District Not Recorded

North Atlantic Medical Services Inc. (NAMS), doing business as Regional Home Care Inc., has agreed to pay $852,378 to resolve allegations that it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory therapy services provided by unlicensed personnel, the Department of Justice announced today.  NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.  

“Respiratory care services should be performed by properly licensed personnel,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division.  “We will not tolerate companies prioritizing their own profits and convenience at the expense of patient safeguards.”    

Medicare and Medicaid require suppliers of respiratory therapy equipment and services to comply with state licensing standards.  In Massachusetts, the Department of Public Health requires respiratory therapists to apply for and obtain a license.  Applicants can do so by passing the National Board for Respiratory Care’s “Certification Examination for Entry-Level Respiratory Therapy Practitioners” or obtaining a reciprocal license from a different jurisdiction.  This settlement resolves allegations that, from September 2010 to January 2013, NAMS used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts.  The government alleged that, even after the Massachusetts Department of Public Health informed the company that the practice was illegal, NAMS continued to use unlicensed personnel and bill Medicare and Medicaid for these services.

“This respiratory care company flouted important licensure requirements, failed to provide patients the standard of care that they deserve and fraudulently billed the federal government for improperly rendered services,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “With the important assistance of whistleblowers, our health care fraud team seeks to ensure patient safety and protect the public fisc.”

“To safeguard patient health and ensure that taxpayer money is spent well, Medicare and Medicaid require providers of respiratory care services to follow state licensure rules,” said Special Agent in Charge Phillip M. Coyne for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Companies seeking to boost profits by using unlicensed personnel will be held accountable for their actions.”

Medicaid is jointly funded by the states and federal government.  The Commonwealth of Massachusetts, which paid in part for the Medicaid claims at issue, will receive $229,210 of the settlement amount. 

The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by former NAMS employees Konstantinos Gakis and Demetri Papageorgiou.  The False Claims Act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery.  Gakis and Papageorgiou will receive $153,428.   

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.2 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 settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, FBI, HHS-OIG, and the Commonwealth of Massachusetts.

The case is captioned United States ex rel. John Does v. Regional Home Care, Inc. d/b/a North Atlantic Medical also d/b/a North Atlantic Medical Tolman Clinical Laboratory and as North Atlantic Medical Services, Docket No. 12-CA-11979 (D. Mass.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.    

Ohio’s former deputy treasurer and a Chicago businessman were sentenced to federal prison today for their roles in a bribery and money laundering scheme involving the Ohio Treasurer’s Office.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio, Acting Special Agent in Charge John A. Barrios of the FBI’s Cincinnati Division and Attorney General Mike DeWine of Ohio made the announcement.

Amer Ahmad, 40, and Joseph Chiavaroli, 34, both of Chicago, were sentenced today by U.S. District Judge Michael H. Watson of the Southern District of Ohio to serve 15 years in prison and 18 months in prison, respectively.  Ahmad was ordered to forfeit $3.2 million, and Chiavroli was ordered to forfeit $400,000.  Last year, Ahmad pleaded guilty to federal program bribery and conspiracy to commit honest services wire fraud, federal program bribery and money laundering, and Chiavaroli pleaded guilty to money laundering.  Following his guilty plea, former Deputy Treasurer Ahmad fled to Pakistan and was sentenced today in absentia.  He is currently in Pakistani custody pending an extradition request from the United States government. 

According to the defendants’ admissions in connection with their guilty pleas, from January 2009 through January 2011, Ahmad used his position as deputy treasurer to direct official state of Ohio business to securities broker Douglas E. Hampton in return for bribes.  Ahmad and Chiavaroli concealed the payments received from Hampton by passing them through the accounts of their landscaping business.  Hampton also funneled more than $123,000 to Mohammed Noure Alo, an attorney and lobbyist who was Ahmad’s close personal friend and business associate.  Over the course of the scheme, Hampton paid in excess of $500,000 in bribes and received, in exchange, approximately $3.2 million in commissions for 360 securities trades on behalf of the Ohio Treasurer’s Office. 

Hampton and Alo were sentenced on Nov. 12, 2014, and Nov. 13, 2014, to 45 months in prison and 48 months in prison, respectively, for their roles in the scheme.    

The case was investigated by the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation.  The case is being prosecuted by Trial Attorneys Eric L. Gibson and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Douglas W. Squires of the Southern District of Ohio.

A former executive of Japan-based Mitsuba Corporation has agreed to plead guilty and serve 13 months in a U.S. prison for conspiring to fix the prices of products installed in cars sold in the United States and elsewhere, the Department of Justice announced today. 

A one-count felony charge was filed today in the U.S. District Court for the Eastern District of Michigan in Detroit against Kazumi Umahashi, a Japanese national and former General Manager of Mitsuba.  Umahashi conspired from in or about June 2005 to in or about December 2009 by agreeing upon bids and prices for, and allocating the supply of, windshield wiper systems and starter motors sold to Honda Motor Co. Ltd. and its subsidiaries and affiliates in the United States and elsewhere, according to the charge.  Umahashi also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“The Antitrust Division has uncovered dozens of conspiracies to fix prices in the automotive industry,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The impact of these schemes has affected nearly every American.  We will continue our efforts to hold culpable companies and individuals accountable for their illegal actions.”

Mitsuba manufactures and sells a variety of automotive parts, including starter motors, which are small electric motors used in internal combustion engines, and windshield wiper systems.  On Nov. 6, 2013, Mitsuba pleaded guilty for its involvement in the conspiracy and agreed to pay $135 million in criminal fines. 

Umahashi is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum sentence for individuals of 10 years and a fine of $1 million.  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. 

Including today’s charges, 48 individuals have been charged in the department’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 more than $2.4 billion in fines. 

This prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section with the assistance of the FBI’s Detroit Field Office and the FBI headquarters’ International Corruption Unit.  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 888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

A campaign manager pleaded guilty today in the Southern District of Texas for conspiring with others to pay voters to vote in a Donna, Texas, school board election, 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.  Five campaign workers have already pleaded guilty to vote-buying charges in connection with this election.

Francisco “Frankie” Garcia, 47, of Donna, Texas, pleaded guilty to one count of conspiring to buy votes and one count of vote-buying in connection with the November 2012 general election.  Garcia’s sentencing hearing is scheduled for Feb. 24, 2015, before Chief Judge Ricardo H. Hinojosa of the U.S. District Court for the Southern District of Texas. 

At his plea hearing, Garcia admitted that a general election was held on Nov. 6, 2012, in Donna, Texas, which included candidates for the presidential election, as well as candidates for various state, county and local offices, including members of the Donna School Board.  Garcia worked as a campaign manager for four school board candidates, and he and others agreed to pay voters with cash and cocaine to vote for those candidates.     

This case was investigated by the FBI and is being prosecuted by Trial Attorneys Monique Abrishami and Maria Lerner of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Leo J. Leo of the Southern District of Texas.

The Department of Justice announced today that it will require Nexstar Broadcasting Group Inc., Mission Broadcasting Inc., Communications Corporation of America (CCA), and Silver Point Partners L.P. to divest their interests in WEVV‑TV, a CBS and FOX affiliate in Evansville, Indiana, in order for Nexstar to proceed with its acquisition of CCA.  Without this divestiture, the department said, Nexstar, with its control of Mission would have gained a dominant position in broadcast television spot advertising in the Evansville, Indiana area, resulting in higher prices to advertisers.  The Nexstar-CCA transaction is valued at approximately $270 million.

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.  Concurrent with the filing of the lawsuit, the division filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.

“This divestiture maintains the status quo in Evansville, Indiana, and avoids a loss of competition for local broadcast television spot advertising,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division.  “By ensuring that Nexstar does not come to control three of four major network affiliations, consumers will benefit as these stations continue to compete to attract viewers and advertisers.”

The department’s complaint alleges that the proposed acquisition would lessen competition in broadcast television spot advertising in the Evansville, Indiana, Designated Market Area (DMA).  In the Evansville DMA, the transaction would result in Nexstar owning or controlling three TV stations and three of the four major broadcast network affiliations in Evansville.  Had the transaction been consummated as originally proposed, Nexstar would have owned or controlled WEHT (ABC affiliate), WEVV-TV (CBS & FOX affiliate), and WTVW (CW affiliate).  To remedy this likely harm, the proposed settlement requires Nexstar and

CCA to divest CCA’s WEVV-TV to Bayou City Broadcasting Evansville Inc., or an alternative, independent buyer to be approved by the United States.

Nexstar, a Delaware corporation with headquarters in Irving, Texas, owns or operates 72 broadcast television stations located in 41 markets in 18 states. Nexstar reported revenues of $378 million for 2013.  Mission, a Delaware corporation with headquarters in Westlake, Ohio, owns broadcast television stations for which Nexstar sells the advertising time.  Nexstar receives substantially all of Mission’s available cash and is deemed to have a controlling interest in Mission under generally accepted accounting principles.

CCA, a Delaware corporation with headquarters in Lafayette, Louisiana, owns or operates 25 broadcast television stations in 10 markets throughout Louisiana, Texas and Indiana.  CCA had revenues of $98.3 million for 2012.  Silver Point Capital Fund L.P., based in Greenwich, Connecticut, controls and is the ultimate parent entity of CCA.

Bayou City Broadcasting Evansville Inc., a Delaware corporation headquartered in Boston, Massachusetts, is a newly formed entity that will be run by individuals with significant experience owning, managing and operating broadcast television stations.

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 Scott A. Scheele, Chief, Telecommunications & Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, 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.

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on November 26, 2014, RANDY YABUT PALAGANAS was sentenced by Chief Judge Frances Tydingco-Gatewood, Chief Judge of the U.S. District Court of Guam, to 60 months incarceration and five years of supervised release.
 
This sentence follows Defendant PALAGANAS’s plea of guilty on November 13, 2013, to one count of Receipt of Child Pornography in violation of 18 U.S.C. § 2252A(a)(2).  As part of his plea, Defendant PALAGANAS admitted to utilizing a peer-to-peer (P2P) network to receive approximately 73 movies that depicted the sexual abuse of young children.  In addition to the sentence of 60 months of incarceration and five years of supervised release, Defendant PALAGANAS was ordered to register with the Sex Offender Registry in any jurisdiction in which he lives, works or attends school.  He was also ordered to forfeit his computer.

U.S. Attorney Limtiaco states, “Child pornography offenses involve the sexual abuse and exploitation of children.  These offenses are extremely serious because they result in perpetual harm to the child victims, and normalize the sexual exploitation of children.  When the Internet is utilized to obtain these images of child sexual abuse, the images can travel to offenders domestically and internationally anywhere in the world, to include into the Pacific region.  The harm to victims is life-long.  The U.S. Attorney’s Office remains committed to aggressively prosecuting defendants who victimize and prey on children through any means, including by computer.”

The U.S. Attorney additionally reminds defendants who have committed sexual abuse of children that, under federal and local law, all sex offenders have a duty to register and keep their registration current with the Sex Offender Registry in their jurisdiction.  Sex offenders who travel to Guam and who reside on Guam must inform the Guam Sex Offender Registry where they reside, work, or attend school. They must also periodically update their registration information.  The U.S. Attorney notes that the Sex Offender Registry was created in order to protect the public by protecting victims, preventing further victimization and informing the public of the whereabouts of sex offenders.  Guam’s Sex Offender Registry can be found online at www.guamcourts.org. 

U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood (PSC) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in the sexual victimization of children and adults, possess or receive child pornography, and sex offenders who fail to register with the jurisdiction’s Sex Offender Registry.      

The investigation was conducted by the Federal Bureau of Investigations.  The case was handled by Assistant U.S. Attorney R. San Nicolas.

The United States has filed suit against Creekside Hospice II LLC, Skilled Healthcare Group Inc. (SKG), its holding company, and Skilled Healthcare LLC (SKH), an administrative services subsidiary of SKG that operates Creekside (collectively the Creekside entities), alleging that these entities knowingly submitted ineligible claims for hospice services and inflated claims for patient visits to government health care programs, the Justice Department announced today. 

“The Medicare hospice benefit is intended to provide pain management and other palliative care to patients nearing the end of life, to help make them as comfortable as possible,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division.  “Too often, however, companies abuse this critical service by using aggressive marketing tactics to pressure patients who do not need, and may be ill-served, by these services in order to get higher reimbursements from the government.  The department will take swift action to protect taxpayer dollars and make sure that Medicare benefits are available to those who truly need them.”

The Medicare and Medicaid hospice benefits are available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain and stress) for a terminal illness and have a life expectancy of six months or less if their disease runs its normal course.  When Medicare or Medicaid patients receive hospice services, they no longer receive services designed to cure their illnesses. 

The government’s complaint alleges that the Creekside entities knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill.  According to the complaint, the companies allegedly directed staff to enroll patients in the hospice program regardless of the patients’ eligibility for hospice benefits, sometimes by instructing staff to change records after the hospice submitted claims for payment to indicate that all requirements had been met.  Management from Creekside, SKG and SKH also allegedly instructed employees to alter medical records to make it appear that doctors at the hospice had conducted personal visits with the patients, when in fact they had not occurred, in order to ensure reimbursement from Medicare and Medicaid.  The complaint alleges that Creekside management aggressively discouraged staff from permitting patients or their families to revoke their elections to accept hospice benefits.  The complaint also alleges that staff at Creekside were discouraged from documenting known improvements in a patient’s health in the medical record, called “Chart Killers” by the hospice, to ensure that Medicare or Medicaid would pay the hospice’s claim. 

Further, the complaint alleges that the Creekside entities knowingly submitted or caused the submission of inflated claims to Medicare for services performed by the medical director.  The government alleges that the companies repeatedly used billing codes that resulted in higher payment by Medicare than were justified by the services actually performed.  As a result of the conduct alleged in the complaint, the government contends that the Creekside entities misspent tens of millions of taxpayer dollars from the Medicare and Medicaid programs.  

“In order to protect the financial integrity of the Medicare and Medicaid programs, upon which so many of our senior American citizens rely, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have made combating healthcare fraud an enforcement priority,” said U.S. Attorney Daniel G. Bogden for the District of Nevada.  “This type of fraud will not be tolerated and DOJ and HHS will act swiftly when it does occur to pursue False Claims Act suits against violators.”

The United States filed its complaint in two consolidated lawsuits brought under the whistleblower provisions of the False Claims Act and the Nevada False Claims Act by Joanne Cretney-Tsosie, a clinical manager for Creekside, and Veneta Lepera, a former clinical manager for Creekside.  Under these statutes, a private citizen can sue for fraud on behalf of the United States and the state of Nevada, respectively, and share in any recovery.  The federal and state governments are entitled to intervene in such a lawsuit, as they have done in this case.

The United States’ suit is part of 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 $23.1 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs. 

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Nevada, the Nevada Attorney General’s Office and the HHS Office of Inspector General.  The claims asserted against Creekside Hospice, SKG and SKH are allegations only and there has been no determination of liability.

The lawsuit is captioned United States and State of Nevada v. Creekside Hospice II, LLC, Skilled HealthCare Group, Inc. and Skilled Healthcare, LLC. (D. Nev.) 

18-year-old Somali American Stopped at Minneapolis/Saint Paul Airport before Boarding Flight to Turkey

Assistant Attorney General for National Security John P. Carlin and United States Attorney for the District of Minnesota Andrew M. Luger today announced a criminal complaint charging Abdi Nur, 20, and Abdullahi Yusuf, 18, with conspiracy to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL).  Nur is additionally charged with providing material support to a foreign terrorist organization.  Yusuf is expected to make an initial appearance at 2:00 p.m. today before Magistrate Judge Janie S. Mayeron in United States District Court in Minneapolis, Minnesota.

“More than 16,000 recruits from over 90 countries traveled to Syria to become foreign terrorist fighters with alarming consequences,” said Assistant Attorney General Carlin.  “This is a global crisis and we will continue our efforts to prevent Americans from joining the fight and to hold accountable those who provide material support to foreign terrorist organizations.  With these two defendants, we have now charged more than 15 individuals with offenses related to the foreign fighter threat in Syria.”

“As charged, these two young men conspired to join ISIL and travel from Minnesota to the Middle East to engage in a campaign of terror in support of a violent ideology,” said U.S. Attorney Luger.  “Since al-Shabaab began recruiting young adults from the Twin Cities in 2007, our region has lost dozens of disaffected young people to terrorist organizations that would sooner see Somali Minnesotans die on foreign battlefields than prosper in peace and security in the United States.  The law-abiding members of Minnesota’s Somali community are great partners in our fight against terror, and I am proud to work closely with community and religious leaders to lift up those Somali youth who remain vulnerable to terrorist recruiters.  Unfortunately, Yusuf and Nur were not the first – and may not be the last – to conspire in support of ISIS.  As we work with our many partners to improve the lives of Somali Minnesotans, we will continue to investigate and prosecute aggressively criminals who provide support for terror.”

“The FBI remains committed to both its community partners and to its law enforcement mandate concerning the detection and disruption of terrorist activity,” said FBI Special Agent in Charge Richard T. Thornton for the Minneapolis Division.  “This complaint epitomizes the FBI's commitment to upholding the laws of the United States as they apply to those who would support terrorism.”

According to the criminal complaint and documents filed in court, on April 28, 2014, Abdullahi Yusuf applied for an expedited passport at the Minneapolis Passport Office.  He told the passport specialist that he intended to travel to Turkey, but when asked, Yusuf could not specify his travel itinerary, travel companions, hotel location or the name or address of a friend in Turkey who he claimed to have met recently via Facebook.  The passport specialist also asked Yusuf about the cost of his trip, which Yusuf reported as, “about $1,500.”  However, Yusuf had no known source of income.  Yusuf obtained his passport on May 5, 2014, and used it to open a checking account on the same day.

According to the criminal complaint and documents filed in court, on May 23, 2014, Yusuf deposited $1,500 in cash into his Wells Fargo checking account in four separate ATM deposits spread throughout the day.  On May 24, 2014, Yusuf used a debit card associated with the same account to purchase a $1,417.05 airline ticket from Minneapolis/Saint Paul to Istanbul, Turkey.  The ticket was for a flight scheduled to depart Minneapolis/Saint Paul on May 28, 2014.  His parents did not know that Yusuf had obtained a passport and planned to travel to Turkey, nor did they know that he had acquired $1,500 and purchased an airline ticket.

Yusuf is associated with H.M., a former Minnesota resident now believed to be fighting in Syria, and who traveled from Minnesota to Turkey on March 9, 2014.  The same debit card was used to purchase H.M.’s airline ticket as was used to purchase an airline ticket for  a third man from Minnesota who later traveled to Syria to fight with  ISIL.  Yusuf exchanged several telephone calls and text messages with H.M. in the days before YUSUF attempted to depart for Turkey.

On the morning of May 28, 2014, Yusuf’s father drove him to school.  Approximately one hour after arriving at school, Yusuf walked to a mosque near his school.  Yusuf left the mosque and was driven to a light rail station from which Yusuf departed for the airport.  At the airport, Yusuf was advised by agents from the Federal Bureau of Investigation (FBI) that he would not be permitted to travel to Turkey as he had planned.

According to the criminal complaint and documents filed in court, Abdi Nur departed from the Minneapolis/Saint Paul airport for Istanbul, Turkey on May 29, 2014.  Prior to his departure, on April 24, 2014, Nur obtained an expedited U.S. passport.  On May 24, 2014, Nur made an ATM deposit of $1,540 in cash to his checking account.  On May 27, 2014, Nur purchased an airline ticket for $1,619.30, using a debit card associated with the same checking account.  Like Yusuf, Nur was unemployed when he purchased his airline ticket.  Nur successfully boarded a flight for Turkey on May 29, 2014.  He was scheduled to return to the United States on June 16, 2014, but did not.

According to the criminal complaint and documents filed in court, Nur had become “much more religious,” in the two months preceding his departure, including talking about how his family needed to pray more and wear more traditional clothing.  Nur began to talk about jihad during this time period.

According to the criminal complaint and documents filed in court, Nur has communicated via Facebook with an individual in the United States after his departure for Turkey.  During those communications, Nur stated that he has gone “to the brothers,” and that we “will see each other in the afterlife inshallah,” and “im not coming back” (sic).  Nur has also communicated with a separately charged defendant, Mohamed Abdullahi Hassan, aka “Miski.”

According to the criminal complaint and documents filed in court, after asking Nur if he knew “Duale” (a U.S. citizen known to have traveled to Syria), Miski advised Nur “…Being connected in Jihad make you stronger and you can all help each other by fulfilling the duties that Allah swt (sic) put over you…Like us in Somalia the brothers from mpls are well connected so try to do the same….It is something we have learned after 6 years in Jihad.”

This case is the result of an investigation conducted by the FBI.  The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Attorney General Eric Holder made the following statement today on the ongoing situation in Ferguson, Missouri.

“Good afternoon.  I have been briefed by members of the Justice Department and I wanted to provide a brief update of the Justice Department’s ongoing efforts arising from the events in Ferguson, Missouri.  I’ve been briefed today by the COPS director, Ron Davis, Principal Deputy Associate Attorney General Molly Moran, Deputy Assistant Attorney General Mark Kappelhoff and members of my staff, all of whom are here with me now.

“They are overseeing the federal investigations into the shooting of Michael Brown as well as the investigation that we are doing of the Ferguson Police Department.  I want to emphasize that we have two investigations that are ongoing.  As I’ve said many times before and reiterated in my statement last night, the department's investigations will continue to be thorough, they will continue to be independent and they remain ongoing.  They will be conducted rigorously and in a timely manner so we can move forward as expeditiously as we can to restore trust, to rebuild understanding and to foster cooperation between law enforcement and community members.

“Last night and throughout the day, I have been briefed on events in and around Ferguson.  I was disappointed that some members of the community resorted to violence rather than respecting what I thought were the really heartfelt words of Michael Brown Sr. and the wishes he expressed about how he wanted his son's memory to be honored with nonviolence. It is clear that acts of violence threaten to drown out those that have legitimate voices, legitimate demonstrators and those acts of violence cannot and will not be condoned.

“By contrast, I’m very encouraged that some of the more peaceful demonstrations last night as well as today have occurred and have been in keeping with Mr. Brown's request.  I would remind demonstrators of our history that those, the way in which we have made progress in this country is when we have seen peaceful, nonviolent demonstrations that has led to the change that has been the most long lasting and the most pervasive. 

“I’ve asked the COPS director, Ron Davis, to continue to confer with local law enforcement and to conduct an after action review so we can develop strategies for identifying and isolating the criminal elements from peaceful protesters.  Additionally, I have instructed department officials to continue to make contact with leaders of the peaceful protesters and to seek their assistance in isolating those individuals who are inclined towards violence.  We’ve had a good ongoing dialogue with peaceful demonstrators in Ferguson.  I’ve been very heartened to hear about the good work that our community relations service has done as well as people under Mark in particular.  And I’ve instructed them to maintain those levels of communications and keep those avenues of communications open.

“I really embrace those who have been proactively intervening to stop acts of violence within their midst and I encourage them to continue to exercise this important leadership.  I know that that is not an easy thing to do but it was very heartening to hear about people last night trying to stop those other people who were trying to loot and trying to destroy businesses and burn things.  Those people who took it upon themselves to try to stop those kinds of things are in fact heroes in my mind.

“Michael Brown's tragic death has revealed a deep distrust between some in the Ferguson community and its police force.  It also developed a need to develop and widely disseminate law enforcement best practices for responding to public demonstrations.  The Department of Justice has begun this work and will continue to work with communities around the country in this regard.  The reality is that what we see in Ferguson is not restricted to Ferguson.  There are other communities around this country that have these same issues that have to be dealt with and we at the Justice Department are determined to do all that we can to bridge those divides.  We launched in September our Building Communities of Trust initiative to provide training to law enforcement and communities on bias reduction and procedural fairness and we plan to apply evidence-based strategies in the five pilot sites around the country.  This is all designed to bridge those divides, bridge those gaps between law enforcement and the communities that they serve.  These gaps, these divides exist in other parts of the country beyond Ferguson and our focus will be nationally in its scope to try to deal ultimately with these issues.  We will continue to advance this work, as I said, around the country in the coming weeks and months by bringing together elected officials, law enforcement officials and community leaders both to ensure dialogue but also action.  This isn't just about talking.  We want to ensure that concrete steps are taken to address these underlying barriers to trust.

“I briefed the president today in the Oval Office about the situation in Ferguson, shared with him the perspectives of people in law enforcement and Justice Department officials who are there on the ground. We talked about programmatic issues that we want to announce relatively soon and also about the need to bring our people together.  This is a difficult time for people in Ferguson.  It’s a difficult time for people in our country. It’s an opportunity for us to find those things that bind us as a nation, to be honest with one another about those things that continue to divide us and come up with ways in which we make this union even more perfect.  So that’s what I talked about with the president.  He is committed to this effort as are the men and women of the United States Department of Justice. Thanks very much.”

(Hagatna, Guam), ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Mateo B. Sardoma, Jr. and Rudy P.H. Sablan, defendants in the Organized Crime Drug Enforcement Task Force (OCDETF) case United States v. Sardoma, et al., Criminal Case No. 12-000010 (D. Guam), were sentenced today by the Honorable Frances
Tydingco-Gatewood, Chief Judge, District Court of Guam.  The Defendants were sentenced to serve eleven years of incarceration followed by three years of supervised release.

In considering the evidence presented at trial, both Sablan and Sardoma were sentenced to ten years of prison for being felons in possession of a firearm, in violation of Title 18, United States Code, Section
922(g)(1) and to an additional year to run consecutively for possession of methamphetamine in violation of Title 21, United States Code, Section 844(a).

Both defendants were jointly and severally ordered to pay $18,000 to the victim of an assault in the case.

Sardoma was also ordered to forfeit $51,136, which will be applied toward a $200,000 money judgment issued against him. He was also ordered to forfeit a 2008 Toyota Pick Up and a 2003 Toyota Highlander.

U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. These cases illustrate the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”  This conviction resulted from the concerted efforts of law enforcement partners in the OCDETF investigation, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

The investigating agencies include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Drug Enforcement Administration (DEA), Department of Homeland Security/U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI), U.S. Coast Guard Investigative Service (USCGIS), U.S. Postal Inspection Service (USPIS), Guam Police Department (GPD) and Guam Customs & Quarantine Agency (GC&QA). The case was prosecuted by Assistant United States Attorneys Frederick Black and Stephen Leon Guerrero.

A Danish citizen today pleaded guilty in the Eastern District of Virginia and was ordered to pay a fine of $500,000 for advertising and selling StealthGenie, a spyware application (app) that could remotely monitor calls, texts, videos and other communications on mobile phones without detection.  This marks the first-ever criminal conviction concerning the advertisement and sale of a mobile device spyware app.  

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

“Spyware is an electronic eavesdropping tool that secretly and illegally invades individual privacy,” said Assistant Attorney General Caldwell.  “Make no mistake: selling spyware is a federal crime, and the Criminal Division will make a federal case out if it.  Today’s guilty plea by a creator of the StealthGenie spyware is another demonstration of our commitment to prosecuting those who would invade personal privacy.”

“The defendant advertised and sold a spyware app that could be secretly installed on smart phones without the knowledge of the phones owner,” said U.S. Attorney Boente.  “This spyware app allowed individuals to intercept phone calls, electronic mail, text messages, voicemails and photographs of others.  The product allowed for the wholesale invasion of privacy by other individuals, and this office in coordination with our law enforcement partners will prosecute not just users of apps like this, but the makers and marketers of such tools as well.”

“Mr. Akbar is the first-ever person to admit criminal activity in advertising and selling spyware that invades an unwitting victim’s confidential communications,” said FBI Assistant Director in Charge McCabe.  “This illegal spyware provides individuals with an option to track a person’s every move without their knowledge.  As technology evolves, the FBI will continue to evolve to protect consumers from those who sell illegal spyware.”

According to the statement of facts accompanying the plea agreement in the case, Hammad Akbar, 31, is the chief executive officer of InvoCode Pvt. Limited and Cubitium Limited, the companies that advertised and sold StealthGenie online.  StealthGenie could be installed on a variety of different brands of mobile phones, including Apple’s iPhone, Google’s Android, and Blackberry Limited’s Blackberry.  Once installed, it could intercept all conversations and text messages sent using the phone.  The app was undetectable by most users and was advertised as being untraceable. 

Akbar was arrested on Sept. 27, 2014, in Los Angeles and pleaded guilty today to sale of an interception device and advertisement of a known interception device.  After accepting the guilty plea, the court immediately sentenced Akbar to time served and ordered him to pay a $500,000 fine.  He was also ordered to forfeit the source code for StealthGenie to the government.

On Sept. 26, 2014, the court issued a temporary restraining order authorizing the FBI to temporarily disable the website hosting StealthGenie, which was hosted from a data center in Ashburn, Virginia.  The court later converted the order into a temporary injunction, and the website remains offline.

According to Akbar’s admissions, StealthGenie had numerous functions that permitted it to intercept both outgoing and incoming telephone calls, electronic mail, text messages, voicemail, and photographs from the smartphone on which it was installed.  The app could also turn on the phone’s microphone when it was not in use and record sounds and conversations that occurred near the phone.  All of these functions could be enabled without the knowledge of the user of the phone.

In order to install the app, the purchaser needed at least temporary possession of the target phone.  During the installation process on an Android smartphone, for example, the person installing the app was required to grant a series of permissions that allowed the app to access privileged information on the device.  Once the app was activated, it was started as a “background” (i.e., hidden) service and set up to launch automatically when the phone was powered on.  The only time that the app interacted with the screen was during activation, and the icon for the app was removed from the phone’s menu.  Akbar admitted that because of these characteristics, a typical smartphone user would not know that StealthGenie had been installed on his or her smartphone.   

Akbar also admitted to distributing an advertisement for StealthGenie through his website on Nov. 5, 2011, and to selling the app to an undercover agent of the FBI on Dec. 14, 2012. 

This case was investigated by the FBI’s Washington Field Office, and was prosecuted by Senior Trial Attorney William A. Hall Jr. of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Alexander Nguyen of the Eastern District of Virginia.

The FBI’s Internet Crime Complaint Center (IC3) has published an advisory for consumers related to the app located at: http://www.ic3.gov/media/2014/140930.aspx.    

The Justice Department announced today that it reached a settlement with La Farine Bakery, a bakery with two stores in the San Francisco Bay Area.  The settlement resolves allegations that the bakery violated the Immigration and Nationality Act (INA) by engaging in discriminatory documentary practices.  Specifically, the Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) found that La Farine improperly rejected a worker’s valid work authorization documents because of the worker’s citizenship status.

Under the settlement agreement, La Farine Bakery will pay $26,000 in back pay and other compensation to an individual who was allegedly harmed by the discriminatory.  The bakery also agreed to change its hiring policies and be subject to monitoring of its hiring practices for two years.

“Employers should not make assumptions about the validity of their workers’ employment documents based on sterotypes or unfounded assumptions,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “The department encourages employers to use the Civil Rights Division’s resources, including OSC’s hotline, if they have questions about accepting Form I-9 documentation in a non-discriminatory manner.”      

OSC is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act.  The statute prohibits employers from placing additional documentary burdens on work-authorized applicants or employees during the employment eligibility verification process because of their citizenship status or national origin.  The statute also prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee, as well as 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 for a fee, should contact OSC’s worker hotline for assistance.

WASHINGTON -- El Departamento de Justicia anunció hoy que llegó a un acuerdo con La Farine Bakery, una panadería con dos tiendas en el área de la Bahía de San Francisco.  El acuerdo resuelve alegaciones que la panadería violó la Ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) por incurrir en prácticas discriminatorias documentales.  Específicamente, La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC por sus siglas en inglés), del Departamento de Justicia, encontró que La Farine indebidamente rechazó documentos de autorización de trabajo válidos de un trabajador por su estatus de ciudadanía. 

Bajo el acuerdo, La Farine Bakery le pagará $26,000 en pago atrasado y otra compensación al individuo que presuntamente fue perjudicado por las prácticas discriminatorias.  La panadería también acordó cambiar sus pólizas de contratación y ser sujeta a un período de monitoreo de sus prácticas de contratación por dos años.

“Los empleadores no deben hacer suposiciones acerca la validez de los documentos de sus trabajadores basadas en estereotipos o suposiciones sin base,” dijo Vanita Gupta  Subprocuradora General Interina para la División de Derechos Civiles. “El Departamento sugiere que los empleadores utilicen los recursos de la División de Derechos Civiles, incluyendo la línea directa de OSC, si tienen preguntas sobre aceptando documentación para el Formulario I-9 en una manera sin discriminación.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración es la oficina responsable por hacer cumplir con la provisión anti-discriminación de la INA. La ley prohíbe, entre otras cosas, discriminación basada en estatus de ciudadanía o en origen nacional en la contratación, el despido, o el reclutamiento o la referencia por comisión, las prácticas injustas de documentación, y represalia e intimidación.

Para obtener más información acerca de la protección contra la discriminación en el empleo según las leyes de inmigración, o para registrarse para un seminario sin costo ofrecido a través del Internet, llame a la línea directa de la OSC para trabajadores al 1-800-255-7688 1-800-237-2515, TTY (para personas con problemas de audición); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con problemas de audición); o visite el sitio web de la OSC en www.justice.gov/crt/about/osc.

Solicitantes o trabajadores que creen que fueron sometidos a: (1) requisitos diferentes de documentación o discriminación por causa de su estatus de ciudadanía, estatus migratorio o su origen nacional; o (2) discriminación por causa de su estatus de ciudadanía, estatus migratorio o el origen nacional en la contratación, el despido o el reclutamiento o referencia por comisión, deben comunicarse a la línea del trabajador de la OSC para obtener ayuda.

The Justice Department today announced a settlement resolving a federal civil rights lawsuit against the City of Ocean Springs, Mississippi, for alleged violations of the Americans with Disabilities Act (ADA).  Under the proposed consent decree, the city will pay $437,500 in damages to an outpatient psychiatric treatment facility that was discriminated against by the city based on unsupported myths and stereotypes about prospective patients at the facility.  The decree requires the city to reform its land use and zoning practices to eliminate discriminatory barriers for providers of mental health services to people with disabilities and combat the stigma of mental illness.  

The documents filed in federal court today allege that the city discriminated against Psycamore LLC when it denied a certificate of occupancy and a use permit because Psycamore treats patients with mental illness.  Psycamore sought to operate in an area allowing medical clinics and should have been allowed to operate by the city.  But the city would not allow it to open.  At public hearings called by the city a flier that depicted Psycamore as the psychiatric ward in the film One Flew Over the Cuckoo’s Nest was circulated to city officials.

The department found that the city based its decision on discriminatory beliefs, myths and stereotypes about Psycamore’s patients and their mental disabilities.  As a result, the city perpetuated the stigma surrounding mental illness, interfered with Psycamore’s ability to treat individuals with mental disabilities in Ocean Springs and forced Psycamore to delay opening its clinic and to move it to Biloxi, Mississippi.  Psycamore also suffered economic losses, including lost profits and out of pocket expenses.

“The Americans with Disabilities Act protects people with mental illness from discrimination and mental health facilities are protected from discrimination based on the disabilities of the people they serve.  ” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “The Civil Rights Division is committed to combating the stigma of mental illness, promoting greater community awareness and protecting the rights of persons living with mental illness as well as the persons and entities who serve them.”

“The participation of the U.S. Attorney’s Office in this important litigation sends a strong message that we will not tolerate discrimination of any kind in this district,” said U.S. Attorney Gregory K. Davis for the Southern District of Mississippi.  “Discrimination based upon myths, fears and stereotypes is never appropriate.  We are fully committed to ensuring that individuals with disabilities and those who provide services to them have a full and equal opportunity to participate in all facets of their communities.”

Under the consent decree, the city will adopt and implement policies to ensure nondiscriminatory zoning practices that will not limit access to needed services and treatment for people with mental disabilities.  City officials involved in zoning decisions will be trained on the ADA.  The city will also report to the Justice Department on future land use decisions involving individuals with disabilities and hire an ADA coordinator to oversee the city’s compliance with the ADA and the consent decree.  In addition to paying damages to Psycamore, the consent decree requires the city to grant Psycamore a certificate of occupancy and use permit, if necessary, to return to Ocean Springs in the future in the same or similar zone where it previously sought to locate. 

The ADA protects individuals with disabilities from discrimination in all activities of state and local government entities, including zoning and land use decisions. Those interested in finding out more about this case or the obligations of state and local government 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 at www.ada.gov.  ADA complaints may be filed by email to ada.complaint@usdoj.gov.

Xiao Ju Guan, aka Tony Guan, a Canadian antiques dealer, pleaded guilty today in Manhattan federal court to attempting to smuggle rhinoceros horns from New York to Canada, announced Sam Hirsch, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, and Preet Bharara, the U.S. Attorney for the Southern District of New York.  Guan was arrested in March 2014 as part of “Operation Crash,” a nation-wide crackdown in the illegal trafficking in rhinoceros horns, for his role in smuggling and attempting to smuggle rhinoceros horns as well as items carved from elephant ivory and coral, from auction houses throughout the United States to Canada.  He pleaded guilty today before U.S. District Judge Laura Taylor Swain.                                                               

“The United States will aggressively prosecute anyone who illegally traffics in endangered wildlife species, in whatever form,” said Acting Assistant Attorney General Hirsch.  “Rhinos and elephants are not antiques, as the president of an antique company engaged in international trade should know.  These are iconic animals of pre-historic origin, fighting for their very survival as a species.  The illegal trade in rhino horn and elephant ivory and the escalation of black-market prices are directly related to horrific poaching on living animals.  Guan has admitted to smuggling rhino horn and elephant ivory across international borders.  The United States is grateful for the Canadian authorities’ coordination and assistance in bringing this wildlife trafficker to justice.”

“Because all species of rhinos are endangered, and elephant populations are either vulnerable or endangered, the trade in rhinoceros horns and elephant ivory is stringently limited,” said U.S. Attorney Bharara.  “The survival of these magnificent animals depends in large part on enforcement of laws and international treaties governing such trade.  Tony Guan’s admitted conduct increased the existential threat to these creatures, and now he awaits the penalty for that conduct.”

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

Guan, the president and owner of an antiques business in Richmond, British Columbia, was arrested on March 29, 2014, after flying from Vancouver to New York and purchasing two endangered black rhinoceros horns from undercover special agents with the U.S. Fish and Wildlife Service at a storage facility in the Bronx.  After purchasing the horns, Guan had the undercover agents drive him and a female accomplice acting as his interpreter to a nearby express mail store where he mailed the horns to an address in Point Roberts, Washington, less than a mile from the Canadian border and 17 miles from his business.  Guan falsely labeled the box of black rhino horns as containing “handicrafts.”  Guan indicated that he had people who could drive the horns across the border and that he had done so many times before.

As part of his plea, Guan admitted that he, and others acting at his direction, smuggled more than $400,000 of rhino horns and sculptures made from elephant ivory and coral from various U.S. auction houses to Canada by the same method, or by having packages mailed directly to Canada with false paperwork and without the required declaration or permits. 

Guan, 39, of Richmond, British Columbia, Canada, pled guilty to one count of attempted smuggling, which carries a maximum penalty of ten years in prison.  He is scheduled to be sentenced by Judge Swain on March 13 2015. 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, Guan agreed to forfeit items recovered from a search of his antiques business in Canada, and also agreed that he will not participate in any further trade, purchase, or sale of wildlife in the United States.   

Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under U.S. and international law.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife, and plants that are or may become imperiled due to the demands of international markets.

Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice.  A “crash” is the term for a herd of rhinoceros.  Operation Crash is an ongoing effort to detect, deter, and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Janis M. Echenberg and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.

Two Northern California real estate investors have agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Su Chu Chou “Terry” Cheng and Chung Li “George” Cheng of Walnut Creek, California.

To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 49 individuals have agreed to plead or have pleaded guilty.

Between May 2008 and January 2011, according to the court documents, George and Terry Cheng conspired with others not to bid against one another, and instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda and Contra Costa counties.  George and Terry Cheng were also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda and Contra Costa County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.  The private auctions often took place at or near the courthouse steps where the public auctions were held.   

“The Antitrust Division continues to vigorously pursue and prosecute those who rig bids and commit fraud at real estate foreclosure auctions,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program.  “The division is committed to working closely with its law enforcement partners to ensure that these real estate auctions are fair and open so that consumers will benefit from competition.”

The department said that the primary purpose of the conspiracies was to suppress and eliminate competition and to conceal payoffs in order to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  These conspirators paid and received money, according to the court documents, that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“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 victims if either amount is greater than $1 million.  A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

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.**

George Cheng Information

Terry Cheng Information

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the investiture of two immigration judges. Chief Immigration Judge Brian M. O’Leary presided over the investiture during a ceremony held at EOIR’s headquarters on Nov. 21, 2014.

After a thorough application process, Attorney General Eric Holder appointed Glen R. Baker and Myrna Amelia Mesa to their new positions. “We are excited to welcome Immigration Judges Baker and Mesa to serve in our immigration courts in Salt Lake City and New Orleans, respectively,” said O’Leary. “These two positions are a first step in bolstering our immigration judge corps.”

Biographical information follows.

Glen R. Baker, Immigration Judge, Salt Lake City Immigration Court

Attorney General Eric H. Holder Jr. appointed Judge Baker in November 2014. Judge Baker received a bachelor of arts degree in 1982 from James Madison University and a juris doctorate in 1994 from Thomas M. Cooley Law School. From 1995 to 2014, he served as an attorney advisor for the Board of Immigration Appeals, Executive Office for Immigration Review (EOIR), U.S. Department of Justice. During this time, from 2010 to 2011, he served as an associate general counsel for EOIR. From 1994 to 1995, Judge Baker worked as a judicial law clerk for the Harlingen Immigration Court, entering on duty through the Attorney General’s Honors Program. From 1993 to 1994, he was the managing editor for the Thomas M. Cooley Law Review. Judge Baker is a member of the North Carolina State Bar.

Myrna A. Mesa, Immigration Judge, New Orleans Immigration Court

Attorney General Eric H. Holder Jr. appointed Judge Mesa in 2014. Judge Mesa received a bachelor of arts degree in 1986 from Loyola University Chicago, a juris doctorate in 1990 from the University of Michigan Law School, and a master of fine arts degree in 2008 from Old Dominion University. From 2007 to 2014, she served as an assistant chief counsel for the U.S. Department of Homeland Security, Immigration and Customs Enforcement (ICE), in Orlando, Fla. During this time, from 2010 to 2014, Judge Mesa served as a special assistant U.S. attorney for the Department of Justice, U.S. Attorney’s Office, Middle District of Florida. From 1999 to 2007, Judge Mesa served as an attorney advisor, U.S. Department of the Army, in Fort Monroe, Va. From 1991 to 1999, she served in the U.S. Army, Judge Advocate General Corps, where she worked primarily as a criminal litigation attorney in various capacities, including senior defense counsel and chief trial counsel. She is currently an active U.S. Army reservist. Judge Mesa is a member of the Illinois and Virginia State Bars.

 

- EOIR -

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

A Massachusetts businessman pleaded guilty to tax evasion for using nominee entities to hide ownership and control over his businesses and assets from the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.

According to the indictment, Richard L. Furnelli, a former resident of Holyoke and South Hadley, Massachusetts, evaded payment of his federal income taxes for 2006 through 2009, among other years, and also failed to file his federal individual income tax returns for those years.

The indictment alleges that from 2006 through 2009, Furnelli earned more than $2 million in income.  Furnelli operated or held substantial interest in Solid Gold Inc. and Gold Club-SF LLC, which owned and operated the Gold Club, an adult entertainment venue in San Francisco.  These corporations allegedly earned annual gross receipts ranging from $2.5 million to more than $10 million dollars.  During that time period, the indictment also alleges that Furnelli directed the payment of his income to a nominee entity, RLF Ventures LLC, and utilized a bank account held in a nominee name.

According to the plea documents, Furnelli has agreed to pay his outstanding federal income taxes owed to the IRS for the years 1998 through 2009.

Furnelli faces a statutory maximum sentence of five years in prison and a $250,000 fine for tax evasion at his April 29, 2015, sentencing before U.S. District Judge Michael A. Ponsor for the District of Massachusetts.

The case was investigated by special agents of IRS–Criminal Investigation of the Springfield, Massachusetts, Field Office.  Trial Attorneys Mark S. McDonald and Thomas G. Voracek of the Tax Division are prosecuting the case.

Continental Automotive Electronics LLC and Continental Automotive Korea Ltd. both have agreed to plead guilty and to pay a single criminal fine of $4 million for their roles in a conspiracy to rig bids of instrument panel clusters installed in vehicles manufactured and sold in the United States, the Department of Justice announced today. 

According to a one-count felony charge filed today in U.S. District Court for the Northern District of Georgia, Newnan Division, Continental Automotive Electronics LLC, based in Cheongwon, South Korea, and Continental Automotive Korea Ltd., based in Seongnam-si, South Korea, conspired to rig bids for instrument panel clusters sold to Hyundai Motor Co., Kia Motors Corp. and Kia Motors Manufacturing Georgia in the United States and elsewhere.  In addition to the criminal fine, the companies have agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.

“As the Antitrust Division’s prosecution of auto parts matters like this one demonstrates, we will prosecute those who participate in international cartels targeting U.S. businesses and consumers,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The Antitrust Division is working closely with competition enforcers around the world to ensure that companies and executives that engage in international cartel crimes find no refuge.”

The charged companies have acknowledged that they and their co-conspirators held meetings and conversations to discuss and agree upon allocation of sales of instrument panel clusters, and the bids and price quotations each would submit.  The charged companies’ involvement in the conspiracy began as early as March 2004 and continued until May 2012.

Instrument panel clusters are a set of instruments located on the dashboard of a vehicle that contain gauges such as a speedometer, tachometer, odometer, and fuel gauge, as well as warning indicators for gearshift position, seat belt, parking-brake engagement, engine malfunction, low fuel, low oil pressure and low tire pressure.

Including Continental Automotive Electronics LLC and Continental Automotive Korea Ltd., 32 companies and 46 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry.  Each of the charged companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $2.4 billion in criminal fines.  Of the 46 individuals, 26 have been sentenced to serve time in U.S. prisons.

Continental Automotive Electronics LLC and Continental Automotive Korea Ltd. are charged with bid rigging in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges are 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 charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Montgomery, Alabama Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  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 Montgomery, Alabama Field Office at 334-263-1691.

Continental Information

Attorney General Eric Holder released the following statement Monday regarding the conclusion of the St. Louis County grand jury proceeding in the shooting of Michael Brown:

“While the grand jury proceeding in St. Louis County has concluded, the Justice Department’s investigation into the shooting of Michael Brown remains ongoing.  Though we have shared information with local prosecutors during the course of our investigation, the federal inquiry has been independent of the local one from the start, and remains so now.  Even at this mature stage of the investigation, we have avoided prejudging any of the evidence.  And although federal civil rights law imposes a high legal bar in these types of cases, we have resisted forming premature conclusions.

“Michael Brown’s death was a tragedy.  This incident has sparked a national conversation about the need to ensure confidence between law enforcement and the communities they protect and serve.  While constructive efforts are underway in Ferguson and communities nationwide, far more must be done to create enduring trust.  The Department will continue to work with law enforcement, civil rights, faith and community leaders across the country to foster effective relationships between law enforcement and the communities they serve and to improve fairness in the criminal justice system overall.  In addition, the Department continues to investigate allegations of unconstitutional policing patterns or practices by the Ferguson Police Department.

“Though there will be disagreement with the grand jury's decision not to indict, this feeling should not lead to violence.  Those who decide to participate in demonstrations should remember the wishes of Michael Brown's parents, who have asked that remembrances of their son be conducted peacefully.  It does not honor his memory to engage in violence or looting.  In the coming days, it will likewise be important for local law enforcement authorities to respect the rights of demonstrators, and deescalate tensions by avoiding excessive displays—and uses—of force.”

Attorney General Eric Holder released the following statement Monday on the resignation of U.S. Attorney Tim Heaphy for the Western District of Virginia:

“Over the past five years, Tim Heaphy has been an outstanding United States Attorney for the Western District of Virginia and a key national leader on a host of pressing criminal justice issues.

“Throughout his distinguished career -- from our days together in the U.S. Attorney’s Office for the District of Columbia, to his current post -- I have known Tim as a dedicated public servant and a champion of the cause of justice.  He has been a fierce advocate for groundbreaking community outreach initiatives within and far beyond his district.  And he has worked tirelessly to promote data-driven prevention, intervention, and reentry programs to improve public safety at the national level.

“As a talented attorney, a dedicated prosecutor, and a leader of both patriotism and principle, Tim Heaphy has been an indispensable member of the U.S. Department of Justice.  From the prosecutions he has led to the policies he has championed, Tim's work has touched countless lives across Virginia and throughout the nation.  I have been proud to count him as a friend.  On behalf of our colleagues and the American people, I thank him for his service and wish him all the best in every future endeavor.”

A civil complaint was filed in federal court in Michigan against Scotty’s Incorporated of Detroit and its co-owner and manager, Sandra Jackson, to prevent the distribution of adulterated sandwiches, the Department of Justice announced today.

According to the complaint, Scotty’s Incorporated, which does business as Bruce Enterprises and Bruce’s Fresh Products, prepares and distributes ready-to-eat (RTE) sandwiches, including RTE tuna sandwiches.  The complaint alleges that the company’s sandwiches are manufactured in insanitary conditions, and that the company’s procedures are inadequate to ensure the safety of its products.  Moreover, the company has failed to implement a written Hazard Analysis and Critical Control Point (HACCP) plan for handling seafood and minimizing the potential for harmful contamination in the company’s RTE tuna sandwiches.  The Justice Department filed the injunction action in the Eastern District of Michigan at the request of the U.S. Food and Drug Administration (FDA).

“Seafood poses well-known risks when it is transported from ship to shore, but these risks can be effectively mitigated if companies handling seafood take proper precautions,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “The Department of Justice will take all appropriate measures to protect the safety of the seafood consumers eat.”

According to the complaint, the FDA has performed five inspections of the defendants’ facility since 2006 and documented insanitary practices and/or seafood HACCP violations every time.  These inspections revealed that the company’s RTE sandwiches are adulterated within the meaning of the Food, Drug, and Cosmetic Act because they are prepared, packed or held under insanitary conditions in which they may have become contaminated with filth or rendered injurious to health.  The complaint alleges, for example, that since 2006, the company was repeatedly told to develop a written HACCP plan recognizing the inherent risks of toxin formation in tuna and enumerating plans to take corrective action when tuna is not properly handled. 

Tuna that is not chilled rapidly or stored at sufficiently lower temperatures is at increased risk for the formation of scombrotoxin.  The toxin can be adequately controlled when tuna is chilled after death and maintained at a cold temperature throughout storage and distribution.  In the event that the tuna is not properly maintained, scombrotoxin readily forms and cannot be removed or destroyed through subsequent washing, freezing or cooking of the tuna.  Consumption of fish containing high levels of scombrotoxin may cause scombrotoxin poisoning, the symptoms of which may include burning sensations in the mouth or throat, dizziness, nausea, vomiting, headaches, diarrhea, rashes, hives, a drop in blood pressure, constriction of the air passage, heart palpitations and respiratory distress.

According to the complaint, the FDA’s most recent inspection was conducted between January 14 and February 6.  At the inspection, according to the complaint, the FDA found that the defendants failed to have and implement an HACCP plan for food safety hazards reasonably likely to occur.  There were also no sanitation control records documenting the safety of, among other things, water used at the facility; the cleanliness of surfaces, utensils and equipment coming into contact with food; maintenance of hand-sanitizing machines and bathrooms; exclusion of pests from the facility; and control of employee health conditions such as the wearing of jewelry, hair nets or beard covers. 

The government is represented by Trial Attorney Dan Baeza of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan, with the assistance of Assistant Chief Counsel for Enforcement Christopher Fanelli of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division. 

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

Two members of the Mara Salvatrucha 13, or MS-13, street gang were sentenced today for their participation in violent crimes committed on behalf of the gang.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, Special Agent in Charge Brock D. Nicholson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.

U.S. District Judge Richard W. Story of the Northern District of Georgia sentenced the following defendants today:

• Emmanual Hidalgo, aka “Scooby,” 25, of Chamblee, Georgia, pleaded guilty to engaging in a RICO conspiracy and use of a firearm in relation to a crime of violence on Aug. 2, 2013, and was sentenced to 25 years in prison to be followed by five years of supervised release; and

• Edwin Menjivar, aka “Vago,” and “Chilly Willy,” 33, of Norcross, Georgia, pleaded guilty to engaging in a RICO conspiracy and committing a violent crime in aid of racketeering on June 7, 2013, and was sentenced to 11 years in prison to be followed by three years of supervised release.

According to information presented in court and admitted to by the defendants, MS-13 is a violent international gang that originated in Central America.  By 2005, MS-13 had established a presence in the Atlanta-area, staking out strongholds in Gwinnett and DeKalb Counties, which they defended with violence.  Members of MS-13 attacked suspected rival gang members, and robbed civilians and area businesses.  The defendants sentenced today admitted involvement in the following crimes:

• Hidalgo, along with other gang members, planned to rob a suspected drug dealer at a hotel in DeKalb County in April 2007.  During the attempted robbery, Hidalgo and his fellow MS-13 members killed the suspected drug dealer, who was also armed, in a shootout.  Hotel surveillance video showed one of the MS-13 members stopping to pick up the victim’s gun, which he later showed off as a trophy.

• Menjivar was the driver in an October 2007 drive-by shooting.  Menjivar and a fellow MS-13 gang member drove to an apartment complex in Gwinnett County where many members of the rival “SUR-13” gang lived.  As Menjivar drove, the other MS-13 gang member fired from the car, hitting one man in the neck as he was standing outside his apartment patio.  The police later recovered the firearm used in the shooting from underneath Menjivar’s bedroom mattress.

This case is being investigated by ICE HSI and the FBI, with assistance from the Gwinnett County Police Department and DeKalb County Police Department.  This case was prosecuted by Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Paul R. Jones and Kim S. Dammers of the Northern District of Georgia.

A federal jury convicted three Miami real estate developers today for their roles in a $20 million mortgage fraud scheme involving the sale of condominium units in the Miami area. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Nadine Gurley of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Inspector General Laura S. Wertheimer of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) made the announcement.  U.S. District Judge Patricia A. Seitz presided over the trial in the Southern District of Florida.

Stavroula Mendez, 68, Lazaro Mendez, 42, and Marie Mendez, 49, were each convicted of one count of conspiracy to commit bank fraud and wire fraud.  Additionally, Stavroula Mendez was convicted of 10 counts of bank fraud and three counts of wire fraud; Lazaro Mendez was convicted of 10 counts of bank fraud, and one count of wire fraud; and Marie Mendez was convicted of three counts of bank fraud and one count of wire fraud. 

According to evidence presented at trial, Stavroula Mendez, Lazaro Mendez, and Marie Mendez controlled and managed various condominiums in the Miami area.  As part of their fraud scheme, the defendants paid straw buyers to apply for mortgages to purchase units in their projects.  The defendants then accepted the mortgage proceeds for the purchase of the units, but continued to control the units after the sales.

The evidence showed that Lazaro Mendez recruited family members and others to be straw buyers of units he controlled, and that he facilitated false loan applications for them.  In addition, Lazaro Mendez enlisted mortgage brokers and another individual to recruit straw buyers and assist them in obtaining fraudulent loans.  He accepted kickbacks out of loan proceeds for each buyer the brokers referred. 

Evidence at trial further demonstrated that after units were sold at a development Stavroula Mendez controlled with her husband, Luis Mendez, Stavroula Mendez funneled money from the loan proceeds to shell companies controlled by others to pay for the straw buyers’ closing cash obligations and mortgage payments.  In 2008 and 2009, Stavroula Mendez used various shell companies to funnel more than $2 million of the fraudulent proceeds to off-shore accounts located in Switzerland and Liechtenstein. 

The evidence also showed that Marie Mendez assisted in the transfer of rental money received by the conspirators to make mortgage payments, and funneled cash to another individual to make mortgage payments on behalf of straw buyers.  She also submitted fraudulent loan applications for three condominium units that were purchased in her name. 

Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to $20 million in losses to the lenders.

Following their convictions, each of the defendants was remanded into custody.  Sentencing is scheduled for Feb. 3, 2015.  Eleven other defendants associated with the scheme were previously convicted of fraud charges.

The case is being investigated by HUD-OIG and FHFA-OIG.  The case is being prosecuted by Senior Trial Attorney Brian Young and Trial Attorneys Gary A. Winters and Kyle Maurer of the Criminal Division’s Fraud Section.

A Douglas, Massachusetts, dentist pleaded guilty to tax evasion in the U.S. District Court for the District of Massachusetts, announced the Department of Justice. 

George Fenzell was indicted in February 2014 by a federal grand jury in Boston on multiple counts of tax evasion and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS).  He pleaded Friday before U.S. District Judge Timothy S. Hillman and faces a statutory maximum sentence of five years in prison and a $250,000 fine for tax evasion at his Feb. 18 sentencing.

According to the indictment, from 1999 through 2012, Fenzell engaged in conduct intended to obstruct the IRS from computing, assessing and collecting his income taxes.  He failed to file timely tax returns with the IRS and tried to conceal income he earned from his dental practice.  Fenzell’s dental offices are located in Shrewsbury, Massachusetts, and Brookline, New Hampshire.  The indictment alleges that Fenzell used nominee entities, including River Valley Dental and Brookline Dental Associates Trust, to divert and conceal his dental business receipts and assets.  He also allegedly used multiple bank accounts in three separate states, including commingled bank accounts maintained by third parties, to conceal his ownership of his income and assets.  It is further alleged that Fenzell used nominee trustees to make it appear as if other individuals owned and controlled his assets and income.  Fenzell titled and registered a Lincoln Navigator and Ducati motorcycle with a nominee entity, Smiling Trust.  According to the indictment, Fenzell falsified his 2006 and 2007 tax returns that were filed late in 2009, and made extensive use of cash in order to conceal his fraud from the IRS.

The indictment further alleges that in 2007, in response to a Massachusetts Department of Revenue investigation and collection action, Fenzell filed his delinquent federal tax returns for 2000 through 2005.  In those returns, Fenzell admitted that he owed federal income taxes for these years in the amount of approximately $129,841, which he failed to pay.  Rather than pay these taxes and additional IRS interest and penalties, between 2007 and 2012, Fenzell allegedly sought to evade IRS collection efforts by making his business receipts payable to nominee entities and used nominee bank accounts in Florida and Rhode Island to divert and hide his income and assets.  During the same period, Fenzell also failed to file his tax returns for 2008 through 2011.

This case was investigated by special agents of the IRS-Criminal Investigation.  It is being prosecuted by Assistant Chief John N. Kane Jr. and Trial Attorney Thomas Koelbl of the Justice Department’s Tax Division.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.  Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.

A California man was sentenced to serve 18 months in prison with two years supervised release, and ordered to pay $34,712 in restitution, today for remotely hacking into the computerized cash registers of Subway restaurants and fraudulently obtaining more than $40,000 in gift cards. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Resident Agent in Charge Holly Fraumeni of the U.S. Secret Service in Manchester, New Hampshire, made the announcement.  U.S. District Judge Richard G. Stearns of the District of Massachusetts imposed the sentence.  

Shahin Abdollahi, aka Sean Holdt, 46, of Lake Elsinore, California, pleaded guilty on May 14, 2014, to one count of conspiracy to commit computer intrusion and wire fraud and one count of wire fraud.

In connection with his guilty plea, Abdollahi admitted that he owned Subway franchises in Southern California, and later operated a California company called “POS Doctor,” which sold and installed point-of-sale (POS) computer systems to Subway franchises around the country.  POS systems are a type of computerized checkout register that allow merchants to manage customer purchases made by credit, debit and gift cards.

Abdollahi further acknowledged that, beginning in 2011, he and Jeffrey Wilkinson conspired to remotely hack into the POS systems he installed in Subway franchises around the country.  Members of the conspiracy hacked into at least 13 Subway POS systems and fraudulently added at least $40,000 to Subway gift cards.  Abdollahi acknowledged that he and Wilkinson used the fraudulent gift cards to make purchases at Subway, and Wilkinson also sold fraudulent gift cards on eBay and Craigslist.

Wilkinson, 37, of Rialto, California, also pleaded guilty for his role in the scheme, and was sentenced to six months in prison on May 28, 2014.

This case was investigated by the U.S. Secret Service, and is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam J. Bookbinder of the District of Massachusetts.

After a three-day trial, a federal jury found the former executive director of the Legislature of the Virgin Islands guilty of accepting bribes and extortion in the awarding of contracts with the Legislature.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands, and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement.

Louis “Lolo” Willis, 56, of St. Thomas, Virgin Islands, was convicted of two counts of federal programs bribery and two counts of extortion under color of official right.  U.S. District Judge Curtis V. Gomez of the District of the Virgin Islands set the sentencing hearing for Feb. 13, 2015.

According to evidence presented at trial, Willis was the executive director of the Legislature between 2009 and 2012.  His responsibilities included oversight of the major renovation of the Legislature building and awarding and entering into government contracts in connection with the project.  Willis was also responsible for authorizing payment to the contractors for their work.  Evidence presented at trial demonstrated that Willis accepted bribes, including $13,000 in cash and checks, from contractors in exchange for using his official position to secure more than $350,000 in contracting work for the contractors and to ensure they received payment upon completion.

This case was investigated by the FBI-San Juan Field Office’s St. Thomas Resident Agency, the Internal Revenue Service, Criminal Investigation, and the Office of the Virgin Islands Inspector General.  The case is being prosecuted by Trial Attorneys Peter Mason and Justin Weitz of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Delia Smith of the District of the Virgin Islands.  Former Trial Attorneys Tracee Plowell and Jennifer Blackwell and former Assistant U.S. Attorney Kim Lindquist assisted in the investigation of the case.

The Bureau of Justice Assistance (BJA) today announced the release of a resource guide intended to help law enforcement officers build stronger community-police relations. The Resource Guide for Enhancing Community Relationships and Protecting Privacy and Constitutional Rights is a collaboration between BJA and the Office of Community Oriented Policing Services (COPS Office).

“The Justice Department encourages law enforcement officials, in every jurisdiction, to work with the communities they serve to minimize needless confrontation,” Attorney General Eric Holder said.  “It is vital to engage in planning and preparation, from evaluating protocols and training to choosing the appropriate equipment and uniforms.  This is the hard work that is necessary to preserve the peace and maintain the public trust at all times—particularly in moments of heightened community tension.”

“The role of law enforcement is not only to enforce the law, but to preserve peace, minimize harm, and sustain community trust,” said BJA Director Denise O’Donnell.  “The resources available through this guide will help police departments and sheriffs’ offices maintain order and build effective police-community relationships, while promoting the rights and protecting the civil liberties of the citizens they serve.”

For many years, BJA and the COPS Office have developed guides, publications, webinars, checklists and tools for law enforcement agencies on community policing, building community trust, diversity training, privacy protections, and safeguarding first amendment rights.  Building strong police-community relations requires a sustained effort over time, yet maintaining these relationships is exceedingly difficult during and in the aftermath of a high-profile incident or civil unrest.  Professional law enforcement departments and effective operations require training and ongoing support from all partners.  This guide helps law enforcement agencies locate these resources in one place, including in-person and online training opportunities, publications, reports, podcasts, and websites.

“Law enforcement officers are stewards of the peace and protectors of the people, but above all else, they are custodians of the public trust,” said COPS Office Director Ron Davis.  “As a former police chief, I am proud of the work we are doing at the Department of Justice to help America’s public safety professionals carry out this sacred duty.”

The Resource Guide is available at www.bja.gov/Publications/CommRelGuide.pdf.

The Office of Justice Programs, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims.  OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. More information about OJP can be found at www.ojp.gov.

The COPS Office, headed by Director Ronald L. Davis, is the federal agency responsible for advancing community policing nationwide.  Since 1995, the COPS Office 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 the COPS Office, please visit www.cops.usdoj.gov.

Pays $1.8 Billion to Department of Justice and the Internal Revenue Service in a Fine and Restitution

Credit Suisse AG was sentenced today for conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS).  Credit Suisse pleaded guilty to conspiracy on May 19.  The sentencing of the Swiss corporation is the result of a years-long investigation by U.S. law enforcement authorities that has also produced indictments of seven Credit Suisse employees and the owner of a trust company since 2011—two of those individuals have pleaded guilty so far—and of U.S. clients of Credit Suisse.  The announcement was made by Deputy Attorney General James M. Cole, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and IRS Commissioner John Koskinen.

At sentencing in the U.S. District Court for the Eastern District of Virginia, U.S. District Chief Judge Rebecca Beach Smith entered judgment and conviction and a restitution order requiring Credit Suisse to pay approximately $1.8 billion dollars to the United States by Nov. 28, per the plea agreement.  Credit Suisse will pay the Justice Department’s Crime Victims Fund, through the District Court Clerk’s Office for the Eastern District of Virginia, a fine of approximately $1.136 billion and will pay the IRS $666.5 million in restitution.  The parties agreed that Credit Suisse cannot challenge the restitution amount, which can also provide a basis for an IRS civil tax assessment. 

“Today, with its criminal conviction and the payment of $2.6 billion in fines and restitution, Credit Suisse is held fully accountable for helping U.S. taxpayers engage in tax evasion,” said Deputy Attorney General Cole.  “As we expand our offshore investigations, not just in Switzerland, but around the world, the message to banks who engaged in these crimes is clear—step forward, accept responsibility for your past conduct,  and help us hold responsible the U.S. taxpayers who benefitted, and the individuals who assisted them.  Only through full cooperation will you avoid the most severe sanctions.”  

The plea agreement, along with agreements made with state and federal agencies, provides that Credit Suisse will pay a total of approximately $2.6 billion—approximately $1.8 billion in a criminal fine and restitution, $100 million to the Federal Reserve and $715 million to the New York State Department of Financial Services.  Earlier this year, Credit Suisse negotiated cease and desist orders with the Federal Reserve and the state of New York requiring the bank to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations in addition to the civil penalties.  Credit Suisse also paid approximately $196 million in disgorgement, interest and penalties to the Securities and Exchange Commission (SEC) for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC.  Together, these actions by U.S. law enforcement and state and federal partners appropriately punish Credit Suisse for its past behavior in these matters.

As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS.

According to the statement of facts filed with the plea agreement, Credit Suisse employed a variety of means to assist U.S. clients in concealing their undeclared accounts, including by:

 

• Assisting clients in using sham entities to hide undeclared accounts;

• Soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;

• Failing to maintain records in the United States related to the accounts;

• Destroying account records sent to the United States for client review;

• Using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;

• Facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;

• Structuring transfers of funds to evade currency transaction reporting requirements; and

• Providing offshore credit and debit cards to repatriate funds in the undeclared accounts.

As part of the plea agreement, Credit Suisse further agreed to make a complete disclosure of its cross-border activities, cooperate in treaty requests for account information, provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed and to close accounts of account holders who fail to come into compliance with U.S. reporting obligations.  Credit Suisse has also agreed to implement programs to ensure its compliance with U.S. laws, including its reporting obligations under the Foreign Account Tax Compliance Act and relevant tax treaties, in all its current and future dealings with U.S. customers.

“Today’s sentencing of Credit Suisse AG holds the bank responsible for its decades-long pervasive conduct of aiding U.S. taxpayers in the commission of tax crimes,” said Acting Deputy Assistant Attorney General Wszalek.  “The Justice Department will continue to vigorously pursue our global enforcement efforts against individuals who avoid their tax obligations by hiding their assets in foreign bank accounts, and the financial institutions, bankers, and other professionals who facilitate these crimes.”

“Credit Suisse AG ran an illegal cross-border business which willfully aided U.S. clients in concealing their offshore assets and income from the U.S. government,” said U.S. Attorney Boente.  “Simply put, if you are in the business of hiding money from the U.S. government you will be caught, you will be prosecuted and you will pay the price for your crime.  The successful prosecution of Credit Suisse AG, and today’s sentencing is representative of the tireless commitment and hard work of this office and our partners at the Internal Revenue Service.”

“Today's sentencing is yet another striking example of what happens to those who help offshore tax evaders,” said IRS Commissioner Koskinen.  “We owe it to the vast majority of honest U.S. taxpayers to tirelessly search for and prosecute those who dodge paying their fair share and the unprincipled professionals who assist them.”

* * *

On December 5, two former employees of a Credit Suisse subsidiary will be sentenced for their involvement in assisting U.S. customers to evade their taxes.  On March 12, Andreas Bachmann, a former banker at Credit Suisse Fides pleaded guilty to a superseding indictment in connection with his work as a banker at Credit Suisse Fides.  On April 30, Josef Dörig, a former Credit Suisse Fides employee and owner/operator of a trust company, pleaded guilty to conspiring to defraud the IRS in connection with his role managing offshore entities used by U.S. taxpayers to conceal their accounts at Credit Suisse.  The pleas were accepted by U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia.  Bachmann and Dörig each face a statutory maximum sentence of five years in prison.

* * *

This case was prosecuted by Assistant U.S. Attorney Mark D. Lytle and Senior Litigation Counsel Mark F. Daly and Nanette L. Davis of the Justice Department’s Tax Division.  The case was investigated by IRS-Criminal Investigation.

The Department of Justice expressed gratitude to the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the SEC and the New York State Department of Financial Services for their significant and valuable assistance.

Christopher W. Loncarich, 55, of Mack, Colorado, was sentenced in federal court in Denver yesterday to serve 27 months in prison.  The sentence was a result of Loncarich’s guilty plea to a felony conspiracy charge stemming from his sale of outfitting services for illegal mountain lion and bobcat hunts in Colorado and Utah, the Justice Department announced. 

On Aug. 15, 2014, Loncarich pleaded guilty to one count of conspiracy to violate the Lacey Act.  The Lacey Act is a federal law that makes it illegal to knowingly transport or sell in interstate commerce any wildlife that has been taken or possessed in violation of state laws or regulations.

According to the plea agreement, and an indictment returned by the grand jury for the District of Colorado on Jan. 7, 2014, Loncarich conspired with others to provide numerous illegal hunts of mountain lions and bobcats in Colorado and Utah from 2007 to 2010.  In particular, Loncarich and his confederates trapped, shot and caged mountain lions and bobcats prior to hunts in order to provide easier chases of the cats for clients.  Loncarich also admitted that he and his assistants guided several hunters that did not possess a Utah mountain lion or bobcat license on mountain lion or bobcat hunts in Utah.  Loncarich’s base of operations in Mack, Colorado, is approximately five miles from the Utah-Colorado border.  Loncarich sold mountain lion hunts for between $3,500 and $7,500 and bobcat hunts for between $700 and $1,500.

Four of Loncarich’s assistant guides have previously pleaded guilty to Lacey Act violations in connection with their guiding activities with Loncarich.  On July 30, 2014, Loncarich’s lead assistant guide, Nicholaus J. Rodgers, pleaded guilty to felony conspiracy to violate the Lacey Act in connection with his work for Loncarich.

The case was investigated by the U.S. Fish & Wildlife Service, Colorado Parks and Wildlife and the Utah Division of Wildlife Resources.  The case is being prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

In Video, Attorney General Also Reminds Potential Demonstrators That ‘History Shows That Most Successful Movements Adhere to Nonviolence’

Attorney General Eric Holder on Friday touted the Justice Department’s release of new guidance to law enforcement, which he said would help officers maintain public safety while safeguarding constitutional rights.  The guidance was issued by the department’s Bureau of Justice Assistance and Office of Community Oriented Policing Services.

“The Justice Department encourages law enforcement officials, in every jurisdiction, to work with the communities they serve to minimize needless confrontation,” the Attorney General said in a video posted on the department’s website.  “It is vital to engage in planning and preparation, from evaluating protocols and training to choosing the appropriate equipment and uniforms.  This is the hard work that is necessary to preserve the peace and maintain the public trust at all times—particularly in moments of heightened community tension.”

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

“At the United States Department of Justice, we are committed to ensuring that our local law enforcement partners have the resources they need to effectively serve and protect all members of their communities, particularly when citizens exercise their constitutionally protected rights.  To that end, the Bureau of Justice Assistance and the Office of Community Oriented Policing Services are providing new guidance to law enforcement officers about how to approach maintaining order during First Amendment-protected events.  This comprehensive new guide compiles information, tools, and best practices that will help law enforcement officers maintain public safety while safeguarding constitutional rights.

“As we’ve seen, durable relationships between the police and their communities do not develop overnight.  But as someone who has spent a career at all levels of law enforcement—and as the brother of a retired police officer—I know the importance of these outreach efforts to ensuring effective neighborhood policing, officer safety, and community health.  The Justice Department encourages law enforcement officials, in every jurisdiction, to work with the communities they serve to minimize needless confrontation.  It is vital to engage in planning and preparation, from evaluating protocols and training to choosing the appropriate equipment and uniforms.  This is the hard work that is necessary to preserve the peace and maintain the public trust at all times—particularly in moments of heightened community tension.

“Over the past few months, we’ve seen demonstrations and protests that have sought to bring attention to real and significant underlying issues involving police practices, implicit bias, and pervasive community distrust.  And in most cases, these demonstrations have been both meaningful and responsible, and have brought vital issues to the attention of the public at large.  Similarly, the vast majority of law enforcement officers have honorably defended their fellow citizens engaged in these peaceful protests.

“I know, from first-hand experience, that demonstrations like these have the potential to spark a sustained and positive national dialogue, to provide momentum to a necessary conversation, and to bring about critical reform. 

“But history has also shown us that the most successful and enduring movements for change are those that adhere to non-aggression and nonviolence.  And so I ask all those who seek to lend their voice to important causes and discussions, and who seek to elevate these vital conversations, to do so in a way that respects the gravity of their subject matter.  Peaceful protest has been a hallmark, and a legacy, of past movements for change, from patriotic women who demanded access to the franchise, to the civil rights pioneers who marched for equal rights and equal justice.  Americans exercising their First Amendment right to free assembly should look to those examples as they work to bring about real and lasting change for themselves and for future generations.

“Of course, I recognize that progress will not come easily, and long-simmering tensions will not be cooled overnight.  These struggles go to the heart of who we are, and who we aspire to be, both as a nation and as a people—and it is clear that we have a great deal of important work to do.  But as we move forward, the Department of Justice—and I personally—will continue to work with law enforcement and communities throughout the country to help build the more perfect Union—and the more just society—that all Americans deserve.”

The full video of the Attorney General’s message is available at http://www.justice.gov/opa/video/maintaining-public-safety-while-safeguarding-constitutional-rights.

Diego Alfonso Navarrete Beltran, 42, an accused member of the Fuerzas Armadas Revolucionarias de Colombia (FARC) terrorist organization, has been extradited from Colombia to face hostage taking and terrorism charges in the United States.

The extradition was announced by John P. Carlin, Assistant Attorney General for National Security, Ronald C. Machen Jr., U.S. Attorney for the District of Columbia and George L. Piro, Special Agent in Charge of the FBI’s Miami Division.

Navarrete Beltran was extradited from Colombia to the United States this week to face charges in a superseding indictment returned in the District of Columbia on Feb. 22, 2011.  The indictment, which names as defendants 18 members of the FARC, charges Navarrete Beltran specifically with one count of conspiracy to commit hostage taking; three counts of hostage taking; one count of using and carrying a firearm during a crime of violence; one count of conspiracy to provide material support to terrorists and one count of conspiracy to provide material support to a designated foreign terrorist organization. 

A second defendant, Alexander Beltran Herrera, 38, a FARC commander, was extradited to the United States from Colombia in March 2012. He pled guilty on March 18, 2014, in the U.S. District Court for the District of Columbia, to three counts of hostage-taking and he was sentenced on Oct. 24, 2014, to a 27-year prison term.

“Diego Alfonso Navarrete Beltran and his FARC accomplices are alleged to have been involved in the hostage-taking of three Americans in Colombia more than a decade ago,” said Assistant Attorney General Carlin.  “Terrorists who target our citizens with violence anywhere in the world should know that we will pursue them and seek to bring them to justice, however long it takes.”

“In 2003, three U.S. citizens were taken hostage by Colombian terrorists and held captive with choke harnesses and chains for more than five years,” said U.S. Attorney Machen.  “Last month, a commander of that Colombian terrorist organization was sentenced to nearly three decades in prison for his role in the hostage-taking.  We have now extradited a second defendant to face charges for the role he allegedly played in their harrowing ordeal.  These prosecutions are a reminder of our unwavering commitment to hold accountable anyone who harms American citizens abroad, no matter how long it takes.” 

“Diego Alfonso Navarrete Beltran, a former member of the FARC terrorist organization, was extradited to the United States to face terrorism and hostage taking charges involving three U.S. Citizens,” said FBI Special Agent in Charge Piro. “There is a message here for would be terrorist hostage takers; don’t do it, you will be brought to justice.”

Navarrete Beltran was arraigned today in federal court in the District of Columbia. If convicted of all charges against him, he faces a maximum potential sentence of life in prison.

According to the indictment, the FARC is an armed, violent organization in Colombia, which since its inception in 1964, has engaged in an armed conflict to overthrow the Republic of Colombia, South America’s longest-standing democracy. The FARC has consistently used hostage taking as a primary technique in extorting demands from the Republic of Colombia.  Hostage taking has been endorsed and commanded by FARC senior leadership.  The FARC has characterized American citizens as “military targets” and has engaged in violent acts against Americans in Colombia, including murders and hostage taking.  The FARC was designated as a foreign terrorist organization by the U.S. Secretary of State in 1997 and remains so designated.

The indictment alleges that Navarrete Beltran was a member of the 1st Front in the FARC’s Southern Block.  He was allegedly involved in the hostage taking of three U.S. citizens, Marc D. Gonsalves, Thomas R. Howes and Keith Stansell.  These three individuals, along with Thomas Janis, a U.S. citizen, and Sergeant Luis Alcides Cruz, a Colombian citizen, were seized on Feb. 13, 2003, by the FARC after their single engine aircraft made a crash landing near Florencia, Colombia.  Janis and Cruz were murdered at the crash site by members of the FARC.

According to the indictment, Mr. Gonsalves, Mr. Howes and Mr. Stansell were held by the FARC at gunpoint and were advised by FARC leadership that they would be used as hostages to increase international pressure on the government of the Republic of Colombia to agree to the FARC’s demands. 

The FARC at various times marched the hostages from one site to another, placing them in the actual custody of various FARC Fronts.  At the conclusion of one 40-day march, in or about November 2004, the hostages were delivered to members of the FARC’s 27th Front, commanded by Daniel Tamayo Sanchez, who was responsible for the hostages for nearly two years, after which they were delivered to the FARC’s 1st Front.  From approximately October 2006 through July 2008, according to the indictment, Navarrete Beltran and others kept the hostages under the control of the FARC’s 1st Front. In order to prevent the Colombian police and military from rescuing the hostages, he and other conspirators transported the hostages into the Republic of Venezuela.

Throughout the captivity of the hostages, FARC jailors and guards, including Naverrete Beltran, used choke harnesses, chains, padlocks and wires to restrain the hostages, and used force and threats to continue their detention and prevent their escape.  The indictment also accuses Navarrete Beltran of using and carrying a military-type machine gun during the hostage taking and providing material support and resources to aid in the hostage taking and to aid the FARC. 

In July 2008, the Colombian military conducted an operation which resulted in the rescue of the hostages. All told, members of the FARC held the Americans hostage for 1,967 days.

An indictment is merely a formal allegation that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty. 

This investigation is being led by the FBI’s Miami Field Division.  The prosecution is being handled by Assistant U.S. Attorney Fernando Campoamor-Sanchez from the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division. 

Substantial assistance in the case was provided by the Justice Department’s Office of International Affairs, the Department’s Judicial Attachés in Colombia, the FBI’s Office of the Legal Attaché in Colombia, and the FBI’s Washington Field Office.

The public is reminded that an indictment contains mere allegations and that defendants are presumed innocent unless and until proven guilty.

Fourteen alleged members of the Aryan Brotherhood of Mississippi, including four of its most senior leaders, have been indicted by a federal grand jury in the Northern District of Mississippi for conspiring to participate in a racketeering enterprise.  In a separate indictment, 11 alleged members and associates of the Universal Aryan Brotherhood of Oklahoma have been charged by a federal grand jury in the Northern District of Oklahoma for conspiring to participate in a racketeering enterprise, among other charges.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Felicia C. Adams of the Northern District of Mississippi and U.S. Attorney Danny C. Williams of the Northern District of Oklahoma made the announcement.

In the Northern District of Mississippi, the 10-count indictment was returned on Oct. 23, 2014, and unsealed today.  Thirteen individuals were taken into custody today.  In the Northern District of Oklahoma, the four-count indictment was returned on Nov. 5, 2014, and unsealed on Nov. 10, 2014.  All of the charged defendants are in custody.

“The Aryan Brotherhood is a violent gang that has seeped from behind prison walls into communities throughout this nation,” said Assistant Attorney General Caldwell.  “Working in lockstep with our law enforcement partners and U.S. Attorneys’ Offices throughout the country, we are targeting and dismantling these gangs from the top general to the foot soldier so they can no longer terrorize our communities.”

“These charges resulted from an unprecedented collaboration of federal, state, and local law enforcement officers targeting a large scale prison gang involved in violent organized crime throughout the state of Mississippi,” said U.S. Attorney Adams.  “This indictment represents a critical first step toward dismantling this violent organization and clearly signals that the United States Attorney’s Office and our law enforcement partners have an unwavering commitment to hold those individuals accountable who insist on creating an atmosphere of violence and fear in our communities.”

“My office remains steadfast in its commitment to work in collaboration with law enforcement to disrupt and dismantle violent crime and gang activities,” said U.S. Attorney Williams.

According to the indictments, the Aryan Brotherhood of Mississippi (ABM) and Universal Aryan Brotherhood of Oklahoma (UAB) are violent, “whites only,” prison-based gangs with members operating inside and outside of state penal institutions in their respective states.  The gangs allegedly modeled themselves 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.  The ABM was allegedly founded in 1984, and in early 2013, pursued unification with the Aryan Brotherhood of California in order to achieve national recognition. 

The UAB was allegedly founded in 1993.  According to the Oklahoma indictment, the UAB has a militaristic structure comprised of a Main Council, Yard Captains and Soldiers.  The Main Council has ultimate authority in all gang matters.

The indictment alleges that both gangs enforced their rules and promoted discipline among members, prospects and associates through violence and threats against those who violated the rules or posed a threat to the gangs.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members.

According to the Mississippi indictment, in order to be considered for ABM membership, a person must be sponsored by another ABM member.  Once sponsored, a prospective member must serve a probationary term of not less than six months, during which he is referred to as a prospect, and his conduct is observed by the members of the ABM.  The prospect is required to sign a “prospect compact,” swear to an oath of secrecy and declare a life-time commitment to the ABM.

The ABM allegedly has a detailed and uniform organizational structure divided into three separate geographic areas of control.  The state is overseen and directed by a three-member “wheel” commonly referred to as “spokes.”  The wheel has ultimate authority in all gang matters.  The indictment charges four alleged wheel members: Frank Owens, Jr, 44, aka “State Raised,” of D’Iberville, Mississippi; Perry Mask, 46, of Corinth, Mississippi; Stephen Hubanks, 45, of Rienzi, Mississippi; and Brandon Creel, 46, aka “Oak,” of Ellisville, Mississippi, with conspiracy to participate in the racketeering activities of the ABM, among other charges.  The indictment also charges 10 other alleged members of the ABM.  All 14 alleged members of the ABM are charged with conspiracy to participate in the racketeering activities of the gang and with involvement in murder, attempted murder, kidnapping, assault, money laundering, firearms trafficking and conspiracy to distribute methamphetamine.

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

The Mississippi case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Drug Enforcement Administration; FBI; U.S. Marshals Service; U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Mississippi Highway Patrol; Mississippi Bureau of Investigation; Mississippi Bureau of Narcotics; Harrison County Sheriff’s Office; South Mississippi Metro Enforcement Team; Tupelo Mississippi Police Department; North Mississippi Narcotics Unit; Tishomingo County Sheriff’s Office; Lee County Sheriff’s Office; Forrest County District Attorney’s Office; Prentiss County Sheriff’s Office; Jones County Sheriff’s Office; Harrison County Sheriff’s Office; and South Mississippi Metro Enforcement Team.

The Oklahoma case is being investigated by a multi-agency task force consisting of the U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Tulsa Police Department; ATF; Internal Revenue Service – Criminal Investigation Division; Tulsa County Sheriff’s Office; and Oklahoma Department of Corrections.

The cases are being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorneys’ Offices for the Northern District of Mississippi and the Northern District of Oklahoma.

ABM Indictment

First Annual Recovery to Exceed $5 Billion; Over 700 Whistleblower Lawsuits for Second Consecutive Year

The U.S. Department of Justice obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, Acting Associate Attorney General Stuart F. Delery and Acting Assistant Attorney General Joyce R. Branda for the Civil Division announced today.  This is the first time the department has exceeded $5 billion in cases under the False Claims Act, and brings total recoveries from January 2009 through the end of the fiscal year to $22.75 billion – more than half the recoveries since Congress amended the False Claims Act 28 years ago to strengthen the statute and increase the incentives for whistleblowers to file suit.

“In the past three years, we have achieved the three largest annual recoveries ever recorded under the statute,” said Acting Associate Attorney General Delery.  “This sustained success demonstrates that these figures result not only from large individual matters, but from a continuous commitment year after year to pursue those who defraud taxpayers and to remain vigilant in identifying those who would unlawfully obtain money from the federal fisc.”

The recoveries reflect the administration’s priorities to hold the financial industry accountable for its part in the gross misconduct that led to the housing and mortgage crisis, and to continue to root out fraud in the health care industry.  In fiscal year 2014, the department recovered an unprecedented $3.1 billion from banks and other financial institutions involved in making false claims for federally insured mortgages and loans.  False claims against federal health care programs such as Medicare and Medicaid accounted for another $2.3 billion.  These amounts reflect federal losses only.  In many of these cases, the department was instrumental in recovering additional billions of dollars for consumers and state treasuries.  

“It has been an extraordinary year for civil fraud recoveries, but the true significance is not in breaking records or making history; it is in the billions of dollars restored to the federal treasury,” said Acting Assistant Attorney General Branda.  “The False Claims Act was enacted both to protect vital taxpayer dollars and deter those who would misuse public funds.  The department will continue to enforce the law aggressively to ensure the integrity of government programs designed to keep us safer, healthier and economically more prosperous.”     

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans’ benefits, federally insured loans and mortgages, transportation and research grants, agricultural supports, school lunches and disaster assistance.  With more whistleblowers coming forward since the act was strengthened in 1986, the government opened more investigations, which led to the surge in recoveries we see today. 

Most false claims actions are filed under the act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government.  If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 percent of the recovery.  The number of qui tam suits filed in fiscal year 2014 exceeded 700 for the second year in a row.  Recoveries in qui tam cases during fiscal year 2014 totaled nearly $3 billion, with whistleblowers receiving $435 million.

Housing and Mortgage Fraud

The $3.1 billion in federal funds recovered in the wake of the housing and mortgage crisis this past fiscal year includes $1.85 billion from Bank of America Corporation, $614 million from JPMorgan Chase, $428 million from SunTrust Mortgage Inc. and $200 million from U.S. Bank.  This brings recoveries for civil fraud and false claims against federal housing and mortgage programs from January 2009 through the end of fiscal year 2014 to $4.65 billion – an historic and important amount, especially as it restores scarce funds stolen from vital government programs.  For details about the settlements, see previously issued press releases on Bank of America, JPMorgan Chase, SunTrust and U.S. Bank. 

Bank of America paid $1.85 billion to settle allegations of false claims in connection with the bank’s practices in underwriting, origination and quality control of residential mortgages the bank sold to Fannie Mae and Freddie Mac, as well as loans insured by the Federal Housing Administration (FHA).  The settlement also covered the bank’s alleged submission of inflated insurance claims to the FHA.  Bank of America acknowledged that it had misrepresented the quality of loans to Fannie Mae, Freddie Mac and the FHA.  The $1.85 billion paid by Bank of America to settle False Claims Act allegations was part of a broader settlement that included a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and $7 billion in relief to consumers harmed by the financial crisis to redress abuses in residential mortgage backed security practices.  In total, Bank of America agreed to pay $16.65 billion under the global resolution – the largest civil settlement with a single entity in the department’s history. 

SunTrust paid $418 million to settle allegations of false claims in connection with mortgages insured by the FHA.  SunTrust admitted that from 2006 to 2012, it originated and underwrote FHA-insured mortgages that did not qualify for federal insurance under the FHA program, failed to institute an effective quality control program to identify noncompliant loans and failed to report the noncompliant loans it did identify to the FHA as required.  In addition to the $418 million restored to the federal treasury, SunTrust agreed to pay $500 million in relief to struggling homeowners by various means, including reducing the principal on mortgages for borrowers who are at risk of default and reducing interest rates for homeowners who are current but underwater on their mortgages.  SunTrust also agreed to pay $10 million to the federal government and an additional $40 million to state governments to remedy the effects of its improper loan servicing practices.  This brings SunTrust’s total payment under the settlement to redress its abusive mortgage origination and servicing practices to $968 million. 

These recoveries are part of the broader enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency task force in 2009, to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  In September, Attorney General Eric Holder informed an audience at a financial fraud conference that the department had brought more than 60 cases against financial institutions since 2009, resulting in recoveries totaling more than $85 billion, including civil remedies, criminal fines and consumer relief.  For more information about the task force, visit www.StopFraud.gov. 

Health Care Fraud

The $2.3 billion in health care fraud recoveries in fiscal year 2014 marks five straight years the department has recovered more than $2 billion in cases involving false claims against federal health care programs such as Medicare, Medicaid and TRICARE, the health care program for the military.  This steady, significant and continuing success can be attributed to the high priority the Obama Administration has placed on fighting health care fraud.  In 2009, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement.  This coordination has yielded historic results: from January 2009 through the end of the 2014 fiscal year, the department used the False Claims Act to recover $14.5 billion in federal health care dollars.  Most of these recoveries relate to fraud against Medicare and Medicaid.  Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the Departments of Justice and Health and Human Services. 

The pharmaceutical industry accounted for a substantial part of the $2.3 billion in health care fraud recoveries in fiscal year 2014.  Global health care giant Johnson & Johnson and its subsidiaries, Janssen Pharmaceuticals and Scios (J&J), paid $1.1 billion to resolve False Claims Act claims relating to the prescription drugs Risperdal, Invega and Natrecor.  The government alleged that J&J promoted the drugs for uses not approved as safe and effective by the U.S. Food and Drug Administration (FDA).  Because J&J marketed the drugs for uses not covered by federal health care programs, the company’s promotion of the drugs caused physicians and other health care providers to submit hundreds of millions of dollars in alleged false claims against Medicare, Medicaid, TRICARE and other federal health care programs.  The government also alleged that J&J paid kickbacks to physicians and to Omnicare Inc., the nation’s largest provider of pharmaceuticals to nursing homes and long-term care facilities.  In addition to the federal civil settlement, J&J paid more than $600 million in civil claims for state Medicaid programs and $485 million in criminal fines and forfeitures, making this $2.2 billion global resolution of the government’s claims one of the largest health care fraud settlements in U.S. history.

In a separate settlement, the department also recovered $116 million from Omnicare.  The settlement resolved allegations that Omnicare engaged in a kickback arrangement with skilled nursing facilities to induce the facilities to select Omnicare as their pharmacy provider, in violation of the Anti-Kickback Statute, which prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The statute is designed to ensure that the decisions of doctors and other professionals in prescribing drugs or recommending providers are driven by the needs of the patient and not the prospect of personal gain.  Since claims for services or supplies induced by kickbacks are not eligible for reimbursement under federal health care programs, the government alleged that these claims violated the False Claims Act.  In addition to recovering $116 million in federal claims, the government recovered $8.2 million that will go to states that jointly funded the Medicaid programs impacted by Omnicare’s conduct.  

Cases involving hospitals resulted in $333 million in fiscal year 2014 settlements and judgments, with significant recoveries from two hospital chains.  Community Health Systems Inc., the nation’s largest operator of acute care hospitals, paid $98.15 million to settle allegations that it billed Medicare, Medicaid and TRICARE for inpatient services that should have been provided in a less costly outpatient or observation setting.  Halifax Hospital Medical Center and Halifax Staffing Inc., hospital service providers in Florida, paid $85 million to resolve allegations that it violated the Stark Law, which prohibits hospitals from billing Medicare for certain services when referred by physicians who have a financial relationship with the hospital. 

The government also had significant recoveries for home health services provided in alleged violation of the False Claims Act.  Amedisys Inc., one of the nation’s largest providers of home health services, paid $150 million to resolve allegations that it billed Medicare for medically unnecessary services, for services to patients who were not homebound and for violations of the Anti-Kickback Statute.  The government alleged that Amedisys management pressured nurses and therapists to provide care based on the financial benefits to Amedisys rather than the needs of patients.

In a trio of cases involving cardiac procedures, the government recovered $85 million based on claims involving potentially life threatening conduct.  Boston Scientific Corp., which purchased Guidant LLC and Guidant Sales LLC, and Cardiac Pacemakers Inc. in 2006, paid $30 million to settle claims that Guidant sold defective heart devices to health care facilities that implanted them into Medicare patients.  The devices were small defibrillators surgically implanted into patients’ chests.  When a working device detects an irregular heartbeat, it sends an electrical pulse to shock the heart back to its normal rhythm.  The Guidant devices allegedly short circuited, rendering them ineffective.  In the other two cases, Kentucky hospitals King’s Daughters Medical Center and Saint Joseph Health System Inc. billed Medicare and Medicaid for coronary procedures that the government alleged were unnecessary.  King’s Daughters paid $39 million in federal claims and $2 million in state Medicaid claims to settle allegations that it billed for medically unnecessary coronary stents and diagnostic catheterizations, and that it had prohibited financial relationships with physicians referring patients to the hospital.  St. Joseph’s paid $16 million in federal claims and $366,000 in state Medicaid claims to settle allegations that St. Joseph Hospital in London, Kentucky, billed Medicare and Medicaid for numerous invasive cardiac procedures that were performed on patients who did not need them, including procedures involving coronary stents, pacemakers, coronary artery bypass graft surgeries and diagnostic catheterizations.

Other Fraud Recoveries and Actions

Although mortgage, housing and health care fraud dominated recoveries for fiscal year 2014, the department has aggressively pursued fraud in government procurement and other federal programs. 

Significant recoveries include settlements with Hewlett-Packard Co. and The Boeing Co.  Hewlett-Packard paid $32.5 million to resolve claims involving a contract for IT products and services with the U.S. Postal Service.  Boeing paid $23 million to settle alleged false claims for labor on maintenance contracts for the C-17 Globemaster aircraft with the U.S. Air Force.

In addition, the government filed lawsuits against a number of government contractors.

In a lawsuit against Kellogg, Brown & Root (KBR) and two foreign subcontractors arising from claims in connection with KBR’s contract with the U.S. Army to provide wartime logistical support, the government alleged that KBR employees took kickbacks from two subcontractors in return for favorable treatment in the award and performance of numerous subcontracts for maintenance, transportation and other services in Iraq.  The alleged scheme resulted in inflated prices for services and equipment that were often deficient or not provided at all.  Three KBR employees previously pleaded guilty to taking kickbacks or making false statements in connection with the allegations made in the government’s complaint.

The government filed a complaint against global software provider CA Inc. after intervening in a whistleblower suit against the company.  The government’s complaint alleges that CA knowingly overcharged the government for software licenses and maintenance in connection with a General Services Administration (GSA) Multiple Award Schedule (MAS) contract.  Under the MAS program, GSA negotiates prices and contract terms for goods and services that are later purchased by federal agencies throughout the government.  To gain access to the vast government marketplace, contractors agree to disclose their commercial pricing practices and discounts so GSA can negotiate fair prices for government customers.  The government’s complaint alleges that CA provided incomplete and inaccurate information that resulted in the Departments of Defense, Energy, Health and Human Services, and Labor, and other federal agencies paying higher prices for software licenses and maintenance than they should have.  

The government recovered an $80 million judgment against BNP Paribas, a global financial institution headquartered in Paris, France, for violations of the Department of Agriculture’s (USDA) Supplier Credit Guarantee Program.  Under the program, the USDA guarantees credit extended to foreign importers to purchase grain and other agricultural commodities from domestic growers and distributers, which opens up foreign markets for U.S. commodities.  To qualify for the program, the U.S. exporter and the foreign importer must be distinct companies, not under common ownership or control.  BNP Paribas consented to an $80 million judgment entered by the court to resolve the government’s allegations that the bank knowingly entered into a scheme to defraud the Supplier Credit Guarantee Program by accepting the assignment of credit guarantees given by U.S. exporters on the sale of grain to Mexican importers under common ownership or control.  The government alleged that BNP knew that the exporters and importers were disqualified from the program because of their common ownership and also knew that some of the transactions were total shams that did not involve a sale or shipment at all.  Yet when the Mexican importers defaulted on the credit financing, BNP claimed reimbursement from the USDA on the guarantees.  In 2012, BNP Paribas vice president Jerry Cruz, who had accepted bribes from the exporters, pleaded guilty to charges involving bank fraud, mail and wire fraud, and money laundering for his part in the scheme.

Recoveries in Whistleblower Suits

Of the $5.69 billion the government recovered in fiscal year 2014, nearly $3 billion related to lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $435 million to the individuals who exposed fraud and false claims by filing a qui tam complaint, often at great risk to their careers. 

The number of qui tam suits rose from 30 in 1987, to 300 to 400 a year from 2000 to 2009, to more than 700 for each of the last two fiscal years. The growing number of qui tam lawsuits filed since 2009 has led to increased recoveries, which exceeded $2 billion for the first time in fiscal year 2010, and has approached or exceeded $3 billion ever since.  As recoveries increased, so have whistleblower awards.  From January 2009 to the end of fiscal year 2014, the government paid awards in excess of $2.47 billion.

“We acknowledge the men and women who have come forward to blow the whistle on those who would commit fraud on our government programs,” said Acting Assistant Attorney General Branda.  “In strengthening and protecting the False Claims Act, Congress has given us the law enforcement tools that are so essential to guarding the treasury and deterring others from exploiting and misusing taxpayer dollars.  We are grateful for their continued support.”

In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud.  In 2009, Senator Patrick J. Leahy, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.  And in 2010, the passage of the Affordable Care Act provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute.

Acting Assistant Attorney General Branda also expressed her deep appreciation for the many dedicated public servants who investigated and pursued these cases – the attorneys, investigators, auditors and other agency personnel throughout the Civil Division and the U.S. Attorneys’ Offices, as well as the agency Offices of Inspector General, and the many federal and state agencies that contributed to the department’s recoveries this past fiscal year. 

“Without the tremendous talent and dedication of the public servants who worked tirelessly to bring these matters to settlement or judgment, the nearly $6 billion in recoveries we announce today would not have been possible,” said Branda.  “I commend them all for their exceptional efforts.” 

The Department of Justice today announced the opening of the grant solicitation period for comprehensive funding to support public safety, victim services and crime prevention improvements in American Indian and Alaska Native communities.  The department’s Fiscal Year (FY) 2015 Coordinated Tribal Assistance Solicitation (CTAS) was posted today at www.justice.gov/tribal/open-sol.html. The solicitation closes on Feb. 24, 2015.

“The Department of Justice is making a concerted effort – one that we are building on every year – to expand our reach to tribes and make resources more widely available to our partners in Indian country,” said Assistant Attorney General Karol V. Mason for the Office of Justice Programs.  “This solicitation addresses an array of tribal justice system issues and will give tribes access to the support they need to keep their communities safe and ensure a just, fair, and effective system for fighting crime.”

CTAS is administered by the Justice Department’s Office of Justice Programs (OJP), Office of Community Oriented Policing Services (COPS), and Office on Violence Against Women (OVW).  The funding can be used to enhance law enforcement; bolster adult and juvenile justice systems; prevent and control juvenile delinquency; serve sexual assault, domestic violence and elder victims; and support other efforts to combat crime.  To view the FY 2015 CTAS, visit www.justice.gov/sites/default/files/tribal/pages/attachments/2014/11/19/ctas_fy-2015_solicitation.pdf.

Applications for CTAS are submitted through the Justice Department’s Grants Management System (GMS) which enables grantees to register and apply for CTAS online.  Applicants must register with GMS prior to submitting an application.  An applicant will not be able to submit an application without registering in GMS before the application deadline of 9:00 p.m. Eastern Time (ET), Feb. 24, 2015.

The FY 2015 CTAS reflects improvements and refinements from earlier versions.  Feedback was provided to the department during tribal consultations and listening sessions, and includes tribal leaders’ request to improve and simplify the DOJ grant-making process.  Changes to DOJ grant programs, enacted with the passage of the Tribal Law and Order Act, are incorporated into the CTAS solicitation and in the appropriate purpose areas.  For more information about changes to the CTAS Solicitation from last year, read the FY 2015 CTAS fact sheet.

For the FY2015 CTAS, a tribe or tribal consortium may submit a single application and select from nine competitive grant programs referred to as Purpose Areas.  This approach allows the department’s grant-making components to consider the totality of a tribal nation’s overall public safety needs. 

The nine purpose areas are:

• Comprehensive Tribal Justice Systems Strategic Planning (OJP/COPS/OVW)

• Public Safety and Community Policing (COPS)

• Justice Systems, and Alcohol and Substance Abuse (BJA)

• Corrections and Correctional Alternatives (BJA)

• Violence Against Women Tribal Governments Program (OVW)

• Children’s Justice Act Partnerships for Indian Communities (OVC) 

• Comprehensive Tribal Victim Assistance Program (OVC)

• Juvenile Justice Wellness Courts (OJJDP)

• Tribal Youth Program (OJJDP) 

Tribes or tribal consortia may also be eligible for non-tribal government-specific federal grant programs and are encouraged to explore other funding opportunities for which they may be eligible.  Additional funding information may be found at www.grants.gov or the websites of individual agencies.  

Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.

U.S. Attorney Kenneth A. Polite announced that DARRELL HARLAND, age 32, of Hammond, Louisiana, was sentenced today for stolen identity refund fraud.

U.S. District Judge Jane Triche Milazzo sentenced HARLAND to 32 months imprisonment, three years of supervised release, and ordered HARLAND to pay $65,168 in restitution to the IRS.

According to court documents, on May 3, 2012, the St. Tammany Parish Sheriff’s Office (STPSO) executed a search warrant at HARLAND’s residence.  In the home, deputies found evidence of identity theft, including lists of names and social security numbers.  HARLAND told deputies that he had purchased the stolen identities online.

At the request of the STPSO, the IRS determined that several of the stolen identities found in HARLAND’s residence had been used to file what appeared to be fraudulent tax returns.  The IRS interviewed several of the individuals whose identities had been used and confirmed that these individuals had not given HARLAND the authority to file tax returns in their names and that all income and dependent information on the tax returns was false.  IRS records show that HARLAND caused approximately $65,168 in loss to the IRS by filing fraudulent tax returns with stolen identities.

U.S. Attorney Polite praised the Internal Revenue Service in investigating this matter.  Assistant United States Attorney G. Dall Kammer is in charge of the prosecution.

A federal grand jury in San Francisco returned three multi-count indictments against eleven real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in Northern California, the Department of Justice announced.

The indictments, filed late yesterday in U.S. District Court for the Northern District of California in Oakland, California, charge Northern California real estate investors Michael Marr; Javier Sanchez; Gregory Casorso; Victor Marr; John Shiells; Miguel De Sanz; Alvin Florida Jr.; Robert A. Rasheed; John L. Berry III; Refugio Diaz; and Stephan A. Florida with participating in conspiracies to rig bids and schemes to defraud mortgage holders and others.  The indictments allege that the defendants agreed not to compete at public auctions in return for payoffs and diverted money to themselves and others that should have gone to mortgage holders and other beneficiaries.  All defendants were charged with bid rigging and fraud in Alameda County, California.  Marr, Sanchez, Shiells, and De Sanz were also charged with bid rigging and fraud in Contra Costa County, California.  Additionally, Shiells and De Sanz were charged with bid rigging and fraud in San Francisco County, California. 

To date, 47 individuals have pleaded guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.  On Oct. 22, 2014, a federal grand jury in San Francisco returned an eight-count indictment against five additional real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in San Mateo and San Francisco Counties, California.

“Collusion at the foreclosure auctions created an unfair playing field where conspirators pocketed illegal payoffs at the expense of lenders and distressed homeowners,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program.  “The division will continue to investigate and prosecute local cartels that harm the competitive process.” 

The indictments allege, among other things, that at various times between June 2007 and January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Alameda, Contra Costa, and San Francisco counties, 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.

“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.”              

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes.  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 victims if either amount is greater than $1 million.

These indictments are the latest charges 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.

The 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.

XS Platinum, Inc. and five of its officers and employess were indicted by a federal grand jury in Anchorage today for five felony violations, including conspiracy to violate the Clean Water Act and for submitting material false statements, announced Sam Hirsch, Acting Assistant Attorney General for the Environment and Natural Resources Division of the U.S. Department of Justice, and Karen L. Loeffler, U.S. Attorney for the District of Alaska.   

The indictment charges XS Platinum, Inc. (XSP), a Delaware corporation, and five of its officers and employees, Dr. Bruce Butcher, age 59, and Mark Balfour, age 62 (both Australian citizens), James Slade, age 57 (a Canadian citizen), and Robert Pate, age 62 and James Staeheli, age 43 (both U.S. citizens residing in Washington state) with conspiracy to violate the Clean Water Act (CWA) during the defendants’ operation of the Platinum Creek Mine on the Salmon River in Western Alaska.  In addition, the indictment charges XSP, Butcher, Balfour, Slade, and Pate with knowingly violating the terms of XSP’s CWA permit in 2010; and XSP, Butcher, Balfour, Slade, and Staeheli with knowingly violating the terms of XSP’s CWA permit in 2011.  The indictment also charges XSP, Butcher, Balfour, Slade and Pate with submitting a false statement in violation of the CWA.  Finally, the indictment charges XSP and Balfour with submitting a separate false statement.

According to the indictment, XSP held 159 placer mining claims and 36 hard-rock claims totaling more than 4,000 acres at the Platinum Creek Mine, which was situated along the Salmon River and its tributaries.  The mine contains placer deposits of platinum metal, along with smaller amounts of gold and palladium.  All but 21 of the claims were on land managed by the BLM, with the remaining (undeveloped) claims lying within the Togiak National Wildlife Refuge.  The Salmon River is an anadromous fish stream that is important for the spawning of all five species of Pacific salmon (chinook, chum, coho, pink, and sockeye), and the rearing of coho and sockeye salmon.  After flowing through BLM land, the Salmon River crosses the Togiak National Wildlife Refuge before entering the Pacific Ocean at Kuskokwim Bay.

The CWA prohibits discharges of industrial wastewaters from mining operations in violation of CWA permits which govern those discharges.  According to the indictment, beginning in 2010 and continuing through 2011, XSP and the individual defendants knowingly discharged industrial wastewaters from XSP’s mechanical placer mining operation at the Platinum Creek Mine into the adjacent Salmon River in violation of the terms of XSP’s CWA General Permit.  According to the indictment, XSP told federal regulators in its mining and CWA permit applications that the operation of the mine would recycle all of its wastewater and result in “zero discharge” of mine wastewater to the Salmon River.  The indictment alleges that XSP and the individual defendants conspired to violate the CWA by concealing the 2010 and 2011 mine wastewater discharge violations from federal officials, and submitting material false statements to federal agencies.  The indictment further alleges that the industrial wastewaters discharged from XSP’s operation of the Platinum Creek Mine included large amounts of sediment, turbidity, and toxic metals. It is further alleged that these discharges exceeded the CWA General Permit limits for those pollutants and that the defendants failed to report the violations as they were required.  According to the indictment, XSP and its corporate officers submitted an annual report in 2011 to federal and state agencies which indicated that the mine had “zero discharge” during the 2010 mining season, when XSP’s own monitoring data showed that it had numerous discharges to the Salmon River.

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. 

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

A registered sex offender with prior convictions for the possession of child pornography and attempted sexual conduct with minors was sentenced to 35 years in prison today for traveling across state lines to engage in sex with a minor and various child pornography-related offenses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Josh Minkler of the Southern District of Indiana made the announcement.  U.S. District Judge Jane E. Magnus-Stinson of the Southern District of Indiana imposed the sentence.  

John Alan Lewis, 65, of Lima, Ohio, was convicted in August 2014 following a three-day trial for traveling across state lines to engage in illicit sexual conduct with a minor, attempted production of child pornography, and transportation and possession of child pornography.

According to evidence presented at trial, Lewis met an individual online that he believed to be a 14 year-old girl.  The individual was actually an adult male registered sex offender from New York who was posing as a 14 year-old girl.  From November 2011 until May 2012, Lewis exchanged numerous images of a minor under the age of 12 engaging in sexually explicit conduct via email with that individual, still believing that he was communicating with a 14 year-old girl. 

Following the August 2012 arrest of the New York sex offender who was posing as the 14 year-old girl, law enforcement assumed the New York sex offender’s online profile and continued to communicate with Lewis.  In the weeks leading up to his arrest, Lewis engaged in a series of online chats with the purported 14 year-old girl, during which he discussed his plan to travel from Ohio to Indiana to take her to a motel to engage in sexual acts.  On Sept. 19, 2012, Lewis rented a car in Lima, Ohio, and drove to Plainfield, Indiana, to meet with the girl.  He was arrested when he arrived at the agreed upon meeting location. 

At the time of his arrest, Lewis had three electronic devices, each of which contained images depicting a minor, between the ages of 10 and 12, fully nude and engaging in sexually explicit conduct.

This case was investigated by the Indianapolis Metropolitan Police Department, the Indiana State Police Cyber Crime Unit, the FBI’s Violent Crimes Against Children Section and the Indiana Internet Crimes Against Children Task Force, which is made up of federal and state law enforcement agencies.  The case was prosecuted by Trial Attorney Amy E. Larson of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana. 

The National Center for Missing and Exploited Children assisted the investigation by providing information to the Indianapolis Police Department, which led to the identification of a minor child victim in Indiana.

This case was 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 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 http://www.projectsafechildhood.gov.  For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”

The Department Moves Court to Dismiss Civil Rights Case, Citing Reforms

Today, the Justice Department announced that its civil rights lawsuit involving the Terrebonne Parish Juvenile Detention Center in Houma, Louisiana, has resulted in improved conditions for the youth confined in the facility, and it asked the federal court to dismiss the case.  Reforms Terrebonne Parish undertook over the past three years resulted in increased protections to prevent sexual abuse of youth by staff; reduce the use of isolation, inappropriate use of force and restraints by staff; to reduce physical abuse of youth by other youth; and to reduce suicide and other self-harming behavior.

In 2011, the department notified Terrebonne Parish officials that conditions at the detention center violated the constitutional rights of confined youth.  Later that year, the department and Terrebonne Parish officials reached a settlement agreement to implement 43 specific substantive remedial measures to reform conditions at the facility.  The parties appointed an independent monitor who closely monitored reform efforts and provided technical assistance to facility officials.

Although the settlement agreement pre-dated the Attorney General’s finalization of the National Standards to Prevent, Detect, and Respond to Prison Rape (PREA Standards), the required remedial measures incorporated several provisions eventually set forth in those Standards.  For example, Terrebonne Parish began complying with PREA’s minimum staffing ratio requirements, ensuring that unannounced supervisory rounds were periodically conducted, established a zero-tolerance policy for sexual abuse, conducted post-incident reviews, ensured that all allegations of abuse were promptly investigated and referred to appropriate external investigative agencies, ensured that staff found to be violating agency policies were subject to formal discipline and trained all staff on sexual abuse identification and prevention practices.

In addition to remedial measures designed to eliminate sexual abuse of youth within the facility, the settlement also required several remedial measures to increase protections against suicide and other self-harming behavior, including a reduction in the facility’s over-reliance on isolation.  For example, the settlement prohibited the routine use of isolation rooms for youth on suicide precautions, prohibited the use of isolation for all youth except where  youth pose an imminent threat to themselves or others (or in rare cases where less severe disciplinary measures have proven ineffective), prohibited the use of any disciplinary isolation longer than 72 hours except in extraordinary circumstances and ensured that any use of isolation be accompanied by strict safeguards such as frequent youth welfare checks and frequent visits by clinicians.  During the remedial action period, the facility proactively implemented an effective incentive-based behavior management program that rewarded youth for positive and pro-social behavior.  In addition, the facility implemented and trained staff on Safe Crisis Management – a program for preventing and responding to disruptive behavior by youth.  Implementation of these programs substantially reduced the frequency of serious incidents at the facility, and enabled facility-leadership to eliminate the use of sanctioned disciplinary isolation – an outcome that exceeded settlement agreement requirements.  

In the spring of 2014, the monitor issued her fifth compliance report indicating that Terrebonne Parish had achieved substantial compliance with all required remedial measures in the settlement agreement.  The department concurs with the monitor’s assessment.

During the course of the department’s investigation, including the enforcement period, Terrebonne Parish officials and the facility director have remained highly cooperative and steadfast in their commitment to improving conditions of confinement in the facility. 

“We commend Terrebonne Parish for its commitment to protecting youth held in custody,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “These improvements will help to ensure the safety and security of all youth in the facility in a sustainable manner.”

“Rehabilitation of the district’s youth is the principal goal of juvenile justice and we are pleased that Terrebonne Parish has been diligent in remedying its facility,” said U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.  “These changes will help foster an environment where our at-risk youth can exit the juvenile justice system ready to positively contribute to their communities.” 

The department initiated this investigation under the Violent Crime Control and Law Enforcement Act of 1994, which gives the department authority to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youth in juvenile justice institutions.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.

The United States filed civil complaints in U.S. District Court for the Eastern District of New York today against individuals and entities alleged to be running two related multimillion-dollar mail fraud schemes.  The United States also filed a motion seeking a temporary restraining order and a preliminary injunction to immediately put a stop to the ongoing schemes. 

According to the complaints, the defendants operate two mail fraud schemes in which they send solicitation letters purportedly written by world-renowned psychics to consumers through the U.S. mail.  The first scheme, operated by Destiny Research Center and the Canadian company Infogest Direct Marketing, sends direct mail solicitations allegedly written by psychics Maria Duval and Patrick Guerin.  The second scheme, operated by Christine Moussu through New York companies CLGE Inc. and I.D. Marketing Solutions Inc., sends direct mail solicitations allegedly written by psychics David Phild, Sandra Rochefort, Antonia Donera and Nicholas Chakan.

“The complaints filed today charge that the companies and individuals made blatant misrepresentations in order to reap financial gain by scamming thousands of Americans, many of whom were elderly and in a vulnerable financial condition,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Our job at the Justice Department is to put a stop to fraud schemes that seek to take advantage of vulnerable Americans.”

The complaints allege that in the letters, the purported psychics state that they are contacting the recipient based on a specific vision or psychic reading revealing that the recipient has the opportunity to dramatically improve his or her financial circumstance, including claims of winning millions in the lottery.  The solicitation letters appear personalized, repeatedly referring to the recipient by first name and often containing portions that appear handwritten.  The solicitations urge victims to purchase various products and services in order to ensure that the foreseen good fortune comes to pass.  The complaints allege that in reality, the solicitations are identical, mass- produced form letters.  Victims responded to the solicitations by completing a form and submitting a payment, usually around $20 to $50, via U.S. mail.  Victims often also wrote personal, handwritten letters back to the purported psychics, which were never opened, and received worthless, mass-produced trinkets and further solicitations after sending these payments. 

“Relying on superstition and fear, the defendants defrauded tens of millions of dollars from thousands of vulnerable citizens,” said U.S. Attorney Loretta Lynch for the Eastern District of New York.  “We have, and will continue to, use all means at our disposal to protect our citizens from such schemes to defraud.”

“These mass solicitations containing purportedly personalized messages to unsuspecting victims were blatant fraud,” said Acting Inspector in Charge Troy Raper of the U.S. Postal Inspection Service's Criminal Investigation Group.  “Postal Inspectors aggressively investigate any operations that use the U.S. mail to fleece unsuspecting victims.”

Metro Data Management Inc., doing business as Data Marketing Group Ltd., a company on Long Island, New York, along with its president, Keitha Rocco, performed “caging” services on behalf of both mail fraud schemes.  According to the complaint, these services consisted of processing victim payments and maintaining databases of consumers who responded to the fraudulent solicitations.  The government alleges that Data Marketing Group processed as much as $500,000 in victim payments in a given two-week period for the Destiny Research Center scheme, resulting in annual gross receipts of at least $13 million.  The CLGE scheme brought in annual revenue of $1.5 to $2 million.  Evidence presented by the United States in support of its motion indicates that victims of the mail fraud schemes were elderly, ill and in perilous financial condition.

The government is seeking an injunction under the Anti-Fraud Injunction Statute immediately shutting down the fraudulent schemes in order to protect victims from further harm.  The injunctions sought by the United States would enjoin the defendants from using the mail to distribute the fraudulent solicitations or to collect victim payments, and from selling lists of consumers who have responded to the solicitations.  The injunctions would also authorize the U.S. Postal Service to detain any outgoing solicitations mailed by the defendants and any incoming responses to solicitations.   

The Justice Department’s case is being handled by the Civil Division’s Consumer Protection Branch and the U.S. Postal Inspection Service, in coordination with the U.S. Attorney’s Office in the Eastern District of New York.

The claims made in the complaints are allegations only, and there has been no determination of liability. 

Attorney General Eric Holder announced today that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder.  “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy.  And it shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”   

The amount is more than three times the $8 billion collected in FY 2013.  The largest civil collections were from affirmative civil enforcement cases, many of which were brought under the whistleblower provisions of the False Claims Act, in which the United States recovered government money lost to fraud or other misconduct or collected from  individuals and/or corporations for violations of federal health, safety, civil rights, tax, or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements.  It includes approximately $13.7 billion in payments made directly to the Justice Department, and $11 billion in indirect payments made to other federal agencies, states and other designated recipients.

In measuring collections recovered in FY 2014, this figure necessarily includes some cases that were resolved in previous years but the proceeds of which were collected in FY 2014.

The largest single source of collections came from civil penalties paid by financial institutions to resolve financial fraud claims stemming from the 2008 financial crisis, including significant amounts paid by JPMorgan and Citigroup Inc, to resolve federal and state civil claims related to the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS).  Both resolutions include record penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and in addition, also provide billions of dollars of relief to struggling homeowners.

Department collections also included hundreds of millions in fines from an ongoing   investigation into institutions involved in the manipulation of the London Interbank Offered Rate (LIBOR), including UBS Securities Japan Co. Ltd., and RBS Securities Japan Ltd., a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS).  Hundreds of millions in additional collections resulted from the department’s ongoing investigation into international price-fixing and bid rigging in the auto parts industry.  For instance, Bridgestone Corp., a company based in Tokyo, Japan, agreed to plead guilty and to pay a criminal fine for its role in a conspiracy to fix prices of automotive anti-vibration rubber parts installed in cars sold in the United States and elsewhere.

The department continued to make polluters pay to safeguard the environment and the taxpayer, collecting several multi-million dollar payments in connection with environmental cleanups.  This included a May 2014 settlement with Titanium Metals Corporation (TIMET) under which the titanium-parts manufacturer paid $14 million in civil penalties under the Toxic Substances Control Act (TSCA) and the Resource Conservation and Recovery Act (RCRA) and agreed to perform an extensive cleanup following the unauthorized manufacture and disposal of PCBs (polychlorinated biphenyls) at its manufacturing facility in Henderson, Nevada.

The department also collected millions in criminal penalties after resolving investigations into violations of the Foreign Corrupt Practices Act (FCPA). For instance, Diebold Inc., an Ohio-based provider of integrated self-service delivery and security systems, pleaded guilty to violating the FCPA by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.

On November 19, in the U.S. District Court for the Eastern District of Michigan, a federal jury after deliberating 4.5 hours convicted the president and founder of Happy’s Pizza of conspiracy to defraud the United States and 32 counts of tax crimes, the Justice Department announced today.

Happy Asker’s convictions include three counts of filing false federal individual tax returns for the years 2006 through 2008, 28 counts of aiding and assisting the filing of false federal income and payroll tax returns for several Happy’s Pizza Franchises restaurants for the years 2006 through 2009, and one count of engaging in a corrupt endeavor to obstruct and impede the administration of the Internal Revenue Code. 

During trial, the evidence established that Asker was the president, founder and public face of the Farmington Hills, Michigan, based Happy’s Pizza franchise.  He also had ownership interests in several Happy’s Pizza franchises located in Michigan, Ohio and Chicago.  From June 2004 through April 2011, Asker, along with certain franchise owners and employees, executed a systematic and pervasive tax fraud scheme to defraud the Internal Revenue Service (IRS).  Gross sales and payroll amounts were substantially underreported to the IRS on numerous individual corporate income tax returns and payroll tax returns submitted for nearly all 60 Happy’s Pizza franchise restaurants located in Michigan, Ohio and Illinois.  Evidence admitted at trial established that from 2008 to 2010, more than $6.1 million in cash gross receipts were diverted from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio.  In total, the evidence at trial established that Asker and certain employees and franchise owners failed to report to the IRS approximately $3.84 million of gross income from the various Happy’s Pizza franchises and approximately $2.39 million in payroll.  The evidence at trial further established that a portion of this unreported income was shared among most of the franchise owners, including Asker, in a weekly cash “profit split.”  The cash was distributed among the investors and managers of the relevant franchises.  The IRS is owed more than $6.2 million in taxes as a result of this fraud scheme.

The evidence at the two-week trial also established that Asker purposely misled IRS-Criminal Investigation special agents during voluntary interviews conducted on Nov. 5, 2010, and Dec. 1, 2010.  Asker denied knowing co-defendant Arkan Summa, a convicted felon, and did not disclose Summa’s association with a number of Happy’s Pizza franchise restaurants.  Documents admitted during trial indicate Summa shared in diverted gross receipts from at least one Happy’s Pizza franchise in Toledo, Ohio.

Four other defendants in the case pleaded guilty prior to Asker’s trial.  On October 23, Maher Bashi, who served as Happy’s Pizza’s corporate chief operating officer, and Tom Yaldo, an owner of numerous Happy’s Pizza franchises, pleaded guilty to conspiracy to defraud the United States.  According to the indictment, their conduct included, among other things, creating and maintaining fraudulent accounting records and falsely reporting income taxes and payroll taxes.  On July 15, Summa pleaded guilty to engaging in a corrupt endeavor to obstruct and impede the due administration of the IRS, and Tagrid Summa, who is identified as a Happy’s Pizza franchise owner in documents admitted during trial, pleaded guilty to providing false documents to the IRS.

At sentencing, Happy Asker faces a statutory maximum sentence of five years in prison and a $250,000 fine for conspiracy to defraud the government.  The charges of filing a false income tax return and aiding or assisting in filing a false return carry a statutory maximum sentence of three years in prison and a fine of $250,000 for each count.  The obstruction charge carries a statutory maximum sentence of three years in prison and a fine of $250,000.  Asker’s sentencing is scheduled for March 5, 2015, in the Eastern District of Michigan. 

The case was investigated by special agents from IRS-Criminal Investigation and the Drug Enforcement Agency.  Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald for the Justice Department’s Tax Division prosecuted the case. 

Michael Garcia, 38, a former detective with the Las Cruces Police Department (LCPD) in Las Cruces, New Mexico, was sentenced today for violating the civil rights of an LCPD student intern.  Garcia was sentenced to nine years in prison followed by five years of supervised release.  Garcia also was ordered to forfeit his law enforcement certification and comply with federal and state sex offender registration requirements.

Garcia pled guilty on April 17, 2014, to a one-count information charging him with violating the civil rights of the victim by sexually assaulting her.  At the time of the assault, Garcia was assigned to a unit that focused on child abuse and sex crimes investigations.  According to court documents, Garcia—in his role as a detective—worked with students who participated in Las Cruces High School’s Excel program, through which students interned at the LCPD.  On or about May 4, 2011, Garcia took the victim on a ride-along in his department-issued vehicle to visit a crime scene.  Afterward, instead of driving the victim directly back to the police department so that she could retrieve her belongings and go home, Garcia drove her to a secluded location where he sexually assaulted her.

“The defendant abused his authority as a sex crimes detective in the most horrific way, exploiting the victim’s trust in him to commit his egregious acts,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “The Civil Rights Division will continue to vigorously prosecute law enforcement officers who use the power of their position to engage in sexual abuse.  The victim showed tremendous bravery when she came forward, and we are thankful for the law enforcement officers in this case, as well as the vast majority of others, who support and help victims of crime.”

“Our system of justice is clear and unequivocal – every law enforcement officer must follow the laws they are sworn to enforce,” said U.S. Attorney Damon P. Martinez for the District of New Mexico.  “Any time a law enforcement officer breaks the law it undermines the public’s trust in the legal system, and we will do everything we can to ensure that trust is not compromised.”

“Law enforcement officers receive a lot of authority in order to serve their community, and the majority of them use that power wisely,” said Special Agent in Charge Carol K.O. Lee of the FBI’s Albuquerque Division.  “But when an officer tramples on the civil rights of someone he swore to protect, it's up to the FBI and our partners to make sure that violator is investigated and prosecuted to the full extent of the law.  I would like to thank the Las Cruces Police Department for assisting with this investigation, and congratulate the U.S. Attorney's Office on its successful prosecution.”

This case was investigated by the Las Cruces Resident Agency of Albuquerque Division of the FBI and the LCPD and was prosecuted by Assistant U.S. Attorney Holland S. Kastrin for the District of New Mexico and Trial Attorney Fara Gold of the Justice Department’s Civil Rights Division.

A Georgia woman pleaded guilty today to one count of conspiracy to commit wire fraud for her involvement in a stolen identity tax refund fraud (SIRF) scheme, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced.

Lashelia Alexander worked for a check cashing business in a Columbus, Georgia, Walmart, according to court documents.  In January 2014, Alexander was approached by several co-conspirators about cashing fraudulent tax refund checks issued in the names of third parties and in return, Alexander would receive a portion of the refunds.  Alexander’s co-conspirators electronically filed fraudulent and unauthorized federal income tax returns for 2013 using the personal identifying information of numerous identity theft victims.  Alexander’s co-conspirators printed out the fraudulent tax refund checks using check stock provided by a financial institution.  Alexander cashed more than $100,000 in fraudulently obtained third-party refund checks containing forged endorsements.

Alexander’s sentencing date has not yet been scheduled.  She faces a statutory maximum sentence of 20 years in prison and a maximum fine of $250,000 for the wire fraud conspiracy.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation.  Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown for the Middle District of Alabama.

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

A brokerage subsidiary of ConvergEx Group LLC was sentenced and ordered to pay a criminal penalty and restitution of $26 million for wire fraud and conspiracy to commit securities and wire fraud in connection with a scheme to charge clients millions of dollars in unwarranted and hidden fees. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Inspector in Charge Philip R. Bartlett of the U.S. Postal Inspection Service (USPIS) made the announcement.

“CGM Limited, a subsidiary of the global brokerage and trading firm ConvergEx, and certain executives and traders defrauded their clients by brazenly and repeatedly lying to them and then siphoning off millions of dollars through hidden fees,” said Assistant Attorney General Caldwell.  “But they didn’t get away with it.  Today’s sentence shows that the Justice Department will require financial companies to answer for taking advantage of their clients’ trust and violating the laws that protect investors in financial markets.”

“Today’s sentencing demonstrates that companies who hide earnings, fabricate transaction reports and provide clients with false details regarding their orders for the purpose of increasing their own bottom line will ultimately pay the price for their schemes,” said Assistant Director in Charge McCabe.  “The FBI will continue to work with our partners to investigate complex international financial crimes and send a message that complete transparency is a requirement in the global trading market.”

“Today’s sentencing is an example of the dedicated work of law enforcement to stop fraud wherever it may be, safeguarding the investments of consumers and protecting the integrity of the financial markets,” said Inspector in Charge Bartlett. 

ConvergEx Global Markets Limited (CGM Limited), a former broker-dealer registered in Bermuda, pleaded guilty on Dec. 18, 2013.  Together with its parent company, ConvergEx Group, which entered into a deferred prosecution agreement on Dec. 18, 2013, CGM Limited will pay a criminal penalty of approximately $18.0 million, forfeit approximately $12.8 million, and will pay defrauded customers approximately $12.8 million in restitution.  In total, CGM Limited and ConvergEx Group are paying $43.8 million in criminal penalties and restitution.  U.S. District Judge Jose L. Linares in the District of New Jersey imposed the sentence.

As CGM Limited admitted when it pleaded guilty, certain ConvergEx Group broker-dealers that provided commission-based brokerage services regularly routed securities trading orders to CGM Limited in Bermuda so that it could take a mark-up (an additional amount paid for the purchase of a security) or mark-down (a reduction of the amount received for the sale of a security) when executing the orders.  ConvergEx employees referred to such mark-ups and mark-downs as “spread,” “trading profits,” or “TP.” 

To hide the increased fees, traders at CGM Limited and sales traders at ConvergEx Group subsidiaries sent false transaction reports to clients with fabricated details, including the number of shares involved in a trade, the time at which a trade was executed, and the price at which shares were purchased or sold.  In total, CGM Limited took approximately $12.8 million in trading profits from these clients after it had sent the false statements to them.

CGM Limited admitted that its employees engaged in other fraudulent activities involving “spread.”  As one example, CGM Limited traders violated a client’s trading instructions to allow them to take spread on the client’s trades, and then an employee of another ConvergEx Group subsidiary offered the client false explanations for the trading activity.   

On Dec. 18, 2013, Jonathan Daspin, the head trader at CGM Limited, and Thomas Lekargeren, a sales trader at a different ConvergEx Group subsidiary, each pleaded guilty to conspiracy to commit securities and wire fraud. 

On Aug. 6, 2014, Anthony Blumberg, the former CEO of CGM Limited, and Craig Marshall, a former trader at CGM Limited, were charged with wire fraud and conspiracy to commit securities and wire fraud.  Blumberg was also charged with securities fraud.  The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty

As part of the deferred prosecution agreement with ConvergEx Group, the department highlighted ConvergEx Group’s extensive cooperation, including its robust internal investigation, and as well as its extensive remediation and enhanced compliance program and internal controls.

The case was investigated by the FBI’s Washington Field Office and the Washington, D.C. and New York offices of the USPIS.  The case is being prosecuted by Trial Attorneys Justin Goodyear, Jason Linder and Patrick Pericak of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Leslie Schwartz of the District of New Jersey.  Fraud Section Assistant Chief Robert Zink also assisted with the investigation. 

The SEC referred the matter to the Justice Department for investigation, and the department expresses its appreciation for the substantial assistance provided by the SEC.

A prominent Chicago businessman was sentenced today to serve six months in prison and six months home confinement, to be followed by one year supervised release and ordered to cooperate in paying taxes owed to the Internal Revenue Service (IRS) for willfully failing to file federal individual income tax returns, announced the Justice Department.

On June 12, a criminal information filed in the U.S. District Court for the Northern District of Illinois in Chicago alleged that Jamie Viteri had willfully failed to file individual income tax returns for tax years 2007, 2008 and 2009.  According to the plea agreement, Viteri earned substantial income that he did not report to the IRS from a company and a state agency.  Viteri’s gross income exceeded $270,000 in 2008 and $290,000 in 2009.  He was the president and chief executive officer of Viteri Inc., doing business as Chicago Latino Network (CLN), a solely owned media company focused on the Latino community in Chicago.  Viteri was also an employee and managing director of the Bureau of Entrepreneurship and Small Business at the Department of Commerce and Economic Opportunity, an Illinois state government agency. 

The case was investigated by special agents from IRS-Criminal Investigation and prosecuted by Trial Attorney Christopher Maietta of the Justice Department’s Tax Division.

Attorney General Eric Holder announced in a video today that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014.  The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

“Every day, the Justice Department’s prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Eric Holder.  “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy.  And as a result, I can report today that – during Fiscal Year 2014 – the Justice Department collected a total of $24.7 billion in civil and criminal actions.”

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

“Every day, the Justice Department’s prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people.  Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy.  And as a result, I can report today that – during Fiscal Year 2014 – the Justice Department collected a total of $24.7 billion in civil and criminal actions.

“That’s more than three times the $8 billion total the Department collected in 2013.  And it’s nearly eight and a half times the combined budgets of our 94 U.S. Attorneys’ Offices and all of our main litigating divisions.

“This year’s total includes every dollar collected as a result of Justice Department-led enforcement actions and negotiated civil settlements.  It comprises roughly $13 billion in payments made directly to the Justice Department, as well as $11 billion in indirect payments made to other federal agencies, states, and other recipients.  And it shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.

“In fact, the largest single source of collections during 2014 came from civil settlements to resolve financial fraud claims, including record penalties paid by JPMorgan and Citigroup.  These settlements also provide for billions of dollars of relief to struggling homeowners.

“As in past years, collections from civil and criminal health care fraud penalties – including hundreds of millions of dollars in fines from pharmaceutical companies accused of fraud, false claims, and drug safety violations – were among the largest sources of recovered funds.  And all across the country – from Wall Street to Main Street – the Justice Department’s robust criminal and civil efforts, in these and many other areas, have made a tremendous, positive difference in the lives of countless people.

“These achievements owe a great deal to the leadership of dedicated career attorneys and support staff members – in Washington and throughout the U.S. Attorney community – who serve the American people every day with integrity, with professionalism, and with steadfast commitment to the highest ideals of justice.  I want to thank each of them for their contributions, and their patriotic service, in securing these collections and returning stolen funds to the public coffers.

“In the days ahead, as this work goes on; as we plan for the next fiscal year; and as the new Congress begins its annual appropriations process early next year, I urge leaders from both parties to come together to increase investments in this critical work – so we can ensure that the Justice Department will continue to have the resources we need to build on these efforts, and keep serving the American people, in the months and years to come.”

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

An Alabama woman pleaded guilty Tuesday to one count of conspiracy to file false claims and one count of aggravated identity theft for her involvement in a stolen identity tax refund fraud (SIRF) scheme, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced.

Charnesha Alexander and her co-conspirators filed false tax returns using stolen identities between January 2011 and December 2013, according to court documents.  Alexander acquired stolen identities from various sources, including the identities of employees from a company in Columbus, Georgia.  Alexander and her co-conspirators also filed the false income tax returns in question using several Electronic Filing Identification Numbers issued in the names of sham tax businesses.  As a result, Alexander and her co-conspirators obtained possession of the fraudulent tax refunds in the form of U.S. Treasury checks, refund anticipation loan checks, and prepaid debit cards.  Alexander and her co-conspirators cashed the fraudulently obtained checks at several businesses located in Alabama.  Alexander also deposited fraudulent refund checks into a bank account that she controlled.

A sentencing date has not been scheduled for Alexander.  She faces a statutory maximum sentence of 10 years in prison for the conspiracy charge and an additional statutory mandatory sentence of two-years in prison for aggravated identity theft.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the U.S. Postal Service’s Office of the Inspector General.  Trial Attorneys Michael C. Boteler, Charles M. Edgar Jr. and Gregory Bailey of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown for the Middle District of Alabama.

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

The Department of Justice and United States Attorney’s Office reached a settlement agreement today with the DeKalb County, Georgia, school district to resolve the department’s inquiry into the district’s ability to prevent and effectively respond to peer-on-peer harassment based on national origin and religion. 

The agreement ensures that the more than 100,000 students in DeKalb County school district (DeKalb County) will be protected by clear and comprehensive anti-harassment policies and procedures in compliance with federal civil rights laws.  It also ensures that parents and students will have access to essential information, including discipline policies and procedures, in their preferred language. 

In May 2013, DeKalb County, the Department of Justice and the United States Attorney’s Office reached a settlement agreement that resolved specific allegations of religious and national origin harassment of a Sikh student.  At the time of the 2013 agreement, the Department of Justice, the United States Attorney’s Office and DeKalb County agreed to continue working collaboratively to resolve the remaining concerns regarding the content and implementation of the school district’s anti-harassment policies and the training of employees and students on such policies.  Since then, DeKalb County has worked with the Justice Department and the United States Attorney’s Office to develop a plan for enhancing anti-harassment protections and increasing access to information for all parents and students; today’s agreement is the result of that collaboration. 

The agreement requires, among other things, that the DeKalb County school district develop and implement annual age and position appropriate trainings on religious and national origin harassment for all students, staff who interact with students (including administrators, teachers, counselors, and bus drivers), and district-level administrators who interact with students or who are involved in addressing harassment or bullying in the district.  The training will include topics related to post-9/11 backlash and harassment that perpetuates negative stereotypes impacting the Sikh, Muslim, Arab-American and South Asian communities.

“We commend the DeKalb County School District’s commitment to ensuring that all students – including Sikhs, Muslims, Arabs, and South Asians – can grow and learn in a safe and supportive environment free from discrimination based on religion or national origin,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “DeKalb County school district has worked hand-in-hand with the department to identify and expand those policies that are successful at protecting kids while modifying those practices that need improvement, and we are confident that the district will continue its work to eliminate harassment in its schools.”    

“Every child should be able to attend school without the fear of being taunted and physically assaulted based on his religion or national origin,” said United States Attorney Sally Quillian Yates for the Northern District of Georgia.  “I am encouraged that DeKalb County School District has demonstrated a commitment to ensure that its schools are free of harassment.”

The enforcement of Title IV is a top priority of the DOJ’s Civil Rights Division.  Additional information about the Civil Rights Division of the DOJ is available on its website at www.justice.gov/crt.  

Assistant United States Attorney Aileen Bell Hughes handled this matter on behalf of the United States Attorney’s Office. 

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016.  The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.