District Not Recorded

WASHINGTON, DC – On February 19, 2015, newly elected Interpol Secretary General Jürgen Stock visited the Interpol Washington office. While at the agency, Dr. Stock addressed Interpol Washington staff, highlighting the role effective information sharing can play via the world police body’s tools and resources and underscoring that the key to the organization’s strength lies in collaboration with Interpol’s 189 other member countries. Dr. Stock also emphasized the importance of defining Interpol’s core capabilities. After his remarks, the Secretary General toured the office, visiting with analysts in Interpol Washington’s 24/7 Interpol Operations and Command Center (IOCC) and meeting with Interpol Washington’s senior staff.

Prior to his visit at Interpol Washington, the Secretary General presented at a ministerial session during the White House Summit on Countering Violent Extremism. The meeting was organized by the U.S. Department of State and attended by Secretary of State John Kerry, Attorney General Eric Holder and Assistant Attorney General John Carlin. In his address, Dr. Stock underlined the effectiveness of Interpol’s Foreign Terrorist Fighter program to deter the movements of foreign fighters. The program represents the third pillar of President Barack Obama’s National Security Strategy and was lauded as a critical component in the fight against transnational crime in the United Nations’ Security Council Resolution 2178. The program has over 40 participating countries which share information on more than 1,500 suspected and confirmed fighters linked to Syria and Iraq. Foreign fighters may seek to travel with revoked passports, stolen or lost passports, or simply their own valid travel documents. In the first two cases, Interpol’s Stolen and Lost Travel Document database can make this information available at the frontlines. In cases where the individual’s valid passport information has been shared, Interpol global tools will generate hit alarms.

For more information on Secretary General Stock’s trip to Washington, DC, read Interpol’s press release at http://www.interpol.int/News-and-media/News/2015/N2015-015.

A La Vista, Nebraska, woman was sentenced today in U.S. District Court for the District of Nebraska in Omaha to serve 36 months in prison and three years of supervised release for tax obstruction, filing a false claim and filing false retaliatory property liens, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced. 

Donna Marie Kozak, a former college instructor, was convicted by a jury on Aug. 1, 2014, on all nine counts charged in the superseding indictment.  At trial, the evidence showed that in 1997, Kozak stopped filing income tax returns, and from 1997 through 2012, she obstructed the Internal Revenue Service (IRS) by hiding assets, applying for tax-exempt status for a sham entity, filing a false claim for a tax refund, sending harassing correspondence to IRS agents, and filing false liens against an IRS-Criminal Investigation special agent and others.

In about 2009, Kozak joined the “Republic for the united States of America,” a sovereign citizen group, and was the group’s designated “governor of Nebraska.”  In 2012 and 2013, Kozak and Georgia resident Randall Due conspired to file false liens in retaliation for the federal criminal tax prosecution and trial convictions of associates David and Bernita Kleensang. In furtherance of the conspiracy, Kozak and Due filed a false lien for $19 million on property located in Boyd County, Nebraska, that was owned by the federal U.S. District Court judge who presided over the Kleensang trial.  After Kozak was indicted by a federal grand jury for the criminal tax charges and while on pre-trial release, she filed five more false liens on properties owned by another federal U.S. District Court judge, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an IRS-Criminal Investigation special agent. Due was tried and convicted in the District of Nebraska on related charges on Sept. 4, 2014. 

Principal Deputy Assistant Attorney General Ciraolo commended the special agents of the FBI and IRS-Criminal Investigation who investigated the case and Trial Attorneys Brian Bailey and Matthew Hoffman of the Tax Division, who prosecuted the case.

A Milledgeville, Georgia, couple were found guilty of tax fraud following a three-day jury trial for skimming more than $1.5 million in cash from their business without disclosing the income, the Department of Justice announced.

Kenneth Horner, 58, and Kimberly Horner, 53, were charged with filing false corporate and personal tax returns for the years 2007 and 2008.  They were convicted of all four counts charged.  Their sentencing is scheduled for May 6 at 10:00 a.m. before U.S. District Judge Timothy C. Batten Sr.

“This jury recognized the defendants’ handling of cash for what it really was: a ploy to avoid disclosing income and paying taxes,” said Acting U.S. Attorney John Horn of the Northern District of Georgia. 

“In willfully failing to report their total business income to the IRS, the Horners cheated the system and dodged the same basic responsibility that millions of other business owners comply with every year:  fairly and honestly reporting their earnings,” said Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Today’s verdict establishes that those who engage in such criminal conduct will be held accountable. The Tax Division is committed to working with its law enforcement partners to identify, investigate and vigorously prosecute these offenders.”    

“At this time of year, when hard-working citizens are sitting down to prepare their tax returns, it is especially disappointing to see the overt steps some individuals will take to hide their taxable funds from the government,” said Special Agent in Charge Veronica F. Hyman-Pillot of the Internal Revenue Service (IRS)-Criminal Investigation.  “Taxpayers deserve our vigilance in the investigation and prosecution of individuals who willfully underreport their income and evade the payment of their fair share of taxes.”

According to Acting U.S. Attorney Horn, the charges and other information presented in court: Kenneth and Kimberly Horner owned Topcat Towing and Recovery Inc. (Topcat Towing), a towing business in Lithonia, Georgia.  Between 2005 and 2008, Topcat Towing had an exclusive contract with DeKalb County, Georgia, for all county car tows needed from the south precinct of the county.  Between 2005 and 2008, the defendants skimmed more than $1.5 million in cash receipts from their towing business and deposited those cash receipts into their personal bank account without disclosing the income to their tax return preparer or on corporate and personal tax returns filed with the IRS.  The defendants tried to conceal their cash deposits from the government by “structuring” their deposits, which is the act of splitting up cash deposits that exceed $10,000 for the purpose of evading a Currency Transaction Report (CTR) from being filed.

Most financial institutions, including banks, are generally required to file CTRs for cash transactions that exceed $10,000.  CTRs are submitted to the U.S. Department of Treasury.  In 2007 and 2008, the defendants used their unreported cash, in part, to build a custom home in Conyers, Georgia, that was appraised at more than $900,000.  The defendants owe approximately $400,000 in taxes to the IRS for their unreported income.

This case is being investigated by the IRS-Criminal Investigation. Trial Attorney Christopher J. Maietta of the Tax Division and Assistant U.S. Attorney Steven D. Grimberg of the Northern District of Georgia are prosecuting the case.

A former military contractor who ran two Kuwaiti companies during the Iraq War pleaded guilty today for paying a $15,000 bribe to an Army National Guard officer in exchange for the award of a contract to provide buses to the United States Army, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania.

George H. Lee, 71, of Philadelphia, pleaded guilty today before U.S. District Judge Joel H. Slomsky in the Eastern District of Pennsylvania to one count of bribery of a public official.  Sentencing has been scheduled for July 7, 2015.

During his guilty plea, Lee admitted that as the president and chief executive officer of American Logistics Services (ALS), a Kuwaiti company providing supplies to the U.S. military in Iraq, he paid a $15,000 bribe to Lieutenant Markus E. McClain in exchange for McClain’s agreement to award an extension of a lucrative bus contract to ALS.  Specifically, Lee admitted that in August 2004 several of his employees met with McClain at Camp Arifjan, Kuwait and offered McClain $15,000 and a Rolex watch in exchange for McClain’s agreement to award the contract extension to ALS.  Lieutenant McClain initially declined, but one month later Lee renewed the offer, and McClain accepted $15,000 to use his official position to award the contract extension to ALS.

McClain previously pleaded guilty to one count of accepting a gratuity and is awaiting sentencing.   

The case is being investigated by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service and the U.S. Department of Homeland Security – Immigration and Customs Enforcement, and was previously investigated by the Office of the Special Inspector General for Iraq Reconstruction.  The case is being prosecuted by Trial Attorneys John Keller and Richard Evans of the Criminal Division’s Public Integrity Section. 

Fifty-Seven Individuals Previously Convicted and Sentenced as Part of This Investigation

A former member of the Arizona Army National Guard was sentenced today to 52 months in prison for his role in a scheme to accept bribes from purported drug traffickers in exchange for using his military position to protect shipments of cocaine during transportation, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

Raul Portillo, 42, of Phoenix, Arizona, pleaded guilty on Nov. 21, 2014, to one count of conspiracy to commit bribery and interfere with commerce by attempted extortion.  U.S. District Judge James A. Soto of the District of Arizona imposed the sentence. 

According to admissions made in connection with his guilty plea, Portillo, a sergeant in the Arizona Army National Guard, conspired with others from the Arizona Army National Guard to accept cash bribes to protect narcotics traffickers who were purportedly transporting and distributing cocaine from Arizona to other locations in the southwestern United States.  Unbeknownst to Portillo and the other co-conspirators, however, the supposed narcotics traffickers were actually undercover FBI agents. 

Specifically, Portillo admitted that he wore his official uniform, carried official forms of identification, used official vehicles and used his official authority, where necessary, to prevent police stops and searches as he drove cocaine shipments through checkpoints manned by the U.S. Border Patrol, the Arizona Department of Public Safety, and Nevada law enforcement officers.  Portillo admitted that he took bribe payments totaling $12,000 for transporting cocaine on two separate occasions.  Portillo also admitted that he accepted a $2,000 cash payment in exchange for recruiting an Immigration and Customs Enforcement inspector into the conspiracy. 

In 2006, an arrest warrant was issued for Portillo, and Portillo was arrested in May 2011, arraigned and released on personal recognizance.  Portillo admitted that in or around July 2011, he fled to avoid prosecution.  

To date, 58 defendants have been convicted and sentenced for charges stemming from this investigation. 

This case is part of a joint investigation conducted by the Southern Arizona Corruption Task Force (SACTF), which is comprised of the FBI, the Drug Enforcement Administration, the Bureau of Immigration and Customs Enforcement, and the Tucson Police Department.  Though not part of the SACTF, the Arizona National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and Internal Revenue Service’s Criminal Investigation Division also participated in the investigation.  The case is being prosecuted by Trial Attorneys Monique T. Abrishami and Peter N. Halpern of the Criminal Division’s Public Integrity Section.

Admits Working with Others to Seek More Than $1.1 Million in Fraudulent Refunds

A Washington, D.C., man pleaded guilty to various crimes committed in a far-reaching identity theft and tax fraud scheme in which he and others filed fraudulent federal income tax returns seeking more than $1.1 million in refunds, the Justice Department announced today.

James Nelson, 31, is among approximately a dozen people who have pleaded guilty in the U.S. District Court for the District of Columbia to charges in one of the largest prosecutions to date involving the use of stolen identifying information.  The overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $40 million.

The guilty plea, unsealed today, was announced by U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, Principal Deputy Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington Field Office, Acting Inspector in Charge David M. McGinnis of the U.S. Postal Inspection Service’s (USPIS) Washington Division, Assistant Inspector General for Investigations John L. Phillips of the  U.S. Department of Treasury, and Special Agent in Charge Kathy A. Michalko of the U.S. Secret Service’s Washington Field Office.

Nelson pleaded guilty to conspiracy to defraud the United States with respect to claims, aiding and abetting in the making of false claims for refund, and aiding and abetting in fraud and related activity involving identification information.  Under federal sentencing guidelines, Nelson faces an estimated range of 41 to 51 months in prison and a fine of up to $75,000 at his sentencing before the Honorable U.S. District Judge Ellen S. Huvelle of the District of Columbia.  In addition, as part of his plea agreement, Nelson must pay $636,026 in restitution to the IRS.

“James Nelson now joins numerous others who have pleaded guilty in this prosecution of a D.C.–based scheme involving at least 12,000 fake income tax returns,” said U.S. Attorney Machen.  “Honest taxpayers – like those filing their returns this week – are victimized by these scammers who use stolen identities to generate fraudulent tax refunds and drain money from the U.S. Treasury.  This prosecution is not over.  We will remain aggressive in our efforts to investigate and prosecute tax refund fraud involving identity theft.”

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

“Perpetrators of identity theft schemes are motivated by greed, acting as if they are above the law and with total disregard for the consequences to the victims,” said Special Agent in Charge Kelly.  “The actions of criminals, such as Mr. Nelson, create distressing hardships for many innocent taxpayers and have a devastating impact on the entire community.”

“Postal Inspectors are proud to join our federal law enforcement partners to bring this case to a successful resolution,” said Acting Inspector in Charge McGinnis.  “By joining forces, we are able to bring justice to those who would misuse the U.S. mail in order to defraud innocent citizens and the U.S. government.”

“I am proud of the work done by our Office of Investigations, cooperating with other law enforcement organizations in detecting and deterring this fraud and protecting the integrity of the nation’s tax system,” said Assistant Inspector General Phillips.

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

According to the government’s evidence, Nelson was among participants in a massive and sophisticated identity theft and false tax refund scheme involving an extensive network of more than 130 people, many of whom were receiving public assistance.  The refunds were sought since 2006, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners.  In other cases, the refunds were sent to people who were willing participants in the scheme.  The refunds listed more than 400 “taxpayer” addresses in the District of Columbia.

From December 2007 through January 2012, according to the government’s evidence, Nelson used his residential addresses, then in the District of Columbia, for the receipt of some of the fraudulently obtained tax refunds.  He also recruited others to receive fraudulent refunds at their addresses.  For example, Nelson paid one woman about $150 per check for each refund check delivered to her residential address in the District of Columbia.

Approximately 360 fraudulent federal income tax returns were filed with the IRS listing the addresses that were under Nelson’s control.  The returns sought refunds of approximately $908,500.  As a result, the IRS sent out 238 checks, totaling about $524,795, and 184 of those checks, totaling $432,804, were ultimately cashed. 

Nelson also recruited others to negotiate at least 86 other refund checks, totaling approximately $203,222, causing a total intended loss to the U.S. Treasury of more than $1.1 million.

In announcing the plea, U.S. Attorney Machen, Principal Deputy Acting Assistant Attorney General Ciraolo, Special Agent in Charge Kelly, Acting Inspector in Charge McGinnis, Assistant Inspector General Phillips and Special Agent in Charge Michalko commended those who investigated the case.  They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialist Donna Galindo.  Finally, they expressed appreciation for the work of Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jessica N. Moran and Jeffrey B. Bender of the Tax Division, who are prosecuting the case.

Attorney General Eric Holder today praised the decision by a judge in the United States District Court in the Eastern District of New York who found in favor of the Justice Department’s lawsuit claiming that American Express’ rules for merchants violate antitrust laws.

“Today’s decision is a triumph for fair competition and for American consumers,” said Attorney General Holder.  “By recognizing that American Express’s rules harm competition, the court vindicates the promise of robust marketplaces that is enshrined in our antitrust laws.  I salute the hardworking men and women who led the lengthy investigation and trial with uncommon skill and unwavering dedication.  With this achievement, we are sending an unambiguous message that the Department of Justice is prepared to litigate any case, no matter how complex, in its pursuit of justice and protection for the American people.”

The United States Department of Justice and 17 state attorneys general sued American Express, Visa Inc. and MasterCard International Inc., in 2010 to eliminate restrictions that the three credit card networks imposed on merchants.  Over the course of a seven week trial during the summer of 2014, the department argued that these restrictions obstruct merchants from using competition to try to keep credit card fees from increasing.  The civil case, brought under Section 1 of the Sherman Antitrust Act, sought to end the violation and to restore competition.

The trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks.  Millions of merchants of all sizes and in scores of industries pay those fees.  Despite these large fee revenues, the Justice Department argued that price competition over merchant swipe fees has been almost non-existent and for decades the credit card networks have not competed on price.  Today’s decision was rendered by Judge Nicholas G. Garaufis.

“Merchants pay over $50 billion in credit card swipe fees each year.  The department and the attorneys general of 17 states brought this case because competition over those fees was being suppressed,” said Deputy Assistant Attorney General for the Antitrust Division Leslie C. Overton.  “The Court’s ruling establishes that the American Express anti-steering rules block merchants from using competition to keep credit card swipe fees down, which means higher costs to those merchants’ customers.  I am proud of the outstanding work done by the investigative and trial teams.  As today’s decision reaffirms, the Antitrust Division remains committed to ensuring that competition is not restricted in this important sector of the economy.” 

Settlements with Visa and MasterCard were filed at the same time the case against American Express was begun; the settlements prohibit the two networks from continuing their rules and practices that had obstructed competition.  The court approved the settlements on July 20, 2011, and they applied immediately to Visa and MasterCard.  American Express was not a party to the settlements, and the litigation against American Express continued.

The department argued that the principal reason for an absence of price competition among credit card companies has been rules imposed by each of the networks that limit merchants’ ability to take advantage of a basic tool to keep prices competitive.  That tool – commonly used elsewhere in the economy – is merchants’ freedom to “steer” transactions to a network willing to lower its price.  Each network has long prohibited such steering to lower-cost cards.  Now that Visa and MasterCard have reformed their anti-steering rules, American Express rules stood as the last barrier to competition.

At trial, an array of merchants came forward to explain both the substantial costs they incur when their customers pay with credit cards and their inability to ignite competition among the networks to reduce those costs.  In fact, the rules not only prevent merchants from offering their customers lower prices or other incentives for choosing a less costly card, they even block merchants from providing consumers with truthful price information about the cost of swipe fees of different credit cards. 

Examples, used as trial exhibits, of what the Amex rule prohibits can be found at http://www.justice.gov/atr/cases/amex/amex-te.html.

Closing arguments in the trial took place on Oct. 9, 2014.  Craig Conrath was the lead trial attorney for the United States.  The 17 plaintiff states were Arizona, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.  The court also entered a scheduling order instructing the parties to submit, within 30 days, a joint proposed remedial order.

Ahmed Stopped in New York While Attempting to Fly Overseas to Join Terror Organization

Defendant Also Charged with Lying to Federal Agents during Terrorism Investigation

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Andrew M. Luger for the District of Minnesota announced today the indictment of Hamza Naj Ahmed, 19, for conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).  Ahmed is also charged with attempting to provide material support to ISIL and for making a false statement in a terrorism investigation.  Ahmed was previously charged by criminal complaint for lying to FBI agents.  The defendant was detained on Feb. 5, 2015, after making an initial appearance before Magistrate Judge Steven Rau in U.S. District Court in St. Paul, Minnesota.

“Hamza Ahmed is at least the fourth person from the Twin Cities charged as a result of an ongoing investigation into individuals who have traveled or are attempting to travel to Syria in order to join a foreign terrorist organization,” said U.S. Attorney Luger. “Since 2007, dozens of people from the Twin Cities have traveled or attempted to travel overseas in support of terror. While my office will continue to prosecute those who attempt to provide material support to ISIL or any other terrorist organization, we remain committed to working with dedicated community members to bring this cycle to an end.”

According to the indictment and documents filed in court, Ahmed and three companions, M.F., H.M.M. and Z.A., travelled by bus from Minneapolis to New York City’s John F. Kennedy International Airport (JFK).  The four men were each booked on international flights scheduled to depart JFK on Nov. 8, 2014.  Ahmed and M.F. were booked on the same flight from JFK to Istanbul, Turkey.  M.F., H.M.M. and Z.A. were each prevented from boarding their flights.  Ahmed successfully boarded, but was escorted from the aircraft by U.S. Customs and Border Protection agents before it left the boarding gate.

According to the indictment and documents filed in court, Ahmed was subsequently interviewed by FBI agents.  He made multiple false statements during the interview, including telling agents that he was traveling alone, and that he did not know M.F. or H.M.M.  When Ahmed arrived back in Minnesota on Nov. 9, 2014, FBI agents conducted a second voluntary interview, during which Ahmed again lied to agents.

This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force. 

This case is being prosecuted by Attorney Andrew Sigler of the Justice Department’s National Security Division, and Assistant U.S. Attorneys Andrew Winter and John Docherty of the District of Minnesota.

Defendant Information:                                                                                                                     

HAMZA NAJ AHMED, 19

Minneapolis, Minnesota

Charges:

• Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count

• Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count

• Making a False Statement in a Terrorism Investigation, 1 count

Hamza Ahmed Indictment

The United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Ronald J. Wiggins, 35, of Granite City, was sentenced on Wednesday, February 18, 2015 to 151 months in federal prison for offenses relating to the distribution of methamphetamine.

Wiggins pled guilty in U.S. District Court in East St. Louis on September 3, 2014 to three federal charges: Maintaining Drug-Related Premises; Distribution of Methamphetamine; and Possession With Intent to Distribute Methamphetamine.

Upon release from prison, Wiggins will also be required to serve a term of three years on supervised release.

At his change of plea hearing in September, Wiggins admitted that he had used his residence in Granite City, Illinois to distribute methamphetamine throughout 2013. Wiggins also admitted that he had sold methamphetamine to a police informant on June 13, and again on June 19, 2013, in Granite City.

The investigation which resulted in Wiggins’ arrest and conviction was conducted by the Granite City Police Department and by the U.S. Drug Enforcement Administration (DEA).

The case was assigned to Assistant United States Attorney Robert L. Garrison.

Yusef Yassin Gomez (Yassin), 49, of Fort Myers, Florida, pleaded guilty today in U.S. District Court in the Southern District of Ohio to one count of conspiracy to commit an offense against the United States in the distribution of prescription drugs without a license.

Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Antoinette Henry of the U.S. Food and Drug Administration’s (FDA) Metro Washington Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) announced the plea entered into today before U.S. District Judge Timothy S. Black in Cincinnati.

According to court documents, Yassin and others conspired to distribute diverted prescription drugs throughout the United States, including in the Southern District of Ohio, while concealing the true illicit sources of the drugs.  The conspirators falsely represented on required pedigree documents that the source of the drugs was one of two Puerto Rico companies, including Yassin’s former company, B&Y Wholesale.  The false pedigrees covered up the illegitimate sources of the drugs – various illicit, unlicensed suppliers – and falsely stated that B&Y was an authorized distributor of the prescription drugs.

“American consumers expect that prescription drugs will be safe and effective and should not face the risk that counterfeit, adulterated, misbranded, sub-potent or expired drugs will be sold to them,” said Acting Assistant Attorney General Branda.  “The Department of Justice will prosecute those who engage in prescription drug diversion.” 

For more than four years, Yassin allowed the drugs to pass through B&Y Wholesale in Puerto Rico before shipment out to a Minnesota company owned by a co-conspirator.  The Minnesota company acquired the drugs from various illegitimate suppliers, and sold the diverted drugs to purchasers nationwide, including to pharmacies in Cincinnati.  In addition to letting the diverted drugs ship through his company in Puerto Rico, Yassin made wire payments to the illicit suppliers in exchange for a commission.  The illegally-sourced drugs were purchased by the Minnesota company at a significantly deeper discount than is offered on legitimately-sourced drugs, thereby generating higher revenues and profits.

“Once a prescription drug is diverted outside of the regulated distribution channels, it becomes difficult, if not impossible, for regulators, law enforcement and end-users to know whether the prescription drug package actually contains the correct drug or the correct dose,” said U.S. Attorney Stewart.  “Patients purchased what they believed were FDA-approved prescription drugs that had remained in regulated distribution channels intended to protect against misbranded, adulterated, sub-potent, improperly handled, counterfeit and stolen products.  Instead, these customers received drugs of unknown quality and origin.”

Yassin faces a statutory maximum sentence of five years in prison and a $250,000 fine.  As part of his plea agreement, he will pay a money judgment of $750,000 representing proceeds from the scheme.

This matter is being investigated by the FDA and USPIS.  Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in this case. 

On Feb. 18, a Detroit man pleaded guilty in the U.S. District Court for the Eastern District of Michigan to obstructing and impeding the Internal Revenue Service (IRS) and conspiring to commit bank fraud, Principal Deputy Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

According to the information and other court documents, Richard Pierce failed to report over $9 million in gross business receipts during 2007 through 2013, derived from the various Detroit-area businesses that he operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Detroit Matrix, First Metro Properties LLC, First Metro Real Estate Services LLC, Phoenix Office Plaza-II LLC, Rosedale/Grandmont Properties LLC, and RFP Ventures LLC.  In addition, on Nov. 26, 2007, Pierce participated in a bank fraud scheme wherein he caused the submission of a false loan application to a mortgage lender on which he falsely reported that the buyer was paying $77,900 for a residential property without disclosing that the buyer received a $46,340 “kickback” from the seller. 

Sentencing is scheduled for July 8 before U.S. District Court Judge Arthur J. Tarnow of the Eastern District of Michigan.  Pierce faces a statutory maximum sentence of three years in prison for filing a false tax return and a statutory maximum sentence of 30 years in prison for conspiring to commit bank fraud, with maximum potential fines totaling $1.25 million.  

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

Second Colombian National Sentenced To 40 Months In Prison For Obstructing The Investigation

Two Colombian nationals were sentenced to prison yesterday in the Eastern District of Virginia for the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James “Terry” Watson in Bogotá, Colombia, on June 20, 2013, and subsequent concealment of those crimes.

Attorney General Eric Holder, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office, DEA Administrator Michele M. Leonhart and Bill A. Miller, Director, U.S. State Department’s Diplomatic Security Service made the announcement.

“These two defendants bear responsibility for the kidnapping and murder of a courageous federal agent,” said Attorney General Eric Holder.  “With this sentencing, they face justice for their involvement in this brutal crime.  Our nation owes a great debt to Special Agent Terry Watson and his loved ones.  We will never rest in our determination to honor his profound sacrifices, to pursue all who would threaten our brave men and women in law enforcement, and to carry on the vital work for which he gave his life.”

“Yesterday’s sentencing is another important step in bringing justice to those responsible for the murder of Special Agent Terry Watson,” said DEA Administrator Michele M. Leonhart.  “Terry was a respected and dedicated DEA Special Agent and we will not rest until all those involved in this heinous act are sentenced.  Our thoughts and prayers continue to go out to the Watson family as this case moves towards a final resolution.”    

Edwin Gerardo Figueroa Sepúlveda, 39, of Bogotá, previously pleaded guilty to aiding and abetting the murder of an internationally protected person and conspiracy to kidnap an internationally protected person.  Yesterday, U.S. District Judge Gerald Bruce Lee of the Eastern District of Virginia sentenced Figueroa Sepúlveda to 360 months.  Wilson Daniel Peralta-Bocachica, 31, also of Bogotá, previously pleaded guilty to obstruction of justice, and was sentenced to 40 months yesterday.

In the statement of facts filed with his plea agreement, Figueroa Sepúlveda admitted that he conspired to conduct “paseo milionarios” or “millionaire’s rides” in which he and his co-conspirators lured victims into taxi cabs, then kidnapped and robbed them.  He admitted that on the evening of June 20, 2013, he was part of a six-person robbery crew that targeted Special Agent Watson.  One of the members of the crew picked up Special Agent Watson in his taxi, while another drove a second taxi carrying the assailants.  Figueroa Sepúlveda entered the taxi carrying Special Agent Watson and shocked him with a stun gun several times while another defendant stabbed him.  Special Agent Watson was able to escape from the taxi, but he later collapsed and died from his injuries. 

In a statement of facts filed with his plea agreement, Peralta-Bocachica admitted that in the days following the kidnapping and murder, he washed the taxi in which Special Agent Watson was stabbed, removing the victim’s blood from the back seat then discarding the cleaning rags, before turning the taxi over to the Colombian National Police. 

A total of six defendants were charged for their involvement in the murder and kidnapping of Special Agent Watson, in addition to Peralta-Bocachica who was charged with obstruction of justice.  Héctor Leonardo López, 34; Julio Estiven Gracia Ramírez, 32; Andrés Álvaro Oviedo García, 22; Omar Fabián Valdes Gualtero, 28; and Édgar Javier Bello Murillo, 28, previously pleaded guilty to conspiracy to kidnap and aiding and abetting the murder of an internationally protected person.  On Dec. 12, 2014, López was sentenced to 25 years in prison, Gracia Ramírez was sentenced to 27 years in prison, and Oviedo García was sentenced to 20 years in prison.  Omar Fabián Valdes Gualtero and Édgar Javier Bello Murillo are scheduled to be sentenced on April 15, 2015.

This case was investigated by the FBI, DEA and the Diplomatic Security Service, in close cooperation with Colombian authorities and with assistance from INTERPOL and the Justice Department’s Office of International Affairs.  The case is being prosecuted by Special Counsel Stacey Luck of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Michael P. Ben’Ary of the U.S. Attorney’s Office for the Eastern District of Virginia.

The Department of Justice gratefully acknowledges the Colombian Attorney General’s Office, Colombian National Police, Colombian Directorate of Criminal Investigation and Interpol (DIJIN), DIJIN Special Investigative Unit, Bogotá Metropolitan Police, Bogotá Police Intelligence Body (CIPOL) Unit and Colombian Technical Investigation Team for their extraordinary efforts, support and professionalism in responding to this incident.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Special Agent in Charge Gary Hartwig of Homeland Security Investigations Chicago, Special Agent in Charge James C. Lee of the Internal Revenue Service’s (IRS) Chicago Office and Special Agent in Charge Brian Reihms of the Department of Defense Criminal Investigative Service in Chicago announced today that an Arlington Heights, Illinois, company, its president and a former employee were indicted on federal charges for unlawfully exporting and importing military articles, including components used in night vision systems and an M1A1 Abrams tank, which is the main battle tank used by the U.S. Armed Forces.  The defendants were charged in an indictment returned by a federal grand jury in January and made public this week.

Vibgyor Optical Systems Inc., a company located in Arlington Heights, purported to manufacture optics and optical systems, including items that were to be supplied to the U.S. Department of Defense (DOD).  Instead of manufacturing the items in Illinois, as it claimed, Vibgyor illegally sent the technical data for, and samples of, the military articles to manufacturers in China, then imported the items from China to sell to its customers—including DOD prime contractors.  Bharat “Victor” Verma, 74, of Arlington Heights, Vibgyor’s president, and Urvashi “Sonia” Verma, 40, of Chicago, a former Vibgyor employee and owner of a now-defunct company that operated as a subcontractor for Vibgyor, were also charged in the indictment.

According to the indictment, between November 2006 and March 2014, the defendants conspired to defraud the United States and violate the Arms Export Control Act (AECA) and International Traffic in Arms Regulations.  The AECA prohibits the export or import of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.  Under the International Traffic in Arms Regulations, any person seeking to import items designated as defense articles on the United States Munitions Import List is required to obtain a permit to do so from the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Vibgyor won subcontracts to supply optical components and systems to DOD prime contractors by misrepresenting the location of manufacture of the items it supplied.  Bharat Verma falsely claimed that the items Vibgyor supplied were manufactured in domestically, when they actually had been manufactured in China, based on information illegally exported to Chinese manufacturers.  In addition to illegally providing technical data for a military item to China, Urvashi Verma attempted to ship an example of one of the military items to the Chinese manufacturer.  

“The Arms Export Control Act and the International Traffic in Arms Regulations are vital to preventing embargoed countries from gaining access to our sensitive military technology, and to ensuring that our armed forces are not issued substandard equipment,” said U.S. Attorney Fardon.  “Where companies and individuals seek to violate the AECA and the International Traffic in Arms Regulations, we will not hesitate to act."

Vibgyor, Bharat Verma and Urvashi Verma are charged with one count of conspiracy to violate both the AECA and the International Traffic in Arms Regulations; one count of conspiracy to defraud the United States—each offense is punishable by up to five years’ imprisonment—and one count of  violating the AECA, with a maximum possible penalty of 20 years in prison and a fine up to $1,000,000.  Vibgyor and Bharat Verma were also charged with international money laundering, an offense with a maximum possible sentence of 20 years’ imprisonment and a fine up to $500,000.  The defendants are scheduled to be arraigned Friday, Feb. 20, 2015, before U.S. Magistrate Judge Sidney I. Schenkier.    

The case is being prosecuted by Trial Attorney Casey Arrowood of the Justice Department’s National Security Division, and Assistant U.S. Attorneys Diane MacArthur, Bolling W. Haxall and Shoba Pillay of the Northern District of Illinois.

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

A Montauk, New York, resident pleaded guilty today in the U.S. District Court in the Eastern District of New York to corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division announced today.

According to court documents and statements, Georges Briguet, a naturalized U.S. citizen, had Swiss financial accounts at UBS AG and at Clariden Leu Ltd., which was a wholly owned subsidiary of Credit Suisse AG.  He opened the UBS account in Switzerland in or around 1992, with approximately 7 million Swiss francs.  In 2008, he transferred the UBS funds to a numbered account at Clariden Leu in Switzerland, which he maintained until at least 2011.  For tax years 2001 through 2010, Briguet filed false federal income tax returns on which he failed to report his foreign financial accounts, failed to report any income earned thereon and failed to pay any taxes on such foreign income. 

In addition, Briguet was interviewed by an IRS revenue agent who was conducting a civil audit.  During the interview, Briguet falsely stated that he had no foreign income and no foreign financial accounts.  He then later repeated those false statements to an IRS special agent who interviewed Briguet as part of a criminal investigation. 

At sentencing, Briguet faces a statutory maximum sentence of three years in prison and a $250,000 fine.  As part of his plea agreement, Briguet has agreed to pay the IRS restitution in the amount of $169,935.

Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS - Criminal Investigation who investigated the case, and Trial Attorneys Mark Kotila and Jeffrey Bender and Senior Litigation Counsel Mark Daly of the Tax Division, who are prosecuting the case.  She also thanked the U.S. Attorney’s Office in the Eastern District of New York for their assistance.

The Department of Justice announced today an agreement with Washington County, Missouri, to resolve issues of accessibility of buildings that offer county services and programs.  This year marks the 25th anniversary of the Americans with Disabilities Act (ADA), which the Civil Rights Division plays a critical role in enforcing. 

Washington County 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 the county is required to ensure that people with disabilities can get inside buildings that offer county services and programs, and take full advantage of those services and programs.

The agreement with Washington County will allow people with disabilities to access county services and programs, such as Randy Barron, who attempted to apply for a marriage license.  Barron was met with barriers after he got through the front door of the county building and found that the ramp going to the Recorder of Deeds office was too steep for him to safely get his wheelchair down.  In addition, there was no room for him to maneuver his wheelchair to a flat surface and reach the door.  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 Barron’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, Washington County will ensure that people with disabilities can get inside buildings that offer county services and programs, and take full advantage of those services and programs.  The county is required to remove architectural barriers in its buildings, including making entrances accessible.  Washington County has already installed an elevator to provide access to the upper and lower levels of the courthouse.

“Access to a county government’s programs, services and activities is a fundamental civil right guaranteed to community members,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Through this agreement, Mr. Barron and other individuals with disabilities will have the opportunity not only to get in the front door of county buildings, but have access to all aspects of civic life provided by the county.”

For more information about the ADA, today’s agreement and 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).

A resident of Great Neck, New York, pleaded guilty today in the U.S. District Court for the Southern District of Florida to a one-count information charging him with filing a false federal income tax return, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced today.

According to the Information and court filings, Paul Raifaizen was an owner of Data Industries Inc., a computer consulting company located in the state of New York, which provided information technology services to public and private sector entities.  Between 1998 and 2012, Data Industries provided information technology services to Miami-Dade County.  Jesus Pons was a Computer Services Manager at the General Services Administration of Miami-Dade County.  Pons was responsible for managing and allocating resources to information technology projects for Miami-Dade County, as well as supervising work performed by county vendors.  From 2007 to 2011, Raifaizen and Pons engaged in an illegal kickback scheme in which Raifaizen made kickback payments to Pons in exchange for Pons approving payments from Miami-Dade County to Raifaizen’s company for consulting work that was never performed.  Raifaizen did not report the payments he received from this kickback scheme on his 2011 individual income tax return.  According to the plea agreement, the tax due and owing to the Internal Revenue Service (IRS) as a result of this scheme is between $200,000 and $400,000. 

Raifaizen is scheduled to be sentenced on May 1.  He faces a statutory maximum sentence of three years in prison and a $250,000 fine for filing a false tax return.

Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS – Criminal Investigation, who investigated the case, and thanked the U.S. Attorney’s Office for the Southern District of Florida for their assistance, as well as Trial Attorneys Jeffrey McLellan and Erin Pulice of the Tax Division, who are prosecuting the case.

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

Assistant Attorney General of National Security John P. Carlin, U.S. Attorney Paul J. Fishman of the District of New Jersey, Special Agent in Charge John P. Woods of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Newark, New Jersey, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division announced that a Florida man was sentenced today to 110 months in prison for producing and selling potentially deadly toxins ricin and abrin for use as weapons, and conspiring to kill a woman in the United Kingdom.

Jesse William Korff, 20, of Labelle, Florida, pleaded guilty before U.S. District Judge Peter G. Sheridan on Aug. 12, 2014, to an information charging him with five counts of developing, producing, transferring and possessing toxins, five counts of smuggling toxins and one count of conspiring to kill a person in a foreign country.

Korff was arrested in Florida on Jan. 18, 2014, following a joint investigation by HSI and the FBI of Korff’s sales of toxins through an underground, Internet-based marketplace known as “Black Market Reloaded” (BMR).   

“Jesse Korff peddled his poison in a shadowy, online network favored by cybercriminals,” said U.S. Attorney Fishman.  “He also offered guidance on its effective use, and his sentence today appropriately took account of his participation with an overseas customer in an attempted murder plot.  Fortunately, law enforcement was able to intercede before Korff could conclude his deadly transaction.”

“This sentence should serve as a warning to those who capitalize from the use of underground websites such as BMR,” said Special Agent in Charge Woods.  “HSI will maintain its unrelenting commitment to protecting our land borders as well as virtual borders from individuals like Korff.  Anyone who mistakenly thinks that they can get away with these types of crimes by hiding in the endless depths of the internet must know that HSI will seek them out and bring them to justice.”

“Jesse Korff acquired abrin and ricin, potentially lethal toxins, through an underground internet-based marketplace, so they could be used for deadly purposes,” said Special Agent in Charge Frankel.  “Thankfully, with the coordinated efforts of our law enforcement partners, and the tactical and technical expertise of the FBI’s Joint Terrorism Task Force, he was intercepted and his potentially deadly threats did not become a reality.”

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

Beginning in April 2013, HSI special agents in Newark launched an investigation of illicit sales activity on BMR.  The website provided a platform for vendors and buyers to conduct anonymous online transactions involving the sale of a variety of illegal goods, including biological agents, toxins, firearms, ammunition, explosives, narcotics and counterfeit items.

From August 2013 through January 2014, Korff maintained a seller’s profile on BMR under the moniker “Snowman840.”  Korff advertised the sale of deadly toxins and provided his prospective purchasers with information about quantities necessary to kill a person of a given weight, along with instructions on how to secretly administer the toxin so as to avoid suspicion by law enforcement officials.  Korff sold various quantities of ricin and abrin to international purchasers located in India, Austria, Denmark and England.  Korff smuggled the toxins from Florida to the international purchasers by concealing the toxins in packages sent through the U.S. Postal Service.

On at least one occasion in December 2013, Korff agreed to produce, and ultimately provided, a quantity of abrin to a purchaser in London who intended to poison and kill an individual she claimed was her mother.  After the purchaser’s receipt and administration of the initial dose, which was ineffective, Korff agreed to provide a second quantity of the toxin in order to assist the purchaser in the implementation of the murder plot.

Before Korff had an opportunity to smuggle the second dose of abrin to the London purchaser, an undercover agent contacted Korff through BMR and commenced negotiations for the sale of two liquid doses of abrin.  During their online conversations, Korff told the agent about his delivery methods – concealing vials in a carved-out and re-melted candle – and discussed how much abrin was needed to kill a person of a particular weight and how best to administer the toxin.  Korff also assured the agent that a victim’s poisoning symptoms would mimic a bad case of the flu, subsequently resulting in death.  Korff claimed that the toxin would not ordinarily be detected in an autopsy.

Korff and the agent agreed on a total purchase price of $2,500 for two doses of the poison, which was intended to be smuggled from Florida, through New Jersey, en route to a destination in Canada.  Korff designated a prearranged location for the transfer of the toxins, and e-mailed the agent pictures of a specific spot at a rest stop approximately 10 miles outside Fort Myers, Florida, where he planned to leave a package containing the abrin.

On the arranged day, Korff dropped off a fast food bag containing two wax candles at the location.  Another undercover agent collected the bag and left behind the required payment.  Law enforcement had Korff under surveillance throughout the transaction.

Subsequent forensic analysis by the FBI of the liquid contained within the vials revealed the presence of active abrin.  Even a small dose of the toxin is potentially lethal to humans if ingested, inhaled or injected – causing death within 36 to 72 hours from the time of exposure.

Following Korff’s arrest, law enforcement agents conducted an exhaustive, three-day search of Korff’s property.  As a result of those efforts, agents recovered several computers, castor beans, rosary peas, capsules, vials, jars, syringes, filters, respirators and other items commonly utilized in the manufacture, production, sale, packaging and shipping of toxins and chemical substances, as well as numerous firearms.  Among the items recovered was the second liquid dose of abrin that Korff had intended to ship to the London purchaser.  Significantly, information and evidence obtained by U.S. law enforcement agents in this case was shared with, and successfully used by, authorities in England, Denmark and Austria to disrupt related criminal activities in those nations.

In addition to the prison term, U.S. District Judge Anne E. Thompson sentenced Korff to five years of supervised release and fined him $1,000.

Assistant Attorney General Carlin joins U.S. Attorney Fishman in thanking the special agents of HSI offices in Newark and Ft. Myers, Florida, and the FBI offices in Newark and Tampa, Florida, for their efforts with the investigation that led to today’s sentence.  He also thanked the FBI’s Joint Terrorism Task Force, including the U.S. Postal Inspection Service and the Glades County, Henry County and Lee County, Florida, sheriff’s offices for their assistance.  Vital support was provided by the FBI WMD Directorate in Washington, D.C., the FBI Laboratory Division, the DHS National Bioforensic Analysis Center, the U.S. Attorney’s Office for the Middle District of Florida, and the London Metropolitan Police Service (MPS), SO15 Counter Terrorism Command, under the direction of Commander Duncan Ball. 

The government is represented by Attorney Joseph N. Kaster of the Justice Department’s National Security Division and Assistant U.S. Attorney Dennis C. Carletta of the District of New Jersey.

The father and son owners and operators of pizza stores in the Raleigh, North Carolina, area were sentenced today in the U.S. District Court for the Eastern District of North Carolina for willfully filing false tax returns, the Justice Department announced. 

Thair Alwan was sentenced to serve one year and one day in prison to be followed by one year of supervised release, and was required to pay a $10,000 fine.  Saill Fadhil, Alwan’s son, was sentenced to serve 30 days in prison to be served during three years of probation and was required to pay a $5,000 fine.  The defendants pleaded guilty to these tax crimes on July 15, 2014.

According to court documents and statements made in court, Alwan and Fadhil own and operate I Love NY Pizza stores in the Raleigh area.  During tax years 2008 and 2009, Alwan and Fadhil skimmed approximately $1.34 million from the company’s various stores and willfully filed false federal income tax returns that failed to report the income, resulting in substantial tax underpayments.  The skimmed cash receipts were used for personal expenditures and deposited into their personal bank accounts.  When making cash deposits, Alwan structured the transactions to be under $10,000 and avoided the filing of Currency Transaction Reports. 

This case was investigated by special agents of IRS – Criminal Investigation and prosecuted by Trial Attorney Todd Ellinwood of the Justice Department's Tax Division and Assistant U.S. Attorney Adam Hulbig of the Eastern District of North Carolina.

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

The Department of Justice and the Federal Trade Commission (FTC) have issued the agenda for their joint public workshop, Examining Health Care Competition, which will be held on Feb. 24 and 25, 2015, at the Constitution Center Auditorium located at 400 7th Street S.W., Washington, D.C., 20024.

The workshop will study recent developments related to health care provider organization and payment models, with an emphasis on how they may affect competition in the provision of health care services.  Specific discussion topics will include early observations regarding accountable care organizations; alternatives to traditional fee-for-service payment models; trends in provider consolidation; trends in provider network and benefit design strategies, as well as contracting practices and regulatory activity that may enhance or undermine these strategies; and early observations regarding health insurance exchanges.

The workshop will be webcast live on the FTC’s website.  Registration information and directions to the FTC Conference Center are available on the event web page.  Advance registration is not required, but is strongly encouraged.

Public comments can be submitted through April 30, 2015.  Suggested comment topics, and instructions on how to submit comments online and by mail, can be found in the Federal Register notice.

Reasonable accommodations for people with disabilities who wish to attend the workshop in person are available upon request.  Requests should be submitted via email to lkittleson@ftc.gov or by calling Lara Kittelson at 202-326-3388.  Requests should be made in advance.  Please include a detailed description of the accommodation needed and provide contact information.                                                                                                                 

Press contacts:

Department of Justice

Office of Public Affairs
Emily Pierce
202-514-2007

Federal Trade Commission

Office of Public Affairs
Betsy Lordan
202-326-3707

Staff contacts:

Department of Justice

Antitrust Division, Office of Legal Policy
Patrick M. Kuhlmann
202-305-4639

Federal Trade Commission

Office of Policy Planning
Stephanie A. Wilkinson
202-326-2084

Attorney General Eric Holder released the following statement on the departure of U.S. Attorney Brendan Johnson:

“During Brendan Johnson's tenure as United States Attorney for South Dakota, he has distinguished himself as an exemplary leader, a passionate advocate for his fellow citizens, and an extraordinarily dedicated public servant," said Attorney General Holder.  "As a lawyer and as a leader, Brendan has set a standard of excellence that will not soon be surpassed.  Particularly with regard to public safety challenges on tribal lands, he has served as a key advisor to senior Justice Department officials - including me.  As past Chair of the Native American Issues Subcommittee, he is not only a respected champion for tribal justice in his own right, but a critical national leader - offering sound guidance, wise counsel, and candid advice on a host of pressing issues.  In standing against violent crime, fraud, drug trafficking, violence against women, and countless other threats, Brendan's fierce and determined service, on behalf of the people of South Dakota, has been without equal.  Although he will be greatly missed, his many contributions will endure.  I thank him for his outstanding service - to South Dakota, and to our nation - and wish him all the best as he takes on new challenges and opportunities.”

 

Defendant Brought From Netherlands

After Fighting Extradition for Over Two Years

A Russian national appeared in federal court in Newark today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Secretary Jeh Johnson of the Department of Homeland Security, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Director Joseph P. Clancy of the U.S. Secret Service.

Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was charged for his alleged role in a data theft conspiracy that targeted major corporate networks, stole more than 160 million credit card numbers, and caused hundreds of millions of dollars in losses.  Prior to his extradition, he had been detained by the Dutch authorities since his arrest in the Netherlands on June 28, 2012.

Drinkman appeared today before U.S. Magistrate Judge James B. Clark and entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained without bail.  Trial before U.S. District Judge Jerome B. Simandle was scheduled for April 27, 2015.

“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” said Assistant Attorney General Caldwell.  “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice.  This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”

“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” said U.S. Attorney Fishman.  “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”

“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” said Acting Director Clancy.  “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators.  Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”

According to the second superseding indictment, unsealed on July 25, 2013, and other court filings, Drinkman and four co-defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems.  Roman Kotov, 33, of Moscow, allegedly specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data.  According to allegations in the indictment, the hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine.  Dmitriy Smilianets, 31, of Moscow, then allegedly sold the stolen information and distributed the proceeds of the scheme to the participants.

Drinkman and his co-defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.  It is not alleged that the NASDAQ hack affected its trading platform.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported.  Gonzalez is currently serving 20 years in federal prison for those offenses.  Kalinin is also charged in two federal indictments in the Southern District of New York: one charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions.  Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012.  Smilianets was extradited on Sept. 7, 2012, and remains in federal custody.  Kalinin, Kotov and Rytikov remain at large.  All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.

The Attacks

According to allegations in the indictment, the five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals.  They allegedly took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired at least 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.”  SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases.  The hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network.  Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, on the system.  This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks. 

Instant message chats obtained by law enforcement reveal that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted for more than a year.

The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data—which they referred to as “dumps”—the conspirators allegedly sold it to resellers around the world.  The buyers then sold the dumps through online forums or directly to individuals and organizations.  Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers.  He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data, offering discounted pricing to bulk and repeat customers.  Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants allegedly used a number of methods to conceal the scheme.  Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement. 

Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection.  Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.

To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions.  The defendants also allegedly worked to evade existing protections by security software.

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses—including more than $300 million in losses reported by just three of the corporate victims—and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.

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

The ongoing investigation is being conducted by the U.S. Secret Service.  The case is being prosecuted by Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the District of New Jersey’s Economic Crimes Unit.

The Criminal Division’s Office of International Affairs assisted with the case, as did public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

Drinkman et al Indictment                                                   

An owner of a Miami home health care company pleaded guilty today in connection with a $13 million Medicare fraud scheme that involved paying kickbacks and bribes to Medicare beneficiaries, doctors’ offices, medical clinics and others in exchange for patient referrals and fraudulent prescriptions to support fraudulent billings to 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 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.

Alexander Lara, 46, of Hollywood, Florida, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida.  A sentencing hearing is scheduled for May 14, 2015.

According to his plea documents, Lara was an owner and operator of Longcare Home Health Corporation (Longcare Home Health), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries.  In connection with his guilty plea, Lara admitted that he and his co-conspirators actually operated Longcare Home Health for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary or not provided at all.

As an organizer and leader of the schemes at Longcare Home Health, Lara admitted that he personally paid kickbacks and bribes to patient recruiters and Medicare beneficiaries in exchange for patient referrals.  Lara also admitted that he paid kickbacks and bribes to doctors’ offices and clinics in exchange for fraudulent prescriptions for medically unnecessary therapy and home health services for Medicare beneficiaries.  These false prescriptions and recruited patients were used to fraudulently bill the Medicare program for home health care services, and Lara admitted that he personally oversaw the submission of these fraudulent claims.  From approximately January 2009 through November 2014, Medicare paid approximately $13.7 million for the fraudulent claims submitted by Longcare Home Health.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  This case is being prosecuted by Trial Attorney Anne P. McNamara 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 more than 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.  To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

New Data Revealed by Justice Department Shows Rate at Which Feds Pursued Mandatory Minimum Penalties in Drug Trafficking Cases Has Hit Record Low

In One of His Final Speeches Before Stepping Down, Holder Lauds Progress In Sentencing Reform Initiative He Launched in ‘13

In a major advance for the sentencing reform project that has been one of his signature initiatives, Attorney General Eric Holder on Tuesday announced that federal drug prosecutors have shifted away from seeking mandatory minimums at record rates, while reserving stricter sentences for more serious offenders.

Speaking at the National Press Club, Attorney General Holder revealed that in the first full year since he imposed reforms to the Justice Department’s charging policies in nonviolent drug trafficking cases, federal prosecutors not only prosecuted fewer such cases overall, but also pursued mandatory minimum sentences at a dramatically lower rate than the year prior.  In fact, according to the U.S. Sentencing Commission, in FY2014, federal drug prosecutors pursued mandatory minimums at the lowest rate on record.

“For years prior to this administration, federal prosecutors were not only encouraged – but required – to always seek the most severe prison sentence possible for all drug cases, no matter the relative risk they posed to public safety.  I have made a break from that philosophy,” said Attorney General Holder.  “While old habits are hard to break, these numbers show that a dramatic shift is underway in the mindset of prosecutors handling nonviolent drug offenses.  I believe we have taken steps to institutionalize this fairer, more practical approach such that it will endure for years to come.”

The figures announced Tuesday were compiled by the U.S. Sentencing Commission at the request of the Justice Department to measure the impact of several reforms implemented in 2013 through Attorney General Holder’s “Smart on Crime” initiative.  Those reforms—aimed at restoring fairness to the criminal justice system and at confronting the problem of America’s overcrowded prison system—instructed federal prosecutors to exercise greater discretion in selecting drug cases to bring to federal court.  The data suggests prosecutors heeded that call, as the overall number of federal drug trafficking cases dropped by six percent in FY2014.

While the sheer number of drug cases went down, the data also showed that federal prosecutors have prioritized more serious cases.  Holder pointed to a rise in the average guideline minimum sentence, from 96 months in FY2013 to 98 months this past year.  That suggests the severity of offenses prosecuted in FY2014 was slightly higher.

Most important of all, Holder said, was the trend observed with respect to mandatory minimums.  After several years in a row that saw federal prosecutors pursue such mandatory sentences in roughly two-thirds of drug cases, last year’s rate dropped to one-in-two.  The Attorney General said this showed that the department was succeeding in reserving these strict sentences for the worst types of offenders rather than imposing indiscriminately.

“This figure, perhaps more than any other, shows the significant impact that our policy reforms are having,” said Attorney General Holder.  “These are extremely encouraging results.”

Holder also presented statistics rebutting past criticisms of the “Smart on Crime” initiative.  For instance, though some warned that the reduced application of mandatory minimums would remove the incentive for defendants to act as government witnesses, the Sentencing Commission’s data showed that defendants provided cooperation at the same rate as in years past.

Remarks as prepared for delivery

Thank you, President [John] Hughes, for that kind introduction – and for your leadership, and stewardship, of this venerable institution.  I’d also like to thank past President Donna Leinwand Leger, of USA Today, for inviting me to be here this afternoon; the National Press Club’s officers, and your entire Board of Governors, for their critical work; and all of the journalists, both in and beyond this crowd, who contribute so much to our national discourse. 

It is a pleasure to stand today among so many distinguished members of the Fourth Estate.  And I am humbled to follow in the footsteps of the remarkable men and women who have addressed this organization since its founding, over a century ago.  Before we open the floor for questions this afternoon, I’d like to take a few minutes to discuss the latest developments in the Justice Department’s ongoing efforts in the field of criminal justice reform – as well as the significant and extremely promising results we’re beginning to see just 18 months after the launch of our Smart on Crime initiative. 

When I took office as Attorney General, a little over six years ago, I came to the job having seen America’s justice system from a number of angles – primarily as a prosecutor, but also as a judge, and as an attorney in private practice.  I’d had the great honor of serving alongside – and learning from – countless dedicated lawyers, brave men and women in law enforcement, and leading criminal justice experts of all stripes.  I’d served under Administrations led by presidents of both political parties.  I knew that, despite the laudable progress we’d brought about – over the past two decades – in lowering the overall crime rate, real and daunting challenges remained before us.  And I understood that few of these challenges were more pressing than the need to strengthen the federal criminal justice system – and reduce America’s overreliance on incarceration. 

After all, although the United States comprises just five percent of the world’s population, we incarcerate almost a quarter of its prisoners.  While the entire U.S. population has increased by about a third since 1980, the federal prison population has grown by almost 800 percent over the same period.  And on the day I took office, as a result of often well-intentioned policies designed to be “tough” on drugs, nearly half of all federal inmates were serving time for drug-related offenses. 

As many of you have so thoroughly reported, this state of affairs not only had serious financial ramifications for our country – occupying roughly a third of the Justice Department’s budget in recent years; it exacted a human and moral toll that’s impossible to calculate.  Studies showed that the policies that imposed these costs had not had a significant impact in making our communities measurably safer.  And the persistence of this status quo demanded that national criminal justice leaders closely examine our institutions and reorient our practices to create the more perfect Union that our founders imagined – and the more just society that all Americans deserve.

With these aims in mind, under President Obama’s leadership, we began to push for serious changes.  In 2010, as the result of our efforts – and the close partnership of leaders from both parties on Capitol Hill – the President was able to sign the Fair Sentencing Act, which reduced the inappropriate and unjust 100-to-1 sentencing disparity between crack and powder cocaine.  Over the years, we’ve also worked to strengthen reentry policies aimed at reducing recidivism – and to advance a host of other targeted improvements like drug courts.  In early 2013, I took these efforts to a new level by initiating an unprecedented, exhaustive and targeted Justice Department review of the federal criminal justice system as a whole – to identify obstacles, inefficiencies, and inequities, and to address ineffective policies.

This review culminated, about 18 months ago, with the launch of our groundbreaking criminal justice reform initiative known as Smart on Crime.  Smart on Crime was a catch-all term for a range of reforms we implemented simultaneously in the summer of 2013, each significant in its own right.  Among other steps, we made major changes to the department’s charging policies related to nonviolent drug offenses; we put sensible limits on when it was appropriate to seek stiffer sentences based on a defendant’s prior criminal record; and we took steps to improve reentry processes in order to reduce the chances that incarcerated individuals reoffend after they exit prison.  Taken together, these reforms reflect the department’s age-old commitment to a criminal justice system that is fair; that deters serious criminal conduct; that holds people accountable for their crimes; and that utilizes incarceration wisely – to punish, deter, and rehabilitate - not merely to confine and forget.

Over the last year and a half – as my colleagues and I have implemented new crime prevention efforts, more effective community policing policies, and promising diversion and reentry strategies – I’ve spoken extensively about the changes we’ve made and the vision that is driving us forward.  I’ve pointed to the favorable results we’ve seen on the state level – in places like Kentucky, Texas, Ohio and Pennsylvania – where governors and legislatures of both parties have provided a model for others to emulate by directing funding away from prison construction and toward programs designed to reduce recidivism.  And I have placed particular emphasis on two of the most vital reforms at the heart of our Smart on Crime initiative: the prioritization of cases within each U.S. Attorney’s Office and a critical change to the Justice Department’s charging policies.

Late last year, we began compiling data to help us measure the impact of our criminal justice reforms.  This data is preliminary.  But it shows that the Smart on Crime initiative is working exactly as intended.  It is having a real and measurable impact on the decisions made by federal prosecutors from coast to coast.  The changes we’ve implemented are firmly taking hold.  And our key reforms appear to be successful by every measure we’ve seen so far.

The numbers are particularly encouraging in three areas. 

First, among the central components of Smart on Crime is an effort to reduce unnecessary incarceration by asking federal prosecutors to exercise discretion – and make smart and targeted decisions – about which cases warrant federal prosecution.  As I said in a speech to the American Bar Association, in August of 2013, not every drug case should be brought in a federal court.  Accordingly, I directed our United States Attorneys to develop specific, locally-tailored guidelines – consistent with national priorities – for determining when federal charges should be filed, and when cases should be handled at the state or local level.  Today, I am pleased to report that our federal prosecutors are heeding that call.  And they are being more selective in bringing certain drug prosecutions.  Between 2013 and 2014, the number of defendants charged with drug trafficking offenses declined by nearly 1,400 individuals – a reduction of more than six percent. 

Second, I instructed our prosecutors that, in the course of weighing which types of drug cases merit federal prosecution, they should focus on the worst offenders and offenses.  The data from last year proves that, as a result of this shift, today, our prosecutors are focusing their attention – and their resources – on the most serious cases.  In 2013, before Smart on Crime was implemented, the average guideline minimum for federal drug prosecutions – in other words, the average suggested minimum prison term for an individual being charged for a drug crime – was 96 months.  A year later, while the number of drug trafficking prosecutions has dropped, the average guideline minimum has actually risen to 98 months.  This demonstrates that the most serious drug crimes are now attracting the highest scrutiny – and that our limited resources are being used in ways that provide the greatest possible benefit to public safety. 

Third, in August 2013, I also ordered a modification of the Justice Department’s charging policies to ensure that people accused of certain low-level, nonviolent federal drug crimes will face sentences appropriate to their individual conduct – rather than excessive mandatory minimum sentences that may be better suited to violent criminals or drug kingpins.  This change was founded on the belief that, by reserving mandatory minimums for cases where they are warranted, we could better promote public safety, deterrence and rehabilitation, while making our expenditures smarter and more productive.  Today, it’s clear that we are making significant progress toward this goal.  In the year before our Smart on Crime charging policy took effect, roughly 64 percent of federally-charged drug trafficking offenses carried a mandatory minimum sentence.  Last year, the new policy brought that number down to approximately 51 percent – a reduction of 20 percent relative to the prior year.  Put another way, we have gone from seeking a mandatory minimum penalty in two out of every three drug trafficking cases, to doing so in one out of two.  That’s a major reduction.  In fact, it is historic.  The Sentencing Commission confirms that these numbers show that federal prosecutors sought mandatory minimum penalties at a lower rate in 2014 than in any other year on record.

This figure, perhaps more than any other, shows the significant impact that our policy reforms are having.  While other factors may play a role in the drop we are seeing in the overall number of drug cases, a decline this pronounced in the rate at which our prosecutors pursue mandatory minimum sentences can only be attributed to the changes we announced in 2013. 

These are extremely encouraging results.  And they demonstrate that, since we launched the Smart on Crime initiative, the federal criminal justice system has begun to operate more efficiently, by reducing its involvement in low-level criminal activity; more effectively, by targeting the most serious crimes, and more fairly – by ensuring that those who are convicted of crimes receive sentences that are commensurate with their conduct.

Now, some have suggested – since I announced these important reforms – that reducing our reliance on mandatory minimums might negatively impact the ability of our prosecutors to elicit cooperation from federal defendants.  They asserted that, without the threat of a mandatory minimum sentence, a defendant in a drug case would have substantially less incentive to provide information or testimony about others who might be engaged in criminal enterprise.  Some critics even worried that prosecutors would be less able to obtain guilty pleas, and that court dockets would overflow with defendants who might previously have pleaded guilty to avoid a mandatory minimum sentence but suddenly had less incentive to shorten the process. 

I never considered these concerns persuasive.  Like anyone who served as a prosecutor in the days before sentencing guidelines existed and mandatory minimums took effect, I knew from experience that defendant cooperation depends on the certainty of swift and fair punishment, not on the disproportionate length of a mandatory minimum sentence.  With or without the threat of a mandatory minimum, it will always be in the interest of defendants to cooperate with the government.  And I am gratified – but by no means surprised – to announce today that our Smart on Crime approach has been vindicated by the data we’ve gathered. 

Even though mandatory minimums have been charged significantly less frequently under our new policies, the percentage of cases in which we receive substantial cooperation from defendants has remained exactly the same.  This also holds true of the ability of our prosecutors to secure guilty pleas in these cases.  In the year before Smart on Crime took effect, our prosecutors won guilty pleas in approximately 97 percent of drug trafficking cases.  A year later, despite significant reductions in our uses of mandatory minimums, this percentage stands at 97.5.  So the notion that the Smart on Crime initiative has somehow robbed us of an essential tool is contradicted not only by our history – but by clear and objective facts.

This newly unveiled data shows we can confront over-incarceration at the same time that we continue to promote public safety.  Already, in Fiscal Year 2014, we saw the first reduction in the federal prison population in 32 years.  Meanwhile, since President Obama took office, we’ve presided over a continued decline in the overall crime rate.  This marks the first time that any administration has achieved side-by-side reductions in both crime and incarceration in more than 40 years.

All of this progress is remarkable, and all of it is noteworthy.  These concrete results illustrate the tremendous – and very real – promise of the work that Smart on Crime is making possible.  They signal a potential paradigm shift in the way our nation approaches vital questions of fairness and justice.  And in the preliminary data we’ve seen – and the growing, bipartisan consensus surrounding the work that’s underway – they prove unequivocally that criminal justice reform is an idea whose time has finally come. 

Remember: for years prior to this administration, federal prosecutors were not only encouraged – but required – to always seek the most severe prison sentence possible for all drug cases, no matter the relative risk they posed to public safety.  I have made a break from that philosophy.  While old habits are hard to break, these numbers show that a dramatic shift is underway in the mindset of prosecutors handling nonviolent drug offenses.  I believe we have taken steps to institutionalize this fairer, more practical approach such that it will endure for years to come. 

We can all be proud of these efforts, and encouraged by the steps that we’re taking every day to strengthen America’s justice system across the board.  Thanks to the work of my dedicated colleagues; the valor of our brave men and women in law enforcement; the thoughtful leadership of bodies like the Judicial Conference of the United States and the United States Sentencing Commission; and the partnership of Republicans and Democrats in Congress and in so many state governments, the goals and the values of the Smart on Crime initiative have been codified and put into practice at every stage of the criminal justice process – from prosecution, to sentencing, to rehabilitation and reentry. 

The work we have done is nothing short of groundbreaking.  But this is no time to rest on our laurels.  Significant challenges remain before us.  And a great deal of work remains to be done.

Our prisons are still overcrowded.  Across the country, far too many people remain trapped in cycles of poverty, criminality, and incarceration.  Unwarranted disparities are far too common.  Law enforcement is distrusted in far too many places and cops are not appreciated for the tough job they do so well.  And if we hope to build on the record we’ve established so far – and to make the Smart on Crime initiative not only successful, but permanent – it will be incumbent upon all Americans—most especially our Congress—to work together to ensure that all of this is just the beginning.  From critical improvements to the juvenile justice system, to a range of back-end criminal justice reforms, we must continue to advance promising, bipartisan legislation to make our communities safer, treat individuals more justly and allow more efficient use of law enforcement resources. 

Our efforts over the last six years have laid a strong foundation for a new era of American justice.  Congress can help us build on this foundation by passing important, bipartisan legislation like the Smarter Sentencing Act, which would give judges more discretion in determining sentences for people convicted of certain federal drug crimes.  And going forward – with measures like this one, and with the tireless work of our United States Attorneys and their colleagues, the strong leadership of our outstanding new Attorney General and Deputy Attorney General, and the robust engagement of the American people – I believe there’s good reason for confidence in where this work will lead us.

In the coming weeks, as you know, my time in the Obama Administration – and my formal career in public service – will draw to a close.  But even now, as I prepare to open a new chapter in my life – with pride in all that my colleagues and I have accomplished, and deep gratitude for the opportunities I’ve been afforded – I know that, for me, this effort will continue.  Whatever I do next, and wherever my own journey may take me, I will keep seeking new ways to contribute, to remain engaged in the effort to improve our institutions, and to build trust in those who serve them.  And although I will soon leave the Justice Department, I will never leave the work that has become the mission – and the single greatest honor – of my professional life: advancing the cause of justice and building a brighter future for the country I love. 

I want to thank you all, once again, for the opportunity to speak with you this afternoon – and for the work you do every day to strengthen our democracy and inform our national dialogue.  I look forward to your questions. 

Three MS-13 gang members were sentenced today to federal prison for violent crimes that they committed on behalf of the gang, including the 2006 murder of a rival gang member and 2008 shooting of a teenage boy, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney John A. Horn of the Northern District of Georgia.

Miguel Guevara, aka Blacky, 31, of Fort Walton Beach, Florida; Irvin Mejia Cruz, aka Triste, Lil Triste, 24, of Duluth, Georgia; and Walter Aldana, aka Goofy, 24, of Norcross, Georgia, were sentenced to 30 years in prison, nine years in prison, and 10 years in prison, respectively.  U.S. District Judge Richard W. Story of the Northern District of Georgia imposed the sentences.  The defendants each pleaded guilty in October 2013 to RICO conspiracy, and Guevara also pleaded guilty to using a firearm in relation to the commission of a crime of violence.

According to admissions made in connection with the defendants’ guilty pleas, the charges and other information presented in court, Mara Salvatrucha 13, or MS-13, is an international gang that originated in El Salvador and Honduras and spread to the United States.  MS-13 members are organized into regional “cliques” within the larger gang.  Each clique has a leader, often referred to as “the first word,” who conducts weekly meetings.  At these meetings, members discuss their crimes and their plans to retaliate against rival gang members.  The clique leaders collect dues from the gang members, which they use to buy guns and post bail for jailed gang members.  Clique leaders often send money back to MS-13 leaders in their home countries, and report back to the same leaders about the clique’s activities on behalf of the gang. 

MS-13 has operated in the greater Atlanta area since at least 2005.  The gang staked out Gwinnett and DeKalb Counties as their home territory, where they committed murders, attempted murders and armed robberies, among other crimes.

According to admissions in connection with his guilty plea, Guevara was a member of MS-13, but in 2006, he decided to become less active in the gang and sought permission to “calm down” from the leader of his clique, Miguel Alvarado-Linares, aka Joker.  Alvarado-Linares discussed this with other members at a meeting of the clique on Dec. 23, 2006, and the other gang members agreed that Guevara would have to shoot at a suspected rival gang member before he could become inactive.  Guevara admitted that he and other gang members went to a nightclub in the early morning hours of Dec. 24, 2006 to hunt for rival gang members.  Guevara admitted that he saw two rival gang members walk out of the night club and get into a car.  Guevara and the other MS-13 members then followed the rival gang members.  As the rival gang members exited the freeway, the MS-13 gang members pulled alongside, and Guevara fired multiple shots at the rival gang members.  Guevara killed one of the gang members and wounded the other.

In connection with their guilty pleas, Cruz and Aldana admitted that they belonged to the same MS-13 clique.  They further admitted that Mejia Cruz advised Aldana to shoot someone if he wanted to earn more respect within MS-13, and, on Aug. 21, 2008, Mejia Cruz gave Aldana a gun for the task.  Aldana admitted that he left Mejia Cruz’s house with the gun, and encountered a group of teenagers, some of whom were playing basketball.  Aldana challenged the teenagers, “Who do you claim,” asking to which gang they claimed allegiance.  He then started firing into the crowd and struck a 14 year-old boy in the back.  Aldana called out “Mara Salvatrucha” as he fled on foot.  He later returned the firearm to Mejia Cruz.

This case was investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, FBI, Gwinnett County Police Department and DeKalb County Police Department.  The case was prosecuted by Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Paul R. Jones of the Northern District of Georgia.

Attorney General Eric Holder released the following statement Friday regarding the tragic killings of three university students this week in Chapel Hill, North Carolina:

“Like all Americans, I was shocked and saddened by this week’s heinous murders of three young people in Chapel Hill, North Carolina.  I join President Obama in offering my deep sympathies to the friends and loved ones of Yusor Mohammad Abu-Salha, Deah Shaddy Barakat, and Razan Mohammad Abu-Salha.

“In addition to the ongoing local investigation, I have made available the full resources of the Department of Justice to help ensure that justice will be served in this case.  The Department’s Civil Rights Division and the FBI, along with the U.S. Attorney’s Office for the Middle District of North Carolina, have opened a parallel preliminary inquiry to determine whether any federal laws, including hate crime laws, were violated.

“Protecting the safety and securing the civil rights of everyone in this country is, and must always remain, a top priority for today’s Department of Justice.  We will never waver in this commitment.  And going forward, we pledge to stand with the families of these three remarkable young people – and with all whose lives were touched by this tragedy – as they begin the long road to healing.”

Assistant Attorney General John P. Carlin of the National Security Division and U.S. Attorney S. Amanda Marshall of the District of Oregon announced today that Reaz Qadir Khan, 50, a naturalized U.S. citizen residing in Portland, Oregon, pleaded guilty to the crime of accessory after the fact for providing assistance to individuals connected to the 2009 suicide bomb attack at the headquarters of Pakistan’s intelligence service that killed approximately 30 individuals and injured 300 more.

In his plea entered before U. S. District Court Judge Michael Mosman, Khan admitted to providing advice and financial assistance to suicide bomber Ali Jaleel’s wives after the bombing knowing that such assistance would hinder and prevent the apprehension of Jaleel’s wives and others in the Maldives who may have been involved with Jaleel.

On May 27, 2009, Jaleel and two others conducted the suicide attack at the ISI headquarters in Lahore, Pakistan.  In a video released by the media outlet of al-Qaeda shortly after the attack, Jaleel made a statement taking responsibility for the attack and was shown preparing for the attack at a training camp in what is believed to be the Federally Administered Tribal Area of Pakistan.  

In the plea agreement, the defense and government jointly recommended a prison sentence of 87 months.  Sentencing is scheduled for June 8, 2015.

This case was investigated by the FBI.  The prosecution is being handled by Assistant U.S. Attorneys Ethan D. Knight and Charles F. Gorder Jr. of the District of Oregon, with assistance from Trial Attorney David P. Cora of the National Security Division.

A federal court in Dayton, Ohio, has entered a permanent injunction against a tax return preparer that requires him to sign tax returns and furnish his Preparer Tax Identification Number (PTIN) on returns he prepares, as well as retain a list or copy of each of the returns that he prepares, the Justice Department announced today.

The court also barred Rodger S. Thomas Sr. from preparing documents that he knows will result in an understatement of his customers’ tax liabilities.

According to the government’s complaint, from 2006 through 2009, Thomas is alleged to have prepared tax returns for customers that claimed false business deductions on their Schedule C (profit and loss from business) and fictitious deductions on their Schedule A (itemized deductions).  Also according to the suit, Thomas also allegedly prepared false Forms 1099 in order to inflate customers’ income and maximize their Earned Income Tax Credits.  The complaint alleged that Thomas would then report these payments on the Schedule C of his own income tax returns as expenses incurred by his business Ramjet Express.  The complaint further alleged that Thomas failed to sign or affix a PTIN to many of the returns that he prepared, negotiated refund checks by filing false Forms 1040 for customers and then, in violation of federal law, deposited the funds into his personal bank account. 

In 2012, Thomas pleaded guilty to one count of making a false statement on an income tax return and one count of aiding and assisting in the filing of a false income tax return.  He was subsequently sentenced to serve 24 months in prison and was released in March 2014.

The court’s order requires Thomas to contact and notify all persons for whom he has prepared a federal tax return or a claim for refund for since Jan. 1, 2006, of the injunction entered against him.

Return preparer fraud is one of the Internal Revenue Service’s (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.      

A computer programmer for the Mega copyright piracy conspiracy, Andrus Nomm, 36, of Estonia, pleaded guilty today in connection with his involvement with Megaupload.com and associated piracy websites.  He was sentenced to a year and a day in federal prison for conspiring to commit felony copyright infringement.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.  U.S. District Judge Liam O’Grady of the Eastern District of Virginia accepted the guilty plea and imposed the sentence.

“This conviction is a significant step forward in the largest criminal copyright case in U.S. history,” said Assistant Attorney General Caldwell.  “The Mega conspirators are charged with massive worldwide online piracy of movies, music and other copyrighted U.S. works.  We intend to see to it that all those responsible are held accountable for illegally enriching themselves by stealing the creative work of U.S. artists and creators.”

“This outcome is the result of years of hard work by our office and our partners from the Criminal Division and the Federal Bureau of Investigation,” said U.S. Attorney Dana J. Boente.  “The Mega Conspiracy engaged in massive criminal infringement of copyrighted works on the Internet, and we are confident that this case will be a sign to those who would abuse technology for illegal profit.”

“Today one conspirator who infringed upon the work of countless artists, actors and musicians takes responsibility for his actions,” said Assistant Director in Charge McCabe.  “We continue to pursue his co-conspirators until they face justice in the American legal system.  This sentence and the remaining charges in this case are the direct result of the hard work of dedicated FBI Special Agents, intelligence analysts and prosecutors who have invested countless hours of effort to bring justice in this case.”

Nomm agreed to waive his extradition hearing in the Netherlands, where he was arrested in January 2012, and plead guilty in the United States.  In light of his role in the conspiracy and acceptance of responsibility, prosecutors agreed to recommend the sentence of a year and a day in federal prison.

Nomm was initially charged along with six other individuals and two privately-held corporations by a federal grand jury on Jan. 5, 2012, and a superseding indictment with additional charges was subsequently returned on Feb. 16, 2012.  The superseding indictment charged the defendants with three separate conspiracies:  conspiracy to commit racketeering, conspiracy to commit copyright infringement and conspiracy to commit money laundering.  In addition, the defendants are charged with five counts of criminal copyright infringement and five counts of wire fraud.  The indictment alleges that, for more than five years, the Mega Conspiracy operated websites that willfully reproduced and distributed infringing copies of copyrighted works, including works that had not been commercially released.  The charges and allegations contained in an indictment are merely accusations and the remaining defendants are presumed innocent unless and until proven guilty. 

In court papers, Nomm agreed that the harm caused to copyright holders by the Mega Conspiracy’s criminal conduct exceeded $400 million.  He further acknowledged that the group obtained at least $175 million in proceeds through their conduct.  Megaupload.com had claimed that, at one time, it accounted for four percent of total Internet traffic, having more than one billion total visits, 150 million registered users and 50 million daily visitors.

In a statement of facts filed with his plea agreement, Nomm admitted that he was a computer programmer who worked for the Mega Conspiracy from 2007 until his arrest in January 2012.  Nomm further admitted that, through his work as a computer programmer, he was aware that copyright-infringing content was stored on the websites, including copyright protected motion pictures and television programs, some of which contained the “FBI Anti-Piracy” warning.  Nomm also admitted that he personally downloaded copyright-infringing files from the Mega websites.  Despite his knowledge in this regard, Nomm continued to participate in the Mega Conspiracy. 

An extradition hearing for co-defendants Kim Dotcom, Mathias Ortmann, Bram Van der Kolk and Finn Batato is currently scheduled for June 2015 in Auckland, New Zealand.  Co-defendants Julius Bencko and Sven Echternach remain at large.

This case is being investigated by the FBI’s Headquarters and Washington Field Office.  The case is being prosecuted by Senior Counsel Ryan K. Dickey and Brian L. Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia.  The Criminal Division’s Office of International Affairs also provided significant assistance.

The Department of Justice announced today that an Illinois physician, Dr. Michael J. Reinstein, pleaded guilty to a federal crime for receiving illegal kickbacks and benefits totaling nearly $600,000 from two pharmaceutical companies in exchange for regularly prescribing an anti-psychotic drug — clozapine — to his patients.  Reinstein also agreed to pay the United States and the state of Illinois $3.79 million to settle a parallel civil lawsuit alleging that, by prescribing clozapine in exchange for kickbacks, Reinstein caused the submission of false claims to Medicare and Medicaid for the clozapine he prescribed for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities. 

“The Department of Justice is committed to ensuring that physicians who accept payments from pharmaceutical manufacturers to influence prescribing decisions are held accountable,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Schemes such as this one undermine the health care system and take advantage of elderly patients who are among the most vulnerable health care recipients.”

“Physicians must prescribe medications for their patients solely on the basis of the patients’ best medical interests and not because those decisions were improperly influenced by kickbacks and other financial favors,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

Both the criminal and civil cases involve the promotion of generic clozapine, a rarely prescribed anti-psychotic drug that has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients.  While clozapine has been shown to be effective for treatment-resistant forms of schizophrenia, it is also known to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.

Reinstein pleaded guilty to one count of violating the federal Medicare and Medicaid Anti-Kickback Statute at his arraignment in U.S. District Court after he was charged on Feb. 3.

The civil settlement resolves a civil action filed against Reinstein by the federal government for accepting payments from pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, to induce the use of generic clozapine.  The United States alleged that in exchange for these payments, Reinstein prescribed clozapine for Medicare and Medicaid beneficiaries.  The United States also alleged that Reinstein submitted and/or caused to be submitted to both Medicaid and Medicare claims for “pharmacologic management” of those patients for whom he prescribed clozapine.  However, Reinstein allegedly did not engage in meaningful pharmacological management, because his prescribing decisions for his clozapine patients were based on the kickbacks he received rather than his independent medical judgment or the individual needs of his patients.  In March 2014, Teva Pharmaceuticals USA Inc. and IVAX LLC, paid the United States and the state of Illinois $27.6 million to settle allegations that they violated the state and federal False Claims Acts by making payments to Reinstein in return for him prescribing clozapine to his patients.

As set forth in the plea agreement, the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein, in violation of the federal Medicare and Medicaid Anti-Kickback statute.  In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and various employees of Reinstein.  Reinstein quickly became the largest prescriber of generic clozapine in the country and prescribed the drug to many elderly patients.  Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs. 

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient. 

The plea agreement and civil settlement 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 $23.6 billion through False Claims Act cases, with more than $15.1 billion of that amount recovered in cases involving fraud against federal health care programs.

The U.S. Attorney’s Office for the Northern District of Illinois represented the United States in connection with the plea agreement.  The civil settlement with Reinstein was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Civil Division’s Commercial Litigation Branch, the Department of Health and Human Services’ Office of Inspector General, the FBI and the Illinois Attorney General’s Office.

Except to the extent admitted by Reinstein in his guilty plea, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.  The civil case is captioned United States v. Reinstein, Civil Action, No. 12-C-9167 (N.D. Ill.).

Timothy Flanagan, 33, was sentenced to nine months and ordered to pay a $5000 fine in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced.  Flanagan previously pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights. 

Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30, 2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee.  Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house.  Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross.  Flanagan and the other co-conspirators then drove the cross to the victim’s residence and, upon arriving at the residence, Flanagan and London exited the truck.  The cross was placed in the driveway leading up to the house and was ignited.  The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence. 

Timothy Stafford, 41, of Minor Hill, Tennessee, and Ivan “Rusty” London IV, 21, of Lexington, Kentucky, previously pleaded guilty for their roles in the conspiracy, and will be sentenced on March 3, and March 26, respectively. 

“Hate-motivated crimes will not be tolerated in our country,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Justice Department will vigorously prosecute individuals that violate the rights of others because of race.”

“There can be no tolerance for such acts of intimidation when innocent persons are targeted simply because of their race,” said U.S. Attorney David Rivera of the Middle District of Tennessee.  “The U.S. Attorney’s Office and our law enforcement partners will work tirelessly to protect the civil rights of all persons and bring to justice, anyone who would attempt to impede the constitutionally protected right to liberty of any person.”

This case was investigated by the Columbia, Tennessee, Division of the FBI and is being prosecuted by Trial Attorney Jared Fishman of the Civil Rights Division and by Assistant U.S. Attorney Hal McDonough of the Middle District of Tennessee.

The Department of Justice filed a statement of interest today with the U.S. District Court for the Middle District of Alabama in Varden v. City of Clanton.  In this class action litigation, the plaintiff alleges that incarcerating individuals solely because of their inability to pay a cash bond violates the U.S. Constitution.

In her complaint, Varden alleges that she was required to pay a cash “bond” in a fixed dollar amount for each misdemeanor charge she faced or else she would remain incarcerated.  In its statement of interest, the department aims to assist the court in evaluating the constitutionality of fixed-money bail practices.  The statement asserts that, as courts have long recognized, any bail or bond scheme that mandates payment of pre-fixed amounts for different offenses in order to gain pre-trial release, without any regard for indigence, not only violates the Fourteenth Amendment’s Equal Protection Clause, but also constitutes poor public policy.  Instead, courts should make an individualized assessment of each defendant to determine whether the defendant is a threat to public safety or a flight risk.  Pretrial detention should be based on an objective evaluation of these factors, not on the defendant’s ability to pay.

“Bail practices that are indifferent to an individual’s ability to pay are incompatible with our Constitution and contrary to our values,” said Attorney General Eric Holder.  “By taking action in this case, the Justice Department is sending a clear message: that we will not accept criminal justice procedures that have discriminatory effects.  We will not hesitate to fight institutionalized injustice wherever it is found.  And we will never waver in our effort to ensure that all Americans – regardless of background or circumstance – receive the equal rights and protections to which they are entitled under the law.”

“The criminal justice system should not work differently for the indigent and the wealthy” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Bail practices that create a two tiered system of justice by treating the indigent and the wealthy differently undermine fundamental fairness in our nation’s criminal justice system.”

The statement of interest provides the court with a framework to assess the plaintiff’s claim of an unlawful bail scheme.  As the department explains in the statement of interest, “Fundamental and long-standing principles of equal protection squarely prohibit bail schemes based solely on the ability to pay.  Fixed-sum bail schemes do not meet these mandates.  By using a predetermined schedule for bail amounts based solely on the charges a defendant faces, these schemes do not properly account for other important factors, such as the defendant’s potential dangerousness or risk of flight.  The federal government recognized as much when it reformed its bail system over fifty years ago.”

Varden v. City of Clanton was filed in January 2015.  The plaintiff seeks declaratory, injunctive and compensatory relief.  A preliminary injunction hearing will be held on Feb. 24.

The U.S. District Court for the Northern District of Alabama approved a consent order yesterday afternoon filed by the Justice Department, together with private plaintiffs and the Calhoun County, Alabama, School District, finding that the district has met its desegregation obligations in certain areas and providing for additional, comprehensive relief in the areas of faculty and staff hiring and recruitment as well as student discipline and school climate.

In approving the consent order, which amends a longstanding federal school desegregation decree, the district court declares that the 9,200-student school district has eliminated the vestiges of prior state-mandated segregation in the areas of student assignment, extracurricular activities, school facilities and transportation, thereby ending the court’s supervision in those areas.  The order requires the district to take additional steps to reach full compliance, including adopting measures to promote racial diversity in its faculty and staff, expanding its use of positive behavioral supports and interventions throughout its schools, and revising its student discipline policies and procedures to ensure they are fair, non-discriminatory and limit the use of exclusionary discipline such as suspensions and expulsions.

“We commend the Calhoun County School District for the progress it has made in complying with its desegregation obligations, and for agreeing to take additional steps to reach our mutual goal of ensuring equal educational opportunities for all students,” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “We will continue to work closely with the district to implement this agreement and bring this case to a successful conclusion.”

The district may seek full dismissal of the case upon compliance with the terms of the three-year agreement.  The Justice Department will monitor and enforce the district’s compliance with the order.

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

A U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities was extradited from Costa Rica to the United States, the Justice Department announced today. 

John White was charged in a Nov. 29, 2011, indictment in the Southern District of Florida with conspiracy to commit mail and wire fraud, five counts of mail fraud and 13 counts of wire fraud.  White was arrested on Feb. 9, 2012, in Costa Rica pursuant to the indictment, which charges that White and his co-conspirators sold fraudulent beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses, to victims in the United States.  The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.

In addition to White, 11 other defendants have been charged in connection with related business opportunity fraud ventures that operated in Costa Rica.  Nine of those other defendants have been convicted in the United States with sentences ranging from three to 16 years in prison.  Two remaining defendants have yet to be received into the custody of the United States.   

“Business opportunity fraud takes a heavy financial toll on victims who believe they are buying a piece of the American dream,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “The Department of Justice will continue its push to prosecute those who defraud consumers whether from here in the United States or abroad.” 

Beginning in May 2005, White and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc. and The Coffee Man Inc.  According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000.  Each company operated for several months, and after one company closed, the next opened.  The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.

The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States.  In reality, White and his co-conspirators operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges. 

According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities.  Among the misrepresentations alleged in the indictment are: that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands.  Potential purchasers were also told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.

The indictment alleges that the companies employed various types of sales representatives, including fronters, closers and references.  A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement.  A closer subsequently spoke to potential purchasers to close deals.  References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.  The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser’s merchandise display racks.  The indictment alleges that White, using assumed names, worked as a fronter and a reference.

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States.  USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, New Mexico; Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colorado; Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nevada; Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia; and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. 

White faces a statutory maximum sentence of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count.  He also faces a statutory maximum sentence of 25 years in prison on each of the mail and wire fraud counts, possible fines and mandatory restitution.

“Business opportunity fraud hurts those who are simply trying to fulfill their dream of running their own business.” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “We will continue to prosecute those who seek to enrich themselves by committing fraud at the expense of innocent victims.” 

“The Postal Inspection Service will continue to aggressively investigate and combat business and investment fraud through the use of the U.S. mail,” said Postal Inspector in Charge Ronald Verrochio of the U.S. Postal Inspection Service Miami Division.

Acting Assistant Attorney General Branda and U.S. Attorney Ferrer commended the investigative efforts of the U.S. Postal Inspection Service.  The Justice Department’s Office of International Affairs provided assistance with the extradition.  The case is being prosecuted by Trial Attorney Alan Phelps of the Civil Division’s Consumer Protection Branch.

An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The Department of Justice announced today that California-based C.R. Laurence Co. Inc., Florida-based Southeastern Aluminum Products Inc. and Texas-based Waterfall Group LLC have agreed to pay $2,300,000, $650,000 and $100,000, respectively, to resolve a lawsuit brought by the United States under the False Claims Act alleging that the companies engaged in schemes to evade customs duties on imports of aluminum extrusions from the People’s Republic of China (PRC).  The companies sell shower doors and shower enclosures made with the PRC-manufactured aluminum extrusions.

“The nation’s customs laws are designed to protect domestic manufacturers from unfair competition abroad,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “The Department of Justice will pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”  

The government’s complaint alleged that C.R. Laurence, Southeastern and Waterfall made false declarations to the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan Golden Gain Aluminum Products Ltd. in the PRC.  The Department of Commerce assesses, and CBP collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products.  Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies.  C.R. Laurence, Southeastern, and Waterfall allegedly misrepresented that the “country of origin” of the aluminum extrusions was Malaysia, when the goods were manufactured in the PRC and merely shipped through Malaysia – a practice called “transshipping.”  Imports of PRC-manufactured aluminum extrusions have been subject to antidumping and countervailing duties since 2010.  No such duties are due on imports of such items from Malaysia.

The government’s complaint also alleged that C.R. Laurence, Southeastern and Waterfall purchased PRC-made aluminum extrusions imported by other domestic companies and caused or conspired with those importers to make false declarations to CBP to evade duties. 

“Countervailing and antidumping duties are designed to provide a level playing field between companies that purchase products domestically and those that import products from countries which subsidize their production,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “Importers who use fraud to avoid paying these duties gain an unfair business advantage over competitors who abide by the rules.  This settlement reaffirms our commitment to ensuring that business competition remains fair in our district.”

“Antidumping and countervailing duties are critical to ensure fair competition for U.S. manufacturers,” said Commissioner R. Gil Kerlikowske of CBP.  “U.S. Customs and Border Protection works diligently with the Department of Justice, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the U.S. Department of Commerce to aggressively pursue duty evasion.”

The allegations resolved by the settlements announced today were originally brought by whistleblower James F. Valenti Jr. in the U.S. District Court for the Middle District of Florida under the qui tam provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, avoid paying funds owed to the government.  The United States may intervene in and take over the lawsuit, as it did in this case.  The act allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Valenti will receive $555,100 as his share of these settlements.

The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida, CBP, U.S. Immigration and Customs Enforcement and the Department of Commerce’s International Trade Administration. 

The lawsuit is captioned United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products Ltd., et al., Case No. 11-cv-368 (M.D. Fla.).  The claims resolved by the settlements are allegations only; there has been no determination of liability.  

A Memphis, Tennessee, man was sentenced today to 15 years in prison for the sex trafficking of a 16-year-old girl, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Edward L. Stanton III of the Western District of Tennessee and Special Agent in Charge Todd McCall of the FBI’s Memphis Division.

Laron Matlock, 33, of Memphis, admitted during his plea hearing that, with the assistance of a co-defendant, he facilitated the travel of a 16-year-old girl from Chicago to Memphis in July 2012 for the purpose of prostitution.  Matlock then transported the minor from Memphis to Nashville, Tennessee, where she engaged in prostitution.  Matlock admitted that he facilitated the online advertisement of the minor on www.backpage.com by paying the cost associated with the posting.  Matlock was arrested on Aug. 1, 2012, after he returned to Memphis with the victim and attempted to take her to a customer’s house for the purpose of prostitution. 

U.S. District Judge Jon Phipps McCalla of the Western District of Tennessee imposed the sentence.

This case was investigated by the Civil Rights Human Trafficking Taskforce, the FBI’s Memphis Division and the Shelby County Sheriff’s Department.  This case was prosecuted by Assistant U.S. Attorney Brian K. Coleman of the Western District of Tennessee and Trial Attorney Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section. 

Three oyster harvesters and dealers, an employee and a related business were sentenced yesterday in federal court in Camden, New Jersey.  Todd Reeves, Thomas Reeves, Renee Reeves, of Port Norris, New Jersey, and their oyster dealer company, Shellrock LLC, were sentenced for their roles in creating false oyster records, trafficking in illegally possessed oysters, obstructing the U.S. Food and Drug Administration’s (FDA) regulation of public health and safety, and conspiring to commit those crimes.  Kenneth Bailey, of Heislerville, New Jersey, was sentenced for creating false oyster records and trafficking in illegal oysters.

Todd Reeves was sentenced to serve 26 months in prison and three years of supervised release, to pay a $7,000 fine, and was ordered to pay New Jersey $140,000 for the restoration of oyster beds in Delaware Bay.  Thomas Reeves was sentenced to serve 16 months in prison and three years of supervised release and pay a $7,000 fine, while Renee Reeves was sentenced to serve five years of probation and pay a $2,500 fine.  Thomas, Renee and Shellrock were found liable for the restitution amount along with Todd.  Todd and Thomas Reeves were additionally ordered to forfeit $144,000 to substitute assets for the vessels that they used to overharvest the oysters.  The Reeves’ business, Shellrock, also known as “Reeves Brothers,” was ordered to pay a fine of $70,000 and complete a term of five years of probation.

Kenneth Bailey was sentenced to serve six months incarceration, followed by six months of home confinement and three years of supervised release, as well as to pay a $10,000 fine.  Bailey was also ordered to forfeit $75,000 in substitute assets for the vessels that he used to overharvest the oysters.

“The conspiracy to traffic in overharvested, unreported and illegally possessed oysters from the Delaware Bay violated laws that protect public health and ensure the sustainability of resources,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division.  “The defendants’ actions were harmful to honest fisherman of the Delaware Bay and the long-term viability of a resource that is vital to the local economy and plays an important role in the history of Southern New Jersey.  Today’s sentences let the public know that we will not allow protected resources to be exploited, and that those who obstruct law enforcement and deprive honest fisherman of the full measure of their labor will be held accountable.”

In 2012, the defendants were convicted of numerous felony crimes related to their overharvest and sale of over $750,000 worth of oysters from the Delaware Bay.  The evidence at trial showed that, for over four years, brothers Todd and Thomas Reeves would overharvest oysters from the Delaware Bay and create false dealer reports and harvester records to hide that overharvest from conservation officers.  The Reeves also created false state and FDA health records to ensure that regulators would not detect their overharvest.  The Reeves then sold their illegal oysters through their company, Shellrock LLC, to Mark Bryan of Harbor House Seafood, a wholesale and retail seafood operator in Delaware.  Bryan and Harbor House are scheduled to be sentenced in Camden on Feb. 27, 2015, for their role in conspiring to create false records to conceal the scheme from authorities.

Kenneth Bailey engaged in similar conduct in 2006 and 2007, overharvesting oysters from the public oyster beds in Delaware Bay.  Bailey then created false dealer reports, harvest reports and bills of lading to hide that overharvest from authorities. 

“This investigation is a great example of state and federal cooperative enforcement,” said Assistant Director Logan Gregory of the National Oceanic and Atmospheric Administration (NOAA) Fisheries’ Office of Law Enforcement.  “The Office of Law Enforcement will continue to support our enforcement partners by providing complex investigation expertise to address wildlife trafficking, seafood fraud and illegal, unregulated and unreported (IUU) fishing.  We enjoy a great working relationship with our partners in the state of New Jersey, which is paramount in helping ensure a level playing field and a resilient coastal economy along the Delaware Bay shore.”

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 the 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.

The Justice Department announced today that it has entered into a consent decree with the state of Maryland and the Queen Anne’s County Sheriff.  If approved by the court, the settlement will resolve Murphy-Taylor v. State of Maryland, et al., a sexual harassment and retaliation lawsuit in which the United States intervened in Feb. 2013.  The United States previously entered into a consent decree with Queen Anne’s County in May 2014.

The United States’ complaint in intervention alleged that several supervisors in the Sheriff’s Office, including the Sheriff’s brother, subjected Kristy Murphy-Taylor to severe sexual harassment and that the Sheriff and members of his command staff retaliated against her when she complained in violation of Title VII of the Civil Rights Act of 1964.  According to the United States’ complaint, over a number of years, Ms. Murphy-Taylor was subjected to numerous acts of unwanted sexual conduct by multiple supervisors including repeated incidents of unwanted sexual touching by the Sheriff’s brother.  Despite Ms. Murphy-Taylor’s complaints about the harassment, the complaint alleges that the defendants failed to take prompt and effective corrective action.  Instead, they allegedly subjected her to intolerable working conditions intended to make her quit, and ultimately terminated her for complaining about the sexual harassment by the Sheriff’s brother.

Under the terms of the consent decree with the state of Maryland and the Queen Anne’s County Sheriff, the defendants have agreed to revise the relevant sexual harassment policies and the procedures for handling complaints of sexual harassment and retaliation.  In particular, the Maryland State Police will provide oversight for the handling of complaints of sexual harassment and retaliation made by employees of the Sheriff’s Office against sworn officers.  Ms. Murphy- Taylor will also receive $250,000 in damages.  Under the terms of the consent decree entered into with Queen Anne’s County in May 2014, Ms. Murphy-Taylor received $620,000 in damages including backpay, frontpay, and attorney’s fees, and Queen Anne’s County agreed to provide oversight and investigative functions for the handling of complaints of sexual harassment and retaliation made by employees of the Sheriff’s Office.

“No woman should have to face losing her job in order to be free from sexual harassment and retaliation at work,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice is committed to eradicating sex discrimination in the workplace.  The resolution of this lawsuit ensures that the Queen Anne’s County Sheriff’s Office will comply with federal law requiring employers to take prompt and effective corrective action to complaints of sexual harassment.”

"Workplace harassment should not be tolerated,” said EEOC Chair Jenny R. Yang. “Complaints of workplace harassment are among the most frequent complaints we receive at EEOC, accounting for 30% of the total charges we received last year.  The Commission is working to prevent and address harassment through targeted outreach and enforcement.”

“This is another example of how collaboration between EEOC and the Department of Justice leads to effective enforcement of Title VII and ensures that public employees are protected from workplace discrimination and retaliation prohibited by Title VII,” said Director Spencer H. Lewis Jr. of the EEOC’s Philadelphia District Office.  The Philadelphia District Office of the EEOC has offices in Philadelphia, Baltimore, Cleveland, and Pittsburgh, and oversees Pennsylvania, Maryland, Delaware, West Virginia and parts of New Jersey and Ohio.

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

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

A 28-year-old man was extradited from Jamaica based on charges that he committed fraud as part of an international lottery scheme against elderly victims in the United States, the Justice Department announced today. 

Damion Bryan Barrett is charged in a 38-count indictment in the Southern District of Florida with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing.  According to the indictment, Barrett and his co-conspirators fraudulently induced elderly victims in the United States to send them thousands of dollars to pay purported fees for lottery winnings that victims had not in fact won.  Barrett is the first Jamaican citizen to be extradited from Jamaica to the United States based on charges of defrauding Americans in connection with a lottery scheme. 

Barrett arrived today in Opa-locka, Florida.  He will make his initial appearance on Feb. 13 before Magistrate Judge Alicia O. Valle in Fort Lauderdale, Florida.  Barrett was indicted by a federal grand jury in Fort Lauderdale on Aug. 9, 2012, and was arrested last month in Jamaica based on the United States’ request that he be extradited.  Barrett’s extradition is the latest step in the United States’ ongoing crackdown on fraudulent lottery schemes based in Jamaica.

According to the indictment, beginning in October 2008, Barrett and his co-conspirators contacted victims in the United States announcing that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money.  The victims never received cash or prizes.  The defendant and his co-conspirators allegedly made calls from Jamaica using voice over internet protocol technology that allowed them to use a telephone number with a U.S. area code.  According to the indictment, Barrett convinced victims to send money to middlemen in South Florida, who then forwarded the money to Jamaica.

“The Department of Justice will find and prosecute those responsible for fraud against American consumers, no matter where the perpetrator resides,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Lottery schemes that target elderly victims for fraud cannot, and will not, be tolerated.”

“Persons who commit crimes against American seniors from outside of the United States will be held accountable,” said U.S. Attorney Wifredo Ferrer of the Southern District of Florida.  “This case serves as an example that there are no borders when it comes to obtaining justice for the victims of these lottery schemes.” 

“Today's extradition signals strong partnership between the Jamaica Constabulary Force and our U.S. law enforcement partners,” said Commissioner of Police Dr. Carl Williams of the  Jamaica Constabulary Force.  “We use this opportunity to warn other lottery scammers who continue to prey on unsuspecting U.S. citizens, that they too will pay the penalty, whether through conviction in Jamaica or through extradition to the United States.  We continue to address this with a high level of attention to contain the scourge.”

If convicted, Barrett faces a statutory maximum sentence of 30 years in prison per count, a possible fine and mandatory restitution.  Barrett’s co-defendant, Oneike Barnett, 29, pleaded guilty on Feb. 28, 2014, to conspiracy to commit wire fraud.  On April 29, 2014, U.S. District Court Judge William J. Zloch sentenced Barnett to serve 60 months in prison and five years of supervised release, and to pay $94,456 in restitution for his role in this case.    

“These criminal telemarking scams heartlessly target the elderly in the United States, at times stealing their life savings,” said Special Agent in Charge Alysa D. Erichs of Homeland Security Investigations (HSI) Miami.  “The successful extradition of Damion Bryan Barrett sends a clear message that the cooperation between our countries is focused on bringing these offenders to justice despite borders that separate us.  This extradition and hopefully others that may follow suit will have a positive impact on diminishing this crime.”

“Together with our international and domestic law enforcement partners we have proven that justice has no borders,” said U.S. Postal Inspector in Charge Ronald Verrochio of the U.S. Postal Inspection Service’s (USPIS) Miami Division.  “We will continue to investigate and prosecute those who defraud American citizens, anywhere in the world.”

“The U.S. Marshals Service, together with our federal partners, will continue to track down and bring to justice those that would pray on our most vulnerable in our country,” said U.S. Marshal Amos Rojas of the Southern District of Florida.

Acting Assistant Attorney General Branda and U.S. Attorney Ferrer commended the investigative efforts of USPIS, U.S. Immigration and Customs Enforcement’s (ICE) HSI Miami and the U.S. Marshals Service.  The case is being prosecuted by Trial Attorney Kathryn Drenning of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Bertha Mitrani of the Southern District of Florida.

An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

A former bank president was charged today for his role in a bank fraud scheme in which he is alleged to have hidden underperforming and at-risk loans from the bank and the Federal Deposit Insurance Corporation (FDIC), among others, 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.  

Gary Patton Hall Jr., 49, of Tifton, Georgia, was indicted today by a grand jury in the Middle District of Georgia with six counts of bank fraud and one count of major fraud against the United States.  

According to allegations in the indictment, Hall was the president and Chief Executive Officer of Tifton Banking Company (TBC) from August 2005 until June 2010.  During that time, Hall was allegedly engaged in a long running scheme to mislead the bank and its loan committee about loans TBC made to local individuals and businesses.  As part of the scheme, Hall allegedly hid past due loans from the FDIC and the TBC loan committee, which resulted in the bank continuing to approve and renew delinquent loans and loans for which the collateral was lacking.  Several of the borrowers eventually defaulted on the loans, resulting in millions of dollars in losses to TBC and others.    

Hall also allegedly hid his personal and business interests in at least two of the transactions over which he exercised approval authority.  For example, in one instance, Hall allegedly approved several loans to the buyer of his condominium in Panama City Beach, Florida.  In doing so, Hall allegedly made several false representations about the loans to TBC’s loan committee, and failed to disclose his personal interest in the transaction.  When the buyer’s loan payments became delinquent, Hall allegedly hid the loans from both the FDIC and state regulators.  Hall allegedly received $50,000 from the sale of his condominium in this transaction, which was allegedly funded in full by an unsecured loan to the buyer approved by Hall.  The buyer eventually declared bankruptcy resulting in a loss of more than $400,000 to TBC.

TBC was closed by the Georgia Department of Banking and Finance in November 2010 due to its poor financial condition.  At that time, TBC had not repaid the $3.8 million it received from the Department of Treasury’s Troubled Asset Relief Program.

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 FBI, the Department of Treasury’s Special Inspector General for the Troubled Asset Relief Program, the Small Business Administration’s Office of the Inspector General, the Federal Deposit Insurance Corporation’s Office of the Inspector General, the Department of Agriculture’s Office of Inspector General and the Tifton County Sheriff’s Office.  The case is being prosecuted by Senior Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Robert McCullers of the Middle District of Georgia.

First Criminal Prosecution in the United States For

Campaign Finance Coordination between Political Committees

A campaign finance manager and political consultant pleaded guilty today in the Eastern District of Virginia for coordinating $325,000 in federal election campaign contributions by a political action committee (PAC) to a Congressional campaign committee.  This is the first criminal prosecution in the United States based upon the coordination of campaign contributions between political committees.   

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.

“The Department of Justice is fully committed to addressing the threat posed to the integrity of federal primary and general elections by coordinated campaign contributions, and will aggressively pursue coordination offenses at every appropriate opportunity,” said Assistant Attorney General Caldwell. 

“Campaign finance laws exist to guard against illegal activity such as coordinated campaign contributions,” U.S. Attorney Boente said.  “The citizens of the Commonwealth of Virginia can rely this office enforce federal campaign finance law.”

 “Today, Mr. Harber took responsibility for violating federal election campaign laws by illegally coordinating payments between a super pac and a candidate’s campaign committee,” said Assistant Director in Charge McCabe.  “The FBI will continue to investigate allegations of campaign finance abuse which are in place to ensure openness and fairness in our elections so the people’s interests are protected.”

Tyler Eugene Harber, 34, of Alexandria, Virginia, pleaded guilty to one count of coordinated federal election contributions and one count of making false statements to the FBI before U.S. District Judge Liam O’Grady of the Eastern District of Virginia.  A sentencing hearing is scheduled for June 5, 2015.

 According to the plea documents, Harber was the Campaign Manager and General Political Consultant for a candidate for Congress in the November 2012 general election.  At the same time, Harber participated in the creation and operation of a PAC, which was legally allowed to raise and spend money in unlimited amounts from otherwise prohibited sources to influence federal elections so long as it did not coordinate expenditures with a federal campaign. 

Harber admitted, among other things, that he made and directed coordinated expenditures by the PAC to influence the election with $325,000 of political advertising opposing a rival candidate.  The coordination of expenditures made them illegal campaign contributions to the authorized committee of Harber’s candidate, and Harber admitted that he knew this coordination of expenditures was an unlawful means of contributing money to a campaign committee.  He further admitted that he used an alias and other means to conceal his action from inquiries by an official of the same political party as Harber’s candidate.

Harber further admitted that he told multiple lies when interviewed by the FBI concerning his activities.

This case was investigated by the FBI’s Washington Field Office, Northern Virginia Resident Agency.  The case is being prosecuted by Richard C. Pilger, Director of the Election Crimes Branch of the Criminal Division’s Public Integrity Section, and Chief Mark D. Lytle of the Financial Crimes and Public Corruption Unit of the Eastern District of Virginia.

Two sergeants with the U.S. Army have pleaded guilty for accepting bribes from Afghan truck drivers at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, 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.

James Edward Norris, 41, of Fort Irwin, California, and Seneca Darnell Hampton, 31, of Fort Benning, Georgia, each pleaded guilty before Chief U.S. District Judge Clay D. Land in the Middle District of Georgia to one count of conspiracy to commit bribery of a public official and one count of money laundering. 

During their guilty pleas, Hampton and Norris admitted to conspiring with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base.  Hampton admitted that he concealed the scheme by attributing the increase in fuel usage to colder winter temperatures. 

Hampton and Norris admitted that they shipped the bribe money back to the United States in tough boxes.  Norris further admitted that on June 7, 2013, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme.  Hampton further admitted that on May 20, 2013, after returning from deployment, he purchased a 2013 GMC Sierra with $29,000 cash derived from the bribery scheme.

As part of their plea agreements, Hampton and Norris agreed to forfeit the proceeds they received from the bribery scheme and the vehicles they purchased with those proceeds, as well as to pay full restitution.  Sentencing has been scheduled for May 21, 2015.

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

On Feb. 10, two former tax return preparers pleaded guilty in the U.S. District Court for the Middle District of Georgia to conspiring to defraud the United States by filing fraudulent tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division.

According to court documents, from at least January 2008 through at least March 2010, sisters-in-law Angela Miller and Lee Lynwood operated a tax return preparation business and conspired to inflate their clients’ federal tax refunds by manipulating the tax returns to reflect false business income or loss amounts and to claim deductions and credits, such as the First-Time Homebuyer Credit, that the clients were not entitled to receive.

“The Department of Justice’s Tax Division, working with Internal Revenue Service-Criminal Investigation and the Offices of the U.S. Attorneys, is committed to prosecuting to the fullest extent of the law tax return preparers who willfully assist in the preparation and filing of false and fraudulent returns,” said Principal Deputy Assistant Attorney General Ciraolo.

Miller and Lynwood also took steps to continue their scheme by impeding the Internal Revenue Service’s (IRS) efforts to shut down their ability to electronically file tax returns.  In May 2008, the IRS notified Miller and Lynwood that their Electronic Filing Number (EFIN) for filing electronic returns at their tax preparation business, A&L Tax Services, was being revoked.  Miller and Lynwood then had an acquaintance apply for another EFIN in her name, which Miller and Lynwood used to continue to file fraudulent tax returns and conceal their preparation from the IRS.  Further, Miller and Lynwood changed the name of their business to B&F Tax Services and caused a bank account for the B&F Tax Services to be opened in the acquaintance’s name as a nominee.

Miller and Lynwood filed false tax returns that claimed more than $130,000 in tax refunds during the course of the conspiracy.  Miller and Lynwood each face a statutory maximum term of five years in prison, three years of supervised release and a fine of up to $250,000.  Sentencing has not yet been scheduled.

Principal Deputy Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the D.C. Office of Tax and Revenue Criminal Investigation Division, who investigated the case, as well as Tax Division Trial Attorneys Hayden M. Brockett and Alex R. Effendi, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office for the Middle District of Georgia for their assistance. 

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

Recognizing that wildlife trafficking is an urgent conservation and national security threat, the Departments of Justice, State and the Interior today unveiled the implementation plan for the U.S. National Strategy for Combating Wildlife Trafficking.  The agencies are co-chairs of the president’s Task Force on Combating Wildlife Trafficking which comprises seventeen federal agencies and offices.

The implementation plan builds upon the Strategy, which was issued by President Obama on Feb. 11, 2014, and reaffirms our nation’s commitment to work in partnership with governments, local communities, nongovernmental organizations and the private sector to stem the illegal trade in wildlife. 

“Illegal wildlife trafficking has become one of the most profitable types of transnational organized crime, and its impact has been devastating,” said Assistant Attorney General for the Environment and Natural Resources Division John C. Cruden.  “Wildlife trafficking threatens security, undermines the rule of law, fuels corruption, hinders sustainable economic development, and contributes to the spread of disease.  This illicit trade is decimating many species worldwide, and some like rhinoceroses, elephants, and tigers  face extinction in our lifetimes if we do not reverse this trend.  The Justice Department is committed to its role in President Obama’s national strategy to combat wildlife trafficking, both by enforcing our nation’s wildlife laws like the Lacey Act and the Endangered Species Act and by working closely with other federal agencies to assist our foreign partners’ enforcement efforts.”

Incorporating recommendations from the secretary of the Interior’s Advisory Council on Wildlife Trafficking, the framework will guide and direct  new and ongoing efforts of the task force in executing the Strategy. 

Building upon the Strategy’s three objectives – strengthening enforcement, reducing demand for illegally traded wildlife, and expanding international cooperation  – the plan lays out next steps, identifies lead and participating agencies for each objective, and defines how progress will be measured.

Some of those steps included in the implementation plan are:

• Continuing efforts to implement and enforce administrative actions to strengthen controls over trade in elephant ivory in the United States;
• Leveraging partnerships to reduce demand both domestically and abroad; and
• Strengthening enforcement capacity, cooperation, and partnerships with counterparts in other countries.

The Task Force has made significant strides toward meeting the objectives since the National Strategy was announced one year ago.  A fact sheet describing these important steps related to law enforcement, demand reduction and international cooperation can be found here.

The United States is also using trade agreements and trade policy to press for groundbreaking commitments on wildlife trafficking and wildlife conservation in the Trans-Pacific Partnership Agreement (TPP) with eleven other countries in the Asia-Pacific region and the Transatlantic Partnership Agreement (T-TIP) with the European Union (EU). These commitments would be fully enforceable, including through recourse to trade sanctions, with far-reaching benefits for species like rhinos, sharks, and pangolins.

Read more about the Justice Department’s work to combat wildlife trafficking.

A Springdale, Arkansas, man was convicted by a jury today in the U.S. District Court located in Fayetteville, Arkansas, of tax crimes, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Conner Eldridge of the Western District of Arkansas.

Doyle Smith, 56, was found guilty following a three-day trial before the Honorable U.S. District Judge Timothy L. Brooks of four counts of subscribing and filing a false tax return, one count of corruptly endeavoring to obstruct and impede the administration of the internal revenue laws and one count of presenting a fictitious financial obligation.

According to evidence introduced at trial, in 2008 and 2009, Smith submitted four false individual federal tax returns for tax years 2005 through 2008, which falsely reported a total of more than $1.4 million in fictitious federal tax withholdings.  Based on these fictitious withholding amounts, Smith claimed a total of $1,021,457 in income tax refunds to which he was not entitled to receive for those tax years.  Smith also submitted false claims and correspondence to both the Internal Revenue Service (IRS) and third-parties in an attempt to cause the IRS and U.S. Treasury to pay his debts to third parties and to obstruct the IRS’ tax administration efforts.  For example, in January 2010, Smith mailed to the Department of Arkansas Finance and Administration a fictitious financial instrument titled “U.S. Treasury Trust Account Money Order.”  This fictitious document purportedly obligated U.S. Treasury funds in the amount of $129,439 to pay for outstanding sales taxes that Smith owed to the state of Arkansas.

“Today’s jury verdict makes it clear that individuals who steal from the government through the filing of false and fraudulent claims for refunds and fictitious financial instruments will be pursued and prosecuted to the fullest extent of the law,” said Principal Deputy Assistant Attorney General Ciraolo.  “The Department of Justice’s Tax Division is committed to working with its federal and state law enforcement partners to identify those who seek to manipulate and abuse our federal tax system, and to hold such individuals accountable.”

“This case involves a scheme in which the defendant attempted to steal taxpayer money from the U.S. Treasury for his own personal gain,” said U.S. Attorney Eldridge.  “This type of fraud is a serious crime, and an insult to hard-working, law abiding citizens and taxpayers.  Today’s conviction sends a strong message that our office and our law enforcement partners will aggressively pursue fraud wherever we find it.”

“At the IRS, protecting taxpayer money is a matter we take extremely seriously,” said Special Agent in Charge Christopher A. Henry of the IRS-Criminal Investigation.  “An integral part of the agency’s mission involves detecting and catching fraudulent tax refund claims.  The object of these schemes is to defraud the government and the taxpaying public.  Today’s conviction should serve as a warning to those that would attempt to enrich themselves by fraudulent means.” 

“It is the Treasury Inspector General for Tax Administration’s (TIGTA) mission to protect the integrity of the Internal Revenue Service and promote the fair administration of our federal tax system,” said Special Agent in Charge Ruben Florez of TIGTA’s Dallas Field Division.  “TIGTA and its law-enforcement partners will vigorously investigate individuals that attempt to corruptly interfere with the administration of the internal revenue laws through fraudulent means, and will do everything within its power to ensure that those involved will be prosecuted to the fullest extent of the law.”

In this case, the statutory maximum sentences are three years in prison and a $250,000 fine for each count of filing a false tax return; three years in prison and a $250,000 fine for the count of impeding the internal revenue laws; and 25 years in prison and a $250,000 fine for the count of presenting a fictitious financial obligation.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Eldridge commended the special agents of IRS-Criminal Investigation and the TIGTA who investigated the case, as well as Trial Attorneys Robert Kemins and David Zisserson of the Tax Division who are prosecuting the case.

A former U.S. Postal Service contracting officer, along with a mail delivery contractor, were indicted today for engaging in a scheme to defraud the Postal Service through bribery and kickbacks in connection with the awarding of contracts to deliver the mail.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Inspector General David C. Williams of the U.S. Postal Service made the announcement.

Gregory Cooper, 59, of Glenn Dale, Maryland, a former U.S. Postal Service Contracting Officer Representative and Purchasing and Supply Management Specialist, and Barbara Murphy, 51, of Rocky Mount, North Carolina, the owner and operator of MC&G Trucking LLC and ER&R Transportation, were charged today in a ten-count indictment unsealed in the District of Maryland.  Both Cooper and Murphy are charged with one count of conspiracy and five counts of honest services wire fraud, and each is separately charged in a single count of bribery.  Cooper is also charged with one count of executing a false document and one count of making false statements.

According to the indictment, from January 2011 through July 2012, Cooper allegedly solicited and accepted bribes and kickbacks from Murphy in exchange for helping her win contracts for delivery of the mail.  Specifically, the indictment alleges that Cooper accepted, among other things, cash deposits into his checking account, payments against his car loan and cell phone bills and a college tuition payment on behalf of his daughter.  In exchange, Cooper allegedly assumed the responsibility for reviewing the contracts on which Murphy bid from his subordinates, recommended that Murphy be awarded nine Postal Service contracts worth $1.5 million, provided Murphy with confidential bid information and assumed direct oversight over Murphy’s contracts from his subordinates.  The indictment further alleges that Cooper made false statements to investigators regarding his allegedly corrupt relationship with Murphy and executed a false financial disclosure document failing to disclose the bribes he had accepted from Murphy.

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

This case was investigated by the U.S. Postal Service Office of the Inspector General.  The case is being prosecuted by Trial Attorneys Maria Lerner and Mark Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Arun Rao of the District of Maryland.    

AstraZeneca LP, a pharmaceutical manufacturer based in Delaware, has agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act, the Justice Department announced today.  AstraZeneca markets and sells pharmaceutical products in the United States, including a drug sold under the trade name Nexium.

“We will continue to pursue pharmaceutical companies that pay kickbacks to pharmacy benefit managers,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs.”

The settlement resolves allegations that AstraZeneca agreed to provide remuneration to Medco Health Solutions, a pharmacy benefit manager, in exchange for Medco maintaining Nexium’s “sole and exclusive” status on certain Medco formularies and through other marketing activities related to those Medco formularies.  The United States alleged that AstraZeneca provided some or all of the remuneration to Medco through price concessions on drugs other than Nexium, namely on Prilosec, Toprol XL and Plendil.  The United States contended that this kickback arrangement between AstraZeneca and Medco violated the Federal Anti-Kickback statute, and thereby caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program.

“By this agreement we are making important strides in holding drug manufacturers accountable not only in Delaware but nationwide,” said U.S. Attorney Charles M. Oberly III of the District of Delaware.  “I am proud of the tireless work by this office to investigate this case.”

“Pharmaceutical companies that pay kickbacks in order to boost profits will be held accountable for their improper conduct,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will continue to crack down on kickback arrangements, which can undermine drug choices for patients and corrode the public’s trust in the health care system.”

This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the government and to share in any recovery.  The lawsuit was filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle, who will collectively receive $1,422,000. 

The settlement with AstraZeneca was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the District of Delaware, the HHS-OIG, the U.S. Postal Service’s Office of Inspector General and the FBI Wilmington, Delaware, Resident Agency Office and the FBI’s Major Provider Response Team.

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 $23.6 billion through False Claims Act cases, with more than $15.1 billion of that amount recovered in cases involving fraud against federal health care programs.

The False Claims Act lawsuit was filed in the U.S. District Court for the District of Delaware and is captioned United States ex rel. DiMattia et al. v. AstraZeneca LP et al. No. 10-910 (D. Del.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

Settlement Requires Substantial Improvements to Dealerships’ Policies and Provides $225,000 in Relief to Affected Customers

The U.S. Department of Justice Civil Rights Division, the U.S. Attorney’s Office for the Western District of North Carolina and the North Carolina Department of Justice today announced a settlement of the federal government’s first-ever discrimination lawsuit involving “buy here, pay here” auto lending.  The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Western District of North Carolina.

The settlement resolves a lawsuit, filed in January 2014 by the Department of Justice and the State of North Carolina, alleging that Auto Fare Inc. and  Southeastern Auto Corp., two “buy here, pay here” used-car dealerships in Charlotte, North Carolina, and their owner – violated the federal Equal Credit Opportunity Act by engaging in a pattern or practice of “reverse redlining” by intentionally targeting African-American customers for unfair and predatory credit practices in the financing of used car purchases.  The state of North Carolina also alleged that the dealerships’ actions violated the state’s Unfair and Deceptive Trade Practices Act.  The settlement came after the court denied the dealerships’ motion to dismiss the case and agreed that reverse redlining by an auto lender is illegal discrimination.

“It is not only illegal, but also fundamentally wrong, to target borrowers of color for predatory loans and exploit their need for a car to do essential tasks such as getting to work,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Combating discrimination in all segments of the auto lending market is, and will remain, a top priority for the Civil Rights Division.  I am pleased that these dealerships have agreed to reform problematic lending and servicing practices and adopt policies that promote responsible lending.  I hope that other buy here, pay here dealerships will evaluate their practices in light of this settlement.”

The settlement requires the dealerships to implement a number of specific practices to ensure that the terms of their loans and repossession practices are no longer unfair and predatory.  The required changes include: limiting projected monthly payments to no more than 25% of a borrower’s income; requiring interest rates to be at least five percentage points below the state’s rate cap; mandating a lower interest rate for borrowers who have specified evidence of lower credit risk; requiring competitive sales prices; prohibiting hidden fees on top of the required down payment; prohibiting repossessions until at least two consecutive missed payments; providing down payment refunds to borrowers who quickly go into default; requiring strict compliance with provisions of state repossession law enacted to protected consumers; providing borrowers improved disclosures at the time of sale (including disclosing the presence of any GPS, or automatic shut off, device); allowing borrowers to obtain an independent inspection of the car before completing the purchase; and providing borrowers improved notices before repossession.

“All consumers deserve to be treated fairly when they buy a car,” said North Carolina Attorney General Roy Cooper.  “We hope this case sends a strong message that car dealers cannot use race when targeting buyers with overpriced cars and oppressive loans.”

The settlement also requires defendants to establish a $225,000 settlement fund to compensate victims of their past discriminatory and predatory lending. 

“Predatory lending practices that lock consumers into contracts they cannot afford are illegal and can spell financial disaster for borrowers of lower income or challenged credit history,” said U.S. Attorney Anne M. Tompkins of the Western District of North Carolina.  “Today’s settlement ensures that all customers of Auto Fare Inc. and Southeastern Auto Corp. will have equal access to credit regardless of their race.”

The lawsuit alleged that the two dealerships’ sales prices, down payments, and interest rates were disproportionately high compared to other subprime used-car dealers.  Because the dealerships did not meaningfully assess the customers’ creditworthiness or ability to repay, their rates of default and repossession were disproportionately high.  Additionally, the dealerships engaged in repossessions when customers were not in default.

The U.S. Department of Justice’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 36 lending matters under the Fair Housing Act, Housing Equal Credit Opportunity Act (ECOA) 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 and other agencies involved in this matter are members 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 settlement provides for an independent party to contact victims and distribute payments of compensation at no cost to borrowers whom the United States Department of Justice and the North Carolina Department of Justice identify as victims of defendants’ conduct.  Former customers who are eligible for compensation from the settlement will be contacted by mail later this year.  Individuals who believe that they may have been victims of illegal conduct by Auto Fare or Southeast Auto and have questions about the settlement may contact the United States Department of Justice and the North Carolina Department of Justice by calling 1-800-896-7743, mailbox 92, or emailing AutoFareLawsuit@usdoj.gov.

A copy of the proposed order and other documents related to this lawsuit, as well as additional information about fair lending enforcement by the United States Department of Justice, can be obtained from the United States Department of Justice website at www.justice.gov/fairhousing. 

Victim Died After Being Run Over by Truck

The Justice Department announced today that Deryl Paul Dedmon, 22, John Aaron Rice, 21, and Dylan Wade Butler, 23, all of Brandon, Mississippi, were sentenced today in U.S. District Court in Jackson for their roles in federal hate crime charges in connection with an assault culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011.  Dedmon, Rice and Butler each 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 their roles in the death-resulting assault of Anderson, 47, of Jackson, Mississippi.  Dedmon was sentenced to 600 months; Rice was sentenced to 220 months; and Butler was sentenced to 84 months.

“The defendants targeted African-American people they perceived as vulnerable for heinous and violent assaults – hate crimes, motivated solely by race, that shook an entire community and claimed the life of an innocent man,” said Attorney General Eric Holder.  “These sentences bring a fitting end to the case against these three men.  Although nothing can erase the grievous harms inflicted, or ease the grief of the victim’s friends and loved ones, this outcome holds those responsible for these horrific crimes fully to account.  And it illustrates the Justice Department’s steadfast commitment to combating hate crimes, supporting victims, and seeing that justice is done – in every case and circumstance.”

“This case demonstrates that the Department of Justice will vigorously pursue those who commit racially motivated assaults and will cast a broad net to ensure that all who commit such acts are brought to justice,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “These sentences are just the first three of ten in what we hope will help provide some closure to the victim’s family and to the larger community affected by Mr. Anderson’s death.”

“Hate crimes not only injure the victims and their families, but intimidate entire communities,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.  “The sentences imposed today send a clear message to the community that this office, in partnership with department’s Civil Rights Division, will prioritize and aggressively prosecute hate crimes and other civil rights violations in Southern Mississippi.” 

“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.  The defendants further admitted that on June 25, 2011, they and others attended a birthday party in Puckett, Mississippi, for a mutual friend.  During the party, the defendants and others talked about going to Jackson to harass and assault African Americans.

By the early morning hours of June 26, 2011, the defendants and four other co-conspirators agreed to carry out their plan to find, harass and assault African Americans.  At around 4:15 a.m., Rice, Butler and two co-conspirators drove to west Jackson in a white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later.  Rice, Butler and the other two 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., Rice, Butler and the 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.  Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive.  After Dedmon and the other two co-conspirators arrived in Dedmon’s Ford F250 truck, Dedmon and Rice physically assaulted Anderson.  Rice first punched Anderson in the face with sufficient force to knock Anderson to the ground, and then Dedmon punched Anderson in the face multiple times while he was on the ground.  After the assault, Rice, Butler and two co-conspirators left the motel parking lot in the Jeep.  As they left, one of the occupants of the Jeep yelled, “White Power!”  Prior to getting back into his truck, Dedmon responded by also yelling “White Power!”

Once back in his truck, Dedmon 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 Rice and Butler agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.  

Seven other defendants involved in related cases, William Kirk Montgomery, 25, of Puckett, Mississippi, Sarah Adelia Graves, 21, of Crystal Springs, Mississippi, Shelby Brooke Richards, 21, of Pearl, Mississippi, John Louis Blalack, 20, Jonathan Kyle Gaskamp, 22, Robert Henry Rice, 24, and Joseph Paul Dominick, 23, all 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 Civil Rights Division of the Department of Justice, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.

Today, the Department of Justice reached a settlement agreement with the Robertson County, Tennessee, school district to resolve the department’s determination that the district had yet to fulfill its desegregation obligations in the areas of student assignment and school construction.  The department identified a series of district decisions that, over decades, impeded desegregation by building and expanding almost all-white schools while leaving African-American students disproportionately in overcrowded schools with portable classrooms. 

As a school system formerly segregated by law, the district has a duty to remedy past discrimination and avoid actions that reestablish segregated schools.  The district also has an ongoing obligation under federal civil rights laws to treat all students equitably regardless of race or ethnicity.  Under the agreement, all Robertson County students will be assigned to schools, and school facilities will be constructed and maintained, in a desegregated and non-discriminatory manner. 

In addition, the agreement ensures that:

• the new elementary school set to open next year will be desegregated,

• overcrowding at predominately minority schools is addressed,

• anticipated changes in student assignment to middle and high schools will further desegregation, and

• cultural sensitivity and competency training is provided to teachers and staff.

“We are pleased that the Robertson County Schools has committed to take steps to provide all students with equitable educational opportunities regardless of race,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We will work closely with the district as it implements the agreement and develops an effective student assignment plan for its middle and high schools.”

Promoting school desegregation is a priority of the department’s Civil Rights Division.  Additional information about the Division is available at www.justice.gov/crt.