District Not Recorded

Acting Assistant Attorney General Vanita Gupta for the Justice Department’s Civil Rights Division and U.S. Attorney Gregory K. Davis for the Southern District of Mississippi announced that John Louis Blalack, 20, and Robert Henry Rice, 24, both from Brandon, Mississippi, pleaded guilty today in U.S. District Court in Jackson to federal hate crime charges in connection with their roles in a series of assaults on African Americans in Jackson, Mississippi.  Blalack and Rice are the ninth and 10th individuals associated with a group of people who conspired to target and assault African Americans based on their race in the spring of 2011.

“Justice has been served,” said Attorney General Eric Holder.  “The hate crimes to which these defendants have pleaded guilty were as shocking as they were reprehensible—targeting innocent people for racially-motivated acts of violence that inflicted grievous harm and even claimed a life.  The Justice Department will never rest in our pursuit of those who victimize their fellow citizens.  This landmark case should send a clear message: that anyone who commits an act of bias-motivated violence, or who violates the civil rights to which all Americans are entitled, will be held accountable to the fullest extent of the law.”

Prior to today's guilty pleas, Deryl Paul Dedmon, 22; John Aaron Rice, 21; Dylan Wade Butler, 23; Jonathan Kyle Gaskamp, 22; and Joseph Paul Dominick, 23, all from Brandon, Mississippi, and William Kirk Montgomery, 25, from Puckett, Mississippi, Shelbie Brooke Richards, 21, from Pearl, Mississippi, and Sarah Adelia Graves, 21, from Crystal Springs, Mississippi, pleaded guilty in connection with their roles in these offenses.  The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.   

Blalack pleaded guilty to two counts of violating the Matthew Shepard – James Byrd Jr. Hate Crimes Prevention Act.  Rice pleaded guilty to one count of violating the same act.  The statutory maximum sentence for these violations is 10 years in prison and a $250,000 fine.  Sentencing for Blalack is set for April 23, 2015, and sentencing for Rice is set for April 30, 2015.

The federal investigation revealed that beginning in the spring of 2011, Blalack, Robert Rice and others conspired with one another to harass and assault African-American people 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-American people.  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.   

On June 25, 2011, Blalack and others attended a birthday party/bonfire for a mutual friend in Puckett, Mississippi.  During the party, Blalack and others talked about going to Jackson to harass and assault African-American people.  By the early morning hours of June 26, 2011, Blalack, Montgomery, Dedmon, John Aaron Rice, Butler, Richards and Graves agreed to carry out their plan to find, harass and assault African-American people.  Robert Rice did not go to Jackson on June 26, 2011. 

At around 4:15 a.m., Blalack, Montgomery, John Aaron Rice, and Butler drove to Jackson in Montgomery’s white Jeep with the understanding that Dedmon, Richards and Graves would join them a short time later.  Blalack and the other three occupants of the Jeep then drove around Jackson and threw beer bottles from the moving vehicle at African-American pedestrians they encountered.  At approximately 5:00 a.m., Blalack and the other three occupants of the Jeep spotted Anderson in a motel parking lot off of 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 visibly intoxicated.  Blalack and John Aaron Rice decided to get out of the Jeep to distract Anderson while they waited for Dedmon, Richards and Graves to arrive. 

After Dedmon Richards, and Graves arrived in Dedmon’s Ford F250 truck, Dedmon and John Aaron 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, Blalack, Montgomery, Rice and Butler 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 Ford F250 truck, Dedmon deliberately used his vehicle to run over Anderson, causing injuries which resulted in his death.  Blalack’s guilty plea includes his role in this offense.

On a previous occasion, Blalack, Montgomery, Butler and Dominick drove around west Jackson to find and assault African Americans.  Blalack and the other occupants of the vehicle purchased bottles of beer to drink and then threw the beer bottles at African Americans.  The occupants of the vehicle also purchased a sling-shot.  Some of the occupants of the vehicle, including Blalack, threw beer bottles and shot metal ball bearings out of the moving vehicle at African American pedestrians.  Blalack pleaded guilty for his role in this offense.

Another previous occasion involved a racially motivated assault at or near a golf course in Jackson.  On this particular evening, Robert Rice, Blalack, Montgomery, Gaskamp, Dedmon and John Aaron Rice were in a vehicle, searching for, and eventually finding,  a vulnerable African-American man to assault.  The vehicle was stopped so Dedmon, John Aaron Rice and Gaskamp could chase the victim down.  The three men beat the man to the point that he begged for his life.  Robert Rice’s guilty plea includes his role in this offense.

“Today’s guilty pleas are the culmination of an extensive federal investigation into this violent hate crime conspiracy,” said Acting Assistant Attorney General Gupta.  “Ten defendants have now pleaded guilty to crimes associated with this conspiracy.  We hope that today’s guilty pleas provide closure to the victim’s family and to the community that has mourned Mr. Anderson’s tragic death and been shocked by the scope of the conspiracy to commit racially motivated assaults in Jackson by a group of ten co-conspirators.”

“There can be no tolerance for acts of gratuitous violence targeting innocent persons simply because of their race,” said U.S. Attorney Davis.  “This case is a testament to the United States Attorney’s Office’s dedication to vigorously investigate and prosecute violations of federal hate crime laws.  I commend not only Mr. Anderson’s family for their continued cooperation throughout this investigation, but our law enforcement partners, including the FBI and Jackson Police Department, who worked tirelessly in this case to ensure our hate crime laws are strictly enforced.”

“With today's guilty pleas, the FBI and its law enforcement partners have identified and brought to justice all those individuals who conspired to deprive Mr. Anderson and other citizens of their civil rights simply because of the color of their skin,” said Special Agent in Charge Donald Alway for the FBI in Mississippi.  “The FBI remains dedicated to protecting the cherished freedoms of all Americans, including aggressively investigating allegations of hate crimes and working to prevent them.”

These guilty pleas were the result of a cooperative effort between the Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County District Attorney’s office.  This case was investigated by the FBI’s Jackson Division 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, and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi. 

Randy Jones, 44, a former corrosion coordinator for Shell Pipeline Company L.P. (Shell), pleaded guilty in Milwaukee today to failing to conduct bi-monthly voltage readings and an annual survey of a pipeline used to transport jet fuel in violation of the Pipeline Safety Act (PSA) and making a false statement to the Pipeline and Hazardous Material Safety Administration (PHMSA).  

Jones, a resident of Louisiana, pleaded guilty to knowingly failing to conduct required safety test between January and December 2011 and submitting false data to PHMSA. The violations were in connection with a pipeline owned by Shell that delivered commercial aviation jet fuel to General Mitchell International Airport in Milwaukee, Wisconsin.  In January 2012 a hole was discovered in the pipeline at Mitchell Airport after jet fuel began showing up in soil surrounding the airport and in nearby Wilson Creek.  Fuel eventually reached and melted asphalt on airport property.  Shell reported that approximately 9,000 gallons of jet fuel was released.  The response and cleanup cost for the spill was approximately $19.3 million.     

Jones was employed by Shell from 1992 through 2012. From 2010 until 2012, Jones was employed as a corrosion coordinator and was responsible for Shell pipelines servicing Mitchell and Chicago O’Hare airports. Jones failed to conduct the required testing for 2011 and when advised of an audit by PHMSA scheduled for December 2011, he submitted false data indicating the required test had been conducted.      

Consistent with requirements of the PSA, which establishes standards for the safe operation of the hazardous materials in pipelines, buried or submerged metal pipelines must be protected to prevent corrosion.  This involves the use of a device called a rectifier which applies a negative current to soil near the pipeline to keep corrosion away from the pipe.  The operator of the pipeline is required to conduct bi-monthly readings of the voltage generated from a rectifier and conduct an annual survey of the pipeline to insure that the pipeline is adequately protected from corrosion.  PHMSA is the primary agency responsible for regulating and enforcing the PSA. 

An information charging Jones with two counts of violating the PSA and one false statement violation was filed on Nov. 14, 2014.  Under the terms of the plea agreement, each offense charged carries a maximum prison sentence of five years. The sentencing is set for April 30, 2015. 

The case was investigated by the U.S. Environmental Protection Agency Criminal Investigation Division, U.S. Coast Guard Investigative Service, U.S. Department of Transportation Office of Inspector General, and FBI, with assistance from PHMSA.  The case was prosecuted by Jennifer A. Whitfield of the Environmental Crimes Section of the Department of Justice and Tracy M. Johnson of the U.S. Attorney’s Office for the Eastern District of Wisconsin.

 Los departamentos de Educación (ED) y Justicia (DOJ) publicaron hoy una Guía de orientación para recordar a los estados, distritos escolares y escuelas que tienen la obligación, según la ley federal, de asegurar que los estudiantes en proceso de aprender inglés tengan igual acceso a una educación de alta calidad y la oportunidad de lograr su pleno potencial académico.

“La diversidad de nuestra nación es uno de nuestros mayores atributos”, dijo Vanita Gupta, fiscal general auxiliar (en fuciones) en la División de Derechos Civiles del DOJ. “Cuando apoyamos la educación de los estudiantes que aprenden inglés, nos apoyamos a nosotros también. La Guía publicada hoy —40 años después de que se promulgó la Ley de Igualdad de Oportunidad Educativa— ayudará a las escuelas a cumplir con su obligación legal de asegurar que todos los estudiantes puedan triunfar”.

“Hace cuatro décadas, la Corte Suprema de los Estados Unidos sostuvo en el caso Lau v. Nichols que todos los estudiantes merecen igual acceso a una educación de alta calidad, independiente de su origen lingüístico o lo bien que saben inglés”, dijo Catherine E. Lhamon, subsecretaria para derechos civiles de ED. “La orientación que hoy publicamos no sólo nos recuerda la sentencia del tribunal, sino que también proporciona información útil a las escuelas que trabajan para asegurar la equidad para los estudiantes y las familias con dominio limitado del inglés”.

Además de la Guía, ED y DOJ también han proporcionado herramientas y recursos adicionales para ayudar a las escuelas a prestar servicio a los estudiantes que aprenden inglés y a los padres con dominio limitado del inglés:

• Una hoja informativa en inglésy en otros idiomas sobre las obligaciones que tienen las escuelas, según la ley federal, de asegurar que los estudiantes que aprenden inglés puedan participar de manera significativa e igual en la escuela.

• Una hoja informativa en inglés y en otros idiomas sobre las obligaciones que tienen las escuelas, según la ley federal, de transmitir a los padres con dominio limitado del inglés información en un idioma que puedan entender.

Un paquete de herramientas preparado por la Oficina de Adquisición del Inglés de ED para ayudar a los distritos escolares a identificar a los estudiantes con dominio limitado del inglés. Este es el primer capítulo de una serie de capítulos para ayudar a las agencias de educación estatales y distritos escolares a cumplir sus obligaciones con los estudiantes que aprenden inglés.

Esta es la primera vez que una guía trata solo sobre las varias leyes federales que rigen las obligaciones que tienen las escuelas con los estudiantes de inglés. La guía reconoce el 40 aniversario de Lau v. Nichols y la Ley de Igualdad de Oportunidad Educativa de 1974 (EEOA), y también el 50 aniversario de la Ley de Derechos Civiles. Igual que la EEOA, Lau requiere que las escuelas públicas adopten medidas apropiadas para ayudar a los estudiantes de inglés a superar las barreras lingüísticas y asegurar su capacidad de participar por igual en la escuela.

La Guía explica las obligaciones que tienen las escuelas de:

• identificar a los estudiantes con dominio limitado del inglés de una manera oportuna, válida y fiable;

• ofrecer a todos los estudiantes que aprenden inglés un programa sólido de ayuda con el idioma;

• proporcionar personal calificado y recursos suficientes para instruir a los estudiantes que aprenden inglés;

• garantizar que los estudiantes que aprenden inglés tengan un acceso equitativo a los programas y actividades de la escuela;

• evitar que los estudiantes que aprenden inglés sean segregados o apartados sin necesidad de los demás estudiantes;

• vigilar el progreso de los alumnos en el aprendizaje del inglés y el trabajo en el aula a  nivel de grado;

• remediar cualquier falta académica que los estudiantes que aprenden inglés incurrieron mientras que asistían a programas de ayuda con el idioma;

• sacar a los estudiantes de los programas de asistencia de lenguaje cuando ya sean competentes en inglés y darles seguimiento para asegurar que no sean retirados de esos programas antes de tiempo;

• evaluar la eficacia de los programas para los estudiantes que aprenden inglés; y

• proporcionar a los padres con dominio limitado del inglés información sobre los programas escolares, servicios y actividades en un idioma que comprendan.

Casi cinco millones de estudiantes en Estados Unidos están aprendiendo inglés, y constituyen el nueve por ciento de todos los estudiantes en las escuelas públicas del país. Del 2002 al 2011, el porcentaje de estudiantes que aprenden inglés en las escuelas públicas aumentó en 40 estados y el Distrito de Columbia. En la actualidad, tres de cada cuatro escuelas públicas tienen estudiantes que aprenden inglés.

La aplicación de la Ley de Igualdad de Oportunidad Educativa y del Título VI de la Ley de Derechos Civiles de 1964, que asegura a los estudiantes que aprenden inglés y a los padres con dominio limitado del inglés acceso igual a los servicios que tienen derecho, es una prioridad de la División de Derechos Civiles del DOJ. Hay más información aquí sobre los esfuerzos de DOJ para brindar igualdad de oportunidad en la educación a todos los estudiantes.

La misión de la Oficina para Derechos Civiles de ED (OCR) es garantizar la igualdad de acceso a la educación y promover la excelencia educativa en todo el país mediante la aplicación rigurosa de las leyes de derechos civiles. La OCR es responsable de aplicar las leyes federales de derechos civiles que prohíben la discriminación por las instituciones educativas por motivos de raza, color, origen nacional, discapacidad, sexo y edad, así como la Ley de Igualdad de Acceso para los Boy Scouts of America de 2001. Hay información adicional sobre la OCR aquí, y hay recursos adicionales, incluido las guías publicadas anteriormente sobre este tema, aquí.

• Asegurar que los estudiantes aprendices del inglés participen de forma significativa y equitativa en programas educativos
• Tools and Resources for Identifying all English Learners
• Estimado colega
• Información para padres y tutores con dominio limitado del idioma inglés (LEP) y para las escuelas y distritos escolares que se comunican con ellos

A Queens, New York, man and his Israeli brother were charged in indictments unsealed today in federal courts in Philadelphia and Brooklyn, New York, with offenses related to a long-running odometer tampering and money laundering scheme, the Justice Department and the U.S. Attorney’s Office for the Eastern District of New York announced.

Chaim Gali aka Mike Gali and John Triculy, 40, of Queens Village, New York, and Shmuel Gali aka Sam Gali, 42, of Israel, are charged in a 15-count indictment in the Eastern District of Pennsylvania (EDPA) with conspiracy, securities fraud and false odometer statements.  The Galis are also charged in a related two-count indictment in the Eastern District of New York (EDNY) with mail and wire fraud conspiracy, and money laundering conspiracy.  If convicted of the charges in the EDPA indictment, the defendants face a statutory maximum of five years in prison on the conspiracy charge; a statutory maximum of 10 years in prison for each securities fraud charge and up to three years in prison for each false odometer statement charge.   If convicted of the charges in the EDNY indictment, they face a statutory maximum of 20 years in prison for each of the charges.

“Mileage is one of the most important factors in a consumer’s decision to purchase a used car,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Misrepresenting the mileage on a used car fraudulently induces a consumer to pay more money for less value, and it hides necessary information that will affect how a consumer maintains and repairs that vehicle.” 

The indictments allege that the Galis devised a scheme to defraud buyers of used motor vehicles by misrepresenting the mileage of approximately 690 vehicles they sold beginning as early as 2006 and through at least 2011.  The indictments charge that the Galis used fictitious dealer names to purchase high-mileage, used motor vehicles from a national vehicle leasing company.  The defendants are charged with conspiring to alter the odometers in these vehicles, which they purchased in Florida, Maryland, Missouri and elsewhere, to reflect false lower mileages.  The indictments allege that the Galis then fraudulently altered the motor vehicle titles to reflect the false lower mileages and as a result, the commonwealth of Pennsylvania issued motor vehicle titles reflecting the altered mileages. 

The defendants subsequently sold the vehicles at wholesale automobile auctions in Pennsylvania and New Jersey using various dealerships, including Chase Auto Center and Conestoga City Autos.  At the auctions, the Galis provided the buyers with Pennsylvania vehicle titles bearing the false lower mileages.  The EDPA indictment alleges that in some instances, the title indicated mileage more than 100,000 miles less than the true mileage of the vehicle and as a result, the defendants received inflated sales prices for the vehicles they sold.

The defendants deposited the proceeds of the sales of the rolled-back vehicles into various bank accounts, mainly in Brooklyn.  Among other things, the defendants then used this money to purchase additional used vehicles and continue their fraud scheme.

“As alleged, the defendants created an elaborate odometer tampering and money laundering scheme to con would-be buyers into purchasing used cars at inflated prices,” said U.S. Attorney Loretta E. Lynch for the EDNY.  “They then used the proceeds of their crimes to continue their fraud against additional unsuspecting consumers.  This case demonstrates our commitment to protect consumers from fraud.” 

Acting Assistant Attorney General Branda and U.S. Attorney Lynch commended the investigative efforts of the Internal Revenue Service-Criminal Investigation and the U.S. Department of Transportation National Highway Traffic Safety Administration’s (NHTSA) Office of Odometer Fraud Investigation.

Chaim Gali was arrested today in New York.  Shmuel Gali is in Israel and the government will seek his extradition.

The case is being prosecuted by Trial Attorney Kathryn Drenning and Senior Litigation Counsel Linda I. Marks of the Civil Division’s Consumer Protection Branch, and Assistant U.S. Attorney Catherine M. Mirabile of the Eastern District of New York.     

NHTSA has established a special hotline to handle odometer fraud complaints.  Individuals who have information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761. 

An update on the status of the case is available on the Consumer Protection Branch’s website.  More information on odometer fraud is available on NHTSA’s website, and tips on detecting and avoiding odometer fraud are also available on the NHTSA website. 

The charges in the indictments are merely allegations, and do not constitute proof of guilt.  Every defendant is presumed to be innocent unless and until proven guilty.

Second U.S. Navy Officer Indicted on Related Bribery Charges

A commander in the U.S. Navy pleaded guilty to federal bribery charges today, admitting that he provided a government contractor with classified ship schedules and other internal U.S. Navy information in exchange for cash, travel and entertainment expenses, as well as the services of prostitutes.  A second U.S. Navy officer was also indicted today on related bribery charges by a federal grand jury in the Southern District of California.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General of Investigations James B. Burch of the Department of Defense, Defense Criminal Investigative Service (DCIS) made the announcement. 

“Commander Sanchez sold out his command and country for cash bribes, luxury hotel rooms, and the services of prostitutes,” said Assistant Attorney General Caldwell.  “After today’s guilty plea, instead of free stays at the Shangri-La hotel, Sanchez is facing many nights in federal prison.  The Department of Justice’s Criminal Division is committed to prosecuting those who abuse positions of public trust for personal enrichment at the expense of national security and the American taxpayers.”

“During the course of the investigation into this criminal enterprise, investigators have compiled voluminous evidence identifying multiple persons of interest, generating numerous leads, and establishing and corroborating connections,” said Director Traver.  “NCIS and our law enforcement partners are committed to seeing this massive fraud and bribery investigation through to its conclusion, so that those responsible are held accountable.”

“This outcome yet again sends the message that corruption will be vigorously investigated and prosecuted,” said Deputy Inspector General of Investigations Burch.  “This is an unfortunate example of dishonorable Naval officers who recklessly risked the safety of our troops by trading classified information for cash, extravagant gifts and prostitutes.  Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.  This investigation should serve as a warning that those who compromise the integrity of the United States will face their day of reckoning.  DCIS and our law enforcement partners will pursue these crimes relentlessly.”

Jose Luis Sanchez, 42, an active duty U.S. Navy Officer stationed in San Diego, California, is one of seven defendants charged – and the fifth to plead guilty – in the corruption probe involving Glenn Defense Marine Asia (GDMA), a defense contractor based in Singapore that serviced U.S. Navy ships and submarines throughout the Pacific.  Sanchez pleaded guilty to bribery and bribery conspiracy before U.S. Magistrate Judge David H. Bartick of the Southern District of California.  A sentencing hearing was scheduled for March 27, 2015, before U.S. District Judge Janis L. Sammartino.

According to his plea agreement, from April 2008 to April 2013, Sanchez held various logistical positions with the U.S. Navy’s Seventh Fleet in Asia.  Sanchez admitted that, beginning in September 2009, he entered into a bribery scheme with Leonard Glenn Francis, the CEO of GDMA, in which Sanchez provided classified U.S. Navy ship schedules and other sensitive U.S. Navy information to Francis and used his position and influence within the U.S. Navy to benefit GDMA.  In return, Francis gave him things of value such as cash, travel and entertainment expenses, and the services of prostitutes.  Sanchez admitted that this bribery scheme continued until September 2013.  Francis was charged in a complaint unsealed on Nov. 6, 2013, with conspiring to commit bribery; that charge remains pending.

In his plea agreement, Sanchez admitted to seven specific instances in which he provided Francis with classified U.S. Navy ship and submarine schedules.  He also admitted using his position and influence with the U.S. Navy to benefit GDMA and Francis on various occasions.  Further, Sanchez admitted that he tipped Francis off about investigations into GDMA overbillings and briefed Francis on internal U.S. Navy deliberations.  

Sanchez further admitted that, in exchange for this information, Francis provided him with cash, entertainment and stays at high-end hotels.  For example, in May 2012, Francis paid for Sanchez to stay five nights at the Shangri-La, a luxury hotel in Singapore, and, two months later, Francis paid for Sanchez’s travel from Asia to the United States, at a cost of over $7,500.  Additionally, Francis arranged and paid for the services of prostitutes for Sanchez while Sanchez was in Singapore and elsewhere in Asia.

In addition to Sanchez, two other U.S. Navy officials – former NCIS Special Agent John Beliveau and Petty Officer First Class Dan Layug – have pleaded guilty in connection with this investigation.Two former GDMA executives, Alex Wisidagama and Edmond Aruffo, have likewise pleaded guilty.

Also today, an indictment was returned against U.S. Navy Captain-Select Michael Vannak Khem Misiewicz, 47, of San Diego, California, charging him with a bribery conspiracy and seven counts of bribery.  According to allegations in the indictment, from at least as early as July 2011 until  September 2013, Misiewicz provided classified U.S. Navy ship schedules and other sensitive U.S. Navy information to Francis and used his position and influence within the U.S. Navy to benefit GDMA.  In return Francis allegedly gave him things of value such as cash, travel and entertainment expenses, and the services of prostitutes. 

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

The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

Attorney General Eric Holder released the following statement Tuesday on the passing of former Governor Mario Cuomo.  The Attorney General Holder’s travel to New York to attend former Governor Cuomo’s funeral was canceled due to inclement weather.

“With the passing of Mario Cuomo, America has lost a giant and a true statesman – a leader of strength and rare humility; of wit and ceaseless compassion. 

“Governor Cuomo was more than a distinguished public servant or a great American success story.  Throughout his extraordinary life, he was a tenacious champion for those too often forgotten and too long overlooked.  Through his words and his deeds, he gave voice to the voiceless, hope to the hopeless, and strength to all those who felt that they had been left out or left behind.   As the son of Italian immigrants – hailing from my own hometown of Queens, New York – he never forgot his roots.  He was always in step with the people he served, and with the glorious immigrant tradition that has always made America so great.  His life’s work was inflected with sincere concern for all of his fellow citizens – no matter what they looked like or where they happened to be from.  And in his own distinctive voice, he consistently challenged us not only to reach for great and untouched heights, but to extend a hand to those unable to make the journey alone.

“For decades, I have admired Governor Cuomo’s unwavering dedication to building an America that’s more fair, more free, and more equitable.  I last spoke with him a few months ago, and will always be grateful for the advice and support he offered throughout my career.  With his loss, a great progressive flame has gone out.  But in the hearts of millions of Americans who heard his message, who knew his story, and who benefited from his passionate service, the fire that he ignited burns on.”

The former Virginia Governor Robert F. McDonnell, 60, of Glen Allen, Virginia, was sentenced today to two years in prison for soliciting and obtaining payments, loans, gifts and other items from Star Scientific, a Virginia-based corporation, and Jonnie R. Williams Sr., Star Scientific’s then chief executive officer, in violation of federal public corruption laws.

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 Adam S. Lee of the FBI’s Richmond Field Office, Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) and Virginia State Police Superintendent Colonel W. Steven Flaherty made the announcement.  Senior U.S. District Judge James R. Spencer of the Eastern District of Virginia imposed the sentence.

Robert McDonnell and his wife, Maureen McDonnell, were convicted following a jury trial of one count of conspiracy to commit honest-services wire fraud and one count of conspiracy to obtain property under color of official right.  Robert McDonnell was also convicted of three counts of honest-services wire fraud and six counts of obtaining property under color of official right, while Maureen McDonnell was convicted of two counts of honest services wire fraud counts and four counts of obtaining property under color of official right.  In total, Robert McDonnell was convicted of 11 of 13 counts and Maureen McDonnell was convicted of eight of 13 counts.

“Robert McDonnell corrupted the most powerful office in Virginia and fractured the public’s trust,” said Assistant Attorney General Caldwell.  “Taking bribes in exchange for official actions is not politics as usual – it is an insidious crime that strikes at the heart of public service and will not be tolerated.”

According to the evidence presented at trial, from April 2011 through March 2013, the McDonnells participated in a scheme to use the former governor’s official position to enrich themselves and their family members by soliciting and obtaining payments, loans, gifts and other things of value from Star Scientific and Jonnie R. Williams Sr.  The McDonnells obtained these items in exchange for the former governor performing official actions to legitimize, promote and obtain research studies for Star’s products, including the dietary supplement Anatabloc.

According to evidence presented at trial, the McDonnells obtained from Williams more than $170,000 in direct payments as gifts and loans, thousands of dollars in golf outings, and numerous items.  As part of the scheme, Robert McDonnell arranged meetings for Williams with Virginia government officials, hosted and attended events at the Governor’s Mansion designed to encourage Virginia university researchers to initiate studies of Star’s products and to promote Star’s products to doctors, contacted other Virginia government officials to encourage Virginia state research universities to initiate studies of Star’s products, and promoted Star’s products and facilitated its relationships with Virginia government officials.

The evidence further showed that the McDonnells attempted to conceal the things of value received from Williams and Star to hide the nature and scope of their dealings with Williams from the citizens of Virginia by, for example, routing gifts and loans through family members and corporate entities controlled by the former governor to avoid annual disclosure requirements.

Maureen McDonnell is scheduled to be sentenced on Feb. 20, 2015.

The case was investigated by the FBI, IRS-CI and the Virginia State Police, and is being prosecuted by Deputy Chief David V. Harbach II of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Michael S. Dry, Jessica D. Aber and Ryan S. Faulconer of the Eastern District of Virginia.

A former executive of Japan-based Toyoda Gosei Co. Ltd. has agreed to plead guilty and to serve one year and one day in a U.S. prison for his role in a conspiracy to fix prices and rig bids of automotive hoses installed in cars sold in the United States, the Department of Justice announced today.

A one-count felony charge was filed today in the U.S. District Court for the Northern District of Ohio in Toledo against Makoto Horie, a Japanese national.  According to the charge, Horie along with co-conspirators, conspired to fix the prices of certain automotive hoses sold to Toyota Motor Corp. and certain of its subsidiaries, affiliates and suppliers, in the United States.  According to the charge, Horie participated in the conspiracy from at least as early as March 2007 until at least September 2010.  In addition to the prison term, Horie has agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“The charge today once again demonstrates the Antitrust Division’s vigorous commitment to holding individuals accountable for engaging in anticompetitive conduct,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The division’s ongoing investigation has resulted in more than two dozen executives serving prison time for their participation in illegal conspiracies involving auto parts.”

Toyoda Gosei manufactures and sells a variety of automotive parts, including certain automotive hoses.  On Sept. 29, 2014, the Department of Justice announced that Toyoda Gosei had agreed to plead guilty and pay a $26 million criminal fine for its role in this conspiracy and another conspiracy involving automotive airbags and steering wheels. 

Horie, a Japanese national, was employed at Toyoda Gosei North America, in Troy, Michigan, a subsidiary of Toyoda Gosei, as Vice President of Sales between March 2007 and December 2007, and as Senior Vice President of Sales between January 2008 and January 2010; and was employed at Toyoda Gosei in Japan as a sales general manager between February 2010 and September 2010. 

To date, 49 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of over $2.4 billion in fines.

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

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, Lima Resident Agency with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 1-216-522-1400.

The former owner and President of Chestnut Consulting Group Inc. and Chestnut Consulting Group Co. (generally referred to as the “Chestnut Group”) was indicted by a federal grand jury today for his alleged participation in a scheme to pay bribes to a foreign official in violation of the Foreign Corrupt Practices Act (FCPA) and the Travel Act, and to launder proceeds of those crimes. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Division made the announcement.

“We are committed to combating foreign corruption, across the globe and across all industries, through enforcement actions and prosecutions of companies and the individuals who run those companies,” said Assistant Attorney General Caldwell.  “As alleged, in this case, the owner and chief executive of a Pennsylvania financial consulting firm secured hundreds of millions of dollars in business by bribing a European banking official.  He now faces an indictment for corruption in federal court.  Bribery of foreign officials undermines the public trust in government and fair competition in business.  The charges returned today reflect the clear message that we will root out corruption and prosecute individuals who violate the Foreign Corrupt Practices Act.” 

“We will aggressively investigate and prosecute individuals in our district who use corrupt means like bribery to influence foreign officials,” said U.S. Attorney Memeger.  “Our criminal statutes in this arena must be enforced to ensure fair dealing in a competitive global marketplace where foreign officials often hold significant decision-making authority.  The alleged conduct here was particularly reprehensible because it undermined the legitimacy of a process designed to support businesses for the citizens of developing nations.”

“This is a great example of the FBI’s ability to successfully coordinate with our international law enforcement partners to tackle corruption,” said Special Agent in Charge Hanko.  “Bribery – foreign or domestic – cripples the notion of fair competition in the marketplace.”

Dmitrij Harder, 42, of Huntingdon Valley, Pennsylvania, the former owner and president of the Chestnut Group, was charged with one count of conspiracy to violate the FCPA and Travel Act, five counts of violating the FCPA, five counts of violating the Travel Act, one count of conspiracy to commit international money laundering, and two counts of money laundering. 

According to allegations in the indictment, the European Bank for Reconstruction and Development (EBRD) was a multilateral development bank headquartered in London, England, and was owned by over 60 sovereign nations.  Among other things, the EBRD provided financing for development projects in emerging economies, primarily in Eastern Europe. 

According to allegations in the indictment, Harder and others paid bribes for the benefit of a senior official at the EBRD in exchange for influencing the official’s actions on applications for financing submitted by the Chestnut Group’s clients and for directing business to the Chestnut Group.  The EBRD ultimately approved applications for financing from two of the Chestnut Group’s corporate clients; the first resulted in the EBRD providing an $85 million investment and a 90 million Euro loan, while the second resulted in a $40 million investment and a $60 million convertible loan.  The Chestnut Group allegedly earned approximately $8 million in “success fees” as a result of the EBRD’s approval of these two applications.    

The indictment alleges that Harder made five payments totaling more than $3.5 million to the sister of the EBRD official, in part as an effort to conceal the bribes.  These payments were allegedly made for purported consulting and other services provided to the Chestnut Group by the official’s sister, when in fact she provided no such services.  Harder also allegedly participated in creating fake documents to justify these payments. 

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

The case is being investigated by the FBI’s Philadelphia Division.  The Criminal Division’s Office of International Affairs also provided assistance.

The case is being prosecuted by Assistant Chief Leo R. Tsao of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michelle Morgan of the Eastern District of Pennsylvania.

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

Defendants Charged with Conspiracy to Violate the Neutrality Act and Conspiracy to Possess Firearms in Furtherance of a Crime of Violence

United States Attorney General Eric Holder, Assistant Attorney General for National Security John P. Carlin, United States Attorney Andrew M. Luger for the District of Minnesota, and Federal Bureau of Investigation Special Agent in Charge Richard T. Thornton of the Minneapolis Division today announced a criminal complaint charging Cherno Njie, 57, and Papa Faal, 46, for their role in a recent attempted coup in The Gambia.  Both men are in custody and are expected to have initial appearances in court today.  Njie will appear in United States District Court in Baltimore, Maryland.  Faal will appear in U.S. District Court in Minneapolis, Minnesota.  Both defendants are charged with conspiring to violate the Neutrality Act by making an expedition against a friendly nation from the United States and conspiring to possess firearms in furtherance of a crime of violence.

On Dec. 30, 2014, there was an unsuccessful attempted coup against the government of The Gambia.  The Gambia is a country in West Africa bordered by Senegal and the Atlantic Ocean.

“These defendants stand accused of conspiring to carry out the violent overthrow of a foreign government, in violation of U.S. law,” said Attorney General Eric Holder.  “The United States strongly condemns such conspiracies.  With these serious charges, the United States is committed to holding them fully responsible for their actions.”

According to the criminal complaint and documents filed in court, in December 2014, Cherno Njie and Papa Faal separately traveled from the United States to The Gambia for the purpose of overthrowing the Gambian government.  Faal is a dual U.S./Gambian citizen and a resident of Brooklyn Center, Minnesota.  Njie, a U.S. citizen of Gambian descent and a resident of Austin, Texas, is a businessman who served as financier and leader of the conspiracy.  Njie and his co-conspirators expected that Njie would have served as the interim leader of The Gambia had the coup attempt succeeded.

According to the criminal complaint, approximately 10-12 members of the conspiracy entered The Gambia to carry out the coup attempt, with the expectation that others in the country would join and assist them.  Prior to departing for The Gambia, between August and October 2014, Faal and other co-conspirators purchased multiple firearms, including M4 semi-automatic rifles, and shipped them to The Gambia for use in the coup attempt.  Members of the conspiracy also acquired night-vision goggles, body armor, ammunition, black military style uniform pants, boots, and other personal equipment.

According to the criminal complaint, on Dec. 30, 2014, a number of the co-conspirators, including Faal, met in the woods near the State House in Banjul, which is the home of the Gambian president, and split into two assault teams.  Njie was not present at that meeting, instead waiting in a safe place until the assault teams took control of the facility.  However, when one of the assault teams approached the State House and fired a shot into the air, the team began taking heavy fire from the guard towers.  Although numerous conspirators on the assault teams were killed or injured during the failed attempt to take control of the government building, Faal was able to flee the scene and he ultimately returned to the U.S.  Njie also returned to the U.S.  Both men have since been arrested.

This investigation is being led by the Federal Bureau of Investigation and its partners on Joint Terrorism Task Forces in multiple field offices.

Assistant U.S. Attorney Charles Kovats of the United States Attorney’s Office for the District of Minnesota is prosecuting this case, with assistance from Richard Scott, a Deputy Chief in the Counterespionage Section of the Justice Department's National Security Division.  A number of other U.S. Attorney’s Offices, including those in the District of Maryland and the Western District of Texas provided critical support during the investigation.

Defendant Information:

CHERNO NJIE, 57

Austin, Texas.

Charges:

• Conspiracy to violate the Neutrality Act, 1 count

• Conspiracy to possess a firearm in furtherance of a crime of violence, 1 count

PAPA FAAL, 46

Brooklyn Center, Minnesota.

Charges:

• Conspiracy to violate the Neutrality Act, 1 count

• Conspiracy to possess a firearm in furtherance of a crime of violence, 1 count

Defendant Harbored Undocumented Mexican Migrant for Labor on Tobacco Farm

The Department of Justice announced today that Pedra Perez-Gumeta, 52, of Lexington, Kentucky, was sentenced to serve 18 months in federal prison by United States Senior District Court Judge Joseph M. Hood for harboring an undocumented Mexican migrant for labor at a tobacco farm, illegally re-entering the United States after deportation and failing to pay a minimum wage to the undocumented Mexican migrant.  Judge Hood also ordered Perez-Gumeta to pay restitution to the Mexican migrant in the amount of $1,311 and mandatory special assessments totaling $210.

Perez-Gumeta previously admitted that she had brought a woman to Lexington from Mexico to provide the woman with a job.  Perez-Gumeta also admitted that she knew the woman was from Mexico and not legally within the United States, nor was the woman able to work legally in the United States.  Perez-Gumeta also admitted that she had been previously deported from the United States and that she had re-entered the United States illegally.  Perez-Gumeta further admitted that she did not pay the woman for all of the labor the woman performed, instead keeping a portion of the woman’s wages for herself.  Perez-Gumeta pleaded guilty to the charges in September of 2014.  In sentencing Perez-Gumeta, the court found that the defendant used coercion in the course of harboring the undocumented Mexican woman for financial gain.

Under federal law, Perez-Gumeta must serve 85 percent of her prison sentence, and, upon release, will be under the supervision of the United States Probation Office for one year, unless she is deported.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Steven L. Igyarto, Resident Agent in Charge, Homeland Security Investigations (HSI), Department of Homeland Security (DHS), Rodney Brewer, Commissioner, Kentucky State Police (KSP), and Mark Barnard, Chief, Lexington-Fayette Urban County Government Division of Police, jointly made the announcement today after the sentencing.

The investigation was conducted by the DHS-HSI, the KSP, and the Lexington Police Department.  The United States was represented by Trial Attorney Victor Boutros of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant United States Attorneys Hydee R. Hawkins and David A. Marye.

The government has intervened in two lawsuits against a Florida cardiologist, Dr. Asad Qamar, and his physician group, the Institute for Cardiovascular Excellence PLLC (ICE), alleging that Qamar and ICE billed Medicare for medically unnecessary peripheral artery interventions and paid kickbacks to patients by waiving Medicare copayments irrespective of financial hardship, the Justice Department announced today. 

“Performing medically unnecessary procedures puts patients at risk and contributes to the soaring costs of health care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Today’s action evidences the Department of Justice’s efforts both to safeguard federal health care program beneficiaries and to protect public funds.”

The lawsuits allege that Qamar and ICE performed excessive and medically unnecessary peripheral artery interventional services and affiliated procedures on Medicare patients.  One of the lawsuits further alleges that Qamar induced patients to undergo those unnecessary procedures by routinely waiving the 20 percent Medicare copayment, regardless of the patients’ financial need.

“Physicians should make medical decisions on the basis of their patients’ needs,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “Performing medically unnecessary procedures solely to line a physician’s pockets strains our nation’s health care system, and can also jeopardize the health and safety of patients.  Fighting Medicare and other health care fraud is one of our office’s most important priorities.”

The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they discover evidence that defendants have submitted false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases.  The cases are captioned United States ex rel. Doe v. Institute of Cardiovasular Excellence, PLLC, ICE Holdings, PLLC, Dr. Asad Qamar, & Dr. Humera Qamar, Case No. 5:11-CV-406-OC-KRS (M.D. Fla.) and United States ex rel. Taylor & the State of Florida v. Institute of Cardiovascular Excellence & Dr. Asad Qamar, Case No. 8:14-CV-1454-T-35-EAS (M.D. Fla.)

“Physicians who try to enrich themselves and their practices by performing medically unnecessary, invasive procedures can cause patients very serious health issues, waste millions in taxpayer dollars each year, and undercut the public’s trust in the medical profession,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).  “We will continue to work with our law enforcement partners to protect beneficiaries and hold health care providers accountable for such outrageous fraud schemes.”

This matter 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 $23.3 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The investigation was conducted by HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Middle District of Florida.  The claims asserted by the government are allegations only and there has been no determination of liability. 

Five Others Previously Sentenced to Substantial Prison Terms for Participation in the Same Tor-Network-Based Child Pornography Website

The former acting director of cyber security at the U.S. Department of Health and Human Services was sentenced to 25 years in federal prison today for engaging in a child exploitation enterprise and related charges in connection with his membership in a Tor-network-based child pornography website.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Deborah R. Gilg of the District of Nebraska and Special Agent in Charge Thomas R. Metz of the FBI’s Omaha Division made the announcement.

“Using the same technological expertise he employed as Acting Director of Cyber Security at HHS, DeFoggi attempted to sexually exploit children and traffic in child pornography through an anonymous computer network of child predators,” said Assistant Attorney General Caldwell.  “But dangerous criminals cannot be allowed to operate on-line with impunity.  Today’s sentence shows that the Department of Justice will bring criminals and child predators to justice, even when they employ anonymous networks like Tor.”

“Today's sentence and the others imposed earlier demonstrate that those who exploit children will be aggressively pursued and prosecuted to the full extent of the law,” said U.S. Attorney Gilg.  “Those who think they are acting anonymously on the Internet will be found and held accountable.”

“The production and distribution of child pornography is one of the most saddening, tragic crimes the FBI investigates,” said Special Agent in Charge Metz.  “Today’s sentencing sends a message to those who advertise, distribute, possess, and trade child pornography that the FBI will look for you, will find you and will make sure you are prosecuted to the fullest extent of the law.”

Timothy DeFoggi, 56, formerly of Germantown, Maryland, was convicted on Aug. 26, 2014, following a four-day jury trial before Chief U.S. District Judge Laurie Smith Camp in the District of Nebraska of engaging in a child exploitation enterprise, conspiracy to advertise and distribute child pornography and accessing a computer with intent to view child pornography.

According to evidence presented at trial, DeFoggi registered as a member of the Tor-network-based child pornography website on March 2, 2012, and maintained his membership and activity until Dec. 8, 2012, when the website was taken down by the FBI.  The website’s users utilized advanced technological means in order to undermine law enforcement’s attempts to identify them.  The website was accessible only through Tor, an Internet application specifically designed to facilitate anonymous communication.  Acting under the cloak of anonymity, users advised others on best practices to prevent detection by law enforcement, including advice about the proper use of encryption software, techniques to hide or password-protect child pornography collections, and programs to remove data from a user’s computer.

Through the website, DeFoggi accessed child pornography, solicited child pornography from other members, and exchanged private messages with other members in which he expressed an interest in the violent rape and murder of children.  DeFoggi suggested meeting one member in person to fulfill their mutual fantasies to violently rape and murder children.

DeFoggi was the sixth individual to be convicted as part of an ongoing investigation targeting three Tor-network-based child pornography websites.  The websites were run by a single administrator, Aaron McGrath, who was previously convicted in the District of Nebraska of engaging in a child exploitation enterprise in connection with his administration of the websites.  On Jan. 31, 2014, McGrath was sentenced to 20 years in prison by Senior U.S. District Judge Joseph F. Bataillon.

Four other members of the same website as DeFoggi were previously convicted and sentenced by Senior U.S. District Judge Bataillon in connection with their illegal activity on the site: 

• Jason Flanary, then 42, formerly of Chicago, Illinois, the Philippines, and Guam, was sentenced to 20 years in prison on June 30, 2014.

• Wesley Cameron, then 22, formerly of Ashford, Alabama, was sentenced to 15 years in prison on Oct. 24, 2014.

• Zackary Austin, 28, formerly of Reno, Nevada, was sentenced to 16 years in prison on Nov. 6, 2014.

• Charles MacMillan, 29, formerly of Rockville, Maryland, was sentenced to 12 years in prison on Nov. 7, 2014.

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

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

The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the state of Arkansas today announced that the city of Fort Smith, Arkansas, will spend more than $200 million over the next 12 years on upgrades to its sewer collection and treatment system to reduce discharges of raw sewage and other pollutants into local waterways.  Under a settlement filed in federal court in the Western District of Arkansas, Fort Smith will also pay a $300,000 civil penalty and spend $400,000 on a program to help qualified low-income residential property owners to repair or replace defective private sewer lines that connect to the city collection system. 

“This settlement will achieve long overdue improvements in the city’s sewer system that will substantially reduce the number of sewage discharges and help assure that the citizens of Fort Smith reside in a safe and clean environment,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resource Division.

Today’s agreement resolves alleged Clean Water Act violations related to Fort Smith’s failure to properly operate and maintain its sewer collection and treatment system.  Since 2004, Fort Smith has reported more than 2,000 releases of untreated sewage from its municipal sewage system, resulting in more than 119 million gallons of raw sewage flowing into local waterways, including the Arkansas River.  These types of releases, known as sanitary sewer overflows, cause serious water quality and public health problems.  Fort Smith also violated limits for discharges of various pollutants from its Massard and P Street wastewater treatment plants numerous times over the last decade.

“This agreement means cleaner water for the residents of Fort Smith by reducing pollution flowing into local waterways,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “EPA works with communities like Fort Smith to develop cost-effective and pragmatic solutions to protect residents from exposure to raw sewage.”

Many of the manholes and pump stations from which Fort Smith’s sanitary sewer overflows occur are located in low-income and minority communities.

To reduce sanitary sewer overflows Fort Smith will conduct a comprehensive assessment of its sewer system to identify defects and places where stormwater may be entering the system.  The city will also repair all sewer pipe segments and manholes that are likely to fail within the next 10 years, develop projects to improve its sewers’ performance and implement a program to reduce the introduction of fats, oil and grease into its system, to reduce root intrusion, and to clean the system of debris which can cause sanitary sewer overflows.  Fort Smith will also implement a program to determine whether human waste is entering and being released from the city’s stormwater system.

The implementation of the consent decree will reduce releases of approximately 3,492 pounds of total suspended solids, 3,343 pounds of biological oxygen demand, 543 pounds of nitrogen, and 78 pounds of phosphorus from the Fort Smith sewage system each year.  High levels of these pollutants can reduce oxygen levels in water bodies, which can threaten the health of aquatic plants and animals.  Too much nitrogen and phosphorus in the water cause algae to grow faster than ecosystems can handle.  Large growths of algae, known as algal blooms, contribute to the creation of hypoxia or “dead zones” in water bodies where oxygen levels are so low that most aquatic life cannot survive.

Sanitary sewer overflows and backups of raw sewage onto private property pose a risk to human health and the environment.  Untreated sewage contains organic matter, bacteria, viruses, parasites, toxics and metals, which may cause illness or even death when humans come into contact with them.  Most illnesses that arise from contact with sewage are caused by pathogens, which are biological agents that cause disease or illness in a host.  The most common pathogens in sewage are bacteria, parasites, and viruses.  They cause a wide variety of acute illnesses including diarrhea and infections.

Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of EPA’s National Enforcement Initiatives.  EPA is working to reduce sanitary sewer overflows by obtaining commitments from cities to implement timely, affordable solutions.

The proposed settlement is subject to a 30-day public comment period and final court approval. The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html.

The Department of Justice has announced today that Gerber Legendary Blades, a division of Fiskars Brands Inc., of Madison, Wisconsin, has agreed to pay a civil penalty of $2.6 million to settle allegations that it knowingly failed to immediately report to the U.S. Consumer Product Safety Commission (CPSC) a safety hazard associated with Fiskars’ Gator Combo Axe.  Fiskars has also agreed to establish and maintain a compliance program with internal recordkeeping and monitoring systems to keep track of information about product safety hazards.  The settlement agreement is awaiting judicial approval.

“Fiskars received numerous reports from consumers who were harmed by this product,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The company had an obligation to immediately report to the CPSC and it failed to do so.  We will take action against those who fail to abide by the law so that our partners at the CPSC can protect consumers from injuries.” 

The Axe was a combination product that had a knife embedded in its handle that was supposed to be secured by two small magnets.  In a complaint filed on behalf of the CPSC in U.S. District Court for the District of Oregon, the United States alleged that Fiskars became aware that the knife in the Axe handle could and did dislodge from the Axe’s handle when the Axe was in use, causing serious injuries to consumers.  Fiskars imported approximately 103,000 Axes from Taiwan through its Gerber Legendary Blades division in Portland, and distributed those Axes to retail sporting good chains and stores throughout the United States. 

“CPSC’s job is to protect consumers,” said Chairman Elliot F. Kaye. “The sooner a firm informs CPSC about incidents or injuries with defective products, the quicker we can act to protect the American public. Failure to report in a timely basis is not only illegal, it can endanger consumer safety. We will not tolerate such irresponsible and dangerous behavior.”

Under the Consumer Product Safety Act (CPSA), manufacturers, distributors and retailers are required to report product hazards to the CPSC.  A knowing violation of the CPSA subjects a firm to civil penalties.  The United States alleged that beginning as early as 2005 and continuing over the next several years, Fiskars received consumer complaints and warranty claims indicating that the knife fell out of the Axe handle while the Axe was being used to chop, pound or hammer.  In several instances, the knife dislodged from the handle during use and caused injuries including lacerations requiring stitches, permanent nerve damage and surgery to repair severed tendons.

“In this case, Fiskar's failure to report to the CPSC not only put consumers at risk, it contributed to people being injured as a result of the unsafe product design,” said U.S. Attorney S. Amanda Marshall for the District of Oregon.  “The settlement not only addresses the product safety issue, but also holds the company accountable and sends a message to others that these violations will be taken seriously.”

In March 2011, Gerber and the CPSC announced a voluntary recall of the Axe.  At that time, consumers were advised to remove the knife from the axe handle and contact Gerber to receive a free handle cap for holding the knife in the axe handle during transport and storage, instructions and a warning label.  Information on the recall can be found on the CSPC website. 

The matter is being handled by Trial Attorney Roger Gural of the Civil Division’s Consumer Protection Branch, Assistant U.S. Attorney Neil J. Evans for the District of Oregon and Harriet Kerwin of the CPSC Office of the General Counsel.

In agreeing to settle this matter, Fiskars has not admitted that it knowingly violated the CPSA. 

The Department of Justice announced today that it will require Verso Paper Corp. (Verso) and NewPage Holdings Inc. (NewPage) to divest two paper mills, one in Rumford, Maine, and another in Biron, Wisconsin, in order for Verso to proceed with its acquisition of NewPage.  Without this divestiture, the department said, the transaction would have risked higher prices in the United States and Canada for papers used for labels, magazines and catalogues.

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

“This deal threatened to weaken competition in key coated publication and label paper markets in the United States and Canada,” said William J. Baer, Assistant Attorney General of the department’s Antitrust Division.  “Competition between Verso and NewPage historically has resulted in lower prices, improved products, and better service.  By requiring the divestiture of mills that produce these products, today’s proposed settlement will ensure that consumers benefit from continuing competition in the sale of coated paper.  The Antitrust Division remains committed to preserving competitive vigor in markets for forest products.”  Baer also noted that this divestiture requirement follows two other proposed mergers between forest products suppliers that were abandoned after the department expressed concern. 

Coated freesheet web paper is bright, heavier-weight glossy paper with excellent print qualities that is used for magazine covers, premium magazines, and similar products.  Coated groundwood paper is typically used for the covers of low-cost magazines and the interior pages of magazines and catalogues.  Label paper, a type of freesheet paper, is coated on only one side to allow for the use of graphics on the coated side and adherence of the uncoated side to a product.  Coated label paper is used on a wide variety of products, from soup cans to wine bottles.

According to the department’s complaint, Verso’s acquisition of NewPage would significantly increase concentration in various coated paper markets in the United States and Canada.  Verso and NewPage’s combined share is approximately 50 percent in coated freesheet web paper, 40 percent in coated groundwood paper, and 70 percent in coated label paper.  Preserving competition between Verso and NewPage is particularly important in the shrinking coated freesheet web and coated groundwood markets, which are likely to see higher-cost competitors exit in the next few years.

The proposed divestitures address these competitive concerns.  Under the terms of the proposed consent decree, Verso must divest NewPage’s Rumford and Biron paper mills to Catalyst Paper Corporation (Catalyst) or an alternative, independent buyer approved by the United States.  Collectively, the mills to be divested produced approximately 940,000 tons of coated groundwood, coated freesheet, and other papers, which is approximately the same amount of production as Verso currently operates.

Verso is a Delaware corporation headquartered in Memphis, Tennessee.  It operates two mills that collectively produce coated freesheet web paper, coated groundwood paper, label paper, and other types of paper.  In 2013, Verso had approximately $1.4 billion in sales.

NewPage is a Delaware corporation headquartered in Miamisburg, Ohio.  NewPage operates eight mills that collectively produce coated freesheet web paper, coated groundwood paper, label paper, and other types of paper.  Its annual sales for 2013 were approximately $3.1 billion.

Catalyst is a Canadian corporation headquartered in Richmond, British Columbia. Catalyst operates three paper mills.  Catalyst’s 2013 sales totaled approximately $1 billion.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Peter Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

The National Law Enforcement Officers Memorial Fund today released preliminary fatality statistics for 2014.  The data in the report shows that 126 federal, state, local, tribal and territorial officers were killed in the line of duty this year.  The report further showed that in 2014, 50 officers were killed by firearms, 49 officers were killed in traffic-related incidents, and 27 officers died due to other causes including 24 who suffered from job-related illnesses—such as heart attacks—while performing their duties.

Attorney General Eric Holder made the following statement today:

"These troubling statistics underscore the very real dangers that America's brave law enforcement officers face every time they put on their uniforms.  Each loss is both tragic and unacceptable -- a beloved father, mother, son, or daughter who never came home to their loved ones.

"That's why, over the last six years, my colleagues and I have taken action to support these courageous men and women.  As we speak, the Justice Department continues its efforts to empower local, state, tribal, and federal law enforcement personnel to do their jobs as safely and effectively as possible.  In 2011, I created an Officer Safety Working Group in response to concerns about violence directed at law enforcement.   The department is currently funding thorough analysis of 2014 officer fatalities, including ambushes of law enforcement and other incidents, so we can mitigate risks in the future.  And through groundbreaking initiatives like VALOR, we are providing cutting-edge training to help prevent violence against law enforcement, to improve officer resilience, and to increase survivability during violent encounters.

"Through our Bulletproof Vest Partnership Program, we're helping to provide lifesaving equipment to those who serve on the front lines.  And through the Public Safety Officers' Benefits Program, we're offering our strongest support to our brave officers and their loved ones in the toughest of times.

"Going forward, this unshakeable commitment to those who serve will continue to guide our efforts to improve 21st-century policing and build trust between law enforcement and the communities they protect.

"I have always been proud to support these selfless public servants.  All Americans owe our courageous law enforcement personnel a tremendous debt of gratitude for their patriotic service, for their often-unheralded sacrifices, and for the dangers they routinely face in the name of public safety."

Company Agrees to Pay $59.4 Million Criminal Fine

Nippon Yusen Kabushiki Kaisha (NYK), a Japanese corporation, has agreed to plead guilty and to pay a $59.4 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers, and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today. 

According to a one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, NYK conspired to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  NYK participated in the conspiracy from at least February 1997 until at least September 2012.  NYK has agreed to cooperate with the Department’s ongoing antitrust investigation.  The plea agreement is subject to court approval. NYK is the third company to agree to plead guilty in this investigation, bringing the total agreed-upon fines to over $135 million.

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

“This is another step in the effort to restore competition in the ocean shipping industry to the benefit of U.S. consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Including today’s charges, three companies have now agreed to plead guilty to participating in this long-running conspiracy.  We are not done.  Our investigation is ongoing.”

According to the charge, NYK and its co-conspirators conspired by agreeing on prices, allocating customers, agreeing to refrain from bidding against one another and exchanging customer pricing information.  The department said the companies then charged fees in accordance with those agreements for international ocean shipping services for certain roll-on, roll-off cargo to and from the United States and elsewhere at collusive and non-competitive prices.

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

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

A Northern California real estate investor pleaded guilty for his role in bid rigging and fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Charles Rock was indicted on Dec. 3, 2014, in the U.S. District Court for the Northern District of California in Oakland, California.  The indictment alleged that Charles Rock and others agreed not to compete at public foreclosure auctions in Contra Costa County, California, and diverted money to themselves that should have gone to mortgage holders and other beneficiaries.  Charles Rock pleaded guilty to one count of bid rigging and two counts of mail fraud. 

To date, 51 individuals have agreed to plead or have pleaded guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.  In addition, 21 real estate investors, including Charles Rock, have been charged in five multi-count indictments for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Francisco, and San Mateo counties.

The indictment alleges, among other things, that as early as June 2008 until about January 2011, Charles Rock and others conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Contra Costa County, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and in the process, defrauded mortgage holders and other beneficiaries.

“This is the first post-indictment plea resulting from the investigation and marks a positive step forward in resolving the case,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “It is important for those who conspired to profit from rigged bids and illegal payoffs to take responsibility for their actions.”

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.” 

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million.  Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. 

Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

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

**The fraud charge(s) referenced in this press release were

subsequently dismissed on the government’s motion.**

A registered sex offender was sentenced today to 35 years in prison for transporting and possessing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John F. Walsh of the District of Colorado and Special Agent in Charge David Thompson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations’ (HSI) Denver Field Office. 

“Insidious crimes like this steal the innocence and youth of our nation’s children,” said Assistant Attorney General Caldwell.  “The Department of Justice is committed to investigating, prosecuting and incapacitating those who prey upon the most vulnerable members of our society.”

“Defendant Hopson, by his repeated acts of victimization and criminal conduct, has made clear that he poses a real and present danger to children and to society,” said U.S. Attorney Walsh.  “The sentence imposed today will neutralize this dangerous perpetrator for 35 years and is a true victory for the community and for Colorado’s children.”

“Anyone who collects and shares child pornography victimizes the most innocent and most vulnerable members of our society,” said HSI Special Agent in Charge Thompson.  “This lengthy prison sentence recognizes the trauma that predators inflict on helpless children.”

Gregory Lynn Hopson, 44, of Westminster, Colorado was indicted on Oct. 24, 2012, and pleaded guilty to transportation and possession of child pornography on Sept. 29, 2014.  He has been in custody since his arrest on March 5, 2011.  Based on the conduct described below, Hopson is currently serving a state prison sentence of 16 years to life for violating the terms of his state probation in connection with his prior conviction for sexual assault on a child.  In addition to the prison sentence imposed today, Senior U.S. District Court Judge Lewis T. Babcock of the District of Colorado ordered Hopson to pay restitution to the victim of his crime.

According to Hopson’s admissions in his plea agreement, during the execution of a search warrant at his residence on March 5, 2011, ICE agents seized Hopson’s encrypted computer and CD-ROMs, which contained a well-organized collection of thousands of images and videos of child pornography.  The material depicted children, including infants, being sexually abused.  One of the CD-ROMs contained images and videos of Hopson engaged in sexually explicit conduct with a child under the age of 12 with whom Hopson was in a position of trust. 

Hopson further admitted in his plea agreement that he exchanged child pornography with others over the Internet.  In fact, ICE agents recovered approximately 300 emails that Hopson sent or received containing approximately 1,700 images and videos of child pornography. 

At the time of the search warrant, Hopson was already a registered sex offender, having been convicted of sexually abusing two children under the age of 12.  He was on intensive probation and was undergoing sex offender treatment when he committed these offenses.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about Internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the resources tab.

This case was investigated by HSI, and prosecuted by Trial Attorney Keith Becker of the Criminal Division’s Child Exploitation and Obscenity Section, and Chief Judith A. Smith and Assistant U.S. Attorney Beth N. Gibson of the District of Colorado’s Special Prosecution Section.

U.S. Attorney Preet Bharara for the Southern District of New York and Deputy Assistant Attorney General David A. Hubbert for the Tax Division of the Department of Justice announced that Wilbur Anthony Huff, a Kentucky businessman, pleaded guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators.  Huff pleaded guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.

“Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud – complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators,” said U.S. Attorney Bharara.  “Those who might be tempted to follow in Huff’s criminal footsteps should understand that this office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”

Huff, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison.  He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (FDIC); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the IRS.

According to the information, plea agreement, and statements made during court proceedings:

Background

Huff was a businessman who controlled numerous entities located throughout the United States (Huff-controlled entities).  Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes.  However, rather than exercise control of these companies openly, Huff concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors or officers.  Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci Sr., the president and chief executive officer, and Matthew L. Morris, the senior vice president. 

Tax Crimes

From 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida.  Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies.  However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an Oklahoma-based insurance company – for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes.  Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses.  The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.

Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company

From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company.  As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank. 

As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period.  Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds. 

Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.

Bribery of Park Avenue Bank Executives

From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; (2) allowed the Huff-controlled entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of Huff’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.  

Fraud on Bank Regulators and a Publicly-Traded Company

From 2008 to 2009, Huff, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions, and that would subject the bank to a range of potential enforcement actions by regulators.  Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital.  Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci.  This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program.  To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned.  Huff, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.

Fraud on Insurance Regulators and the Investment Firm

From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “investment firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C – the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the investment firm into providing a $30 million loan to finance the purchase.  Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan.  However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the investment firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C.  Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C. 

After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients.  Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.

*                *                *

Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on Oct. 8, 2010.  Matthew L. Morris and Allen Reichman were charged by Indictment with Huff on Oct. 1, 2012.  Morris pleaded guilty in connection with the case on Oct.17. 

Reichman is currently scheduled to go to trial March 2, 2015 before Judge Buchwald.  The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt. 

U.S. Attorney Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the FBI, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI), and the Office of Inspector General of the FDIC.  Mr. Bharara also thanked the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Southern District of Florida for their assistance.

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

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.

The Justice Department announced today that it reached a settlement agreement with the County of Erie, New York, to ensure equal access to the facilities and services of the Erie County Holding Center and the Erie County Correctional Facility, collectively referred to as the Erie County Jail.  The Erie County Holding Center, located in Buffalo, New York, is primarily a pretrial detention facility and is the second largest detention facility in New York State.  The Erie County Correctional Facility, located in Alden, New York, holds inmates of various classifications and processes more than 20,000 inmates annually.

The Justice Department initiated a compliance review of the Erie County Jail under the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973 after receiving complaints alleging that, because the Erie County Jail did not have a sufficient number of accessible cells and shower facilities, the jail housed inmates with mobility disabilities in its medical unit even though they did not require medical treatment.  The department determined that the jail’s medical unit also did not have accessible features.  In resolution of the department’s findings, the agreement requires the Erie County Jail to:

• Complete specified accessibility modifications to its facilities within four years, including providing accessible cells in various classifications and housing units, providing accessible showers and toilet facilities, and providing accessible features in the medical unit.
• Ensure that a minimum of three percent, but no fewer than one, of the total number of cells in its newly constructed and altered facilities are accessible to inmates with mobility disabilities.
• Ensure that inmates with disabilities are not housed in designated medical areas unless they are receiving medical care or treatment.
• Ensure that wheelchairs and other adaptive equipment used by inmates with disabilities are routinely maintained, repaired, and generally kept in safe, operable condition.
• Provide appropriate devices, such as medical trapezes, hearing aid batteries, or special shoes, as required to meet the needs of inmates with disabilities.
• Ensure that when inmates who are deaf or have hearing loss are handcuffed or restrained, they are handcuffed or restrained in a manner that permits effective communication (e.g., handcuffing detainees in the front so they can sign) unless legitimate security concerns dictate otherwise. 
• Ensure that when inmates who are blind or have low vision are handcuffed or restrained, they are handcuffed or restrained in a manner that permits safe mobility, including the use of a cane or sighted guide. 
• Designate a disabilities coordinator who coordinates ADA access at the Erie County Holding Center and the Erie County Correctional Facility.
• Develop and implement an ADA grievance policy for resolving inmate ADA complaints.
• Develop and implement an effective communication policy for inmates who are deaf, have hearing loss, blind or have low vision.

“The ADA prohibits discrimination by public entities on the basis of disability, including the denial by correctional facilities and jails of equal services to individuals with disabilities,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “With this agreement, the Erie County Jail is taking important steps to ensure that people incarcerated in the jail are not endangered or discriminated against because of their disabilities.” 

To read the settlement agreement or for more information on the ADA, visit the ADA website at www.ada.gov.   Those interested in finding out more about this settlement or the obligations of public entities under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website.  ADA complaints may be filed by email to ada.complaint@usdoj.gov.

The Justice Department today announced the filing of a lawsuit against the Chicago Board of Education, alleging that the board discriminated against pregnant teachers at Scammon Elementary School by subjecting them to adverse personnel actions, including termination in some instances, after they announced their pregnancies.  According to the complaint, these adverse personnel actions were in violation of Title VII of the Civil Rights Act of 1964.  Title VII is a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion.  The statute explicitly prohibits employers from discriminating against female employees due to pregnancy, childbirth or related medical conditions. 

The suit, filed in the United States District Court for the Northern District of Illinois, alleges that, starting in 2009, the principal at Scammon subjected female teachers to lower performance evaluations, discipline, threatened termination and/or termination because of their pregnancies.  The complaint further alleges that the board approved the firing of six recently pregnant teachers employed at Scammon and forced two other recently pregnant teachers to leave Scammon.  The department’s complaint seeks a court order that would require the board to develop and implement policies that would prevent its employees from being subjected to discrimination due to their pregnancies.  The relief sought also includes monetary damages as compensation for those teachers who were harmed by the alleged discrimination.

Two teachers who had been pregnant while working at Scammon filed charges of sex discrimination with the Chicago District Office of the Equal Employment Opportunity Commission (EEOC).  The EEOC investigated the charges and determined that there was reasonable cause to believe discrimination occurred against the two charging parties as well as against other pregnant teachers.  The EEOC was unsuccessful in its attempts to conciliate the matter before referring it to the Department of Justice.

“No woman should have to make a choice between her job and having a family,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “Federal law requires employers to maintain a workplace free of discrimination on the basis of sex.”

“Despite much progress, we continue to see the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices in the workplace,” said EEOC Chair Jenny R. Yang.

“The EEOC will continue to vigorously enforce Title VII’s prohibition of discrimination against pregnant employees,” said John P. Rowe, former District Director of the EEOC’s Chicago District Office.  Rowe led the EEOC’s administrative investigation of the charges filed by the two teachers.

This lawsuit is 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/).

The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division.  Additional information on the Civil Rights Division’s work is available on its website at www.justice.gov/crt/.  Pregnancy discrimination, in particular, has been identified by the EEOC as a strategic enforcement priority, and earlier this year, the agency issued updated guidance, which is available at www.eeoc.gov/laws/types/pregnancy_guidance.cfm

UNITED NATIONS, New York – Identifying new mechanisms to assist law enforcement efforts in identifying and seizing criminal assets was the focus of an INTERPOL meeting at the United Nations headquarters.

During the three-day (17 – 19 December) working group meeting some 90 experts from 32 countries and six international organizations, including a number of UN agencies, the International Criminal Court and the World Bank, discussed the creation of operational tools through which INTERPOL could assist in asset tracing and recovery.

Organized by the INTERPOL General Secretariat in cooperation with the US National Central Bureau in Washington DC, the aim of the second session of the Expert Working Group on the Identification, Location and Seizure of Assets was to provide practitioners with new insight and instruments to enhance law enforcement and judicial cooperation.

Headed by chairman Ambassador Eugenio María Curia and Joël Sollier, INTERPOL General Counsel, the group recommended the creation of a new INTERPOL notice to locate, identify and obtain information on, seize or freeze criminal assets in compliance with national and international laws and obligations, supported by the establishment of an operational database.

The experts also recommended further consideration of developing mechanisms to simplify and expedite the transmission of mutual legal assistance requests using the secured INTERPOL communications channel (e-MLA). Rapid law enforcement action is particularly important to bridge the gap between lengthy legal assistance procedures and the high speed at which criminals move and hide proceeds.

With studies showing less than 10 percent of all criminal gains are being recovered, one of the key drivers behind the creation of the expert working group is to increase the number of criminal assets being frozen, confiscated for the benefit of society or given back to original owners.

The working group session was addressed by New York City Police Commissioner William Bratton who highlighted the important role of asset recovery in daily police work.

The meeting, attended by three INTERPOL Executive Committee members, Vice President for the Americas, Alan Bersin and Delegates for Europe, Filippo Dispenza and Alexander Prokopchuk, followed the recent briefing to the UN Security Council by INTERPOL Secretary General Jürgen Stock.

In his address to the Security Council, Mr Stock emphasized INTERPOL’s important role in providing assistance for the implementation of UN sanctions, and highlighted the work of the expert working group in supporting the coordination of international law enforcement efforts in asset tracing and freezing.

A former FBI special agent pleaded guilty today to bribery charges, admitting that he provided internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival in exchange for cash.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.

“Robert Lustyik discarded the FBI’s principles of ‘fidelity, bravery, and integrity,’ and sold his badge to the highest bidder,” said Assistant Attorney General Caldwell.  “Greed has no place in public service or law enforcement.  The Department of Justice will root out corruption wherever it takes hold, and hold accountable those who abuse the public’s trust for personal gain.” 

“Robert Lustyik today admitted to conducting a bribery scheme in which, for his own personal gain, he secretly sold information and documents to which he had access as an FBI agent,” said U.S. Attorney Bharara.  “Lustyik betrayed our system of justice: he breached not only the law, but also his sworn oath, and the great trust and confidence placed in him by citizens and colleagues.  For his criminal conduct he now faces, as he must, serious, commensurate penalties.”

“The Department of Justice Office of the Inspector General is committed to working with our law enforcement partners to identify, investigate, and bring to justice all DOJ employees who engage misconduct,” said Inspector General Horowitz.

Robert Lustyik, 52, of Westchester County, New York, pleaded guilty to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property, and unauthorized disclosure of a Suspicious Activity Report.  Lustyik is scheduled to be sentenced by U.S. District Court Judge Vincent L. Briccetti of the Southern District of New York on April 30, 2015.

According to the complaint, indictment, court hearings, and today’s plea proceeding, Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency.  Johannes Thaler was Lustyik’s friend, and Rizve Ahmed, aka, “Caesar,” was an acquaintance of Thaler.  From September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme.  As part of the scheme, Lustyik and Thaler solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI special agent.  The documents and information pertained to a prominent citizen of Bangladesh (Individual 1), who Ahmed perceived as a political rival.  Ahmed sought, among other things, to obtain information about Individual 1, to locate and harm Individual 1 and others associated with Individual 1.

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

As another example, in late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, sent a text message to Thaler stating, “I want to kill C . . . . I hung my ass out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to Individual 1].”  Lustyik further stated, “So bottom line.  I need ten gs asap.  We gotta squeeze C.”

Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud, and are scheduled to be sentenced on Jan. 23, 2015. 

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

A Brooklyn, New York, tax preparer was indicted by a federal grand jury in the Eastern District of New York and charged with 30 counts of aiding in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced following her Dec. 22 arrest and the unsealing of the indictment.

Awilda Rosario owned and operated a Brooklyn-based tax preparation business called Edujas Multiservices Corporation, according to the indictment.  The indictment charges that Rosario prepared false individual income tax returns for taxpayer-clients for at least six years, spanning tax years 2008 through 2013.  Rosario allegedly attached false schedules that reported business losses the taxpayers did not incur and attached schedules that reported inflated or fictitious deductions.  Rosario also attached forms claiming fictitious education and fuel tax credits that the taxpayers were not entitled to receive.

The indictment further alleges that after the IRS revoked the electronic filing number for Edujas Multiservices Corporation, Rosario obtained at least two different e-file provider numbers and continued to prepare and submit false tax returns for her clients, listing a different paid tax return preparer and tax preparer firm to conceal her involvement.

If convicted, Rosario faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 for each count.

The case was investigated by special agents of IRS-Criminal Investigation.  Assistant Chief Jorge Almonte and Trial Attorney Shawn T. Noud of the Justice Department’s Tax Division are prosecuting the case.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. 

The Department of Justice and the U.S. Environmental Protection Agency announced today that XTO Energy Inc. (XTO), a subsidiary of ExxonMobil and the nation’s largest holder of natural gas reserves, will spend an estimated $3 million to restore eight sites damaged by unauthorized discharges of fill material into streams and wetlands in connection with hydraulic fracturing operations.  XTO will also implement a comprehensive plan to comply with federal and state water protection laws at the company’s oil and gas extraction facilities in West Virginia that use horizontal drilling methods.

“The extraction of domestic energy resources is vitally important, and so it is equally important that companies ensure that all such activities comply with the nation’s environmental laws,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division.  “This settlement will resolve allegations that XTO’s illegal discharges of fill materials damaged streams and wetlands, by requiring the company to pay a penalty, restore the damaged resources where possible and take other mitigation and compliance measures.”  

The company will pay a civil penalty of $2.3 million for violations of Section 404 of the Clean Water Act and West Virginia law.  Section 404 of the Clean Water Act prohibits the filling or damming of wetlands, rivers, streams, and other waters of the United States without a permit from the U.S. Army Corps of Engineers (Corps).  The Clean Water Act requires a company to obtain a permit prior to discharging dredge or fill material into wetlands, rivers, streams, and other waters of the United States.

The settlement also resolves alleged violations of state law asserted by WVDEP.  The state of West Virginia is a co-plaintiff in the settlement and will receive half of the $2.3 million civil penalty.

“American communities expect EPA and our state partners to make sure energy development is done responsibly,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “This case will help to protect clean water in West Virginia, and support a level playing field for energy developers that play by the rules.”

The federal government and the West Virginia Department of Environmental Protection (WVDEP) allege that the company impacted streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit in order to construct well pads, road crossings, freshwater pits, and other facilities related to natural gas extraction.  The alleged violations being resolved by today’s settlement occurred at eight sites located in the West Virginia Counties of Harrison, Marion and Upshur.  The federal government and WVDEP allege that the violations impacted more than 5,300 linear feet of stream, and 3.38 acres of wetlands.

The settlement requires that the company fully restore the wetlands and streams wherever feasible, monitor the restored sites to assure the success of the restoration, and implement a comprehensive compliance program to ensure future compliance with the Clean Water Act and applicable state law.

EPA discovered some of the violations through information provided by the state and through routine joint inspections conducted with the Corps, who actively supported the EPA and the Justice Department in this case.  In addition, the company voluntarily disclosed potential violations at five of the sites following an internal audit.  Beginning in 2011, EPA issued administrative compliance orders for violations at all eight sites.  Since that time, the company has been working with EPA to correct the violations and restore those sites in full compliance with EPA’s orders. 

In July 2013, the United States concluded a settlement with XTO to resolve an alleged violation of the Clean Water Act related to the discharge of wastewater from XTO’s Penn Township, Lycoming County, Pennsylvania, facility used for the storage of wastewater generated by hydraulic fracturing operations.

Filling wetlands illegally and damming streams can result in serious environmental consequences.  Streams, rivers, and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.  Any person, firm or agency planning to work in, or discharge dredged or fill material into waters of the U.S., including wetlands, must first obtain a permit from the Corps.  Compliance with the Corps’ permit process and regulations helps to ensure that enforcement actions like this one do not occur.  For more information about the permitting process under Section 404 of the Clean Water Act, contact: Regulatory.Permits@usace.army.mil.

XTO engages in the exploration and production of natural gas in the Appalachian Basin.  The company has Marcellus Shale holdings in Pennsylvania, New York, Ohio and West Virginia.

The consent decree, lodged today in the Northern District of West Virginia, is subject to a 30-day public comment period and court approval.  The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html.

The United States has filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received millions of dollars in kickbacks from pharmaceutical manufacturer Abbott Laboratories, the Justice Department announced today.  Omnicare is the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes.  Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate.

In its complaint, the United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare.  According to the complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients.  The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.

“Elderly nursing home residents suffering from dementia are among our nation’s most vulnerable patient populations, and they depend on the independent judgment of healthcare professionals for their daily care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Kickbacks to consulting pharmacists compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

The United States alleges that Omnicare disguised the kickbacks it received from Abbott in a variety of ways.  Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote.  For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program.  Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents.  In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program.  The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.  Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

“Although the United States Attorney’s Office for the Western District of Virginia is small, we will not waver in our pursuit of the largest corporations, like Omnicare and Abbott, who illegally raid the coffers of Medicaid, Medicare, and other healthcare benefit programs,” said Acting U.S. Attorney Anthony P. Giorno for the Western District of Virginia.

“Kickback allegations place elderly nursing home residents at risk that treatment decisions are influenced by improper financial incentives,” said Special Agent in Charge Nicholas DiGiulio for the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) region including Virginia. “We will continually guard government health programs and taxpayers from companies more intent on their bottom lines than on patient care.”

In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.

The United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia.  The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery.  The United States is entitled to intervene and take over such lawsuits, as it has done here.

This case 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 $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, HHS-OIG, the Office of the Attorney General for the Commonwealth of Virginia and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.).  The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.

Twelve former Puerto Rico police officers have been sentenced for using their law enforcement affiliation and equipment to commit robbery and extortion, and to sell illegal narcotics and manipulate court records. 

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

The following 12 defendants have been sentenced:

• Osvaldo Vazquez-Ruiz was sentenced to 138 months in prison.Vazquez-Ruiz pleaded guilty on Aug. 21, 2014, to conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) and carrying a firearm during and in relation to a crime of violence.

• Orlando Sierra-Pereira was sentenced to 157 months in prison.Sierra-Pereira pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Danny Nieves-Rivera was sentenced to 157 months in prison.Nieves-Rivera pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Roberto Ortiz-Cintron was sentenced to 154 months in prison.Ortiz-Cintron pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Yovanny Crespo-Candelaria was sentenced to 70 months in prison.Crespo-Candelaria pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Nadab Arroyo-Rosa was sentenced to 78 months in prison.Arroyo-Rosa pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Jose Flores-Villalongo was sentenced to 78 months in prison.Flores-Villalongo pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Eduardo Montañez-Perez was sentenced to 63 months in prison.Montañez-Perez pleaded guilty on Aug. 15, 2014, to conspiracy to violate RICO.

• Carlos Candelario-Santiago was sentenced to 63 months in prison.Candelario-Santiago pleaded guilty on Aug. 15, 2014, to conspiracy to violate RICO.

• Ruben Casiano-Pietri was sentenced to 78 months in prison.Casiano-Pietri pleaded guilty on Aug. 21, 2014, to attempted Hobbs Act robbery.

• Ricardo Rivera-Rodriguez was sentenced to 33 months in prison.Rivera-Rodriguez pleaded guilty on Aug. 25, 2014, to attempted Hobbs Act extortion under color of official right.

• Christian Valles-Collazo was sentenced to 78 months in prison.Valles-Collazo pleaded guilty on Aug. 21, 2014, to attempted Hobbs Act robbery.

All 12 of the above defendants were sentenced by Senior U.S. District Judge Daniel R. Dominguez of the District of Puerto Rico, and the remaining four defendants convicted in this case are scheduled to be sentenced in January 2015.  At the time of the crimes, Flores-Villalongo and Candelario-Santiago were sergeants with the Police of Puerto Rico; the others were police officers.

The officers convicted of the RICO conspiracy admitted to being members of a criminal organization that sought to enrich its members through a pattern of illegal conduct.  Over the course of the conspiracy, the officers worked together to conduct traffic stops and enter homes or buildings used by persons suspected of being engaged in criminal activity to steal money, property and narcotics.  The officers also planted evidence to make false arrests, and then extorted money in exchange for their victims’ release from custody.  In exchange for bribe payments, the officers gave false testimony, manipulated court records and failed to appear in court when required so that cases would be dismissed.  Additionally, the officers sold and distributed wholesale quantities of narcotics.

As just a few examples of their criminal conduct, in April 2012, Vazquez-Ruiz and Sierra-Pereira conducted a traffic stop in their capacity as police officers and stole approximately $22,000 they believed to be illegal drug proceeds.  Vazquez-Ruiz later attempted to extort approximately $8,000 from an individual he believed to be a drug dealer’s accomplice in exchange for promising to release an alleged prisoner.

Further, in November 2012, Sierra-Pereira, Nieves-Rivera, Ortiz-Cintron and Valles-Collazo illegally entered an apartment and stole approximately $30,000, which they believed was illegal lottery proceeds.

The defendants frequently shared the proceeds they illegally obtained and used their power, authority and official positions as police officers to promote and protect their illegal activity.  Among other things, the defendants used their police firearms, badges, patrol cars, tools, uniforms and other equipment to commit the crimes and concealed their illegal activity with fraudulently obtained court documents and falsified police paperwork to make it appear that they were engaged in legitimate police work.

The case was investigated by the FBI’s San Juan Division.  The case is being prosecuted by Trial Attorneys Brian K. Kidd, Emily Rae Woods and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Mariana E. Bauzá of the District of Puerto Rico.

A federal court in Memphis, Tennessee, permanently barred three individuals from preparing tax returns for others and owning or operating a tax return preparation business, the Justice Department announced today.

The civil injunction order, to which the defendants Shandon Allen, Tabitha Tunstall, and Shewanda Hamilton agreed, was signed by U.S. District Judge S. Thomas Anderson of the U.S. District Court for the Western District of Tennessee.

The United States brought the civil injunction suit in October 2014, alleging that the defendants and their employees prepare fraudulent tax returns that cause their customers to incorrectly report their federal tax liabilities and underpay their taxes.  According to the complaint, the defendants and their employees prepare federal tax returns on which they falsely claim the Earned Income Tax Credit, improper filing status, and bogus education credits.  Additionally, the defendants and their employees allegedly improperly prepare tax returns using paystubs rather than W-2 forms, fabricate bogus W-2 forms and file tax returns without some customers’ consent while charging deceptive and unconscionable fees, according to the suit.

The complaint alleged that the defendants were former managers of Mo’ Money Taxes, but began doing business as Southern King Taxes in 2012.  The United States previously obtained an injunction permanently barring the owners of Mo’ Money Taxes, Markey Granberry and Derrick Robinson, as well as a former Mo’ Money manager, Eumora Reese, from preparing tax returns for others and owning or operating a tax return preparation business.  The complaint alleged that Allen, Tunstall, and Hamilton continue to prepare tax returns in the same fraudulent manner as alleged in the complaint against the owners of Mo’ Money Taxes.    

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  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.

The Justice Department reached an agreement today with Diversified Business Consulting Group Inc., an information technology staffing agency headquartered in Silver Spring, Maryland.  The settlement resolves the department’s claims that Diversified discriminated against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).

The department’s investigation concluded that Diversified’s human resources personnel required non-U.S. citizens, but not U.S. citizens, to present specific types of documents during the employment eligibility verification process to establish their work authority.  The INA’s anti-discrimination provision prohibits employers from specifying documents that employees must present during the employment eligibility verification process based on an employee’s citizenship status or national origin. 

Under the settlement agreement, Diversified will pay $7,700 in civil penalties to the United States and undergo department-provided training on the anti-discrimination provision of the INA.  Diversified’s corporate office and its branches will be subject to departmental monitoring and reporting requirements.

“The Civil Rights Division is committed to protecting work-authorized individuals from discriminatory practices in the employment eligibility verification process,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “We commend Diversified for working cooperatively with the division to resolve this matter.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits, among other things, citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; document abuse; retaliation; and intimidation.   

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

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

A federal court in Waco, Texas has permanently barred Patricia Foley aka Sissy Foley; Amanda Smith; April Leann Morgan aka April Leann Ercanbrack; Cassandra Egbert and Joshua Stifle, individually and doing business as Accounting System Services and doing business as A Kind Bookkeeping and Tax Service from preparing tax returns for others, the Justice Department announced today.  The five defendants agreed to the stipulated order of permanent injunction, which U.S. District Judge Walter S. Smith Jr. entered on Dec. 19.

The complaint alleges that the defendants prepared income tax returns for their customers that contained false, improper or inflated business expense deductions on Schedule F (Profit or Loss from Farming) on their returns.  These activities led to the defendants’ customers filing tax returns that unlawfully understated income and tax liabilities and overstated refunds, according to the suit.

The injunction requires the defendants to turn over to the United States a list of all persons for whom they prepared federal tax returns or claims for a refund for tax years 2009 through 2014.  The order granting the injunction further authorizes the United States to monitor the defendants’ compliance with the terms of the order.]\

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  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.

WASHINGTON – El Departamento de Justicia anuncio hoy que llegó a un acuerdo con Diversified Business Consulting Group, Inc., una agencia de empleo con sede en Silver Spring, Maryland. El acuerdo resuelve la alegación del departamento que Diversified discriminó en contra de individuos que no son ciudadanos estadounidenses pero que sí tienen permiso de trabajar, en contra de la Ley de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del departamento reveló que Diversified requería que personas que no eran ciudadanos estadounidenses presentaran documentos específicos durante el proceso de verificación de elegibilidad de empleo para establecer su autorización de trabajo, mientras que a los ciudadanos estadounidenses se les permitía presentar los documentos de su elección. La provisión antidiscriminatoria de la INA prohíbe a los empleadores que especifiquen los documentos que los trabajadores deben presentar durante el proceso de verificación de elegibilidad de empleo basado en el estatus de ciudadanía u origen nacional del empleado.

Según el acuerdo, Diversified le pagará $7,700 en multas a Los Estados Unidos y se someterá a un adiestramiento proporcionado por el departamento sobre la provisión antidiscriminatoria de la INA. La oficina corporativa de Diversified y sus ramas estarán sujetas a monitoreo del departamento y a requisitos de informacóin.

"La División de Derechos Civiles está comprometida a proteger a las personas autorizadas a trabajar contra prácticas discriminatorias en el proceso de verificación de elegibilidad de empleo," dijo Vanita Gupta Subprocuradora General Interina para la División de Derechos Civiles. "Felicitamos a Diversified por trabajar cooperativamente con la División para resolver este asunto."

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a la Inmigración es responsable por hacer cumplir con la provisión antidiscriminatoria de la INA. Entre otras cosas, la ley prohíbe discriminación por estatus de ciudadanía u origen nacional durante la contratación, el despido, el reclutamiento o la referencia por comisión; las prácticas injustas de documentación; represalias e intimidación.

Para más información sobre las protecciónes contra la discriminación en el empleo bajo las leyes de inmigración, llame a la línea directa de la OSC para el trabajador, al 1-800-255-7688 (teléfono de texto 1-800-237-2515, para las personas con discapacidades auditivas), o a la línea directa de la OSC para el empleador, al 1-800-255-8155 (teléfono de texto 1-800-237-2515, para las personas con discapacidades auditivas); suscríbase a un seminario por internet gratis en www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico a osccrt@usdoj.gov; o visite el sitio del internet de OSC en www.justice.gov/crt/about/osc.

Los solicitantes o empleados que creen que han sido sometidos a: (1) requisitos documentarios diferentes por causa de su estado de ciudadanía, estado de inmigración u origen nacional; o (2) discriminación por causa de su estado de ciudadanía, estado de inmigración u origen nacional, en la contratación, el despido, el reclutamiento o la recomendación por un honorario, deberán comunicarse a la línea directa de la OSC para el trabajador para recibir ayuda.

A major Israeli international bank admitted that it conspired to aid and assist U.S. taxpayers to prepare and present false tax returns to the Internal Revenue Service (IRS) by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.  A deferred prosecution agreement between the Bank Leumi Group and the Department of Justice was filed today in the Central District of California that defers prosecution on a criminal information charging the bank with conspiracy to aid and assist in the preparation and presentation of false tax returns and other documents to the Internal Revenue Service.  This unprecedented agreement marks the first time an Israeli bank has admitted to such criminal conduct which spanned over a 10 year period and included an array of services and products designed to keep U.S. taxpayer accounts concealed at Bank Leumi Group’s locations in Israel, Switzerland, Luxembourg and the United States.

The Bank Leumi Group’s parent company is Bank Leumi le-Israel, B.M.  Bank Leumi le-Israel is one of Israel’s largest banks, with subsidiaries in seven countries and more than 13,000 employees.  Other subsidiary banks entering into this deferred prosecution agreement include The Bank Leumi le-Israel Trust Company Ltd., the oldest and largest of all bank trust companies in Israel; Leumi Private Bank S.A., a Switzerland-based subsidiary; Bank Leumi (Luxembourg) S.A., a Luxembourg-based subsidiary; and Bank Leumi USA, a FDIC-insured, full-service commercial bank with offices in California, Florida, Illinois and New York.

According to documents filed in the case, to account for their criminal conduct, Bank Leumi Group will pay the United States a total of $270 million. Of this total payment, $157 million represents a penalty for U.S. taxpayer accounts held at Leumi Private Bank in Switzerland.  This $157 million penalty is consistent with the department’s Swiss Bank Program, which permits certain Swiss Banks to avoid prosecution by making a full and complete disclosure of their U.S. taxpayer-held accounts and paying substantial penalties.  The agreement further provides that Bank Leumi Luxembourg and Leumi Private Bank will cease to provide banking and investment services for all accounts held or beneficially owned by U.S. taxpayers.

“The Bank Leumi Group recognized that the writing is on the wall for offshore banking, and cooperating with the government’s investigation was the only way to proceed,” said Deputy Attorney General James M. Cole.  “This deferred prosecution agreement demonstrates both that the Justice Department will hold financial institutions accountable for their crimes, and that we will be fair in recognizing extraordinary cooperation.”

According to the filed statement of facts, from at least 2000 until early 2011, the Bank Leumi Group took affirmative and extensive steps to assist U.S. clients in concealing their assets offshore, including:

• surreptiously sending private bankers from Israel and elsewhere around the world to the United States to meet secretly with U.S. clients at hotels, parks and coffee shops to discuss their offshore account activity;

• assisting U.S. clients in using nominee corporate entities created in Belize and other foreign jurisdictions to hide their undeclared accounts by concealing the U.S. client as the true beneficial owner of the account;

• using the Bank Leumi le-Israel Trust Company as a nominee account holder for U.S. clients with accounts in Israel to conceal the U.S. client as the true beneficial owner of the account;

• maintaining U.S. clients’ undeclared offshore accounts under assumed names or numbered accounts to conceal the U.S. client as the true beneficial owner of the account;

• providing hold mail services so that correspondence and other account information would not go directly to the U.S. client to make it more difficult to connect the client to the secret offshore account;

• extending loans to U.S. clients from Bank Leumi USA that were collateralized by the assets in those clients’ offshore accounts, so that the clients could leverage their offshore assets to obtain and use capital in the United States while keeping their foreign accounts secret and undetected from the U.S. government; and

• after the department’s investigation into UBS and other Swiss banks’ criminal conduct in aiding U.S. taxpayers to evade their taxes became public, the Bank Leumi Group opened and maintained accounts for U.S. taxpayers who left UBS and other Swiss banks due to the investigation in an effort to continue to avoid detection by the U.S. government.

“The Bank Leumi Group’s admission of guilt to knowingly conspiring to assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS) represents the Department of Justice’s next step in its worldwide efforts to hold banks and other financial institutions responsible for their criminal conduct,” said the Tax Division’s Acting Deputy Assistant Attorney General Larry J. Wszalek.  “Those institutions that have engaged, or continue to engage, in conduct similar to that of Bank Leumi Group are well advised that the Tax Division will continue to extend its global reach in enforcing this nation’s criminal tax laws.”

According to documents filed in the case, as part of its agreement with the department, the Bank Leumi Group provided the names of more than 1,500 of its U.S. account holders.  As part of the agreement, the Bank Leumi Group will continue to disclose information to the government regarding its cross-border business and provide testimony and information regarding other investigations. 

“There are many provisions of federal law that can benefit taxpayers, but maintaining secret offshore accounts to conceal assets is not a legal method of lowering one’s tax liability,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California.  “Any financial institution – no matter where it operates – will be held accountable if it helps U.S. residents dodge their tax responsibilities.  This agreement with Leumi Bank is the latest notice to American taxpayers who might flout the law that we can and will uncover your hidden assets.”

“Today’s deferred prosecution announcement against Leumi Bank is yet another historical event in the international tax arena,” said Commissioner John Koskinen of the IRS.  “IRS will not tolerate the use of offshore accounts to illegally escape paying taxes and we will continue to focus on this priority area.”

“This case shows that banks who promote the use of offshore tax schemes against the United States will be held accountable and face substantial fines and penalties,” said Chief Richard Weber of IRS-Criminal Investigation.  “This investigation involved untangling a complex web of financial transactions where Bank Leumi assisted U.S. taxpayers in concealing undeclared bank accounts.  As the premier financial investigators in the world, and the only law enforcement agency to investigate tax cases, our special agents will continue to investigate banks and individuals who violate the U.S. tax laws no matter where they reside.”

This case was prosecuted by Trial Attorneys Christopher S. Strauss, Ellen M. Quattrucci and Dennis R. Kihm for the Tax Division.  The Tax Division expressed gratitude to Assistant U.S. Attorney Sandra R. Brown and the U.S. Attorney’s Office for the Central District of California for their invaluable assistance in the investigation and prosecution of this case.  The case was investigated by IRS-Criminal Investigation.

WASHINGTON—Attorney General Eric Holder released the following statement Monday in response to President Obama’s announcement of his intent to nominate Sally Yates, the U.S. Attorney for the Northern District of Georgia, to serve as the next Deputy Attorney General, succeeding James M. Cole:

"I congratulate Sally Yates on her forthcoming nomination as Deputy Attorney General -- an important and demanding office in which she will most certainly excel.

"Over the years, I have come to know, admire, and rely on Sally as an essential leader of the U.S. Attorney community.  As a longtime career prosecutor, she has handled a wide range of complex and high-profile cases with remarkable skill and poise.

"Sally's leadership in combating public corruption has rightfully earned the accolades of her colleagues at every level of law enforcement.  Her successful prosecution of Eric Rudolph for the Centennial Olympic Park bombing cemented her sterling reputation as a tough, and extremely talented, attorney.  And her distinguished tenure as U.S. Attorney, and service as vice chair of the Attorney General's Advisory Committee, have been marked by indelible contributions in advancing the Justice Department's Smart on Crime initiative and other important policies.

“As Deputy Attorney General, Sally will play a critical role in leading the Department of Justice, building on our Smart on Crime reforms, and expanding on the record of achievement we have established during the last six years.  I know her tenure will be defined by the same standard of excellence that has guided her throughout her career, and I am proud to join President Obama in congratulating her, once again, on her planned nomination."

Alstom S.A. (Alstom), a French power and transportation company, pleaded guilty today and agreed to pay a $772,290,000 fine to resolve charges related to a widespread scheme involving tens of millions of dollars in bribes in countries around the world, including Indonesia, Saudi Arabia, Egypt and the Bahamas.

Deputy Attorney General James M. Cole, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson of the District of Connecticut and FBI Executive Assistant Director Robert Anderson Jr. made the announcement.

“Alstom’s corruption scheme was sustained over more than a decade and across several continents,” said Deputy Attorney General Cole.  “It was astounding in its breadth, its brazenness and its worldwide consequences.  And it is both my expectation – and my intention – that the comprehensive resolution we are announcing today will send an unmistakable message to other companies around the world: that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.” 

“This case is emblematic of how the Department of Justice will investigate and prosecute FCPA cases – and other corporate crimes,” said Assistant Attorney General Caldwell.  “We encourage companies to maintain robust compliance programs, to voluntarily disclose and eradicate misconduct when it is detected, and to cooperate in the government’s investigation.  But we will not wait for companies to act responsibly.  With cooperation or without it, the department will identify criminal activity at corporations and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool, and considering all possible actions, including charges against both corporations and individuals.”

“Today’s historic resolution is an important reminder that our moral and legal mandate to stamp out corruption does not stop at any border, whether city, state or national,” said First Assistant U.S. Attorney Gustafson.  “A significant part of this illicit work was unfortunately carried out from Alstom Power’s offices in Windsor, Connecticut.  I am hopeful that this resolution, and in particular the deferred prosecution agreement with Alstom Power, will provide the company an opportunity to reshape its culture and restore its place as a respected corporate citizen.”

“This investigation spanned years and crossed continents, as agents from the FBI Washington and New Haven field offices conducted interviews and collected evidence in every corner of the globe,” said FBI Executive Assistant Director Anderson.  “The record dollar amount of the fine is a clear deterrent to companies who would engage in foreign bribery, but an even better deterrent is that we are sending executives who commit these crimes to prison.”

Alstom pleaded guilty to a two-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.  Alstom admitted its criminal conduct and agreed to pay a criminal penalty of $772,290,000.  U.S. District Judge Janet B. Arterton of the District of Connecticut scheduled a sentencing hearing for June 23, 2015 at 3pm.

In addition, Alstom Network Schweiz AG, formerly Alstom Prom (Alstom Prom), Alstom’s Swiss subsidiary, pleaded guilty to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  Alstom Power Inc. (Alstom Power) and Alstom Grid Inc. (Alstom Grid), two U.S. subsidiaries, both entered into deferred prosecution agreements, admitting that they conspired to violate the anti-bribery provisions of the FCPA.  Alstom Power is headquartered in Windsor, Connecticut, and Alstom Grid, formerly Alstom T&D, was headquartered in New Jersey. 

According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom Grid, through various executives and employees, paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.  In Indonesia, for example, Alstom, Alstom Prom, and Alstom Power paid bribes to government officials – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia – in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million.  In total, Alstom paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of approximately $300 million.   

Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants purportedly to provide consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the government officials.  Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”

The plea agreement cites many factors considered by the department in reaching the appropriate resolution, including:  Alstom’s failure to voluntarily disclose the misconduct even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the department in connection with a power project in Italy; Alstom’s refusal to fully cooperate with the department’s investigation for several years; the breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials; Alstom’s lack of an effective compliance and ethics program at the time of the conduct; and Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.

After the department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation, including assisting the department’s prosecution of other companies and individuals. 

To date, the department has announced charges against five individuals, including four corporate executives of Alstom and its subsidiaries, for alleged corrupt conduct involving Alstom.  Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme.  David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA.  William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA.  Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in a second superseding indictment on July 30, 2013, and is pending trial in the District of Connecticut in June 2015.  The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty.  The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year term of imprisonment. 

In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, pleaded guilty on Dec. 4, 2014, in federal court in the District of Maryland to mail fraud, conspiring to launder money, and tax fraud for accepting kickbacks from Alstom and other companies.  In his plea agreement, Elgawhary agreed to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.

This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut Resident Agency, and the FBI’s Newark and Baltimore Divisions.  The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland, the Serious Fraud Office in the United Kingdom, as well as authorities in Germany, Italy, Singapore, Saudi Arabia, Cyprus and Taiwan.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom Grid and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary.  The Criminal Division’s Office of International Affairs also provided substantial assistance.         

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

Attorney General Eric Holder released the following statement Saturday regarding the fatal shootings of two New York City police officers:

“I condemn this afternoon's senseless shooting of two New York City police officers in the strongest possible terms. This was an unspeakable act of barbarism, and I was deeply saddened to hear of the loss of these two brave officers in the line of duty.

“On behalf of all those who serve in the United States Department of Justice, I want to express my heartfelt condolences to the officers' loved ones and colleagues. I will make available all of the resources of the Department to aid the NYPD in investigating this tragedy.

"This cowardly attack underscores the dangers that are routinely faced by those who protect and serve their fellow citizens.  As a nation we must not forget this as we discuss the events of the recent past. These courageous men and women routinely incur tremendous personal risks, and place their lives on the line each and every day, in order to preserve public safety.  We are forever in their debt.

"Our nation must always honor the valor -- and the sacrifices -- of all law enforcement officers with a steadfast commitment to keeping them safe.  This means forging closer bonds between officers and the communities they serve, so that public safety is not a cause that is served by a courageous few, but a promise that's fulfilled by police officials and citizens working side by side."

PacifiCorp Energy, a subsidiary of PacifiCorp, based in Portland, Oregon, pleaded guilty in U.S. District Court in Wyoming today to violating the federal Migratory Bird Treaty Act (MBTA) in connection with the deaths of protected birds, including golden eagles, at two of the company’s wind projects in Wyoming. 

Under a plea agreement with the government, the company was sentenced to pay fines, restitution and community service totaling $2.5 million and was placed on probation for five years, during which it must implement an environmental compliance plan aimed at preventing bird deaths at the company’s four commercial wind projects in the state.  The company is also required to apply for Eagle Take Permits which, if granted, will provide a framework for minimizing and mitigating the deaths of golden eagles at the wind projects.

The charges stem from the discovery of the carcasses of 38 golden eagles and 336 other protected birds, including hawks, blackbirds, larks, wrens and sparrows by the company at its “Seven Mile Hill” and “Glenrock/Rolling Hills” wind projects in Carbon and Converse Counties between 2009 and the present.  The two wind projects are comprised of 237 large wind turbines sited on private and company-owned land. 

“PacifiCorp Energy built two of its Wyoming wind projects in a manner it knew would likely result in the deaths of eagles and other protected birds,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “PacifiCorp has taken steps to minimize the hazard, and with this plea agreement has committed to a comprehensive plan to continue such efforts in partnership with the U.S. Fish and Wildlife Service, to seek eagle take permits for each project, and to work to prevent future eagle deaths.”

In documents presented in court, the government alleged that PacifiCorp Energy failed to make all reasonable efforts to build the projects in a way that would avoid the risk of avian deaths by collision with turbine blades, despite prior guidance from the U.S. Fish and Wildlife Service (FWS).  However, the company cooperated with the FWS investigation and has already implemented measures aimed at minimizing avian deaths at the sites.

“Improperly sited and operated wind energy facilities can kill significant numbers of federally protected birds and other species,” said U.S. Fish and Wildlife Service Director Dan Ashe, urging developers to follow the Service’s Land-based Wind Energy Guidelines.  “That’s why it’s imperative that wind energy developers work with the Fish and Wildlife Service to minimize these impacts at every stage in the process.”

More than 1,000 species of birds, including bald and golden eagles, are protected under the Migratory Bird Treaty Act (MBTA).  The MBTA, enacted in 1918, implements this country’s commitments under avian protection treaties with Great Britain (for Canada), Mexico, Japan and Russia.  The MBTA provides a misdemeanor criminal sanction for the unpermitted taking of a listed species by any means and in any manner, regardless of fault.  The maximum penalty for an unpermitted corporate taking under the MBTA is $15,000 or twice the gross gain or loss resulting from the offense, and five years’ probation. 

Commercial wind power projects can cause the deaths of federally protected birds in four primary ways: collision with wind turbines, collision with associated meteorological towers, collision with, or electrocution by, associated electrical power facilities, and nest abandonment or behavior avoidance from habitat modification.  Collision and electrocution risks from power lines (collisions and electrocutions) and guyed structures (collision) have been known to the utility and communication industries for decades, and specific methods of minimizing and avoiding the risks have been developed, in conjunction with the FWS.  The FWS issued its first interim guidance about how wind project developers could avoid impacts to wildlife from wind turbines in 2003, and replaced these with a “tiered” approach outlined in the Land-Based Wind Energy Guidelines (2012 LBWEGs), developed with the wind industry starting in 2007 and released in final form by the USFWS on March 23, 2012.  The Service also released Eagle Conservation Plan Guidance in April 2013 and strongly recommends that companies planning or operating wind power facilities in areas where eagles occur work with the agency to implement that guidance completely.

For wind projects, due diligence during the pre-construction stage—as described in the 2003 Interim Guidance and tiers I through III in the 2012 LBWEGs— requires surveying the wildlife present in the proposed project area, consulting with agency professionals, determining whether the risk to wildlife is too high to justify proceeding and, if not, carefully siting turbines so as to avoid and minimize the risk as much as possible.  This is critically important because no post-construction remedies, known as “advanced conservation practices” have been developed that can “render safe” a wind turbine placed in a location of high avian collision risk.  Other experimental measures such as prey reduction, and devices that detect and deter avian proximity to turbines are being tested.  In the western United States, golden eagles may be particularly susceptible to wind turbine blade collision by wind power facilities constructed in areas of high eagle use.

The $400,000 fine imposed in the case will be directed to the federally-administered North American Wetlands Conservation Fund.  The company will also pay $200,000 in restitution to the State of Wyoming, and perform community service by making a $1.9 million payment to the congressionally-chartered National Fish and Wildlife Foundation, designated for projects aimed at preserving golden eagles and increasing the understanding of ways to minimize and monitor interactions between eagles and commercial wind power facilities, as well as enhance eagle rehabilitation and conservation efforts in Wyoming.  The company must implement a migratory bird compliance plan containing specific measures to avoid and minimize golden eagle and other avian wildlife mortalities at the company’s four commercial wind projects in Wyoming. 

According to papers filed with the court, PacifiCorp will spend approximately $600,000 per year implementing the compliance plan.  The company must also apply to the U.S. Fish and Wildlife Service for a Programmatic Eagle Take Permit at each of the four wind projects cited in the case.  

The case was investigated by Special Agents of the U.S. Fish and Wildlife Service and prosecuted by Senior Counsel Robert S. Anderson of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Jason Conder of the District of Wyoming.

Today, the FBI would like to provide an update on the status of our investigation into the cyber attack targeting Sony Pictures Entertainment (SPE).  In late November, SPE confirmed that it was the victim of a cyber attack that destroyed systems and stole large quantities of personal and commercial data.  A group calling itself the “Guardians of Peace” claimed responsibility for the attack and subsequently issued threats against SPE, its employees, and theaters that distribute its movies.

The FBI has determined that the intrusion into SPE’s network consisted of the deployment of destructive malware and the theft of proprietary information as well as employees’ personally identifiable information and confidential communications.  The attacks also rendered thousands of SPE’s computers inoperable, forced SPE to take its entire computer network offline, and significantly disrupted the company’s business operations.

After discovering the intrusion into its network, SPE requested the FBI’s assistance.  Since then, the FBI has been working closely with the company throughout the investigation.  Sony has been a great partner in the investigation, and continues to work closely with the FBI. Sony reported this incident within hours, which is what the FBI hopes all companies will do when facing a cyber attack.  Sony’s quick reporting facilitated the investigators’ ability to do their jobs, and ultimately to identify the source of these attacks.

As a result of our investigation, and in close collaboration with other U.S. Government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions.  While the need to protect sensitive sources and methods precludes us from sharing all of this information, our conclusion is based, in part, on the following:

• Technical analysis of the data deletion malware used in this attack revealed links to other malware that the FBI knows North Korean actors previously developed.  For example, there were similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks.

• The FBI also observed significant overlap between the infrastructure used in this attack and other malicious cyber activity the U.S. Government has previously linked directly to North Korea.  For example, the FBI discovered that several Internet protocol (IP) addresses associated with known North Korean infrastructure communicated with IP addresses that were hardcoded into the data deletion malware used in this attack. 

• Separately, the tools used in the SPE attack have similarities to a cyber attack in March of last year against South Korean banks and media outlets, which was carried out by North Korea.

We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there.  Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States.  Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart.  North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves.  Such acts of intimidation fall outside the bounds of acceptable state behavior.  The FBI takes seriously any attempt – whether through cyber-enabled means, threats of violence, or otherwise – to undermine the economic and social prosperity of our citizens.

The FBI stands ready to assist any U.S. company that is the victim of a destructive cyber attack or breach of confidential business information.  Further, the FBI will continue to work closely with multiple departments and agencies as well as with domestic, foreign, and private sector partners who have played a critical role in our ability to trace this and other cyber threats to their source.  Working together, the FBI will identify, pursue, and impose costs and consequences on individuals, groups, or nation states who use cyber means to threaten the United States or U.S. interests.

All Seven Defendants Charged Have Now Been Convicted

Two Colombian nationals pleaded guilty today to second degree murder and conspiracy to kidnap an internationally protected person for their roles in the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James “Terry” Watson in Bogotá, Colombia, on June 20, 2013.

Attorney General Eric H. 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.

“The Department of Justice has now obtained pleas for all seven individuals charged with the kidnapping and murder of Special Agent Watson, as well as the attempt to cover up the crime,” said Attorney General Eric Holder.  “Although this marks an important milestone in our effort to achieve justice for a fallen hero, our work is far from over.  The Justice Department will never rest in its commitment to honor the service, and the profound sacrifice, of Special Agent Watson and so many other courageous men and women in federal law enforcement.  And we will never waver in our pursuit of criminals who target or seek to harm Americans anywhere in the world.”

“Special Agent Terry Watson’s kidnapping and murder resulted in a loss that will always be felt by the men and women of DEA,” said DEA Administrator Michele M. Leonhart.  “Today’s admission of guilt brings us closer to ensuring that justice is served in this tragedy.  DEA will never forget Terry’s outstanding career and the work he did with our global partners in the shared fight against international drug traffickers.”

In the statements of facts filed with their plea agreements, Omar Fabián Valdes Gualtero, 28, and Édgar Javier Bello Murillo, 28, both of Bogotá, admitted that they conspired with four other individuals— Edwin Gerardo Figueroa Sepúlveda, Julio Estiven Gracia Ramírez, Héctor Leonardo López, and Andrés Álvaro Oviedo García—to conduct “paseo milionarios” or “millionaire’s rides” in which victims were lured into taxi cabs, kidnapped, and then robbed.  Valdez Gualtero admitted that he was responsible for helping to organize the robbery crew and obtaining disposable cell phones for use during the robberies.  Both defendants admitted that on the evening of June 20, 2013, their robbery crew targeted Special Agent Watson outside of a restaurant in Bogotá.  Gracia Ramírez picked up Special Agent Watson in his taxi, while López drove a second taxi carrying Valdes Gualtero, Bello Murillo and Figueroa Sepúlveda.  After Gracia Ramírez pretended to have mechanical trouble and stopped the taxi, Bello Murillo and Figueroa Sepúlveda entered the back seat with Special Agent Watson.  A struggle ensued and Figueroa Sepúlveda shocked Special Agent Watson with a stun gun while Bello Murillo stabbed him at least four times.  Special Agent Watson was able to escape from the taxi, but he later collapsed and died from his injuries.

In total, seven defendants were arrested and extradited from Colombia to the United States to face charges in connection with Special Agent Watson’s murder and the subsequent attempt to cover up the crime.  Six defendants were charged with murder and conspiracy to kidnap.  A seventh defendant, Wilson Daniel Peralta-Bocachica, was charged with obstruction of justice for his role in cleaning the victim’s blood from the backseat of the taxi.  All of the defendants have pleaded guilty for their roles in this incident.  Gracia Ramírez, López, and Oviedo García were sentenced on Dec. 14, 2014, to 20 years, 25 years, and 27 years, in prison respectively.  Figueroa Sepúlveda and Peralta-Bocachica are scheduled to be sentenced on Feb. 18, 2015.  Valdes Gualtero and Bello Murillo are scheduled to be sentenced on April 10, 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 of 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.

A federal jury sitting in Los Angeles today convicted two California tax return preparers of one count of conspiracy to defraud the Internal Revenue Service (IRS) and two counts  of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR) announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division, Acting U.S. Attorney Stephanie Yonekura for the Central District of California, and  Chief of the IRS-Criminal Investigation Rich Weber. 

According to the second superseding indictment and evidence introduced at trial, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States.  David Kalai worked primarily at URS’s former headquarters in Newport Beach, California, and later at URS’s location in Costa Mesa, California.  Nadav Kalai, who is David Kalai’s son, worked out of URS’s headquarters in Bethesda, Maryland, as well as the URS locations in Newport Beach and Costa Mesa.  David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS’s East Coast locations. 

U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “yes” or “no” in the appropriate box and identifying the country where the account is maintained.  They further have an obligation to report all income earned from the foreign financial account on the tax returns.  Separately, U.S. citizens, resident aliens and legal permanent residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year must also file an FBAR with the U.S. Treasury disclosing such an account by June 30th of the following year. 

“As the defendants in this case have learned, hiding income and assets offshore is not tax planning; it’s tax fraud,” said Chief Richard Weber IRS-Criminal Investigation.  “There is no secret formula that can eliminate an individual’s tax obligations.  Today’s verdict reinforces our commitment to every American taxpayer that we will identify and prosecute those who implement off-shore tax schemes designed to evade the payment of taxes.”

The second superseding indictment and the evidence introduced at trial established that the co-conspirators prepared false individual income tax returns that did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts.  In order to conceal the clients’ ownership and control of assets and to conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks, Bank A and Bank B.  Bank A is a large financial institution headquartered in Tel -Aviv, Israel, with branches worldwide.  Bank B is a mid-size financial institution, also headquartered in Tel Aviv, with a presence on four continents.                                                                                                                       

As further proven at trial, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks.  The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense.  The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in and authority over, the secret accounts and caused the clients to fail to file FBARs with the U.S. Treasury.  

“The Kalais created sham foreign corporate entities and used banks in Luxembourg and Israel as havens for hiding their U.S. clients’ money from the U.S. government,” said Acting Deputy Assistant Attorney General Wszalek.  “Today’s guilty verdict sends a clear message that those professionals who facilitate tax evasion through the use of offshore bank accounts will be held accountable for their criminal conduct.  The Tax Division will continue its vigorous tax enforcement efforts in prosecuting return preparers, bankers, and other facilitators who assist clients in concealing assets offshore.”

The evidence at trial established that David Kalai and Nadav Kalai each failed to file FBARs for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg.  The bank account was held in the name of a nominee corporation in Belize and held over $300,000. 

Sentencing is scheduled for March 16, 2015.                                    

This case was prosecuted by Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci of Tax Division, with the assistance of Assistant U.S. Attorney Sandra R. Brown for the Central District of California, and was investigated with the assistance of the IRS.

A Massapequa, New York, man was sentenced in U.S. District Court in Allentown, Pennsylvania, to serve 24 months in prison on charges related to an odometer tampering scheme, the Department of Justice announced today. 

Edward Capicchioni, 54, was also ordered to pay $412,880 in restitution to victims who purchased vehicles without knowing the odometers were incorrect.  In March 2014, Capicchioni pled guilty to one count of conspiracy to tamper with odometers. 

Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.  According to the charges, Capicchioni purchased high-mileage cars, sport-utility vehicles and trucks from individual sellers in Maryland, New York, Pennsylvania, Rhode Island,  and other states.  Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania.  Capicchioni also took steps to hide his odometer fraud scheme.  He checked the Carfax public database to see if it included a mileage that was higher than the tampered mileage.  If the Carfax mileage was higher, Capicchioni submitted fraudulent documentation in the name of the vehicle’s prior owner in order to have the higher mileage reading removed from the database. 

“Odometer tampering is a pervasive consumer fraud,” said Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division.  “We will continue to enforce these important consumer protection laws, and we will prosecute people who defraud vehicle purchasers by rolling back odometers on used cars.”

After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the National Highway Traffic Safety Administration (NHTSA) Office of Odometer Fraud Investigation.  NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities. 

This case was prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch. 

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

More information on odometer fraud is available on the NHTSA Odometer Fraud website.  Tips on detecting and avoiding odometer fraud are available at this NHTSA page.

Iron Mountain Incorporated and Iron Mountain Information Management LLC (collectively Iron Mountain) has paid $44.5 million to resolve allegations under the False Claims Act that Iron Mountain overcharged federal agencies for record storage services under General Services Administration (GSA) contracts, the Department of Justice announced today.  Iron Mountain is a records storage company headquartered in Boston. 

“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”

“This settlement illustrates our commitment to protecting the integrity of federal contracting programs,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “Federal agencies rely on pricing information under the Multiple Award Schedule program in particular, and deserve the full benefit of applicable contract terms.”

This settlement relates to contracts under which Iron Mountain provided record storage services to government entities from 2001 to 2014 through GSA’s Multiple Award Schedule (MAS) program.  The MAS program provides the government with a streamlined process for procurement of commonly used commercial goods and services.  The settlement resolves allegations that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts.  It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements. 

“My office will continue working diligently to make sure American taxpayers are getting the best value for every dollar spent,” said Acting Inspector General Robert C. Erickson for GSA.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of California by Brent Stanley, a former Iron Mountain employee, and Patrick McKillop, who worked in the records management industry.  Collectively, they will receive $8,010,000.

The settlement with Iron Mountain was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of California, the Civil Division’s Commercial Litigation Branch, the GSA’s Office of the Inspector General, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, the NASA Office of Inspector General, the U.S. Department of Veterans Affairs’ Office of Inspector General, the U.S. Department of Agriculture’s Office of Inspector General, U.S. Army Criminal Investigation Command, and the U.S. Department of Housing and Urban Development’s Office of Inspector General.

The lawsuit is captioned United States ex rel. Brent Stanley and Patrick McKillop v. Iron Mountain Incorporated, Civil Action No. 11-3260 (E.D. Cal.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

COPS Office Releases 42 Findings and Recommendations to Implement Best Practice at the Spokane Police Department

The U.S. Department of Justice Office of Community Oriented Policing Services (COPS) announced today the completion of a Collaborative Reform Review of the Spokane Police Department’s use of force policies and practices.  The new report, funded by a grant from the COPS Office’s Collaborative Reform Initiative for Technical Assistance, lists 42 findings and recommendations to address use of force practices, improve tactical policing strategies and build stronger collaborative relationships between local police and the communities they protect.  

“The COPS office is confident in the Spokane Police Department’s capability to implement these evidence based recommendations and build on their commitment to building a stronger community,” said Director Ronald Davis of the COPS Office.  “We look forward to strengthening the collaborative relationship between the community and law enforcement to ensure that this process remains expansive, transparent and inclusive.”

The COPS office first announced the beginning of the Collaborative Reform Review in February 2013.  The scope of the work announced today reviewed the use of force over the last five years, including an analysis of policies, training, investigation and community outreach efforts.  Interviews were conducted with 140 area stakeholders, including community members, current and former officers and prosecutors, community organizations and police union officials.  The 11-month assessment concluded that police officers in the Spokane Police Department do not routinely and deliberately engage in excessive use of force or deadly force.  The report also did not find a biased application of use of force.  Other findings and recommendations include the need for improvements in use of force documentation and investigation practices used by the police department.  The review also outlined the need to formalize the roles and responsibilities of the ombudsman and the commission members. 

“I want to thank the COPS Office for engaging in the collaborative reform process,” said Chief Frank G. Straub of the Spokane Police Department.  “I believe the findings and recommendations provide an important road map for us to improve our internal business practices and more importantly better engage with the community we serve.  We are fully committed to implementing all of the recommendations within the 18-month timeframe and continuing to serve all members of the Spokane community with dignity, integrity and respect.”

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

The report, The Collaborative Reform Model: A Review of Use of Force Policies, Processes, and Practices in the Spokane Police Department, can be found online here.

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The COPS Office, headed by Director Davis, is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about COPS, please visit www.cops.usdoj.gov.

Lockheed Martin Integrated Systems (LMIS) has agreed to pay $27.5 million to resolve allegations that it violated the False Claims Act by knowingly overbilling the government for work performed by LMIS employees who lacked required job qualifications. 

The settlement was announced today by Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Branda.  “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”

“U.S. forces rely on the goods and services provided by defense contractors, so it is imperative the government be able to rely on those contractors to adhere to the rules,” said U.S. Attorney Fishman.  “This settlement should remind all who do business with the government that there is a price to pay for fudging the math.”

LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland.  The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM).  CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland.  The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM.  LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees.  The overbilling allegedly resulted in greater profit for LMIS.

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS) and our partners to vigorously pursue alleged violations of the False Claims Act,” said Special Agent in Charge Craig W. Rupert of the DCIS Northeast Field Office.  “All contractors doing business with the federal government are expected to abide by the acquisition rules no matter who they are.  Investigations of such allegations are necessary to protect American taxpayers and our warfighters.”

This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of New Jersey, the Southern New Jersey Branch of the Defense Contract Audit Agency (DCAA) and the DCAA’s Mid-Atlantic Region's Comprehensive Labor Team and Investigative Support Team, the U.S. Army’s Criminal Investigative Command’s Major Procurement Fraud Unit and the DCIS. 

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

Deputy Assistant Attorney General David Hubbert for the Justice Department’s Tax Division Civil Trial Matters, U.S. Attorney Preet Bharara for the Southern District of New York, Commissioner John Koskinen of the Internal Revenue Service (IRS), and Special Agent in Charge Anthony D. Williams of the Drug Enforcement Administration’s (DEA) Los Angeles Field Division announced that U.S. District Judge Vernon S. Broderick entered an order yesterday authorizing the IRS to issue summonses requiring Federal Express Corporation, doing business as FedEx Express, FedEx Ground Package System Inc., aka FedEx Ground, DHL Express (DHL), United Parcel Service Inc. (UPS), Western Union Financial Services Inc., the Federal Reserve Bank of New York (the FRBNY), Clearing House Payments Company LLC, and HSBC Bank USA National Association (HSBC USA) to produce information about U.S. taxpayers who may be evading or have evaded federal taxes by using the services of Sovereign Management & Legal Ltd. (Sovereign) to establish, maintain or conceal foreign accounts, assets and entities. 

In this action, the court granted the IRS permission to serve what are known as “John Doe” summonses on FedEx Express, FedEx Ground, DHL, UPS, Western Union, the FRBNY, Clearing House and HSBC USA.  The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown.  The John Doe summonses direct these eight entities to produce records that will assist the IRS in identifying U.S. taxpayers who, from 2005 through 2013, used Sovereign’s services to establish, maintain, operate or control any foreign financial account or other assets; any foreign corporation, company, trust, foundation or other legal entity; or any foreign or domestic financial account in the name of such foreign entity.  

“This summons action is but the latest step in the Department of Justice’s efforts to identify and hold fully accountable U.S. taxpayers who have sidestepped their tax obligations by hiding money overseas,” said Deputy Assistant Attorney General Hubbert.  “The world is getting smaller for tax cheats, and we will work with our partners at the IRS to vigorously enforce the nation’s tax laws against those who seek to avoid paying their fair share.”

“This action demonstrates our Office’s commitment to pursuing tax evaders who use offshore service providers to avoid their U.S. tax obligations,” said U.S. Attorney Bharara.  “By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who conceal their foreign assets in order to dodge their legal responsibility to pay taxes.”

“The IRS remains committed to continuing our priority efforts to stop offshore tax evasion wherever it is found,” said Commissioner Koskinen.  “We have made tremendous progress in this area, working cooperatively with other agencies.  The John Doe summons remains an important tool in our efforts to find international tax evaders and those who help them.”

“The DEA has a longstanding commitment to sharing information with our federal, state, and local partners,” said Special Agent in Charge Anthony D. Williams.  “Issuance of these summonses exemplifies how outstanding investigative results can be derived from a culture of interagency cooperation.”

According to the allegations set forth in the documents filed in support of the petition, and other information in the public record:

Sovereign is a multi-jurisdictional offshore services provider that offers clients, among other things, the formation and administration of anonymous corporations and foundations in Panama as well as offshore entities.  Related services provided by Sovereign include the maintenance and operation of offshore structures, mail forwarding, the availability of virtual offices, re-invoicing, and the provision of professional managers who appoint themselves directors of the client’s entity while the client maintains ultimate control over the assets. 

As a result of a DEA investigation of online narcotics trafficking known as Operation Adam Bomb, the IRS learned that Sovereign was involved in assisting U.S. clients evade their taxes.  During the IRS investigation that led to today’s action, one taxpayer, making a voluntary disclosure of tax non-compliance to avoid prosecution, reported that Sovereign helped the taxpayer form an anonymous corporation in Panama that the taxpayer used to control assets without appearing to own them. 

The IRS investigation also determined that Sovereign uses Federal Express, UPS and DHL to correspond with U.S. clients, and Western Union to transmit funds to and from clients in the United States.  In addition, the IRS learned that the wire services operated by the FRBNY and Clearing House, and the U.S. correspondent bank accounts that HSBC USA holds for Sovereign’s banks in Panama and Hong Kong, are likely to have records of financial transactions between Sovereign and its clients in the United States.  By obtaining information from these entities through John Doe summonses, the IRS expects to be able to identify Sovereign’s U.S. clients who may be avoiding or evading taxes.

Federal law requires U.S. taxpayers to pay taxes on all income earned worldwide.  U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year.  Willful failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation.

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This case is being handled by the U.S. Attorney’s Office for the Southern District of New York Tax and Bankruptcy Unit.  Assistant U.S. Attorney Joseph N. Cordaro is in charge of the case.

A federal jury today returned a guilty verdict against a civilian employee of the U.S. Navy posted at the Capodichino Navy Base near Naples, Italy, for obstructing an investigation and making false statements, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.  

Steven William Ashton, 41, with a last known U.S. residence in Davenport, Iowa, was found guilty after a nine-day jury trial of creating false documents to obstruct the Naval Criminal Investigative Service (NCIS) investigation into Ashton’s private consulting business called BlackGrid Consulting LLC.  The jury also found Ashton guilty of making false statements about his tour of duty in order to obtain federal benefits and access to military bases worldwide.   

The evidence at trial showed that the NCIS was investigating Ashton for conflicts of interest and using inside government information to advance his business.  When Ashton learned about the investigation, he created fraudulent documentation purporting to show that he had fully disclosed his business to Navy authorities and received approval.  At Ashton’s direction, his defense counsel unwittingly submitted those false documents to the prosecutors and gave other false explanations to the Justice Department.   

According to the evidence presented at trial, from April 2004 to March 2013, Ashton was employed by the Navy as the North Atlantic Treaty Organization and Host Nation Programs Manager for the regions of Europe, Africa and Southwest Asia, responsible for managing contracts and agreements among the Navy and other countries to support the United States’ military efforts.

He was found not guilty on charges of theft of government funds for obtaining housing benefits, called Living Quarters Assistance, to which he was not entitled, and of obstructing that investigation.

This case was investigated by the NCIS and the Air Force Office of Special Investigations.  The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Clifford Cronk of the Southern District of Iowa.

In New Video, Attorney General Hails Finding as ‘Significant Milestone’ That Shows Crime and Incarceration Levels Can Be Reduced at Same Time

Attorney General Eric Holder announced today that the number of persons under the supervision of adult correctional systems in the United States has fallen to its lowest level since 2003.  This finding is highlighted in a study to be released today by the Bureau of Justice Statistics.

According to the study, an estimated 6,899,000 persons were under the supervision of adult correctional systems at year end 2013, down from 6,940,500 at year end 2012. The decrease of 41,500 offenders in 2013 resulted in the number of persons under correctional supervision falling below 6.9 million for the first time since 2003.

The Attorney General called the drop a “significant milestone.”

“While we clearly have much more work to do, it is my hope that we are witnessing the start of an overall trend that will continue – and accelerate – as our reform efforts take full effect,” the Attorney General said. “As I have said many times, we cannot incarcerate our way to becoming a safer nation.  That’s why we need to focus on commonsense sentencing reforms and on proven, evidence-based solutions like diversion programs for those convicted of low-level, nonviolent offenses.”

The complete text of the Attorney General’s video message is below:

“The Department of Justice is dedicated to ensuring that America’s criminal justice system is as fair, as efficient, and as effective as possible.  That’s why, in August of 2013, I launched the “Smart on Crime” Initiative – a targeted effort to enhance the way we charge, sentence, and release individuals in order to end this country’s overreliance on incarceration and to promote efforts that give people the tools they need to return to their communities and lead better and more productive lives. 

“In the six years since President Obama took office, we have made important progress in fighting crime and advancing our long-term criminal justice efforts.  In fact, during this Administration, overall crime has decreased by over 15 percent, while overall incarceration has decreased by nearly 9 percent – the first time these two critical markers have declined together in more than 40 years.  And just two months ago, I was able to report that over the past year, the federal prison population declined by roughly 5,000 inmates – the first decrease we’ve seen in many ‎decades.‎

“Today, I can announce that the number of persons supervised by U.S. adult correctional systems – in prison or jail, or on probation or parole – fell below 6.9 million individuals at the end of 2013.  This drop leaves the United States with the smallest population under the authority of adult correctional supervision in nearly a decade.

“This is a significant milestone.  It is highlighted in a study to be released by the Bureau of Justice Statistics.  And while we clearly have much more work to do, it is my hope that we are witnessing the start of an overall trend that will continue – and accelerate – as our reform efforts take full effect. 

“As I have said many times, we cannot incarcerate our way to becoming a safer nation.  That’s why we need to focus on commonsense sentencing reforms and on proven, evidence-based solutions like diversion programs for those convicted of low-level, nonviolent offenses.  We are seeing this approach take root in states across the country, as more and more governors and legislatures recognize that incarceration must be used to punish, deter, and rehabilitate—not merely to warehouse and forget.  And here in Washington, D.C., I am proud to work with leaders in Congress from both parties to advance this vital conversation and bring about a paradigm shift in the way our nation approaches criminal justice. 

“Of course, I recognize that these are challenging issues, and the changes we seek will not occur overnight.  But I am dedicated – and the Department of Justice is committed – to an ongoing effort that strengthens our criminal justice system; lives up to our founding ideals; and builds the safer, more just society that all Americans deserve.”

The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.

Final 10 of 36 Convicted and Sentenced

Ten Aryan Brotherhood of Texas (ABT) gang members and associates were sentenced to prison this week for their roles in the violent ABT enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Today, Michael Richard Lamphere, 56, of Houston, Texas, Glen Ray Millican Jr., 41, of Houston, Texas, and Rebecca Johnson Cropp, 46, of Dallas, Texas, were sentenced to serve respective terms of 240 months, 120 months and 36 months in federal prison by U.S. District Judge Sim Lake in the Southern District of Texas.  Earlier this week, William David Maynard, 44, of Houston, Texas, Sammy Keith Shipman, 32, of Houston, Texas, Chad Ray Folmsbee, 32, of Houston, Texas, David Orlando Roberts, 36, of Houston, Texas, Justin Christopher Northrup, 29, of Houston, Texas, Tammy Melissa Wall, 45, of Otto, North Carolina, and Benjamin Troy Johnson, 43, of Corpus Christi, Texas, were each sentenced to serve respective terms of 262 months, 188 months, 140 months, 135 months, 130 months, 72 months and 36 months in federal prison.

According to information presented in court, the 10 defendants were admitted members and associates of the ABT, a powerful race-based organization that operates inside and outside of state and federal prisons throughout Texas and the United States.  Along with other ABT gang members and associates, they agreed to commit multiple acts of murder, robbery, arson, kidnapping and narcotics trafficking on behalf of the ABT gang.  ABT gang members met on a regular basis at various locations throughout Texas to report on gang-related business, collect dues, commit disciplinary assaults against fellow gang members and discuss acts of violence against rival gang members, among other things.  

The ABT was established in the early 1980s within the Texas prison system.  The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s.  Previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism, but over time, the ABT has expanded its criminal enterprise to include illegal activities for profit, according to court records.

In order to be considered for ABT membership, a person must be sponsored by another gang member.  Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.

Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, arson, assault, robbery and threats against those who violated the rules or posed a threat to the enterprise.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”

The defendants sentenced this week represent the final 10 of 36 defendants convicted of conducting racketeering activity through the ABT criminal enterprise, among other charges.  

This Organized Crime Drug Enforcement Task Force case was investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite, Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.

The case was prosecuted by Trial Attorney David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Ed Gallagher and Tim Braley of the Southern District of Texas.

A Miami woman charged with running an operation that threatened and defrauded Spanish-speaking consumers was sentenced today in federal district court in Miami, the Department of Justice and U.S. Postal Inspection Service (USPIS) announced. 

Maria Luzula, 52, was sentenced to serve 165 months in federal prison to be followed by three years of supervised release for her operation of Angeluz Florida Corporation and call centers in Peru that lied to and threatened Spanish-speaking victims into paying fraudulent settlements for nonexistent debts.  In addition to her prison sentence, Luzula was ordered to forfeit assets, including her home.

In October, Luzula pleaded guilty to all 27 counts against her midway through trial before U.S. District Court Judge Patricia A. Seitz.  The charges against her included conspiracy, mail fraud, wire fraud and attempted extortion.  Luzula’s son, Juan Alejandro Rodriguez Cuya, 35, was convicted by a jury after less than two hours of deliberation following a two-week trial and will be sentenced on Jan. 22, 2015.

“The defendants targeted and preyed upon the Spanish-speaking community – and the harm that their fraud caused on individual victims is heart-wrenching,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The Justice Department will be particularly vigilant towards schemes that target specific populations, and we will track down fraudulent actors whether they commit their offenses from the United States or abroad, and whether they commit them in English or another language.”

According to evidence presented at trial, the defendants’ employees in Peru used Internet-based telephone calls to threaten Spanish-speaking victims in the United States.  The Peruvian callers falsely accused the victims of having failed to accept delivery of certain products and claimed that the victims owed thousands of dollars in fines and that lawsuits would be brought against them.  In reality, the victims had never ordered these products and nothing had been delivered.

Additional evidence at trial established that the call center employees claimed that the consumers could resolve the fines if they immediately paid a “settlement fee.”  Consumers who contested these settlement fees were told that failure to pay could lead to arrest, deportation or seizure of property.  Thousands of victims succumbed to these threats and paid fees that they did not owe. 

Victims who testified at trial spoke of how anxious the calls made them.  The victims were so afraid of the threats that they paid fees they simply could not afford.  At sentencing, victims told the judge that they have lost trust in people and that they still become nervous every time the phone rings.  

“Consumer fraud that targets a specific population is shameful,” said U.S. Attorney Wilfredo A. Ferrer for the Southern District of Florida.  “In this case, the defendants targeted Spanish-speaking consumers and falsely threatened them with arrest, deportation, forfeiture of property or harm to their credit scores when the consumers refused to settle claims for products that were not delivered or ordered.  Such tactics are intolerable.  The U.S. Attorney’s Office is committed and stands united with the Department of Justice’s Civil Division Consumer Protection Branch to protect our consumers from fraud.”

“The USPIS will continue to aggressively investigate and go after those who defraud citizens of their hard earned money through the use of threats and other abusive tactics,” said Postal Inspector in Charge Ronald Verrochio of the USPIS Miami Division.

Acting Assistant Attorney General Branda commended the USPIS for its investigative efforts and thanked the U.S. Attorney’s Office for the Southern District of Florida for their contributions to the case.  The case was prosecuted by Trial Attorney Phil Toomajian and Assistant Director Richard Goldberg of the Civil Division’s Consumer Protection Branch.