicion that the selection term is associated with an approved international terrorist organization. The President also directed that the query results must be limited to metadata within two hops of the selection term instead of three.

These two changes have been in effect since February 2014.

In addition, the President also directed the Intelligence Community and the Attorney General to develop options for a new approach to match the capabilities and fill gaps that the Section 215 program was designed to address without the government holding this metadata.

After carefully considering the available options, the President announced in March that the best path forward is that the government should not hold this data in bulk, and that the data should remain at the telephone companies with a legal mechanism in place that would allow the government to obtain data pursuant to individual orders from the FISC approving the use of specific numbers for such queries.

The President also noted that legislation would be required to implement this option, and he has called on Congress to enact this important change.

As the White House said, the Administration welcomes the opportunity to work with the new Congress to implement the changes the President has called for.  Given that legislation has not yet been enacted, and given the importance of maintaining the capabilities of the telephony metadata program, the government has sought a reauthorization of the existing program, as modified by the changes the President directed in January.

Consistent with prior declassification decisions and in light of the significant and continuing public interest in the telephony metadata collection program, DNI James R. Clapper declassified the fact that the government filed an application with the FISC to reauthorize the existing program until June 1, 2015, and that the FISC issued an order approving the government’s application.   The Government sought renewal of this authority to and including June 1, 2015 in order to align the expiration date of the requested order for this program with the June 1, 2015 sunset of Section 215 of the PATRIOT Act.

The Administration is undertaking a declassification review of this most recent court order, and when complete, the ODNI will post the document to its website and icontherecord.tumblr.com.

Former Police of Puerto Rico Sergeant Antonio Rodriguez Caraballo was sentenced today to serve 46 months in prison and three years supervised release for making a false statement under oath to the federal grand jury investigating civil rights violations stemming from the fatal beating of Jose Luis Irizarry Perez, 19, announced Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Rosa Emilia Rodriguez-of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI San Juan Field Office. 

Rodriguez Caraballo pleaded guilty to perjury for providing false information to the grand jury concerning what he observed during the police-involved beating of Irizarry Perez.  One other former Puerto Rico police officer has already been sentenced for his obstructive conduct during the federal investigation into the incident, while four 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, two former Puerto Rico police officers violated the constitutional rights of Irizarry Perez by striking him with their police batons while another former police officer physically restrained Irizarry Perez during an election evening celebration at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008.   

U.S. District Court Judge Juan M. Perez Gimenez issued the sentence, which will be followed by 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 will not tolerate those who violate the sanctity of the grand jury by lying under oath,” said Acting Assistant Attorney General Gupta.  “Such conduct is especially egregious in the case at hand, where a sworn law enforcement officer attempted to cover up an assault by police officers by misleading the grand jury.”

“When those who are sworn to uphold the law and protect others choose to abuse their power and position, they undermine the public’s confidence in the justice system and our government institutions,” said U.S. Attorney Rodriguez-Vélez.  “The U.S. Attorney’s Office and the Department of Justice are committed to promoting trust in our system of justice by vigorously prosecuting those who obstruct justice.”

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.

A Fort Wayne, Indiana, resident pleaded guilty yesterday in the U.S. District Court in the Northern District of Indiana to two counts of filing a false tax return and one count of perjury, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the information and court documents, in 2008 and 2009, Jared Hochstedler participated in five separate “wrap,” or stock-for-equity, agreements where two companies, Signature Worldwide Advisors LLC and K&L Enterprises Inc., assumed more than $3.2 million in debt owed to Hochstedler by his company, Enzyme Environmental Solutions Inc. (EES), primarily for his back wages in exchange for stock in EES.  Signature and K&L then sold the stock on the over-the-counter market for profit and paid Hochstedler more than $2.8 million.  Hochstedler failed to report this income on his 2008 and 2009 individual federal income tax returns.  Hochstedler also failed to report more than $1 million paid by K&L as purported loans.

Hochstedler engaged in another stock-for-equity agreement with Bebida Beverage Company, where he assumed the debt of Bebida in exchange for its stock.  In 2009, he sold the Bebida stock for more than $1 million and substantially underreported the capital gain on his tax return. 

In June of 2009, the SEC deposed Hochstedler regarding the stock-for-equity transactions.  During the deposition, Hochstedler falsely stated that the stock he received from Bebida represented repayment of loans and that he sold the Bebida stock for $300,000 to $400,000, when the actual sales price was in excess of $1 million.

Hochstedler faces a statutory maximum sentence of three years in prison and a $250,000 fine for each false return count, and a statutory maximum sentence of five years in prison and a $250,000 fine for the perjury count.            

Principal Deputy Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation who investigated the case, as well as Trial Attorneys Richard Rolwing and Christopher O’Donnell of the Tax Division, who are prosecuting the case.  She also thanked the U.S. Attorney’s Office for the Northern District of Indiana for their assistance.

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

A Florida man pleaded guilty today for his role in a large-scale identity trafficking ring, which sold the identities of Puerto Rican U.S. citizens to foreign nationals to allow them to enter or remain in the United States illegally.  To date, a total of 14 individuals have been charged for their roles in this identity trafficking ring, and four have pleaded guilty.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico, Director Sarah R. Saldaña of Immigration and Customs Enforcement (ICE), Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS), Director Bill A. Miller of the Department of State’s Diplomatic Security Service (DSS) and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Rey David Bravo-Aguirre, 43, of Bartow, Florida, pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit alien smuggling for financial gain and one count of transferring and possessing means of identification of another person during and in relation to a felony.  A sentencing hearing is scheduled for June 3, 2015, before U.S. District Judge Juan M. Pérez- Giménez of the District of Puerto Rico.

According to his plea agreement, Bravo-Aguirre operated as a broker of Puerto Rican identities and corresponding identity documents out of Bartow, Florida.  In that role, Bravo-Aguirre received identity documents from other members of the conspiracy located in the Caguas-area of Puerto Rico and sold them to individuals unlawfully residing in Florida.  Specifically, Bravo-Aguirre admitted that he provided Social Security cards and corresponding Puerto Rico birth certificates to his customers.

The charges are the result of Operation Island Express II, an ongoing, nationally-coordinated investigation led by ICE’s Homeland Security Investigations (HSI), USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office.  The Illinois Secretary of State Police also provided substantial assistance.  The ICE-HSI Attaché office in the Dominican Republic, National Drug Intelligence Center - Document and Media Exploitation Branch and International Organized Crime Intelligence and Operations Center (IOC-2) provided invaluable assistance, as well as various ICE, USPIS, DSS and IRS CI offices around the country.

The case is being prosecuted by Trial Attorneys Marianne Shelvey of the Criminal Division’s Organized Crime and Gang Section and William Kenety of the Criminal Division’s Human Rights and Special Prosecutions Section, and Special Assistant U.S. Attorney Jorge Ramos of the District of Puerto Rico.

Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html.  Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline.  Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website.  Additional resources regarding identity theft include the Office for Victims of Crime’s Identity Theft and Financial Fraud; the Social Security Adminstration’s Identity Theft and Your Social Security Number; the FBI’s Identity Theft; and the IRS’s Identity Protection: Prevention, Detection and Victim Assistance.

A Burbank, Washington, woman was convicted by a jury yesterday after a five-day trial in the U.S. District Court in the Eastern District of Washington located in Spokane, Washington, of willfully failing to pay more than approximately $2.6 million in federal payroll taxes withheld from her employees, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael C. Ormsby of the Eastern District of Washington. 

“Employers who willfully fail to timely collect, account for and deposit employment taxes are, quite simply, stealing from their employees and the U.S. Treasury,” said Principal Deputy Assistant Attorney General Ciraolo.  “Yesterday’s verdict sends a clear message to those individuals who view this obligation as optional – you will be investigated and prosecuted to the fullest extent of the law.”

According to the evidence introduced at trial and other documents filed in the case, Maria Elizabeth Townsend was the president and majority owner of Townsend Controls Inc. (TCI), an electrical contractor in Pasco, Washington.  The majority of TCI’s employees were members of Local 112 of the International Brotherhood of Electrical Workers (Local 112).  From at least April 1, 2007, through Sept. 30, 2009, Townsend withheld employment taxes from the wages of the members of Local 112 that TCI employed as well as its other non-union employees.  She willfully failed, however, to pay those taxes to the Internal Revenue Service (IRS).  Instead of paying the withheld taxes, Townsend purchased several automobiles and made large disbursements of corporate funds to her family members.

Townsend faces a statutory maximum sentence of five years in prison and a $250,000 fine for each count of failing to pay over employment taxes.  Sentencing is scheduled for June 4.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Ormsby commended the special agents of IRS-Criminal Investigation who investigated the case, as well as Assistant U.S. Attorney George J. C. Jacobs III and Trial Attorney Lisa L. Bellamy of the Tax Division, who are prosecuting the case. 

The Justice Department announced today the enhanced collaborations its law enforcement and community partners are taking to stem the tide of fraud schemes directed at certain groups of Americans.  On Wednesday, high ranking officials of the department, the Federal Trade Commission (FTC), the U.S. Postal Inspection Service (USPIS) and non-profit community groups met to discuss an increase in fraud schemes that intentionally target older Americans and the Latino community. 

The public/private group met in anticipation of National Consumer Protection Week (March 1 through 7) and, among a number of continuing efforts, announced that they will be releasing a tip sheet aimed at educating consumers and stopping these targeted schemes. 

Consumer fraud affects every U.S. community, but law enforcement has noted an uptick in schemes that prey on the vulnerabilities of specific groups of Americans.  Bogus lotteries, mass-marketed “psychic” mailers, and other scams, often perpetrated from foreign soil, have stolen hundreds of millions of dollars from seniors.  At the same time, call centers in South America have begun calling and threatening Spanish-speaking residents of the United States, extorting them into paying money they do not owe.

“As we approach National Consumer Protection Week, the Justice Department remains steadfast in our commitment to pursue those who commit consumer fraud, particular the invidious schemes that target older Americans and the Spanish-speaking community,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “We also recognize that the most important thing we can do to stop these schemes is to help educate the consumers who are being targeted so that together we can prevent these schemes from succeeding in the first place.” 

The meeting with national and local nonprofit groups focused on the affected populations and offered an opportunity for the law enforcement community to share intelligence gathered through enforcement and for the non-profit groups to provide insight learned from their members.  Officials from the Civil Division’s Consumer Protection Branch and FTC distributed materials to organizations in attendance to provide to their constituents in an effort to raise awareness on how to avoid the fraud schemes when confronted with them.

“The FTC works closely with our partners to stop scams,” said Director Jessica Rich of the FTC’s Bureau of Consumer Protection.  “We coordinate with law enforcement agencies – like the Department of Justice and the Postal Inspection Service – to investigate scams and shut them down, and we offer free materials to teach people in every community how to avoid fraud and report it.”

“Consumer fraud schemes are growing more sophisticated and we are here to share with you what we have learned so that you can pass word on to your constituents,” said Deputy Assistant Attorney General Jonathan F. Olin of the Civil Division’s Consumer Protection Branch at Wednesday’s meeting with community groups.  “Many more fraud schemes are originating overseas in other countries including Canada, Jamaica, Costa Rica, Peru, Argentina, Brazil, the Philippines, Israel and Romania.” 

Earlier this month, the department achieved a first in one such case.  The Jamaican government extradited its first Jamaican citizen, Damion Barrett, wanted on criminal charges in an international lottery scheme that targeted older Americans.  Barrett’s co-defendant, Oneike Barnett, was previously apprehended in August 2013 when he visited the United States, arriving at the airport in Orlando, Florida.  Barnett pleaded guilty and was sentenced to serve five years in federal prison in April 2014. 

“Lottery scams perpetrated from Jamaica have been increasing over the past several years,” said U.S. Postal Inspector in Charge Ronald J. Verocchio of the USPIS Miami Division, which investigated the Barrett case.  “The Jamaican government’s willingness to extradite one of its own citizens provides an important step towards protecting the older Americans that disproportionately make up phony Jamaican lottery victims.”

The department has also made progress in efforts to deter schemes that defraud and extort money from the Spanish-speaking community by obtaining lengthy prison terms for perpetrators.  Recent sentences ranging from nine to 17 years in prison have been obtained for defendants convicted of lying to Spanish-speaking consumers about debts they did not, in fact, owe. 

Recent actions by the Department of Justice, USPIS and Homeland Security Investigations include:

• http://www.justice.gov/opa/pr/justice-department-files-enforcement-actions-shut-down-psychic-mail-fraud-schemes

• http://www.justice.gov/opa/pr/virginia-resident-indicted-connection-fraudulent-lottery-scheme-based-jamaica

• http://www.justice.gov/opa/pr/south-florida-resident-convicted-connection-international-fraudulent-lottery-scheme

• http://www.justice.gov/opa/pr/jamaican-citizen-sentenced-connection-international-lottery-scheme-defrauded-elderly

• http://www.justice.gov/opa/pr/florida-residents-sentenced-defrauding-and-threatening-spanish-speaking-consumers

Recent actions by the FTC include:

• http://www.ftc.gov/news-events/press-releases/2014/10/ftc-takes-action-stop-phantom-debt-scam-targeted-spanish-speaking

• http://www.ftc.gov/news-events/press-releases/2014/11/ftc-obtains-court-orders-temporarily-shutting-down-massive-tech

• http://www.ftc.gov/news-events/press-releases/2014/06/ftc-continues-crack-down-deceptive-debt-collection-houston-based

• http://www.ftc.gov/news-events/press-releases/2014/10/ftc-halts-fake-medicare-scheme-took-money-seniors-bank-accounts

A tip sheet for consumers to remember when dealing with individuals who contact them by phone, U.S. mail or via the Internet.  The tips on scams and how to complain about or report a scam are available in English and in Spanish at http://www.consumer.gov/handouts.  More detailed help and advice for consumers is available at FTC.gov. 

 

The Consumer Protection Branch leads the Justice Department’s efforts to protect the health, safety and economic security of the American consumer.  The branch, together with its partners in the department’s U.S. Attorney's Offices and in consumer protection agencies, fulfills this mission through civil and criminal enforcement of federal consumer protection statutes across the country.  Visit the Civil Division’s website for the latest division news.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Preet Bharara for the Southern District of New York and Administrator Michele Leonhart of the Drug Enforcement Administration (DEA) announced today the extradition of Cristian Vintila, 44, Massimo Romagnoli, 43, and Virgil Flaviu Georgescu, 42, international arms traffickers charged with conspiring to sell large quantities of military-grade weaponry to the Fuerzas Armadas Revolucionarias de Colombia (the FARC) – a designated foreign terrorist organization – to be used to kill officers and employees of the United States in Colombia. Vintila, Georgescu, and Romagnoli, all of whom were arrested in December 2014, were extradited from Montenegro yesterday and will be arraigned in front of U.S. District Court Judge Ronnie Abrams later today.

“As alleged, these three men were ready and willing merchants of death, poised to sell sophisticated weapons to a terrorist organization,” said U.S. Attorney Bharara.  “It is further alleged that they conspired to sell the weaponry with the understanding that it would be used to shoot down American aircraft and kill American officers.  We once again laud the efforts of the DEA to stem the flow of lethal weapons that could be aimed at U.S. officers and to deter weapons traffickers who mean harm to the United States.”

According to the Indictment, which was unsealed in December 2014:

Since at least May 2014, Vintila has been a Romania-based weapons trafficker, Romagnoli has been a Europe-based weapons trafficker, who is able to procure fraudulent end-user certificates (EUCs) for military-grade weaponry, and Georgescu has been a Romania-based weapons broker.  Between May and October 2014, Vintila, Romagnoli, and Georgescu conspired to sell an arsenal of weapons, including machine guns and anti-aircraft cannons, with the understanding that the weapons would go to the FARC to be used by FARC against the United States.  During a series of recorded telephone calls and in-person meetings, Vintila, Romagnoli and Georgescu agreed to sell the weapons to three confidential sources working with the DEA (the CSs), who represented that they were acquiring these weapons for the FARC.  Vintila, Romagnoli and Georgescu agreed to provide these weapons to the CSs with the specific understanding that the weapons would be used to kill officers and employees of the United States and, in particular, to shoot down American helicopters and airplanes.  Romagnoli further agreed to provide fraudulent EUCs in order to make the illegal sale of weapons look legitimate.

During their recorded meetings, Vintila and Romagnoli provided the CSs with catalogues of military-grade weapons they were prepared to provide the FARC.  Vintila gave the CSs a catalogue of weapons that included pistols, machine guns and other high-powered weaponry, and Romagnoli showed the CSs a catalogue that included automatic weapons and shoulder-fired rocket launchers.  Romagnoli additionally showed one of the CSs a sample fraudulent EUC.  Vintila, Romagnoli, and Georgescu also discussed the logistics of receiving payment for the weapons from the CSs and delivering the weapons to the FARC. 

* * *

The indictment charges Vintila, Romagnoli, and Georgescu, with two separate terrorism offenses:

Count one charges all three defendants with conspiracy to kill U.S. officers or employees.  If convicted of count one, the defendants each face a maximum sentence of life in prison.  Count two charges all three defendants with conspiracy to provide material support or resources to a designated foreign terrorist organization, the FARC.  If convicted of count two, the defendants each face a maximum sentence of 15 years in prison.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the outstanding investigative efforts of the DEA’s Special Operations Division, the DEA’s Bucharest Country Office, the DEA’s Rome Country Office, the Montenegrin National Police, and the Romanian National Police.  The defendants’ arrests and subsequent extradition are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the National Security Division of the Department of Justice, and the Justice Department’s Office of International Affairs.

The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit.  The case is being prosecuted by Assistant U.S. Attorneys Andrea Surratt and Ilan Tuviah Graff, with assistance provided by Trial Attorney Brenda Sue Thornton of the Justice Department’s National Security Division.

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

A federal court in Chicago has permanently barred Laurie G. Helfer, aka Laurie G. Powell, individually and doing business as Laurie’s Freelance & Tax Preparation Services and Tax Lady Laurie Inc., from preparing federal tax returns for others and from operating a tax return business, the Justice Department announced today.  The defendant was also ordered to surrender any existing Preparer Tax Identification Number (PTIN) or Electronic Filing Identification Number (EFIN) registered in her name or in any name used for any purpose by Helfer.

The civil injunction order, to which the defendant consented, was signed by Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois.

According to the complaint, Helfer promised her customers that she could obtain tax refunds for them by amending their tax returns from prior years.  Helfer allegedly fabricated expenses from businesses that she concocted and entered those expenses on a Schedule C-Profit or Loss From Business that she filed with her customers’ amended tax returns.  The complaint alleged that the expenses offset her customers’ income from prior years and illegally generated a refund.  Helfer also prepared original returns for customers during tax-filing season using this same scheme.  The complaint further alleged that, in an attempt to avoid detection by the Internal Revenue Service (IRS), Helfer stopped signing the tax returns that she prepared and frequently changed the locations in which she prepared her customers’ tax returns, including various Chicago-area hotel rooms.

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 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.

Helfer Injunction Order

Former CEO and Corporate Counsel of Financial Services Marketing Company Previously Pleaded Guilty

A California man and purported billionaire financier was taken into federal custody today for his role in an alleged Ponzi scheme in which investors lost $2.5 million, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Inspector in Charge Gary Barksdale of the U.S. Postal Inspection Service’s Criminal Investigations Group.  

Kenneth Brewington, 50, of Corona, California, was indicted on Feb. 24, 2015, by a federal grand jury in the District of Colorado for conspiracy to commit wire and mail fraud, mail fraud and six counts of wire fraud.

According to allegations in the indictment, from September 2009 until 2011, Brewington and his co-conspirators sold promissory notes to investors through a financial services marketing company based in Denver called Compass Financial Solutions (CFS).  The indictment alleges that Brewington and his co-conspirators falsely represented to investors that Brewington held millions of Euros in overseas bank accounts, and that the proceeds raised from investors would be used to obtain the release of his overseas funds.  To conceal the scheme, Brewington and his co-conspirators allegedly had investors wire their funds to an attorney trust account.  The funds from that account, however, were then allegedly sent to Brewington and his co-conspirators.  Brewington and his co-conspirators allegedly used the investors’ money for their own personal benefit. 

The former corporate counsel for CFS, William E. Dawn, 77, of Denver, and the former CEO of CFS, Brian G. Elrod, 58, of Lakewood, Colorado, previously pleaded guilty for their roles in the scheme.  Sentencing hearings are scheduled for May 29, 2015, and May 22, 2015, respectively. 

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

The case was investigated by the U.S. Postal Inspection Service, and is being prosecuted by Trial Attorneys Henry P. Van Dyck and Jennifer G. Ballantyne of the Criminal Division’s Fraud Section.  The Securities and Exchange Commission has provided substantial assistance in this matter.

Two Defendants Allegedly Planned to Travel to Syria in Order to Join ISIL;

One Defendant Arrested While Boarding a Flight to Turkey

Earlier today, a criminal complaint was unsealed in federal court in Brooklyn charging Abdurasul Hasanovich Juraboev, Akhror Saidakhmetov, and Abror Habibov with attempt and conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.  The initial appearances of Juraboev and Saidakhmetov are scheduled for later today before United States Magistrate Judge Lois Bloom at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.  Habibov’s initial appearance will be held later today at the U.S. Courthouse, 300 North Hogan Street, Jacksonville, Florida.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

As alleged in the complaint, Juraboev first came to the attention of law enforcement in August 2014 after he made a posting on an Uzbek-language website that propagates ISIL’s ideology.  The investigation subsequently revealed that Juraboev and Saidakhmetov devised a plan to travel to Turkey and then to Syria for the purpose of waging jihad on behalf of ISIL.  Saidakhmetov, a resident of Brooklyn and a citizen of Kazakhstan, was arrested early this morning at John F. Kennedy International Airport, where he was attempting to board a flight to Istanbul, Turkey.  Juraboev, a resident of Brooklyn and a citizen of Uzbekistan, had previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the United States next month.  Habibov, a resident of Brooklyn and a citizen of Uzbekistan, helped fund Saidakhmetov’s efforts to join ISIL.

As alleged in the complaint, Juraboev was also prepared to engage in an act of terrorism in the United States if ordered to do so by ISIL, and Saidakhmetov intended to commit such an act if unable to travel abroad to join ISIL.  In the August 2014 posting on the website that propagates ISIL’s ideology, Juraboev offered to kill the President of the United States if ordered to do so by ISIL.  More recently, Saidakhmetov expressed his intent to buy a machine gun and shoot police officers and FBI agents if thwarted in his plan to join ISIL in Syria.

“The flow of foreign fighters to Syria represents an evolving threat to our country and to our allies,” stated United States Attorney Lynch.  “As alleged in the complaint, two of the defendants in this case sought to travel to Syria to join ISIL but were also prepared to wage violent jihad here in the United States.  A third defendant allegedly provided financial assistance and encouragement.  We will vigorously prosecute those who attempt to travel to Syria to wage violent jihad on behalf of ISIL and those who support them.  Anyone who threatens our citizens and our allies, here or abroad, will face the full force of American justice.”  Ms. Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state, and local agencies from the region.

“The charges against Juraboev, Saidakhmetov and Habibov reflect our commitment to finding those who wish to provide material support to ISIL, as well as those committed to fighting on behalf of ISIL, either at home or abroad, and preventing them from doing so,” said Assistant Attorney General Carlin.  “The National Security Division will continue to work to stem the flow of foreign fighters and financial resources to terrorist organizations operating in Iraq and Syria. I would like to commend all those whose tireless efforts helped bring these charges.”

“As alleged, the defendants looked to join the Islamic State of Iraq and the Levant by flying to Turkey in a vain attempt to evade detection.  And one of the defendants was prepared to commit acts of terror here—in America—if he could not travel, to include killing FBI agents.  The defendants violated the true tenets of their faith in pursuit of their radical, violent agenda.  We rely on help from the community, the public, and religious leaders to be mindful of those who could be radicalized.  We cannot do this alone,” said FBI Assistant Director-in-Charge Rodriguez.   

“ISIL calls on its followers to come fight for the terrorist organization in Syria,” said Police Commissioner Bratton, “and in messages to followers outside Syria, ISIL has called on them to attack police, intelligence officers, or the military in their home countries including the United States.  By pledging allegiance to ISIL, these defendants allegedly conspired to fight for a designated foreign terrorist organization, either in Syria or even New York.”  Commissioner Bratton commended the work of the detectives and agents of the JTTF and the guidance of the U.S. Attorney for the Eastern District of New York throughout the investigation.     

If convicted, each defendant faces a maximum sentence of 15 years in prison.  The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant United States Attorneys Alexander Solomon, Douglas M. Pravda, and Amanda Hector, with assistance provided by Trial Attorney Danya Atiyeh of the Justice Department’s Counterterrorism Section and the United States Attorney’s Office for the Middle District of Florida.

The Defendants:

ABDURASUL HASANOVICH JURABOEV

Age:  24

Nationality: Uzbeki

 

AKHROR SAIDAKHMETOV

Age:  19

Nationality: Kazakh

 

ABROR HABIBOV

Age:  30

Nationality: Uzbeki

 

E.D.N.Y. Docket No. 15-M-0172

Victim Died After Being Run Over by Truck

The Justice Department announced today that William Kirk Montgomery, 25, of Puckett, Mississippi, Jonathan Kyle Gaskamp, 22, and Joseph Paul Dominick, 23, both of Brandon, Mississippi, were sentenced today in U.S. District Court in Jackson for their roles in a federal hate crime conspiracy involving multiple racially motivated assaults, culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011.  Montgomery was sentenced to 234 months; Gaskamp was sentenced to 48 months; and Dominick was sentenced to 48 months.

Montgomery had previously pleaded guilty to one count of conspiracy and one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act for his role in the death-resulting assault of Anderson, 47, of Jackson, Mississippi.  Gaskamp previously pleaded guilty to one count of conspiracy and one count of violating the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act for his role in the conspiracy and in a violent assault of an unidentified African-American man near a golf course in the spring of 2011.  Dominick pleaded guilty to one count of conspiracy for his role.  A restitution hearing will be set for a later date.

“The Justice Department will always fight to hold accountable those who commit racially motivated assaults,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We hope that the prosecution of those responsible for this horrific crime will help provide some closure to the victim’s family and to the larger community affected by this heinous crime.”

“Violence fueled by hate spreads fear and intimidation throughout our community,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.  “The prison sentences today make clear that our community will not tolerate hate, and individuals who commit such despicable crimes will be brought to justice.”  

“The guilty pleas and resulting sentences handed down today are the result of the tremendous efforts by men and women in law enforcement who worked on this case,” said Special Agent in Charge Donald Alway of the FBI in Mississippi.  “The FBI takes very seriously its responsibility to protect the civil rights of all Americans, and remains committed to its pursuit of justice for anyone who is deprived of those rights." 

In prior court hearings, the defendants had admitted that beginning in the spring of 2011, they and others conspired with one another to harass and assault African Americans in and around Jackson.  On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African Americans.  They would specifically target African Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault.  The co-conspirators would often boast about these racially motivated assaults.

Montgomery admitted his presence and participation in numerous racially motivated assaults, including the beating and killing of James Craig Anderson.  Specifically, Montgomery admitted that in the early morning hours of June 26, 2011, he and six other co-conspirators agreed to carry out their plan to find, harass and assault African Americans.  At around 4:15 a.m., Montgomery and three co-conspirators drove to west Jackson in Montgomery’s white Jeep with the understanding that the other three co-conspirators would join them a short time later.  Montgomery and the three other occupants of the Jeep then drove around west Jackson and threw beer bottles from the moving vehicle at African-American pedestrians they encountered.

At approximately 5:00 a.m., Montgomery and the three other two occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue.  The occupants of the Jeep decided that Anderson would be a good target for an assault because he was African-American and appeared to be intoxicated.  Two of the co-conspirators got out of the Jeep to distract Anderson while they waited for the other three co-conspirators to arrive.  After the other three co-conspirators arrived in a Ford F250 truck, two of the co-conspirators physically assaulted Anderson.  After the assault, Montgomery and three co-conspirators left the motel parking lot in the Jeep.  The driver of the Ford F250 then deliberately used his truck to run over Anderson, causing injuries which resulted in Anderson’s death.  After Anderson’s death, a number of the co-conspirators including Montgomery agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.

Gaskamp admitted to participating in an assault-filled evening during which he and five co-conspirators drove to Jackson armed with Gaskamp’s handgun, struck multiple victims with large glass beer bottles hurled from the moving vehicle.  Gaskamp further admitted that they located a homeless African-American man near a golf course and that he and two of his co-defendants punched and kicked the man until he begged for his life.  Dominick admitted to participating in different assault-filled evening during which he and four co-conspirators also struck multiple victims with large glass beer bottles thrown from their moving vehicle, and to shooting multiple victims with metal ball bearings fired from a slingshot. 

Three other defendants in related cases, Deryl Paul Dedmon, 22, John Aaron Rice, 22, and Dylan Wade Butler, 23, all of Brandon, Mississippi, were previously sentenced to 600 months, 220 months, and 78 months, respectively for their roles in the conspiracy.  Four other defendants involved in related cases,  Sarah Adelia Graves, 21, of Crystal Springs, Mississippi, Shelby Brooke Richards, 21, of Pearl, Mississippi, John Louis Blalack, 20, and Robert Henry Rice, 24, both of Brandon, Mississippi, are awaiting sentencing.

This case was the result of a cooperative effort among the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County, Mississippi, District Attorney’s Office.  This case was investigated by the Jackson Division of the FBI and the Jackson Police Department.  It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Justice Department’s Civil Rights Division, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.

MetLife Home Loans LLC has agreed to pay the United States $123.5 million to resolve allegations that MetLife Bank N.A. (MetLife Bank) violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. 

MetLife Bank was a banking services company headquartered in Bridgewater, New Jersey.  In June 2013, MetLife Bank merged into MetLife Home Loans LLC, a mortgage finance company headquartered in Irving, Texas.  MetLife Bank was, and MetLife Home Loans LLC is, a wholly owned subsidiary of MetLife Inc., a holding company headquartered in New York City.

“MetLife Bank’s improper FHA lending practices not only wasted taxpayer funds, but also inflicted harm on homeowners and the housing market that lasts to this day,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “As this settlement shows, we will continue to hold accountable financial institutions that elected to ignore the rules and to pursue their own financial interests at the expense of hardworking Americans.” 

“MetLife Bank took advantage of the FHA insurance program by knowingly turning a blind eye to mortgage loans that did not meet basic underwriting requirements, and stuck the FHA and taxpayers with the bill when those mortgages defaulted,” said U.S. Attorney John Walsh of the District of Colorado.  “This settlement is part of our systematic, national effort to hold lenders accountable for irresponsible lending practices that not only harmed FHA, but also contributed to a catastrophic wave of home foreclosures across the country.”

During the time period covered by the settlement, MetLife Bank participated as a Direct Endorsement Lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and certify mortgages for FHA insurance.  If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to the FHA for the losses resulting from the defaulted loan.  Because the FHA does not review the underwriting of a loan before it is endorsed for FHA insurance, the FHA depends on a DEL to follow program rules to ensure that only eligible loans are submitted for FHA insurance. 

As part of the settlement, MetLife Home Loans LLC admitted to the following facts: From September 2008 through March 2012, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements.  MetLife Bank was aware that a substantial percentage of these loans were not eligible for FHA mortgage insurance due to its own internal quality control findings.  According to these findings, between January 2009 and August 2010, the portion of MetLife Bank loans containing the most serious category of deficiencies, which MetLife Bank called “material/significant,” ranged from 25 percent to more than 60 percent.  These quality control findings were routinely shared with MetLife Bank’s senior managers, including the chief executive officer and board of directors.  While the overall “significant” error rate identified by MetLife Bank decreased in 2010 and 2011, during the same time period, MetLife Bank more frequently downgraded FHA loans from “significant” to “moderate.”  In one instance, a quality control employee wrote in an email discussing MetLife Bank’s practice of downgrading its quality control findings: “Why say Significant when it feels so Good to say MODERATE.”  Overall, between January 2009 and December 2011, MetLife Bank identified 1,097 FHA mortgage loans underwritten by MetLife Bank with a “significant” finding, but despite an obligation to self-report findings of material violations of FHA requirements, MetLife Bank only self-reported 321 mortgages to HUD.  MetLife Bank’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans. 

“The settlement announced today is the culmination of two years of work by HUD OIG and our continued efforts to identify and properly respond to instances of fraud against HUD’s mortgage insurance program,” said Inspector General David Montoya of HUD.

“We appreciate that MetLife Bank has accepted responsibility for its actions and is settling with the government,” said General Counsel Helen Kanovsky of HUD.  “We want to thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us make this settlement a reality.  This settlement with MetLife Bank underscores our consistent message that HUD takes compliance with its requirements seriously.”

The settlement was the result of a joint investigation conducted by HUD, HUD OIG, the Civil Division and the U.S. Attorney’s Office for the District of Colorado.

The Justice Department today announced that it has reached a consent decree with the town of Davie, Florida, to resolve allegations that the Davie Fire Department discriminated against firefighter/paramedic Lori Davis because of her pregnancy and retaliated against firefighter/paramedic Monica Santana because she complained about gender discrimination.  Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, sex, national origin and religion.  

According to the Justice Department, the consent decree resolves allegations of disparate treatment based on pregnancy that resulted from light duty policies implemented by the Davie Fire Department.  In 2012, the Department of Justice challenged those discriminatory light duty policies in a related pattern or a practice Title VII case resulting in the filing of a complaint and consent decree to resolve the case.  The consent decree entered by the U.S. District Court for the Southern District of Florida required that the fire department abandon its existing discriminatory light duty policies and adopt new, non-discriminatory policies.  This new complaint is the result of individual charges of discrimination referred to the Justice Department by the Equal Employment Opportunity Commission.   

As alleged by the Justice Department in this complaint, Davis worked for the Davie Fire Department under its prior policies and was adversely affected by those policies which were implemented in violation of Title VII.  Under Title VII, discrimination based on sex includes discrimination due to pregnancy, and requires that women affected by pregnancy be treated the same as other employees who are similar in their ability or inability to work.  Under federal law, an employer may not retaliate against employees because they complain about discrimination based on sex.

As alleged in the complaint, Davis’s doctor wanted Davis on light duty during her pregnancy.  The fire department’s policy, however, would not allow her light duty during her first trimester.  Davis continued to work and eventually was required to fight a fire while pregnant.  She suffered a miscarriage after doing so.  The complaint also alleges that Santana complained about other policies and practices at the fire department that she reasonably believed discriminated against female firefighters.  After she complained about the discriminatory treatment, the fire department responded to her complaints by taking adverse actions against her designed to discourage similar complaints.                       

The consent decree, filed simultaneously with the complaint in U.S. District Court for the Southern District of Florida must still be approved by the federal court.  Under the terms of the agreement, the fire department must review and adopt appropriate anti-retaliation policies to protect its employees from further violations of Title VII and conduct training of its personnel to ensure that they properly handle future complaints under Title VII.  The fire department must also pay monetary awards to compensate Davis, Santana, and two other similarly-situated, pregnant firefighters.  The total monetary awards to all four women will exceed $400,000.  

“Every day, expectant mothers after consulting with their doctors make difficult decisions about how and, more importantly, when to restrict their work duties due to pregnancy,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Civil Rights Division is firmly committed to vigorous enforcement of Title VII’s prohibitions against pregnancy discrimination and retaliation so that women can make decisions regarding their pregnancies and try to remedy discriminatory treatment without fear of unwarranted repercussions in the work place after doing so.”

“Firefighters are dedicated public servants who put their lives at risk every day to protect the citizens of our community,” said U.S. Attorney Wilfredo A. Ferrer of the Southern District of Florida.  “We are committed to enforcing the federal laws that protect expectant mothers against discrimination so that they will not be forced to choose between their job and their decision to have a family.”

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

Santander Consumer USA Inc. has agreed to pay at least $9.35 million to resolve a lawsuit by the Department of Justice alleging that the motor vehicle lender violated the Servicemembers Civil Relief Act (SCRA), the Justice Department announced today.  The complaint and the settlement, which is subject to court approval, were filed today in the U.S. District Court for the Northern District of Texas.

The settlement covers the improper repossessions of 1,112 motor vehicles between January 2008 and February 2013.  The proposed consent order represents the largest settlement for illegal automobile repossessions ever obtained by the United States under the SCRA.

“This is a just resolution that will provide service members with financial relief and help repair their bad credit caused by Santander’s improper repossessions and fee collections with respect to more than 1,100 cars,” said Acting Associate Attorney General Stuart Delery.  “The Department of Justice will continue devoting time and resources to protect our service members and their families from such unjust actions and hold bad actors accountable."

“Those who answer this nation’s call to duty understandably have much on their minds while they are in military service,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Whether their car will be seized and sold at auction should not be an additional worry.  We will continue to vigorously pursue lenders who fail to take the simple steps necessary to determine, before repossessing a car, whether it is owned by a service member.”

The SCRA protects service members against certain civil proceedings that could affect their legal rights while they are in military service.  It requires a court to review and approve any repossession if the service member took out the loan, and made a payment, before entering military service.  The court may delay the repossession or require the lender to refund prior payments before repossessing.  The court may also appoint an attorney to represent the service member, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the service member.  By failing to obtain court orders before repossessing motor vehicles owned by protected service members, Santander prevented service members from obtaining a court’s review of whether their repossessions should be delayed or adjusted in light of their military service.

The lawsuit alleges that Santander initiated and completed 760 repossessions, without court orders, of motor vehicles owned by SCRA-protected service members.  The agreement requires Santander to pay $10,000 plus compensation for any lost equity (with interest) to each of these service members.  The lawsuit also alleges that Santander sought to collect fees arising from an additional 352 repossessions that unrelated motor vehicle lenders had conducted in violation of the SCRA before Santander acquired the loans.  The agreement requires Santander to pay $5,000 to each of these service members.  Santander also must repair the credit of all affected service members.

“The SCRA is an important protection for the men and women serving our country in the armed forces, and this settlement not only will rectify the past improper repossessions of service members’ vehicles, but will work to prevent such improper repossessions in the future,” said Acting U.S. Attorney John Parker of the Northern District of Texas.

For future repossessions, the settlement requires Santander to check the Defense Department’s automated database to see if a car’s owner is in military service prior to conducting a repossession.

The Department of Justice first learned of Santander’s repossession practices through a referral from the U.S. Army’s Legal Assistance Program.  The referral involved a claim that Santander illegally repossessed the car of a service member, U.S. Army Specialist Joshua Davis, in the middle of the night, after having been informed that he was at basic training.  The department also opened its investigation after learning that Santander used an arbitration clause included in its loan documents to prevent a second service member from pursuing systematic relief through a class action lawsuit he filed alleging that Santander had repossessed service members’ vehicles in violation of the SCRA.

As part of its investigation, the United States has already identified Santander’s illegal repossessions, and efforts to collect unlawful repossession fees, occurring between January 2008 and February 2013.  Service members identified based on that investigation will be contacted by an independent settlement administrator later this year.  The settlement also requires Santander to conduct a review and provide compensation for any additional unlawful repossessions that may have occurred since February 2013.  All service members who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the Department of Justice.

The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 37 lending matters under the Fair Housing Act, the Equal Credit Opportunity Act, and the Servicemembers Civil Relief Act.  The settlements in these matters provide for over $1.2 billion in monetary relief for impacted communities and individual borrowers.  The Attorney General’s annual reports to Congress on ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.

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

The Civil Rights Division is the component within the Department of Justice authorized to enforce the SCRA.  This federal law provides protections for active duty service members in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments.  For more information about SCRA enforcement by the Justice Department, please visit www.servicemembers.gov or call 1-800-896-7743, Mailbox 91.

The former mayor of the municipality of Río Grande, Puerto Rico, was sentenced today to 64 months in prison and ordered to forfeit $39,000 for soliciting and receiving cash bribes from a contractor who sought construction inspection contracts with the municipality.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.  U.S. District Judge Carmen C. Cerezo of the District of Puerto Rico imposed the sentence.

Eduard Rivera-Correa, 61, pleaded guilty on Oct. 24, 2014, to one count of bribery.  According to the plea agreement and statement of facts, while mayor of Río Grande in early 2010, Rivera-Correa requested that a contractor make regular kickback payments in exchange for the award of three construction inspection contracts worth a total of $329,000.  After the contracts were awarded and while payments were being disbursed by the municipality, the contractor delivered envelopes containing approximately $39,000 in cash to Rivera-Correa’s office and placed them in his drawer. 

In his plea agreement, Rivera-Correa also admitted to obstructing justice by threatening the contractor who paid the bribes.  On or about April 16, 2012, in a recorded conversation, Rivera-Correa threatened the contractor in an effort to intimidate him and dissuade him from cooperating with law enforcement. 

This case was investigated by the FBI and prosecuted by Trial Attorney Charles R. Walsh of the Criminal Division’s Public Integrity Section and Criminal Chief Jose Ruíz of the District of Puerto Rico.  The Puerto Rico Office of Government Ethics provided assistance in the investigation.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Deirdre M. Daly for the District of Connecticut announced that Mozaffar Khazaee, 60, formerly of Manchester, Connecticut, pleaded guilty today before U.S. District Judge Vanessa L. Bryant in Hartford to violating the Arms Export Control Act, in connection with his efforts to send to Iran sensitive, proprietary, trade secret and export controlled material relating to military jet engines for the U.S. Air Force’s F35 Joint Strike Fighter program and the F-22 Raptor program, which he had stolen from defense contractors where he had previously been employed. 

“While employed with U.S. defense contractors, Mozaffar Khazaee stole sensitive, proprietary and controlled technology to send it to Iran,” said U.S. Attorney Daly.  “The illegal export of our military technology compromises U.S. national security and reduces the advantages our armed forces currently possess.   As today’s case demonstrates, we will aggressively investigate and hold accountable those who attempt to steal trade secrets and sensitive military technology from U.S. industries, whether for their own personal gain or for the benefit of foreign actors.”

“Today’s guilty plea demonstrates the ongoing cooperation with our federal law enforcement partners to prevent U.S. technology from falling into the wrong hands,” said Special Agent in Charge Bruce Foucart of HSI Boston.  “Across the globe, the magnitude and scope of threats facing the United States has never been greater, and that's why one of Homeland Security Investigations highest priorities is to prevent illicit procurement networks, terrorist groups and hostile nations from illegally obtaining U.S. military products and sensitive dual-use technologies.  Homeland Security Investigations takes pride in protecting our country, and today’s guilty plea is the latest example of our effective investigative efforts.”

“This joint investigation has emphasized the need for American companies to remain vigilant against the theft of valuable and sensitive technologies,” said Special Agent in Charge Patricia M. Ferrick of the FBI’s New Haven Division.  “As our nation continues to lead the way in research and development, we are constantly reminded that there are those who seek to advance their own causes by stealing the hard work of others, and we owe it to ourselves and to the American public to guard against it. The FBI vigorously investigates these matters in cooperation with our law enforcement partners, both domestic and abroad.”

“This investigation demonstrates the dedication of the Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service and our federal and military partners to ensure that critical technology is not exploited by criminals acting on behalf of governments hostile to the U.S.,” said Special Agent in Charge Craig W. Rupert of the Defense Criminal Investigative Service’s Northeast Field Office.  “Foreign governments continue to actively seek U.S. military technology in an effort to advance their own military development.  Today’s plea represents our continuing efforts to safeguard sensitive technology and to shield America’s investment in national defense by thwarting those who try to illegally acquire our national security assets.”

According to court documents and statements made in court, at different times between 2001 and 2013, Khazaee was employed by three separate defense contractors.  From at least 2009 through and including late 2013, Khazaee attempted to use trade secret, proprietary and export controlled material that he had obtained from his employers to gain employment in Iran. 

In November and December 2009, Khazaee corresponded by email with an individual in Iran to whom he attempted to send, and in some cases did send, documents containing trade secret, proprietary and export controlled material relating to the Joint Strike Fighter Program.  In one email Khazaee wrote “some of these are very controlled . . . and I am taking [a] big risk.  Again please after downloading these two Power Point files delete everything immediately.” 

Analysis of Khazaee’s computer media revealed not only additional documents containing proprietary, trade secret and export controlled material belonging to the U.S. defense contractors at which he had been employed, but also cover letters and application documents, dating from in or about 2009 through in or about 2013, in which Khazaee sought employment with multiple state-controlled technical universities in Iran.  In multiple letters Khazaee described the knowledge and skills he had obtained while working for the U.S. defense contractors and wrote:  “[a]s lead engineer in these projects I have learned some of the key technique[s] that could be transferred to our own industry and universities.”  Khazaee stated that he was “looking for an opportunity to work in Iran, and . . . transferring my skill and knowledge to my nation.” 

In or about November 2013, while residing in Connecticut, Khazaee caused a shipment to be sent by truck from Connecticut to a freight forwarder located in Long Beach, California, which was intended for shipment to Iran.  The shipment included numerous boxes and digital media containing thousands of documents consisting of sensitive technical manuals, specification sheets, technical drawings and data, and other proprietary material relating to military jet engines and the United States Air Force’s F35 Joint Strike Fighter (JSF) program and the F-22 Raptor.  Many documents were labeled as “Export-Controlled,” as well as stamped with “ITAR-controlled” warnings.  Khazaee did not apply for nor did he obtain any export license or written authorization to export any of the documents, and the export or attempted export of such material to Iran is illegal. 

On Jan. 9, 2014, Khazaee was arrested at the Newark Liberty International Airport before boarding a flight with a final destination of Iran.  Search warrants executed on Khazaee’s checked and carry-on luggage revealed additional sensitive, proprietary, trade secret and export controlled documents relating to military jet engines, in both hard copy and in electronic form on Khazaee’s computer media.  Khazaee has been detained since that time.

Judge Bryan scheduled sentencing proceedings for May 20, 2015, at which time Khazaee faces up to 20 years in prison and a $1,000,000 fine. 

This investigation is being led by the United States Department of Homeland Security’s Homeland Security Investigations in New Haven, in coordination with the New Haven Division of the Federal Bureau of Investigation, the Defense Criminal Investigative Service in New Haven and the Department of Commerce’s Boston Office of Export Enforcement. 

Assistant Attorney General Carlin joins U.S. Attorney Daly in commending the efforts of the many other agencies and offices that were involved in this investigation, including U.S. Attorney’s Offices for the Central District of California, the Southern District of Indiana and the District of New Jersey, Homeland Security Investigations in Los Angeles, the U.S. Customs and Border Protection Service in Los Angeles, the U.S. Air Force’s Office of Special Investigations in Los Angeles and Boston,  as well as HSI, CBP, and FBI in New Jersey, and HSI, FBI and DCIS in Indianapolis.

This case is being prosecuted by Assistant U.S. Attorneys Stephen Reynolds and Krishna Patel of the National Security and Major Crimes Unit of the District of Connecticut, and Trial Attorney Brian Fleming of the Justice Department’s National Security Division.

A federal jury in Detroit today convicted a patient recruiter and a physical therapist for their roles in a $1.6 million Medicare fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office.

Reginald Smith, 54, of Flint, Michigan, a patient recruiter, was found guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to solicit and receive health care kickbacks.  Rajan Patel, 30, of Clinton Township, Michigan, a physical therapist, was found guilty of one count of conspiracy to commit health care fraud, three counts of health care fraud, and three counts of making false statements relating to health care matters.  Sentencing hearings are scheduled for April 16, 2015, and April 15, 2015, respectively, before U.S. District Judge Arthur J. Tarnow of the Eastern District of Michigan.

According to evidence presented at trial, Smith worked as a patient recruiter for Angle’s Touch Home Health Care LLC (Angle’s Touch) in 2011 and 2012.  In that role, he solicited patients for foot care services at adult foster care homes.  Smith then referred the patients to Angle’s Touch for medically unnecessary home health care services in exchange for kickbacks.  The kickbacks were disguised as payments to Smith’s nonprofit Medicare provider, People Helping People of Detroit. 

Patel worked as a physical therapist at Angle’s Touch.  According to the evidence presented at trial, Patel and others recruited patients from an adult daycare center in Flint, Michigan.  Patel then fabricated patient medical records to make it appear that the recruited patients qualified for and received the home health care services, when they did not.    

Evidence presented at trial showed that Medicare paid Angle’s Touch over $1.6 million in the course of the conspiracy.

Four other individuals charged in this case pleaded guilty to conspiracy to commit health care fraud in connection with their roles in the fraud scheme.

The investigation was led by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of Michigan.  This case was prosecuted by Trial Attorneys Niall M. O’Donnell, Aisling O’Shea and Allan Medina of the Fraud Section.    

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

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

A federal grand jury has returned a superseding indictment against two brothers late yesterday, adding conspiracy to commit wire fraud, mail fraud, aggravated identity theft and money laundering charges arising from a scheme in which they filed 30 fraudulent tax returns seeking refunds of more than $204 million, announced U.S. Attorney Rod J. Rosenstein of the District of Maryland, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C., Field Office. 

“As millions of U.S. taxpayers prepare to honestly file their returns, the Tax Division, working with its law enforcement partners, remains committed to prosecuting those individuals who seek to abuse and manipulate our nation’s tax system for personal gain,” said Principal Deputy Assistant Attorney General Ciraolo.

“The IRS allegedly sent $16 million to two criminals who filed bogus tax returns claiming ‘refunds’ that were not owed,” said U.S. Attorney Rosenstein.  “Federal agents and prosecutors have a duty to pursue perpetrators of such fraud schemes and try to recover money stolen from the United States Treasury.”

“The American tax system is designed to fund vital government services to people in this country,” said Special Agent in Charge Kelly.  “It is not a slush fund for thieves and fraudsters.  Those who illegally target our nation’s tax dollars for personal financial gain could face criminal prosecution and lengthy prison sentences."

The six-count superseding indictment alleges that Sean Aude Gallman, 38, of Upper Marlboro, Maryland, and Eric Maurice Gallman, 41, of Huntersville, North Carolina, established trusts and business entities, and used mailboxes at numerous private commercial postal carrier stores in Maryland and North Carolina as the addresses for the trusts and business entities.  The defendants, acting as trustees and agents, mailed fraudulent tax returns to the IRS in the names of the trusts and businesses requesting refunds.

The indictment alleges that in January 2013, Sean Gallman mailed to the IRS a fraudulent 2012 tax return in the name of the Gallman Charitable Trust, requesting a refund of $8,218,930.  Also around this time, the defendants mailed to the IRS a fraudulent 2012 tax return in the name of LEA Group Holdings Trust, requesting a refund of $8,293,562.  The defendants knew that the trusts were not entitled to the tax refunds.  After receiving refund checks in these amounts, on Feb. 15 and March 11, 2013, the defendants deposited the two refunds in bank accounts they controlled.  To hide their receipt of these refunds, the defendants used cashier’s checks and other financial instruments to transfer a portion of the money to third parties and other bank accounts.

The indictment further alleges that from January 2013 to March 23, 2014, Sean Gallman filed an additional 19 fraudulent tax returns for 2012 or 2013, in the name of numerous purported trusts and business entities, seeking $200,924,949 in refunds.  On March 16, 2014, Eric Gallman filed a fraudulent tax return for 2013 in the name of a business entity, seeking a refund of $275,548.  And from February 2013 to March 2014, the defendants together filed eight fraudulent tax returns for 2012 or 2013 in the name of purported trusts and business entities, seeking $42,091,389 in refunds. 

Altogether, the defendants are alleged to have filed a total of 30 fraudulent tax returns seeking refunds totaling $204,971,904, for which the IRS paid two refunds totaling $16,512,492.

The indictment seeks forfeiture of the two refunds paid by the IRS; $11,529,954 seized from numerous bank accounts; foreign currency and gold and silver coins seized from a residence in Upper Marlboro; nine residential properties located in Upper Marlboro and Laurel, Maryland, North Carolina and South Carolina; and two Mercedes-Benz vehicles and one Hyundai vehicle.

The defendants each face a statutory maximum sentence of 20 years in prison for each count of conspiring to commit mail and wire fraud, conspiring to commit money laundering, and mail fraud.  Sean Gallman also faces a statutory maximum sentence of 20 years in prison for an additional count for mail fraud and for money laundering, and a statutory mandatory minimum sentence of two years in prison consecutive to any other sentence imposed for aggravated identity theft.

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

U.S. Attorney Rosenstein praised the Tax Division and IRS-Criminal Investigation for its work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorney Thomas P. Windom and Trial Attorney Erin Pulice of the Department of Justice Tax Division, who are prosecuting the case.

The Justice Department, in partnership with the U.S. Department of State’s Transnational Organized Crime (TOC) Rewards Program, announced today a reward of up to $3 million for information leading to the arrest and/or conviction of a prolific cyber criminal.  Evgeniy Mikhailovich Bogachev was charged with numerous violations for his role as an administrator of the GameOver Zeus botnet.

The software was used to capture bank account numbers, passwords, personal identification numbers and other information necessary to log into online banking accounts.  It is believed GameOver Zeus is responsible for more than 1 million computer infections, resulting in financial losses of more than $100 million.

Bogachev is on the FBI’s Cyber’s Most Wanted and is believed to be at large in Russia.

The TOC reward offer reaffirms the commitment of the U.S. government to bring those who participate in organized crime to justice, whether they hide online or overseas. 

Bogachev was charged in 2014 in Pittsburgh, Pennsylvania, with conspiracy, computer hacking, wire fraud, bank fraud, and money laundering in connection with his alleged role as an administrator of the GameOver Zeus botnet. Bogachev was also indicted by criminal complaint in Omaha, Nebraska, in 2012 and charged with conspiracy to commit bank fraud related to his alleged involvement in the operation of a prior variant of Zeus malware known as Jabber Zeus.

Anyone with information on Bogachev should contact the FBI via the Major Case Contact Center, 1-800-CALL-FBI (225-5324), or the nearest U.S. Embassy or Consulate.  You may also submit a tip online via tips.fbi.gov.  All information will be kept strictly confidential.

A Los Angeles-area executive was arrested today in connection with a $9 million scheme to defraud United Commercial Bank and East West Bank, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP), Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s (IRS-CI) Los Angeles Field Office.

Chung Yu “Louis” Yeung, 37, of San Dimas, California, was indicted on Oct. 22, 2014, in the Central District of California for one count of conspiracy to commit bank fraud and five counts of bank fraud.  The indictment was under seal until his arrest today.  Guo Xiang “David” Fan, 52, was also indicted for conspiracy to commit bank fraud and bank fraud, as well as money laundering, and remains at large.   

According to the indictment, Yeung was Vice President and Fan was President of Eastern Tools and Equipment, an Ontario, California company that sold portable generators and other equipment.  The indictment charges Yeung and Fan with defrauding United Commercial Bank (UCB) and East West Bank, which took over UCB’s accounts, of more than $9 million. 

Specifically, the indictment alleges that Yeung, Fan, and others overstated Eastern Tools’ accounts receivable to increase its line of credit with UCB and later East West.  To support the inflated accounts receivable submitted to the banks, Yeung, Fan, and others allegedly opened approximately 20 shell companies, backstopped with fictitious business name statements, post office boxes, bank accounts, and telephone numbers.  They then allegedly moved money from Eastern Tools’ bank accounts into the shell companies’ bank accounts to create the false appearance of substantial commercial activity.  Finally, Yeung, Fan, and others allegedly siphoned those funds into their own personal accounts.

East West Bank allegedly sustained a loss of approximately $9,157,172 as a result of the fraud scheme.

In November 2008, UCBH Holdings, Inc., UCB’s parent company, received $298.7 million in federal taxpayer funds through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP).  On Nov. 6, 2009, UCB failed and was taken over by state and federal regulators.  As a result of the bank’s failure, none of the TARP funds were repaid, and the $298.7 million TARP investment has been written-off. 

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

The case is being investigated by SIGTARP, the FBI and IRS-CI, and prosecuted by Trial Attorney Fred Medick of the Criminal Division’s Fraud Section.

Yeung Indictment

A Miami man pleaded guilty today to health care fraud charges in connection with a $5 million scheme to defraud Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Field Office, Special Agent in Charge Mike Fields of HHS-OIG’s Dallas Field Office, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office, and Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office made the announcement.

Angel M. Mirabal, 62, of Miami, Florida, pleaded guilty to one count of conspiracy to commit wire fraud and health care fraud before U.S. District Judge Marcia G. Cooke of the Southern District of Florida.  A sentencing hearing is scheduled for May 6, 2015.

In connection with his guilty plea, Mirabal admitted that he was the owner, president and manager of Quick Solutions Medical Supplies Inc. (Quick Solutions), a durable medical equipment (DME) supply company located in Houston, Texas.  Mirabel further admitted that from April 2010 through July 2013, he and his co-conspirators operated Quick Solutions for the purpose of billing the Medicare program for, among other things, expensive DME that was medically unnecessary and in many instances not provided to the Medicare beneficiaries.  Indeed, many of the beneficiaries who purportedly received the DME resided hundreds of miles away in Miami.

From June 2011 through February 2012, Quick Solutions submitted approximately $5 million in fraudulent claims, and Medicare paid approximately $587,900 for these claims.

This case was investigated by the FBI, HHS-OIG and Texas Attorney General’s Medicaid Fraud Control Unit, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Southern District of Florida.  This case is being prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.

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

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

A former senior vice president of Bank of America (BOA) in Las Vegas pleaded guilty today to misapplication of bank funds in a scheme that led to over $6.4 million in losses to BOA on two business-related loans.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Office and Special Inspector General Christy L. Romero of the Troubled Asset Relief Program made the announcement.

Justin T. Brough, 39, of North Las Vegas, Nevada, pleaded guilty to one count of misapplication of bank funds before U.S. District Judge Andrew P. Gordon of the District of Nevada.  A sentencing hearing is scheduled for May 28, 2015.

According to his plea documents, Brough was a senior vice president at BOA in Las Vegas, serving as a business banking market executive.  Brough provided financial services to high-net-worth clients.

Brough admitted to misapplying bank funds in connection with two business loans: a $6.3 million short-term construction loan, and a $600,000 line of credit in connection with the acquisition of a business.  Brough admitted that neither borrower qualified for the loans, because they did not meet the bank’s underwriting requirements.  Brough further admitted that he falsified documents in order to help both borrowers get the loans, including forging signatures on loan papers.

According to Brough’s admissions, when the borrowers had difficulty making payments on the loans, Brough misused the bank’s general ledger fund to make a total of $436,676 in payments on the loans for the borrowers.  Brough admitted that he disguised those payments, among other ways, as “goodwill,” “miscellaneous adjustments” and refunds of various fees.  He also admitted that he kept each of the individual payments under $10,000 so he would not need additional approval within BOA.

Both borrowers ultimately defaulted on the loans.  According to Brough’s plea agreement, the aggregate loss to BOA was $6,468,767: $5,291,000 on the first loan, and $1,177,167 on the second loan.

BOA received a total of $45 billion in taxpayer funds from the Troubled Asset Relief Program (TARP) of the U.S. Department of the Treasury, which BOA repaid in full in December 2009.

The case was investigated by the FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  This case is being prosecuted by Senior Trial Attorney Nicholas Acker of the Criminal Division’s Fraud Section.

The Justice Department announced today that the independent federal investigation found insufficient evidence to pursue federal criminal civil rights charges against George Zimmerman for the fatal shooting of Trayvon Martin on Feb. 26, 2012, in Sanford, Florida.  Prosecutors from the Justice Department’s Civil Rights Division, officials from the FBI, and the Justice Department’s Community Relations Service met today with Martin’s family and their representatives to inform them of the findings of the investigation and the decision.

“The death of Trayvon Martin was a devastating tragedy.  It shook an entire community, drew the attention of millions across the nation, and sparked a painful but necessary dialogue throughout the country,” said Attorney General Eric Holder.  “Though a comprehensive investigation found that the high standard for a federal hate crime prosecution cannot be met under the circumstances here, this young man’s premature death necessitates that we continue the dialogue and be unafraid of confronting the issues and tensions his passing brought to the surface.  We, as a nation, must take concrete steps to ensure that such incidents do not occur in the future.”

Following the shooting, a team of some of the department’s most experienced civil rights prosecutors and FBI agents conducted a comprehensive, independent investigation of the events of Feb. 26, 2012.  The federal investigation was opened and conducted separately from the state of Florida’s investigation of the shooting under local laws.  Once the state initiated the second-degree murder prosecution, federal investigators began monitoring the state’s case and halted active investigation in order not to interfere with the state’s trial.  Federal investigators provided reports of interviews and other evidence they obtained to the state’s prosecution team. 

Shortly after Zimmerman’s acquittal in state court on July 13, 2013, federal investigators resumed active investigation.  Federal investigators reviewed all of the material and evidence generated by the state of Florida in connection with its investigation and prosecution of Zimmerman, including witness statements, crime scene evidence, cell phone data, ballistics reports, reconstruction analysis, medical and autopsy reports, depositions, and the trial record.  Federal investigators also independently conducted 75 witness interviews and obtained and reviewed the contents of relevant electronic devices.  The investigation included an examination of police reports and additional evidence that was generated related to encounters Zimmerman has had with law enforcement in Florida since the state trial acquittal.  In addition, federal authorities retained an independent biomechanical expert who assessed Zimmerman’s descriptions of the struggle and the shooting.                         

The federal investigation sought to determine whether the evidence of the events that led to Martin’s death were sufficient to prove beyond a reasonable doubt that Zimmerman’s actions violated the federal criminal civil rights statutes, specifically Section 3631 of Title 42 of the U.S. Code or Section 249 of Title 18 of the U.S. Code, as well as other relevant federal criminal statutes.  Section 3631 criminalizes willfully using force or threat of force to interfere with a person’s federally protected housing rights on account of that person’s race or color.  Section 249 criminalizes willfully causing bodily injury to a person because of that person’s actual or perceived race.  Courts define “willfully” to require proof that a defendant knew his acts were unlawful, and committed those acts in open defiance of the law.  It is one of the highest standards of intent imposed by law.

The federal investigation examined whether Zimmerman violated civil rights statutes at any point during his interaction with Martin, from their initial encounter through the fatal shooting.  This included investigating whether there is evidence beyond a reasonable doubt that Zimmerman violated Section 3631 by approaching Martin in a threatening manner before the fatal shooting because of Martin’s race and because he was using the residential neighborhood.  Investigators also looked at whether there is evidence beyond a reasonable doubt that Zimmerman violated Section 3631 or Section 249, by using force against Martin either during their struggle or when shooting Martin, because of Martin’s race.     

“Although the department has determined that this matter cannot be prosecuted federally, it is important to remember that this incident resulted in the tragic loss of a teenager’s life,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Our decision not to pursue federal charges does not condone the shooting that resulted in the death of Trayvon Martin and is based solely on the high legal standard applicable to these cases.”

After a thorough and independent investigation into the facts surrounding the shooting, federal investigators determined that there is insufficient evidence to prove beyond a reasonable doubt a violation of these statutes.  Accordingly, the investigation into this incident has been closed.  This decision is limited strictly to the department’s inability to meet the high legal standard required to prosecute the case under the federal civil rights statutes; it does not reflect an assessment of any other aspect of the shooting. 

The Justice Department is committed to investigations of allegations of bias-motivated violence and will continue to devote the resources required to ensure that allegations of civil rights violations are fully and completely investigated.  The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.

On Feb. 20, a federal court permanently barred a Kahului, Hawaii, man from preparing federal tax returns for others, the Justice Department announced today.

The U.S. District Court for the District of Hawaii issued the injunction finding that James A. Ericson knowingly and repeatedly violated the Internal Revenue Code by preparing returns that understated his customers’ tax liabilities and by taking unreasonable positions in filing his customers’ returns.  The court found that an injunction permanently barring him from preparing federal tax returns for others was necessary to prevent further recurrence of Ericson’s practices.  The court’s order applies to Ericson and “all those in active concert or participation with him.”

The complaint alleged that Ericson prepared roughly more than 1,000 tax returns per year.  According to the complaint, Ericson improperly understated his customers’ federal tax liabilities by fabricating business schedules, expenses and business income for non-existent businesses; claiming false or inflated credits; and deducting personal expenses that were not legally deductible.  The suit also alleged that Ericson falsely claimed to some of his customers that he was a former Internal Revenue Service (IRS) employee.  In total, the government’s complaint alleged that the loss to the U.S. Treasury from Ericson’s activities may have exceeded $31 million for tax years 2007 through 2012.

The court’s order requires Ericson to produce to the government counsel a list of all persons for whom he has prepared federal tax returns or claims for a refund since Jan. 1, 2008, and to notify all such persons of the injunction entered against him.

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 website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Assistant Attorney General for National Security John P. Carlin, 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 two men with ties to the Inland Empire region of California were each sentenced today to 300 months in federal prison for participating in plots to provide material support to terrorists and to kill American personnel.

The two men sentenced today by U.S. District Judge Virginia A. Phillips are Sohiel Omar Kabir, 37, a naturalized U.S. citizen who was born in Afghanistan and who until late 2011, resided in Pomona, California; and Ralph Deleon, 26, of Ontario, a lawful permanent resident and citizen of the Philippines.

Last summer, Kabir and Deleon were convicted by a federal jury for their role in a plot to travel overseas to fight against U.S. and allied forces in Afghanistan and elsewhere.  Specifically, the jury convicted Kabir and Deleon of conspiring to provide material support to terrorists and conspiring to murder United States military and government personnel.  The jury also found Kabir guilty of conspiring to provide material support to a designated foreign terrorist organization, namely Al-Qa’ida, and conspiring to receive military-type training from Al-Qa’ida.  In addition, the jury convicted defendant Deleon of conspiring to murder, maim, or kindap overseas.          

Two other defendants who were indicted in the case in 2012 – Miguel Alejandro Santana Vidriales and Arifeen David Gojali – previously pleaded guilty and are scheduled to be sentenced by Judge Phillips on March 16, 2015.

“This case demonstrates the need for vigilance and swift action to counter the false allure of violent extremism,” said U.S. Attorney Yonekura.  “When confronted with young Americans who succumbed to the empty promises of violent extremism and sought to assist a terrorist group in killing American soldiers abroad, law enforcement acted swiftly to eliminate the threat.”

“The defendants betrayed the citizens of the United States by supporting terror and conspiring to murder military members serving overseas” said Assistant Director in Charge Bowdich.  “The lengthy prison sentences handed to Mr. Kabir and Mr. DeLeon should send a clear message to those who support terror groups that the FBI and our partners are committed to preventing deadly plots hatched either at home or abroad targeting the United States.”

The evidence presented during last year’s trial showed Kabir introduced Deleon and Santana to radical Islamic ideology in 2010.  Kabir left the United States in the final days of 2011, arriving in Afghanistan in July 2012.  While in Afghanistan, Kabir continued to communicate with Deleon and others, encouraging them to join him in Afghanistan. Kabir told the group that he had contacts with terrorist organizations and that, when they arrived, he and the group would join “the Students” – referring to the Taliban – and later “the Professors” – referring to Al-Qa’ida.

Deleon, Kabir, and others involved in the plot were heavily influenced by the doctrine of now-deceased Al-Qa’ida in the Arabian Peninsula spokesman Anwar Al-Awlaki and other advocates of violent jihad, whose teachings they frequently invoked during their planning and preparation in this case.

In September 2012, Deleon recruited Gojali to join the plot to travel overseas to engage in violent jihad.  As part of their planning and preparation, Deleon led Santana and Gojali in training activities in southern California, including participating in paintball activities and traveling to firearms ranges to fire AK-47s and other assault weapons, which they expected to use in future fighting.

The men made plans to rejoin Kabir, who had relocated to Kabul, Afghanistan.  In effort to avoid detection by law enforcement, Deleon and the others planned to cross the border into Mexico by land and from there to travel to the Middle East by air.  In November 2012, Deleon purchased airline tickets for the group.  On Nov. 16, 2012, the FBI arrested Deleon, Santana, and Gojali as they departed a Chino apartment in a car driven by one of Deleon’s associates intending to drive to Mexico.  Kabir was taken into custody by American military personnel in Afghanistan.

The investigation into this terrorism scheme was conducted by the Joint Terrorism Task Force (JTTF) in Riverside, California.  The Riverside JTTF is comprised of members from the following agencies: Riverside County Sheriff’s Office; Riverside Police Department; San Bernardino Sheriff’s Department; Beaumont Police Department; Ontario Police Department; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the U.S. Attorney’s Office; and the FBI.

The case was prosecuted by Assistant U.S. Attorneys Allen W. Chiu, Christopher D. Grigg and Susan J. DeWitt of the Central District of California, and Trial Attorneys Annamartine Salick and Josh Parecki of the Justice Department’s National Security Division.

Two South Florida medical doctors and their wives have agreed to settle allegations that they violated the False Claims Act when their wives accepted sham marketer salaries in exchange for their husbands’ referrals to a home health care company called A Plus Home Health Care Inc., the Justice Department announced today.  Under the settlements, Dr. Alan and Lynn Buhler will pay to the United States $1.047 million and Dr. Craig and Cynthia Prokos will pay $90,000.  Dr. Buhler practices in Plantation, Florida, and Dr. Prokos practices in Jupiter, Florida.

“Kickbacks can corrupt the judgment of physicians and cause them to make decisions for their own financial benefit rather than for the benefit of their patients,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “We will not tolerate these conflicts of interest where Medicare patients and dollars are concerned.”  

“The settlement announced today is another example of the Justice Department’s unrelenting efforts to hold accountable those who engage in kickback schemes,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “Health care providers should generate business by offering their patients superior care.  Financial relationships that put profits over patients undermine the quality and care given to patients and ultimately, the integrity of our public health care program upon which millions of Americans depend.”

The United States alleged that, beginning in 2006, A Plus and its owner, Tracy Nemerofsky, engaged in a scheme to increase Medicare referrals in the heavily saturated home health care market in South Florida.  Specifically, the United States alleged that A Plus paid spouses of referring physicians for sham marketing positions in order to induce patient referrals.  Among the spouses allegedly paid by A Plus as part of this scheme were Lynn Buhler and Cynthia Prokos.  The United States alleged that the spouses were required to perform few, if any, of the job duties they were allegedly hired for and instead, the spouses’ salaries were intended as an inducement for the husband physicians to refer their Medicare patients to A Plus.  The United States also alleged that Alan Buhler received medical director payments as part of A Plus’s scheme to obtain his referrals and he attempted to hide those payments from the United States. 

The United States previously settled with A Plus, Tracy Nemerofsky and five other couples that allegedly accepted payments from A Plus.

The settlements announced today resolve allegations that were brought by William Guthrie, a former director of development at A Plus, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims and to receive a share of any recovery.  On Jan. 6, Judge William P. Dimitrouleas dismissed Mr. Guthrie’s suit without prejudice to the United States’ right to proceed.  The lawsuit was captioned U.S. ex rel. Guthrie v. A Plus Home Health Care, Inc., 12 CV 60629 (S.D. Fla.). 

“Being a physician in the Medicare program is a privilege, not a right,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Physicians who engage in such in-your-face kickback schemes to refer Medicare patients to certain home health companies in exchange for money will be held accountable for their behavior.  Our agency will continue to crack down on kickbacks, which undermine impartial medical judgment, corrode the public’s trust in the health care system and waste scarce Medicare funding.”

These settlements illustrate the government’s emphasis on combating health care fraud and mark 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 $23.7 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 investigation of this matter reflects a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of Florida, HHS-OIG and the FBI. 

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

A North Carolina resident was arrested today for allegedly making a fraudulent claim on the fund set up to compensate victims of the 2010 Deepwater Horizon oil spill, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

Michael R. Rosella, 45, of Wilmington, North Carolina, was arrested in connection with an indictment returned last week and unsealed following his arrest.  The indictment by a grand jury in the District of Columbia charges Rosella with one count of mail fraud, three counts of wire fraud and two counts of money laundering.

According to allegations in the indictment, Rosella, who lived in the District of Columbia in 2010, submitted a claim for compensation in the amount of $2.3 million to the Gulf Coast Claims Facility (GCCF), the entity that formerly handled claims for persons and businesses injured by the Deepwater Horizon oil spill.  Rosella allegedly submitted the claim on behalf of a fictitious entity called the Bayou Barataria Sportsmen’s Resort, which Rosella allegedly represented to have been a successful hotel and sport fishing business in Louisiana immediately before the spill, and to have suffered lost profits due to the spill’s impact on the Gulf of Mexico.  The documents submitted by Rosella allegedly included false affidavits of the Resort’s “owners,” federal tax filings, state sales tax records, financial statements, and invoices.

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

The case is being investigated by the U.S. Secret Service and is being prosecuted by Trial Attorney Gary A. Winters of the Criminal Division’s Fraud Section.

Rosella Indictment

Attorney General Eric Holder released the following statement on the departure of U.S. Attorney Anne Tompkins:

“As United States Attorney for the Western District of North Carolina, Anne Tompkins has pursued the cause of justice with passion, with integrity, and with results,” said Attorney General Holder.  “In her outstanding work on matters involving health care and financial fraud, she helped safeguard the well-being of the American people and bring wrongdoers to justice.  Through her service on the Attorney General’s Advisory Committee, she proved herself to be an indispensable advisor on a range of vital issues.  And with her efforts to protect civil rights and combat human trafficking, she stood up for innumerable men, women, and children who are too frequently overlooked and too often underserved.  Over the course of her extraordinary career, Anne has never lost sight of the most vulnerable in her own community, and has spearheaded trailblazing projects to engage young people in the work of building a more just society, from anti-bullying efforts to leadership development.  Through her work at all levels, she has served as an inspiring example to public servants throughout the country – including me.  And while I will miss her distinguished leadership and wise counsel, I look forward to all that she will achieve in the next stage of her already remarkable career.”

Defendants Used Deception, Threats, Violence and Coercion to Compel Young Women into Prostitution in Orange County, California

Roshaun Nakia Porter, 39, was sentenced today by U.S. District Judge Josephine L. Staton to a sentence of 240 months in prison and 10 years of supervised release for his role in a sex trafficking conspiracy, announced the Civil Rights Division and the U.S. Attorney’s Office for the Central District of California.  Porter’s co-conspirator, Marquis Monte Horn, 40, was sentenced on Oct. 24, 2014, to serve 78 months in prison and five years of supervised release for his role in the conspiracy.  Two other defendants have entered guilty pleas in connection with the case.

The judge ordered Porter to pay $866,244.68 in restitution to 10 victims of the conspiracy.

On July 11, 2014, Porter and Horn each pleaded guilty to one count of conspiring to engage in sex trafficking by force, fraud and coercion.  According to documents filed in court and admissions in court in connection with Porter’s guilty plea, between 2010 and April 2012, Porter masterminded a scheme in which he exploited young women, including foreign nationals and U.S. citizens, in his prostitution operation in Orange County, California.  Using various deceptive means, including false online personal advertisements and fraudulent promises of legitimate employment, Porter reaped substantial illicit profit by luring his victims into personal relationships with him and, thereafter, compelling them to prostitute and provide him the proceeds from their commercial sex acts.  To compel the victims into compliance, Porter used physical violence, psychological abuse, threats to harm the victims’ family members and other coercive means.  In connection with his guilty plea, Horn admitted that between December 2010 and April 2012, he conspired to recruit and entice victims into Porter’s prostitution ring. 

“The Department of Justice is steadfast in its commitment to prosecuting those who seek to profit from enslaving and exploiting others.” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “We will continue our unrelenting work to end the scourge of human trafficking and obtain justice on behalf of victims of these heinous crimes.” 

“Porter masterminded a reprehensible sex trafficking enterprise that caused extreme trauma and lasting injury to victims,” said Acting U.S. Attorney Stephanie Yonekura of the Central District of California.  “Over the course of nearly two years, Porter victimized young women with flagrant lies, bogus romantic overtures and acts of violence as he forced them to give up their bodies for his profit.  This conduct is intolerable and warrants the lengthy sentenced issued today by the court.”

“The defendant recruited unsuspecting victims as sex slaves through fraudulent promises of wealth and a better life,” said Assistant Director in Charge David Bowdich of the FBI Los Angeles Office.  “He then held them hostage by imposing physical beatings and issuing death threats while he cashed in on their suffering.  The FBI is committed to protecting the civil rights of trafficking victims by identifying violent sexual offenders and pimps operating in our communities, and building federal cases to ensure they go to prison."

This matter was investigated by the FBI.  It is being prosecuted by Trial Attorney Daniel Weiss of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant U.S. Attorney Sandy Leal of the U.S. Attorney’s Office in the Central District of California.

After a four-month trial, a federal jury in the Eastern District of Michigan convicted six members of the Devils Diciples Motorcycle Gang today, including the national president, national vice president and national warlord, for their participation in various criminal acts, including violent crimes in aid of racketeering, methamphetamine production and trafficking, illegal firearms offenses, obstruction of justice, illegal gambling and other federal offenses. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office made the announcement.

“For too many years the Devils Diciples spread fear and violence throughout Michigan and the country,” said Assistant Attorney General Caldwell.  “This outlaw motorcycle gang thrived on intimidation and its ability to avoid prosecution – but no longer.  Through these convictions, we have decimated the gang and its leadership and helped secure justice for the communities they harmed.”

"These defendants were responsible for violence and trafficking in methamphetamine in Macomb County and across the country,” said U.S. Attorney McQuade.  “We are grateful for the work of the investigating agencies and the jury to bring them to justice."

“The defendants in this case perpetrated a broad range of violent criminal activities in support of their illegal enterprise,” said Special Agent in Charge Abbate.  “Today’s convictions, which targeted the leadership of this criminal organization, reflect the hard work and dedication of federal, state and local law enforcement, the Department of Justice Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Eastern District of Michigan.”

Devils Diciples national President Jeff Garvin Smith, aka “Fat Dog,” 60, of Mt. Clemens, Michigan; National Vice President Paul Anthony Darrah, aka “Pauli,” 50, of Macomb Township, Michigan; and National Warlord Cary Dale Vandiver, aka “Gun Control,” 56, of Sand Mountain, Alabama, were all found guilty by a jury of engaging in a RICO conspiracy, methamphetamine trafficking conspiracy, conspiracy to obstruct justice, violent crimes in aid of racketeering and various substantive charges.  Another prominent leader, Vincent John Witort, aka “Holiday,” 64, of Fontana, California, and a methamphetamine cook, Patrick Michael McKeoun, aka “Magoo,” 60, of Birmingham, Alabama, were found guilty of engaging in a RICO conspiracy and methamphetamine trafficking conspiracy.  David Randy Drozdowski, aka “D,” 38 of Fair Haven, Michigan, was found guilty by a jury of committing violent crimes in aid of racketeering and being a felon in possession of a firearm.  Scott William Sutherland, aka “Scotty Z,” 49, of Redford, Michigan, was acquitted by the jury of various charges, but previously pleaded guilty to being a felon in possession of a firearm.  Sentencing hearings will be scheduled at a later date before U.S. District Judge Robert H. Cleland of the Eastern District of Michigan.

According to evidence presented at trial, the Devils Diciples (which is intentionally misspelled) is a motorcycle gang with its national headquarters in Clinton Township, Michigan.  The Devils Diciples operated regional chapters in cities throughout Michigan, Alabama, Arizona, California, Illinois, Indiana, Ohio and elsewhere, and engaged in criminal activities for financial gain.

Evidence presented at trial demonstrated that membership in the Devils Diciples is based in part on successful completion of a probationary period, followed by formal approval by one or more members or leaders.  Members, commonly referred to as “full patched members,” are required to own Harley Davidson motorcycles and are required to follow orders from the gang’s leadership, including orders to assault, threaten and intimidate others, to transport and distribute drugs, to lie to law enforcement and to hide or destroy evidence.  Members are also required to follow the Devils Diciples by-laws and attend regular meetings referred to as “church.”

According to evidence presented at trial, Smith was the National President and Darrah was the National Vice President of the gang.  In those roles, they were responsible for overall management of the activities of the other Devils Diciples members and chapters, including giving final approval to any activity generally affecting the gang as a whole.  Vandiver was the National Warlord – or enforcer – of the gang.  With other gang members, the leaders also participated directly in criminal activities both for financial gain on behalf of the Devils Diciples, and to protect the gang and its members.

Specifically, the evidence showed that in late 2007, Smith and Darrah were involved in the shooting of a Devils Diciples member who failed to abide by the gang’s rules.  And, in August 2008, Smith violently assaulted the girlfriend of another Devils Diciples member because he believed she disrespected him and the gang. 

Additionally, the evidence showed that Smith possessed state and federal law enforcement manuals regarding outlaw motorcycle gangs marked “For Official Use Only” and “Law Enforcement Sensitive,” and numerous documents related to criminal matters involving members of the Devils Diciples, including police reports, search warrants, affidavits, indictments and witness interview transcripts.  The evidence showed that the documents were used for the purposes of counter-surveillance and to identify suspected informants. 

The other defendants were also full patched members of the gang, who committed several other acts of violence.

For example, in August 2003, Witort and other gang members robbed, kidnapped and attempted to murder members of the gang’s Arizona Chapter for violating the gang’s rules.  Inside the Arizona clubhouse, the victims were bound with duct tape and zip ties, and severely beaten with firearms, tasers, knives, and other weapons.  The victims were then loaded into the bed of a pick-up truck, driven out into the desert, dumped into ravines, and left to die.  The evidence showed that Witort and Smith helped to plan the beatings and that Smith later congratulated one of the participants, telling him in a letter that the Devils Diciples were “all proud of you.”

Additionally, the evidence demonstrated that in 2012, at a bar in Chesterfield Township, Michigan, Drozdowski and another Devils Diciples member assaulted a perceived rival motorcycle gang member for being present in Devils Diciples territory.  The victim was knocked unconscious and suffered multiple fractures to his face and jaw.  Drozdowski and the other Devils Diciples member then ripped the leather vest off of the unconscious victim. 

In addition to the defendants convicted today, 21 members and associates of the Devil’s Diciples have been pleaded guilty to various crimes as result of this investigation.  The investigation further resulted in the seizure of more than 60 firearms and more than 6,000 rounds of ammunition and the dismantling of eight methamphetamine manufacturing laboratories across the country.

The case was investigated by the FBI, the Michigan State Police, the Macomb County Sheriff’s Office and the County of Macomb Enforcement Team (COMET), with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the St. Clair County Sheriff’s Office.  The case is being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

A Midvale, Utah, man and a Henderson, Nevada, woman were convicted by a jury yesterday in the U.S. District Court in Salt Lake City of tax crimes, announced U.S. Attorney Carlie Christensen of the District of Utah and Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  

Gerrit Timmerman, of Midvale, and Carol Jean Sing, of Henderson, were convicted of conspiracy to defraud the United States related to their promotion of a tax fraud scheme. 

According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes.  Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status.  They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole.

According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients.  Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole.  At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities, and recommended the corporation sole to his clients as another way to impair the IRS.  Both defendants referred customers to one another and paid each other referral fees. 

A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property.  Several states, including Utah in 2004 and Nevada in 2009, have disallowed the creation of new corporations sole.  The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and even included corporations sole on their “dirty dozen” tax scams in 2004.

“Individuals who enrich themselves by promoting tax avoidance schemes and assist others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen.  “They should expect to be prosecuted and convicted for this conduct, as yesterday’s verdict demonstrates.”

“Yesterday’s convictions send a clear message that individuals who willfully violate our nation’s tax laws through the promotion of abusive tax schemes and the creation of sham entities will be investigated and prosecuted to the fullest extent of the law,” said Principal Deputy Acting Assistant Attorney General Ciraolo.  “The Tax Division is committed to working with its law enforcement partners to disrupt and dismantle these criminal enterprises.”

“Designing tax shelter transactions intended to conceal the true facts from the IRS isn't tax planning; it's criminal activity,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah.  “Yesterday's verdict reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal tax shelters under the guise of religion or charities to assist their clients in evading their tax obligations.”

Sentencing is scheduled for May 20.  Sing and Timmerman each face a statutory maximum sentence of five years in prison and a fine of $250,000.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who are prosecuting the case.