District Not Recorded

The Justice Department announced today that it reached an agreement with Serendipity Hearing Inc., doing business as Sonus Hearing Care (Sonus), a hearing services provider headquartered in the Los Angeles, California, metropolitan area.  The agreement resolves a claim, filed with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), that the company violated the Immigration and Nationality Act (INA) by engaging in discriminatory documentary practices during the employment eligibility verification process.    

The department’s investigation found that Sonus required the complainant, a lawful permanent resident it had hired, to produce a new employment eligibility document when her Permanent Resident Card expired, even though the Form I-9 and E-Verify rules prohibit this practice because lawful permanent residents have permanent work authorization in the United States after their Permanent Resident Cards expire.  When the complainant failed to present her new Permanent Resident Card, Sonus terminated her.  The INA’s anti-discrimination provision prohibits employers from making additional and unauthorized documentary demands based on citizenship status or national origin when verifying or re-verifying an employee’s employment eligibility. 

“The Civil Rights Division is committed to identifying and tearing down discriminatory barriers that prevent work-authorized individuals from employment,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “The Division commends Sonus for working to resolve this matter expeditiously.”

Under the settlement agreement, Sonus will pay $16,727 in back pay to the charging party and $400 in civil penalties to the United States, undergo training on the anti-discrimination provision of the INA, revise its employment eligibility re-verification policies and be subject to monitoring of its employment eligibility verification practices.          

OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation.  This matter was handled by Trial Attorney Luz V. Lopez-Ortiz and Paralegal Specialist Ryan Thompson. 

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.

Today, the Justice Department announced that the Grand Jury for the Middle District of Georgia charged Miguel Angel Reyes and Gloria Gallego with conspiring with former Lowndes County Sheriff’s Deputy Jason Stacks to use Stacks’ law enforcement authority to violate Hispanic motorists’ civil rights, as well as with actually carrying out the scheme.  The indictment was unsealed for Reyes yesterday and for Gallego today.

The indictment charges that Reyes and Gallego conspired with Stacks to subject Hispanic motorists to unlawful traffic stops so that the conspirators could demand that the motorists pay money in order to avoid arrest and/or deportation, in violation of the motorists’ right under the Fourth Amendment of the U.S. Constitution to be free from unreasonable seizures of person and property.  The indictment also charges Reyes and Gallego with working with Stacks to unlawfully stop motorist T.C., and to use the threat of arrest and/or deportation to take $300 from T.C. 

Additionally, the indictment charges Reyes with working with Stacks to detain motorist E.B. without probable cause or reasonable suspicion, in order to facilitate a robbery of E.B.’s home, in violation of E.B.’s rights under the Fourth Amendment of the U.S. Constitution to be free from unreasonable seizures of his person.

The civil rights conspiracy charge against Reyes and Gallego carries a maximum penalty of 10 years imprisonment.  The two substantive civil rights charges against Reyes each carry a maximum penalty of one year imprisonment, and the one substantive civil rights charge against Gallego carries a maximum penalty of one year imprisonment.  

This case is being investigated by the Federal Bureau of Investigation, with assistance from the Lowndes County Sheriff’s Office.  The matter is being prosecuted by Trial Attorney Risa Berkower of the Justice Department’s Civil Rights Division, with support from the U.S. Attorney’s Office for the Middle District of Georgia.

An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.

The former mayor of the municipality of Río Grande, Puerto Rico, pleaded guilty today to soliciting and receiving approximately $39,000 in cash bribes from a contractor who sought to be awarded three construction inspection contracts with the municipality of Río Grande.

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

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

Rivera-Correa pleaded guilty before U.S. Magistrate Judge Marcos E. López to one count of bribery.  Rivera-Correa was arrested on July 10, 2014, after being indicted by a federal grand jury.  His sentencing will be scheduled at a later date.

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

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

The Justice Department announced today that First RF Corporation (First RF), an antenna and radio system company located in Boulder, Colorado, has agreed to pay $10 million to settle allegations that it violated the False Claims Act by submitting inflated  claims for electronic warfare antennas sold to the U.S. Army to combat Improvised Explosive Devices.

“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The Justice Department will take action where contractors make false statements to inflate the price of goods or services sold to the government.”

The settlement announced today resolves the United States’ investigation into First RF’s conduct in connection with a 2005 Army contract for the sale of electronic warfare antennas.  Specifically, the United States alleged that First RF knowingly submitted false data to the Army that misrepresented First RF’s cost to manufacture the antennas, and thereby inflated the price for the antennas and the payments First RF received for them. 

“When defense contractors supply our armed forces with equipment, those contractors must be absolutely truthful in their price negotiations,” said U.S. Attorney John Walsh for the District of Colorado.  “It is no excuse for dishonesty that the military equipment was urgently needed.  Defense contractors that fail to act with integrity in such negotiations should know that they will face consequences.”

“The Defense Criminal Investigative Service (DCIS) is committed to ensuring the integrity of the Defense Department’s procurement process,” said Special Agent-in-Charge Janice M. Flores of the DCIS Southwest Field Office located in Arlington, Texas.  “Contractors such as FRF are expected to comply with their statutory obligations and act in good faith when dealing with the U.S. government and this settlement demonstrates that companies will be held accountable for their actions.”  

“Our men and women in uniform are putting their lives on the line daily around the world, and the U.S. Army relies heavily on the contracting process to bring the very best to our service men and women,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.  “Shortchanging our troops or the American taxpayers in any way, shape or form will not be tolerated and we are committed to investigating all allegations of possible fraud or misrepresentation of costs with great interest.”

This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Colorado and the Defense Criminal Investigative Service.

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

A Dothan, Alabama, woman was sentenced to serve 34 months in prison by the Honorable Judge Myron H. Thompson of the U.S. District Court for the Middle District of Alabama in connection with her role in committing stolen identity tax refund fraud, announced Acting Deputy Assistant Attorney General Larry Wszalek of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.

On July 16, a jury found Nina Macena, 32, guilty of conspiring to defraud the government through the filing of false tax returns, three counts of wire fraud and three counts of aggravated identity theft. U.S. District Court Judge Thompson also ordered Macena to pay restitution in the amount of $109,480.

According to court documents and evidence from the trial, Macena provided stolen identities to Ivory Bolen, also of Dothan, who used the identities to file false tax returns that fraudulently requested refunds from the Internal Revenue Service (IRS).  Bolen would attempt to have the refunds deposited onto prepaid debit cards, which would be mailed to addresses controlled by Bolen and Macena.  Macena obtained the identities from Roderick Neal, a former bail bondsman in Dothan, who had access to the personal information of individuals who had been detained at the Dothan City Jail.  Both Bolen and Neal previously pleaded guilty to their involvement in the scheme.   Altogether, Bolen filed tax returns claiming more than $300,000 in refunds using the stolen identities that Macena provided, butthe IRS successfully stopped a number of the fraudulent returns.  Macena was ultimately convicted by the jury on all counts in the indictment.

Macena testified in her own defense at trial and admitted that she had obtained information from Neal for Bolen, but claimed that she was unaware of the nature of the information.  She also testified that she stored items for Bolen in her storage unit but that she was unaware of what she was storing.  At sentencing, the judge found that her testimony was not credible and consequently increased her prison time.

This case was investigated by special agents of the IRS-Criminal Investigation.  Trial Attorneys Jason Poole and Charles M. Edgar Jr. of the Tax Division prosecuted the case with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama.

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

A California woman pleaded guilty today for her role in a half-million-dollar “sweepstakes fraud” scheme that was run from Costa Rica and targeted U.S. residents.  A Costa Rican national and an Ohio resident were also indicted for their roles in separate but similar schemes earlier this week.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Anne M. Tompkins of the Western District of North Carolina made the announcement.

Patricia Diane Clark, 56, of Sacramento, California, pleaded guilty today before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina to conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, all in connection with a Costa Rican telemarketing fraud scheme that targeted U.S. residents. 

According to Clark’s plea agreement, from approximately 2007 through February 2013, her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a “sweepstakes.”  The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.”  Clark admitted that she picked up money from the victims and sent it to her co-conspirators in Costa Rica.  Clark also admitted that she managed others who picked up money from the victims in the United States and that she kept a portion of the victims’ payments.

Also according to Clark’s plea agreement, once the victims sent money, Clark’s co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified.  The victims then had to send additional money to pay for new purported fees to receive the now larger sweepstakes prize.  The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme. 

Clark admitted that, along with her co-conspirators, she was responsible for approximately $640,000 in losses to hundreds of U.S. citizens.   

Additionally, earlier this week, Marco Vinicio Fallas Hernandez, 41, a Costa Rican citizen, was charged in a superseding indictment in the Western District of North Carolina with one count of conspiracy to commit wire fraud, ten counts of wire fraud, one count of conspiracy to commit money laundering, and nine counts of international money laundering in connection with a similar telemarketing scheme.  According to the indictment, Hernandez and his co-conspirators were responsible for causing approximately $10,000,000 in losses to hundreds of U.S. citizens, many of whom are elderly.  Eight individuals, including Hernandez, are charged in the superseding indictment. 

Separately, Paul Ronald Toth Jrj., 38, a resident of Bloomingdale, Ohio, was indicted in the Western District of North Carolina this week on one count of conspiracy to commit money laundering and six counts of international money laundering.  According to the indictment, between November 2009 and November 2010, Toth and others he supervised received money from victims of a Costa Rican telemarketing scheme.  Toth allegedly kept some of the proceeds and wired the remainder to Costa Rica using numerous persons as senders and recipients, all in a manner designed to conceal and disguise the fraudulent source and nature of the transactions.  Toth is alleged to have received more than $300,000 of illegal proceeds during the scheme. 

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

These cases were investigated by the U.S. Postal Inspection Service, FBI, Internal Revenue Service, Federal Trade Commission, and Department of Homeland Security.  These cases are being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorneys William Bowne and Anna Kaminska of the Criminal Division’s Fraud Section. 

The owners of Out of Africa Adventurous Safaris were charged with conspiracy to sell illegal rhinoceros hunts in South Africa in order to defraud American hunters, money laundering and secretly trafficking in rhino horns, announced Sam Hirsch Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division; George L. Beck, Jr., U.S. Attorney for the Middle District of Alabama; and Dan Ashe, Director of the U.S. Fish & Wildlife Service.  The indictment was unsealed today in Montgomery, Alabama following the federal indictment. 

The indictment charges Dawie Groenewald,  46, and his brother, Janneman Groenewald, 44, both South African nationals, and their company Valinor Trading CC (d/b/a Out of Africa Adventurous Safaris) with conspiracy, Lacey Act violations, mail fraud, money laundering and structuring bank deposits to avoid reporting requirements.   The Lacey Act, the nation’s oldest criminal statute addressing illegal poaching and wildlife trafficking, makes it a crime to sell animal hunts conducted in violation of state, federal, tribal and foreign law. 

According to the 18-count indictment, from 2005 to 2010, the Groenewald brothers traveled throughout the United States to attend hunting conventions and gun shows where they sold outfitting services and accommodations to American hunters to be conducted at their ranch in Mussina, South Africa.  During the time period covered by the indictment, Janneman Groenewald lived in Autauga County, Alabama, where Out of Africa maintained bank accounts and is accused of money laundering and structuring deposits to avoid federal reporting requirements.  Hunters paid between $3,500 and $15,000 for the illegal rhino hunts.

The defendants are charged with selling illegal rhino hunts by misleading American hunters.  The hunters were told the lie that a particular rhino had to be killed because it was a “problem rhino.”  Therefore, while no trophy could be legally exported, the hunters could nonetheless shoot the rhino, pose for a picture with the dead animal, and make record book entries, all at a reduced price.  Meanwhile, the defendants are alleged to have failed to obtain necessary permits required by South Africa and cut the horns off some of the rhinos with chainsaws and knives. 

The indictment alleges that the defendants then sold the rhino horn on the black market.  Eleven illegal hunts are detailed in the papers filed in federal court, including one in which the rhino had to be shot and killed after being repeatedly wounded by a bow, and another in which Dawie Groenewald used a chainsaw to remove the horn from a sedated rhino that had been hunted with a tranquilizer gun.  The American hunters have not been charged.

“We are literally fighting for the survival of a species today.  In that fight, we will do all we can to prosecute those who traffic in rhino horns and sell rhino hunts to Americans in violation of foreign law,” said Sam Hirsch, Acting Assistant Attorney General for the Environment and Natural Resources Division.  “This case should send a warning shot to outfitters and hunters that the sale of illegal hunts in the U.S. will be vigorously prosecuted regardless of where the hunt takes place.” 

“These defendants tricked, lied and defrauded American citizens in order to profit from these illegal rhinoceros hunts,” stated U.S. Attorney Beck.  “Not only did they break South African laws, but they laundered their ill-gotten gains through our banks here in Alabama. We will not allow United States’ citizens to be used as a tool to destroy a species that is virtually harmless to people or other animals.”    

“The fact that defendants used American hunters to execute this scheme is appalling - but not as appalling as the brutal tactics they employed to kill eleven critically endangered wild rhinos,” said FWS Director Ashe. “South Africa has worked extraordinarily hard to protect its wild rhino population, using trophy hunts as a key management tool. The illegal ‘hunts’ perpetrated by these criminals undermine that work and the reputation of responsible hunters everywhere.”

Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.   Adult rhinoceros have no known natural predators.  All species of rhinoceros are protected under United States 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.  Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population.  Like hair or finger nails, rhino horn is actually composed of keratin and has no proven medical efficacy.  As a result, rhino populations have declined by more than 90 percent since 1970.  South Africa, for example, has witnessed a rapid escalation in poaching of live animals, rising from 13 in 2007 to a record 1004 in 2013.  Illegally killed rhinos like the ones charged in this prosecution are not included in the published statistics of poached animals.

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 of Out of Africa is part of Operation Crash (named for the term “crash” which describes a herd of rhinoceros), an ongoing nation-wide effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns led by the Special Investigations Unit of the Fish and Wildlife Service Office of Law Enforcement in coordination with the U.S. Department of Justice.  Thus far there have been 26 arrests and 18 convictions with prison terms as high as 70 months. (See attached Crash Fact Sheet).  Throughout the course of the investigation on the current charges, U.S. authorities received substantial cooperation from South Africa’s National Prosecuting Authority and a specialized endangered species unit within the organized crime unit of the South African Police Service.  That unit is known as the Hawks.  Additional assistance has been provided in this case by the Bureau of Alcohol, Tobacco and Firearms, in Montgomery, Alabama and the Autauga County, Alabama Sheriff’s Office.  The Out of Africa case is being prosecuted in the Middle District of Alabama by Assistant U.S. Attorney Brandon K. Essig and by Richard A. Udell, Senior Litigation Counsel with the Environmental Crimes Section of the U.S. Department of Justice in Washington, D.C.  The Out of Africa investigation is continuing.     

The Criminal Division’s Office of International Affairs provided assistance.

Rhino Indictment

Opeartion Crash Summary

A certified public accountant (CPA) from Dayton, Ohio, was sentenced today to serve 12 months and one day in prison to be followed by one year of supervised release by U.S. District Judge Edmund A. Sargus Jr. in Columbus, Ohio, on tax charges, announced the Justice Department and Internal Revenue Service (IRS). 

Larry E. Couchot, 59, who is the president and part owner of a CPA firm in Centerville, Ohio, was also ordered to pay $40,711 in restitution and a $10,000 fine, and to serve four months of community confinement followed by two months of home confinement following his prison term.  Couchot’s sentencing today follows the sentencing of three of his tax clients, Jon B. Field, of Dublin, Ohio, Paul A. Butler, also of Dublin, and Eric P. Schilder, of Marion, Ohio, who were all associated with Cadillac Ranch restaurants.  

On June 5, 2014, Couchot pleaded guilty to two tax fraud charges and admitted that he assisted in the preparation of false individual income tax returns for his clients Jon B. Field, Butler and Schilder, which caused a tax loss of over $191,000 to the IRS.  Jon B. Field, along with his associates Butler and Schilder and his brother Joel Field, owned and operated the Cadillac Ranch restaurant enterprise.

Joel A. Field also pleaded guilty to tax charges earlier this year, but his tax charges were unrelated to Couchot.  His sentencing is scheduled to take place in November.

According to the documents filed with the court, during 2006 through 2010, Couchot prepared false federal income tax returns for his clients Jon B. Field, Butler and Schilder.  According to the court filing, the three clients used a substantial amount of company funds for personal purposes, which included payments for their personal cars, car insurance, country club dues and their individual income tax liabilities.  In addition, the individuals made substantial charges for personal purposes on credit cards that were paid for with company funds.  Couchot also admitted that he believed that Jon B. Field used company funds to pay for personal expenditures including lawn services, repairs and maintenance to personal residences, granite counter tops, TV and audio systems, and other expenditures that were personal in nature. 

Couchot admitted that he prepared false tax returns for these individuals which failed to report all of the above personal expenditures as income on the individuals’ income tax returns.  Couchot pleaded guilty to aiding and assisting in the preparation of a false income tax return for the year 2009 for Jon B. Field, and to preparing a false income tax return for Schilder for the year 2007 which reported only $68,000 of income despite the fact that the business records of the company showed that Shilder earned over $129,000 in that year.  Couchot admitted that after the false return was filed with the IRS on behalf of Schilder, he created a false summary which he retained in his records to support the false income of $68,000.  The clients were sentenced for their crimes by Judge Sargus earlier this year, and Jon B. Field was sentenced to serve time in jail for his conduct.

These cases were investigated by the IRS-Criminal Investigation and are being prosecuted by Trial Attorney Richard M. Rolwing and Senior Litigation Counsel John E. Sullivan of the Justice Department’s Tax Division.  Additional information about the Tax Division and its enforcement efforts may be found on the division website.  Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.

Today, two West Bloomfield, Michigan, residents pleaded guilty to tax fraud in the U.S. District Court for the Eastern District of Michigan, announced the Justice Department and Internal Revenue Service (IRS). 

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. 

A multiple count indictment was unsealed July 16, 2013, alleging that from approximately June 2004 through April 2011, Bashi, Yaldo and others conspired to divert business receipts, underreport wages and understate the true income and expenses of specified Happy’s Pizza franchises.  According to the indictment, the scheme resulted in the specified franchises paying more than $2.1 million in unreported wages to employees and shareholders.

Documents filed with the court indicate Bashi, Yaldo and others executed a scheme which systematically underreported the taxable income and payroll taxes of Happy’s Pizza franchises to the IRS and distributed the resulting gain among the conspirators and other Happy’s Pizza franchise partners.  Additionally, documents filed with the court indicate Yaldo caused at least three Happy’s Pizza franchises in which he held an ownership interest to file false corporate income tax returns in 2008 and 2009 that underreported a total of more than $1,581,000 in gross receipts.  According to the plea agreement, Bashi and Yaldo will pay restitution to the IRS for unpaid income taxes and employment taxes.

Bashi and Yaldo each face a statutory maximum sentence of five years in prison and a fine of up to $250,000. 

This case was investigated by IRS – Criminal Investigation, the Drug Enforcement Administration and the FBI.  It is being prosecuted by Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division.

A Robert, Louisiana, woman was sentenced today to serve 87 months in prison for filing false tax returns, corruptly endeavoring to obstruct or impede the Internal Revenue Service (IRS) and aggravated identity theft, announced the Justice Department and IRS. 

Hazel M. McGary, 46, aka Hazel M. Alexander and Hazel M. Kimble, was also ordered to serve two years of supervised release following her prison term and to pay $148,673 in restitution to the IRS. 

According to court documents, from 2008 through November 2013, McGary owned and operated a series of tax preparation businesses under different names, including Just for You Services, Just For Taxes and H&H Unlimited Services, in Hammond, Albany, Baton Rouge and Covington, Louisiana.  In 2012, McGary’s tax preparation location in Albany operated as a business where clients were permitted to drive their cars to a drive-through window in order to have their tax returns prepared. 

As part of her plea agreement, McGary admitted that she prepared and filed false returns that claimed artificially high tax refunds, primarily by abusing the Earned Income Tax Credit.  Court documents further show that McGary obtained electronic filing numbers from the IRS using the names and social security numbers of other individuals in an effort to hide her fraudulent activity.  McGary falsely listed these other individuals’ names and identification numbers on the returns she filed but did not identify herself as the preparer.  McGary further filed at least one false return in her own name on which she failed to include tax preparation fees she received as income.

Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division would like to thank IRS-Criminal Investigation, in partnership with the Louisiana State Police, who investigated the case, and Trial Attorneys Hayden Brockett and Kevin Lombardi of the Tax Division, who prosecuted the case.

Hakim J. Sutton, 33, of Washington, D.C., pleaded guilty today to evading income taxes and violating campaign finance laws while working as the treasurer and custodian of records for a District of Columbia political campaign.

The guilty plea, in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen Jr., Acting Deputy Assistant Attorney General Larry J. Wszalek for the Department of Justice’s Tax Division, Chief Cathy L. Lanier of the Metropolitan Police Department (MPD) and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington Field Office.

Sutton pleaded guilty to one count of income tax evasion, a federal offense, and one count of knowingly filing a false and misleading campaign finance report, a violation of District of Columbia law.  The Honorable Judge Richard J. Leon scheduled sentencing Feb. 4, 2015.  Under the applicable sentencing guidelines, the parties have agreed that Sutton faces a likely range of 10 to 16 months in prison and a fine of up to $30,000 for federal income tax evasion, and a likely range of six to 24 months in prison for knowingly filing a false or misleading campaign finance report.  The plea agreement also calls for Sutton to pay full restitution of $18,231 in taxes and interest to the IRS.

According to a statement of offense, signed by the defendant as well as the government, Sutton was the principal owner of the Sutton Group, which performed political consulting services in the District of Columbia and elsewhere.  In 2011 and 2012, Sutton served as the treasurer and custodian of records for the campaign of Michael A. Brown, a candidate seeking re-election to an at-large seat on the District of Columbia Council.  Brown ultimately lost in the November 2012 election.

Between July 2011 and May 2012, Sutton diverted approximately $115,250 from the campaign bank account to himself by depositing the funds drawn from the campaign bank account into his own personal bank accounts and converting funds drawn from the campaign bank account to cash.  All told, Sutton wrote 36 checks payable to himself.

According to the statement of offense, some, but not all, of the money that Sutton diverted was compensation for Sutton’s work on the campaign.  However, Sutton failed to file income tax returns for calendar years 2011 and 2012.  He owes a total of $17,180 in federal income taxes for those years along with an additional $1,051 in interest.

Sutton also omitted references to the checks that he had written to himself in a series of six reports he filed in 2011 and 2012 with the District of Columbia Office of Campaign Finance.

This case was investigated by the MPD and IRS-CI.  It was prosecuted by Assistant U.S. Attorney David A. Last and former Assistant U.S. Attorney Bryan Seeley of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Kenneth C. Vert of the Tax Division.  Assistance was provided by Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section, Legal Assistant Angela Lawrence, Paralegal Specialist Tasha Harris, former Paralegal Specialist Nicole Wattelet and Criminal Investigator John Marsh, all of the U.S. Attorney’s Office for the District of Columbia.

Four former security guards for Blackwater USA were found guilty today of charges stemming from the Sept. 16, 2007, shooting at Nisur Square in Baghdad, Iraq, that resulted in the killing of 14 unarmed civilians and the wounding of numerous others.

The jury verdicts, in the U.S. District Court for the District of Columbia, were announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office.

The defendants include Nicholas Abram Slatten, 30, of Sparta, Tenn.; Paul Alvin Slough, 35, of Keller, Texas; Evan Shawn Liberty, 32, of Rochester, N.H.; and Dustin Laurent Heard, 33, of Maryville, Tenn. Slatten, who was accused of firing the first shots, was found guilty of one count of first-degree murder. Slough was found guilty of 13 counts of voluntary manslaughter, 17 counts of attempted manslaughter, and one firearms offense. Liberty was found guilty of eight counts of voluntary manslaughter, 12 counts of attempted manslaughter, and one firearms offense. Heard was found guilty of six counts of voluntary manslaughter, 11 counts of attempted manslaughter, and one firearms offense.

“This verdict is a resounding affirmation of the commitment of the American people to the rule of law, even in times of war,” said U.S. Attorney Machen.  “Seven years ago, these Blackwater contractors unleashed powerful sniper fire, machine guns, and grenade launchers on innocent men, women, and children. Today they were held accountable for that outrageous attack and its devastating consequences for so many Iraqi families. I pray that this verdict will bring some sense of comfort to the survivors of that massacre. I want to thank the prosecutors and law enforcement agents who have fought for the past seven years to bring justice to the memories of those who were gunned down in Nisur Square.” 

“Today’s verdict demonstrates the FBI's dedication to investigating violations of U.S. law no matter where they occur,” said Assistant Director in Charge McCabe. “International investigations such as this one are very complex and frequently dangerous. This case took a tremendous amount of coordination to bring over a large number of foreign witnesses in support of this prosecution. I commend the FBI Special Agents, Task Force Officers, Intelligence Analysts and Language Specialists and our partners at the U.S. Attorney’s Office for working to bring those responsible to justice and conveying some measure of comfort to the victims’ families in Iraq.”

The verdicts came on the 28th day of jury deliberations and followed more than two months of trial. The Honorable Senior Judge Royce C. Lamberth ordered that the four defendants be detained pending sentencing. A sentencing date has not yet been set.

The murder charge against Slatten calls for a mandatory sentence of life in prison. Each of the voluntary manslaughter counts against the other defendants carries a statutory maximum of 15 years in prison. Each of the attempted manslaughter counts carries a statutory maximum of seven years of incarceration. The weapons offense carries a mandatory 30-year prison sentence.

Another Blackwater security guard, Jeremy P. Ridgeway, pled guilty in December 2008 to voluntary manslaughter and attempt to commit manslaughter. Ridgeway, who testified as a government witness in the trial, has not yet been sentenced.

The defendants worked for Blackwater USA, a private security contractor that was paid by the U.S. government to provide protective services to U.S. officials.

The trial began June 17, 2014. Over the next 10 weeks, the government presented testimony from 71 witnesses, including 30 from Iraq. This represented the largest group of foreign witnesses ever to travel to the United States for a criminal trial. The witnesses included 13 people who were wounded in the shootings, as well as relatives of many of those who died. The government’s witnesses also included nine members of “Raven 23,” the Blackwater team that was on the scene on the day of the shootings.

According to the government’s evidence, at approximately noon on Sunday, Sept. 16, 2007, several Blackwater security contractors, including the four defendants, opened fire in and around Nisur Square, a busy traffic circle in the heart of Baghdad. When they stopped shooting, 14 Iraqi civilians were dead. Those killed included 10 men, two women, and two boys, ages 9 and 11. Another 18 victims were injured.

The four defendants and 15 other Blackwater security contractors were assigned to a convoy of four heavily-armed trucks known as a Tactical Support Team, using the call sign “Raven 23.” Shortly before noon, Raven 23 learned that a car bomb had detonated in central Baghdad near a location where a U.S official was being escorted by a Blackwater personal security detail team. Raven 23 team members promptly reported to their convoy vehicles, and the convoy drove to a secured checkpoint between the Green Zone and Red Zone.

Once there, in disregard of an order from Blackwater’s command, the team’s shift leader directed Raven 23 to leave the Green Zone and establish a blockade in Nisur Square, a busy traffic circle that was immediately adjacent to the Green Zone. While occupying the southern part of the traffic circle, seven of the 19 members of Raven 23, including the four defendants and Ridgeway, fired their weapons, resulting in the deaths or injury of the unarmed Iraqi civilians there. While leaving the traffic circle, Slough continued to fire his weapon, resulting in additional deaths and injuries.

Finally, further away, north of the traffic circle, Slough and Ridgeway again fired their weapons, resulting in the injury of three more unarmed Iraqi civilians.

The first to be killed was Ahmed Haithem Ahmed Al Rubia’y, 21, an aspiring doctor, who was driving his mother to an appointment. His mother, Mahassin Mohssen Kadhum Al-Khazali, 44, a medical doctor, also was killed. Others who died included Ali Mohammed Hafedh Abdul Razzaq, 9, who was traveling with his family; Osama Fadhil Abbas, 52, a businessman who sold used cars and who was enroute to a business meeting; Mohamed Abbas Mahmoud, 47, a delivery truck driver, and his 11-year-old son, Qasim Mohamed Abbas Mahmoud; Sa’adi Ali Abbas Alkarkh, 52, a businessman; Mushtaq Karim Abd Al-Razzaq, 18, an Iraqi soldier who was standing at a military checkpoint; Ghaniyah Hassan Ali, 55, who was traveling with her daughter on a public bus, and who was in the area to get documentation for a trip to holy sites; Ibrahim Abid Ayash, 77, a gardener, who was traveling in another bus; Hamoud Sa’eed Abttan, 33, and his cousin, Usday Ismail Ibrahiem, 27, who were out looking for work with the Iraqi Army; Mahdi Sahib Nasir, 26, a taxi driver, and Ali Khalil Abdul Hussein, 54, a motorcyclist who was commuting to work.

The jury considered charges involving injuries to 14 men and three women. Because of travel issues, witnesses to support an 18th charge of attempted manslaughter did not appear at the trial, and the charge related to that victim’s injuries was dismissed by the government. 

This case was investigated by the FBI’s Washington Field Office. The Iraqi Ministry of Interior and the Iraqi National Police provided cooperation and assistance in the investigation.

The case was prosecuted by Assistant U.S. Attorneys Anthony Asuncion, John Crabb, Jr., Christopher R. Kavanaugh, T. Patrick Martin, and David Mudd, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia. The case was originally indicted by Assistant U.S. Attorneys Jonathan M. Malis and Kenneth Kohl.

The founder of three Detroit-area home health agencies pleaded guilty today in federal court for his role in a $22 million home health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office made the announcement.

Tayyab Aziz, 45, of Homer Glen, Illinois, pleaded guilty today before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  His sentencing is scheduled for March 3, 2015.

According to admissions in his plea agreement, Aziz founded three Detroit-area home health care agencies, Prestige Home Health Services Inc. (Prestige), Royal Home Health Care Inc., and Platinum Home Health Services Inc. (Platinum).  Using these companies, Aziz admitted that he orchestrated a conspiracy to defraud Medicare through fraudulent billings for home health care services.   

Specifically, Aziz admitted that he and his co-conspirators submitted fraudulent claims to Medicare for services that were medically unnecessary or never performed.  They also submitted claims for services purportedly provided to Medicare beneficiaries who were recruited through illegal kickbacks paid to the patients and recruiters.  To conceal the fraud, Aziz admitted that he and his co-conspirators created fictitious physical therapy files to document physical therapy and other services that had not actually been provided and were not medically necessary.  Aziz also created and submitted falsified records to the Michigan Community Health Accreditation Program (CHAP) in order for Prestige and Platinum to remain accredited Medicare providers. 

As a result of Aziz’s fraudulent conduct, Medicare paid approximately $1,915,513.  Five of six other defendants in this case have also previously pleaded guilty.

This case was investigated by the FBI, HHS-OIG and IRS-CI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald of the Criminal Division’s Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

An order of permanent injunction against The Zaken Corp. of Thousand Oaks, California, and company president Tiran Zaken, of Calabasas, California, was entered today by U.S. District Court Judge Dean D. Pregerson, finding that they made false and misleading statements in marketing work-at-home business opportunities and promising commissions to consumers, the Justice Department announced.  In a written opinion entered Sept. 18, the court found that 110,000 consumers had bought the defendants’ program and “more than 99.8 percent never earned any commission whatsoever.”  The court ordered the defendants to pay $25,406,781 as redress for consumer injury.

“This order reflects the Department of Justice’s commitment to protecting consumers from fraud schemes,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Those who take advantage of Americans searching for an honest day’s work, depriving them of their savings, will be held accountable.”

The Zaken Corp. sold consumers a “Wealth Building Home Business Plan” called QuikSell.  For an initial investment of $148, consumers became Associates of QuikSell Liquidations and received a manual including instructions on how to locate excess inventory.  The defendants represented that once purchasers of the opportunity identified businesses interested in selling excess inventory, The Zaken Corp. would find a buyer for the inventory.  If The Zaken Corp. succeeded in negotiating a sale of the inventory, it promised to give the associate a “commission” equal to half the profit on the sale. 

The Zaken Corp. and Tiran Zaken lured customers with claims that purchasers of their program could expect that “two to four hours a week working this business will earn participants an average of $3,000 to $6,000.”  They further claimed that “the average commission checks associates get … will be approximately $4,280!”  In the court’s written decision, Judge Pregerson of the Central District of California found that “fewer than one percent of consumers ever earned any income at all.” 

Once consumers purchased the QuikSell program, they were inundated with advertisements to purchase additional business “tools” costing hundreds or thousands of dollars.  The court found that consumers were encouraged to spend an additional $2,300 if they were “serious about this business and … really wanted to make the kind of money others have made.”  However, after making this additional investment, consumers received only a directory consisting of “largely outdated telephone numbers of companies who were out of business.”

The court found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission Act by making false claims regarding the earnings potential of QuikSell.  The court also found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission (FTC)’s Business Opportunity Rule, which requires sellers of business opportunities to provide specific, truthful information to help consumers evaluate a business opportunity prior to purchase.  The FTC promulgated an updated Business Opportunity Rule in 2012, in order to protect consumers from exactly this sort of work-at-home scheme, in which sellers lure victims with false representations of substantial earnings.

Pursuant to the injunction issued by the court, The Zaken Corp. and Tiran Zaken are permanently banned from advertising or selling any work-at-home opportunity or business opportunity.

This case was brought by the Department of Justice as part of “Operation Lost Opportunity,” a sweep of business opportunity fraud cases coordinated by the FTC.  Trial Attorneys Ann Entwistle and Lisa Hsiao of the Justice Department’s Consumer Protection Branch litigated this case with support from Dana Barragate of the FTC’s East Central Region, the FTC’s Division of Marketing Practices and Assistant U.S. Attorney Anoiel Korshid in the Central District of California. 

The Executive Office for Immigration Review’s (EOIR) Office of Legal Access Programs (OLAP), formerly known as the Legal Orientation and Pro Bono Program, was established in April 2000 to improve access to legal information and counseling and to increase representation rates for foreign-born individuals appearing before the immigration courts and Board of Immigration Appeals (BIA). OLAP is responsible for administering the Legal Orientation Program, the Legal Orientation Program for Custodians of Unaccompanied Alien Children, and the BIA Pro Bono Project. OLAP also coordinates EOIR’s Committee on Pro Bono, the Model Hearing Program, and other initiatives which improve access to legal services for individuals appearing before EOIR’s tribunals.

Legal Orientation Program

Since 2003, EOIR has carried out the LOP to improve judicial efficiency in the immigration courts, and to assist detained individuals and others involved in detained removal proceedings to make timely and informed decisions. Under the LOP, EOIR contracts with non-profit organizations to provide group and individual orientations, self-help workshops, and pro bono referral services for detained individuals in removal proceedings. LOP is operational mainly at detention sites, but it also serves certain sites with non-detained individuals and certain family detention centers.

Independent analysis has shown that the LOP has positive effects on the immigration court process: detained individuals make better informed and more timely decisions and are more likely to obtain representation; and cases are completed faster, resulting in fewer court hearings, less time spent in detention and cost savings.

Legal Orientation Program for Custodians of Unaccompanied Alien Children

The Trafficking Victims Protection Reauthorization Act of 2009 tasked EOIR and the Department of Health and Human Services' Office of Refugee Resettlement to offer legal orientation presentations to the adult custodians of unaccompanied alien children in EOIR removal proceedings. The goals of the legal orientations include seeking to protect children from mistreatment, exploitation and trafficking, as well as increasing the appearance rates of these children in immigration court. In 2010, EOIR launched the LOPC to meet these goals and to help increase pro bono representation rates of unaccompanied alien children in immigration proceedings.

EOIR has contracted with non-profit partners to carry out the LOPC at 14 sites nationwide. The LOPC providers offer services similar to those provided under the LOP: general group orientations, individual orientations, self-help workshops, and assistance with pro bono referrals. Additionally, LOPC providers are able to assist with school enrollment and make referrals to social services to help ensure the well-being of the child. OLAP issues guidance to LOPC providers designed to assist them in identifying victims of mistreatment, exploitation, and trafficking; protecting the victims from further harm; and connecting the victims to needed social services.

In addition, since 2013, the LOPC has operated the LOPC National Call Center to assist in making appointments for custodians at one of the LOPC provider locations, and to provide telephonic assistance to custodians who live outside the geographic areas in which LOPC is currently available. This telephonic assistance includes legal orientations on the immigration court process, as well as guidance in filing basic court forms, such as the change of address and motion to change venue.

BIA Pro Bono Project

In 2001, EOIR and non-profit agencies developed the BIA Pro Bono Project (the "Project"). Individuals in removal proceedings are generally not entitled to publicly-funded legal assistance and, as a result, many appear before the immigration courts and BIA without counsel. Agencies that provide legal services to immigrants can face many obstacles in identifying, locating and communicating with unrepresented individuals in time to write and file an appeal brief. The Project helps overcome such obstacles. Through the Project, OLAP assists in identifying certain cases based upon pre-determined criteria. Once cases are identified and reviewed, their summaries are then distributed by a non-profit agency to pro bono representatives throughout the United States. Volunteers who accept a case under the Project receive a copy of the file, as well as additional time to file the appeal brief.

A ten-year review of the BIA Pro Bono Project, completed in February 2014, demonstrated that the Project found counsel willing to accept the case for 87% of cases screened between 2002 and 2011. Additionally, those who were represented through the Project were more likely to have briefs filed with their appeals than pro se respondents. Most significantly, an analysis of the appeals before the Board between 2002 and 2011 showed those who were represented through the Project were more likely to obtain a favorable outcome in their cases than those who do not receive representation. This was particularly the case for individuals who were detained. Since the beginning of the Project, over 1,000 individuals have been represented by pro bono counsel.

Model Hearing Program

The Model Hearing Program is an educational program developed to improve the quality of advocacy before the court, as well as to increase levels of pro bono representation. Model hearings consist of small-scale "mock" trial training sessions held in immigration court and presented by immigration judges. The training sessions, carried out in cooperation with partnering bar associations and/or pro bono agencies, provide practical and relevant "hands-on" immigration court training to small groups of attorneys/law students with an emphasis on practice, procedure and advocacy skills. Participants receive training materials, may obtain Continuing Legal Education credit from the partnering organization, and commit to a minimal level of pro bono representation. Since June 2001, more than 60 model hearing training sessions have been held in immigration courts nationwide. The Model Hearing Program Training Manual contains detailed information on the content and structure of this program, as well as samples of past training sessions.

Other Initiatives

Drawing on informational pamphlets developed by non-profit partners, throughout the nation's detention facilities, OLAP makes available 11 self-help guides. These guides, posted in English and Spanish, cover the most common forms of relief, as well as information about bond and an overview of immigration proceedings. The guides are generally accessible to detainees in the facility libraries and are available on the OLAP website as well.

Additional resources:

• American Bar Association Know Your Rights video
• LOP Cost Saving Analysis report

- 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.

FALLS CHURCH, VA – The Executive Office for Immigration Review (EOIR) today announced that, beginning Nov. 1, 2014, it will provide assistance to families detained at the Karnes Family Residential Center, in Karnes City, Texas, through the Legal Orientation Program (LOP). The LOP is a program in which representatives from non-profit organizations provide explanations about immigration court procedures along with other basic legal information to groups of detained individuals. This expansion is possible due to additional funds Congress provided to EOIR for the LOP. The expansion of the program to the Karnes facility marks EOIR's 32nd LOP site, and the third LOP location within a family detention center.

"The Legal Orientation Program is critical to the efficiency of our immigration court proceedings," said EOIR Director Juan P. Osuna. "By attending an LOP, individuals are better able to make timely and informed decisions in their removal proceedings and, with more information about available resources, are more likely to obtain representation."

Since the start of fiscal year 2014, the LOP has expanded to seven additional sites. In addition to the Karnes facility, LOP recently began serving the Artesia Family Residential Center, in Artesia, N.M., and will soon begin to serve the expanded Berks County Family Shelter, in Leesport, Pa. The LOP expansion also includes new detention sites in Woodstock, Ill. and Kenosha, Wis.

Since 2003, EOIR has carried out the LOP to improve judicial efficiency in the immigration courts, and to assist detained individuals and others involved in removal proceedings to make timely and informed decisions. Under the LOP, EOIR contracts with nonprofit organizations to provide group and individual orientations, self-help workshops, and pro bono referral services for individuals in removal proceedings.

Please see EOIR's fact sheet, EOIR's Office of Legal Access Programs, for more information on the LOP and EOIR's additional legal access programs.

- 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 doctor was sentenced today to serve 18 months in prison by U.S. District Court Judge Rudolph T. Randa in the Eastern District of Wisconsin for committing tax evasion and making false statements, announced the Justice Department and Internal Revenue Service (IRS).

On May 22, Dr. Michael N. Mangold pleaded guilty to one count of tax evasion and one count of making false statements.  According to court documents, Mangold was a medical doctor specializing in emergency medicine and urgent care who, since about 1993, had worked as a physician for various hospitals, emergency rooms and urgent care facilities.  At times, he also worked as a physician in state and county correctional facilities.  Mangold primarily earned income through a combination of employee wages and independent contractor payments. 

In his plea agreement, Mangold admitted that from 1997 through 2007, he willfully concealed his income from the IRS.  Mangold further admitted that he made false statements to the IRS.  In total, Mangold owed approximately $191,577 in taxes based on his income and wages during the relevant calendar years plus interest.

Mangold also admitted that he made materially false statements during the course of a civil lawsuit concerning his failure to repay federal student loan obligations.  Mangold admitted that he submitted a false financial affidavit to government officials which contained false statements about the amount of income he earned as a doctor.

This case was investigated by special agents of IRS - Criminal Investigation.  Trial Attorneys Charles M. Edgar Jr. and Rebecca Perlmutter of the Justice Department’s Tax Division are prosecuting the case.

DaVita Healthcare Partners, Inc., one of the leading providers of dialysis services in the United States, has agreed to pay $350 million to resolve claims that it violated the False Claims Act by paying kickbacks to induce the referral of patients to its dialysis clinics, the Justice Department announced today. DaVita is headquartered in Denver, Colorado and has dialysis clinics in 46 states and the District of Columbia.

The settlement today resolves allegations that, between March 1, 2005 and February 1, 2014, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring and/or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including  entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers. 

“Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals,” said Deputy Assistant Attorney General for the Justice Department’s Civil Division Jonathan F. Olin. “The Justice Department is committed to protecting the integrity of our healthcare system and ensuring that financial arrangements in the healthcare marketplace comply with the law.”

The government alleged that DaVita used a three part joint venture business model to induce patient referrals.  First, using information gathered from numerous sources, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease within a specific geographic area. DaVita would then gather specific information about the physicians or physician group to determine if they would be a “winning practice.” In one transaction, a physician’s group was considered a “winning practice” because the physicians were “young and in debt.”  Based on this careful vetting process, DaVita knew and expected that many, if not most, of the physicians’ patients would be referred to the joint venture dialysis clinics.

Next, DaVita would offer the targeted physician or physician group a lucrative opportunity to enter into a joint venture involving DaVita’s acquisition of an interest in dialysis clinics owned by the physicians, and/or DaVita’s sale of an interest in its dialysis clinics to the physicians. To make the transaction financially attractive to potential physician partners, DaVita would manipulate the financial models used to value the transaction.  For example, to decrease the apparent value of clinics it was selling, DaVita would employ an assumption it referred to as the “HIPPER compression,” which was based on a speculative and arbitrary projection that future payments for dialysis treatments by commercial insurance companies would be cut by as much as half in future years. These manipulations resulted in physicians paying less for their interest in the joint ventures and realizing returns on investment which were extraordinarily high, with pre-tax annual returns exceeding 100 percent in some instances. 

Last, DaVita ensured future patient referrals through a series of secondary agreements with their physician partners. These included paying the physicians to serve as medical directors of the joint venture clinics, and entering into agreements in which the physicians agreed not to compete with the clinic. The non-compete agreements were structured so that they bound all physicians in a practice group, even if some of the physicians were not part of the joint venture arrangements. These agreements also included provisions prohibiting the physician partners from inducing or advising a patient to seek treatment at a competing dialysis clinic. These agreements were of such importance to DaVita that it would not conclude a joint venture transaction without them.

The Government’s complaint identifies a joint venture with a physicians’ group in central Florida as one of several examples illustrating DaVita’s scheme to improperly induce patient referrals. The group had previously been in a joint venture arrangement involving dialysis clinics with Gambro, Inc., a dialysis company acquired by DaVita in 2005. Prior to the acquisition, Gambro had entered into a settlement with the United States to resolve alleged kickback allegations that, among other things, required Gambro to unwind its joint venture agreements. As a consequence, Gambro purchased the group’s interest in the joint venture clinics and agreed to a “carve-out” of the associated non-competition agreement which allowed the group to open its own dialysis clinic nearby, which it did. After acquiring Gambro, DaVita bought a majority position in the group’s newly established dialysis clinic, and sold a minority position in three DaVita-owned clinics. Despite the fact that each of the clinics involved were roughly comparable in terms of size and profits, DaVita agreed to pay $5,975,000 to acquire a 60 percent interest in the group’s clinic, while selling a 40 percent interest in the three clinics it owned for a total of $3,075,000. As part of this joint venture, the group agreed to enter into new non-compete agreements. 

“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers.   Federal law protects patients by making buying and selling patient referrals illegal, so as to ensure that the interest of the patient is the exclusive factor in the referral decision,” said U.S. Attorney John Walsh.  “When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”

In conjunction with today’s announcement, the U.S. Attorney’s Office noted that after extensive review, it is closing its criminal investigation of two specific joint ventures.

As part of the settlement announced today, DaVita has also agreed to a Civil Forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions entered into in Denver, Colorado.   Additionally, DaVita has entered into a Corporate Integrity Agreement with the Office of Counsel to the Inspector General of the Department of Health and Human Services which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an Independent Monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the Anti-Kickback Statute.

“Companies seeking to boost profits by paying physician kickbacks for patient referrals – as the government contended in this case – undermine impartial medical judgment at the expense of patients and taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services.  “Expect significant settlements and our continued investigation of such wasteful business arrangements.” 

The settlement resolves allegations originally brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The suit was filed by David Barbetta, who was previously employed by DaVita as a Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department. Mr. Barbetta’s share of the recovery has yet to be determined.             

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 $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the United States Attorney’s Office for the District of Colorado, the Civil Division of the United States Department of Justice, and the U.S. Department of Health and Human Services, Office of Inspector General. 

The lawsuit is captioned United States ex rel. David Barbetta v. DaVita, Inc. et al., No. 09-cv-02175-WJM-KMT (D. Colo.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

WASHINGTON – Alan Dresner, a federally-licensed fish dealer from Brooklyn, New York, was sentenced today in federal court in Central Islip, New York, for violations stemming from his role in systematically underreporting fluke (summer flounder) that was being harvested as part of the federal Research Set-Aside (RSA) Program, the Justice Department’s Environment and Natural Resources Division announced.

On April 23, 2014, Alan Dresner pleaded guilty to one count of wire fraud. The scheme involved his personal falsification and internet submission of at least 120 fisheries dealer reports from July 2009 to December 2011, as part of a scheme to defraud the United States of 246,376 pounds of overharvested and underreported fluke valued at $510,000.

As part of his sentence, Dresner will serve four months in prison followed by three years of supervised release. The defendant was fined $6000 and ordered to make a $15,000 community service payment to the Cornell Cooperative Extension of Suffolk County in order to pay for the enhancement of fluke habitat in the waters of Long Island through the C.C.E.’s Marine Meadows Program. Dresner was ordered to pay $510,000 in restitution to the Marine Resources Account of the New York State Conservation Fund. Dresner was also ordered to surrender his federal dealer license and was banned from accessing the National Oceanic and Atmospheric Administration’s (NOAA) SAFIS computer system.

“Today, Dresner was held accountable for his role in defrauding a federal research program, a program whose purpose is to help ensure the long-term sustainability of Long Island’s fisheries,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division. “We are committed to protecting the natural resources that the American people depend on today and for future generations as well.”

“This scheme to land tremendous amounts of overages for profit was not only detrimental to the RSA program, but also to the law abiding fishermen who will not be able to participate in this program in 2015,” said NOAA Special Agent Logan Gregory. “The Office of Law Enforcement will continue to focus on ensuring a level playing field by investigating these types of environmental crimes.”

Alan Dresner is “Fish Dealer X” as that person is identified in the related case of U.S. v. Anthony Joseph. As a federal fish dealer, Dresner had a NOAA permit to purchase fish directly from commercial fishing vessels without having to go through an intermediary. In July 2009, Dresner learned that Anthony Joseph, captain of the F/V Stirs One, was consistently overharvesting fluke through Joseph’s abuse of the RSA Program. By July 2009, Dresner was making regular purchases of illegal fluke from Joseph at the Point Lookout, New York, waterfront.

In order to cover-up his illegal fishing, Joseph would mail falsified fishing logs, known as FVTRs, to NOAA.  However, falsified FVTRs were just one side of the coin. This is because fish dealers are required to report their purchases to NOAA on an electronic form known as a dealer report. The dealer reports include information such as date of landing, port of landing, catch vessel, corresponding FVTR numbers, commercial grade, species, price, and weight. NOAA utilizes the data in the dealer reports to set quotas and implement other management measures designed to ensure a sustainable fisheries. The dealer reports also serve as a check on the information that is submitted in FVTRs.  In other words, for their scheme to work, the false data on the FVTRs had to match the false data on the dealer reports. A mismatch would have indicated a serious error or fraud, and would have been a red flag for fisheries managers.  Accordingly, during July 2009 to December 2011, the defendant schemed with Anthony Joseph to file at least 120 false dealer reports with NOAA, representing a loss of 246,376 pounds of fluke valued at $510,000. 

Theft of domestic marine resources has far-reaching consequences beyond illicit financial gain. Fisheries managers operate on the basic assumption that fishers and dealers make accurate and honest reports to NOAA. When harvested fish is misreported or unreported, the integrity of fisheries statistics and associated mathematical models are jeopardized. Recently, based in large part on the recently quantified illegal fluke harvesting revealed by the guilty pleas in the Jones Inlet Seafood, Charles Wertz Jr., Anthony Joseph, and Dresner cases, on Aug. 12, 2014, the Mid-Atlantic Fisheries Management Council voted to suspend the RSA Program for 2015 in order analyze the effect illegal fishing has had on the soundness of the RSA Program.

Anthony Joseph pleaded guilty to wire fraud, mail fraud, and falsification of federal records on April 11, 2014, for his fisheries fraud crimes related to Alan Dresner and Jones Inlet Seafood. He is scheduled to be sentenced on May 20, 2015.

The case was investigated by agents of NOAA’s National Marine Fisheries Service, with assistance from the New York State Department of Environmental Conservation Police. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division.

The Justice Department announced today that Science Applications International Corporation (SAIC), now known as Leidos Holdings Inc., has agreed to pay $1.5 million to resolve a False Claims Act lawsuit alleging that it knowingly engaged in prohibited conflicts of interest as a contractor for the U.S. Nuclear Regulatory Commission (NRC) between 1992 and 2000.  SAIC provides scientific, engineering and other technical services for government and commercial customers and is headquartered in Reston, Virginia. 

“Organizational conflicts of interest undermine the integrity of the federal procurement process,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Even more importantly, where the conflicts relate to a government program aimed at protecting the public health, work biased by conflicts of interest can put the public’s health at risk.  This resolution, reached after a long and difficult litigation, demonstrates that the Justice Department will ensure that contractors who put their financial interests above the good of the American public will be held accountable.” 

Between 1992 and 2000, SAIC held two contracts with the NRC to provide scientific and technical services, including assisting the NRC in its consideration of a rule that could have permitted the release or recycling of certain types and quantities of material with very low levels of radioactivity below regulatory safety limits.  The NRC decided in 2005 not to proceed with such a rule.  The United States alleged that, under these contracts, SAIC was required to avoid conflicting business relationships that could bias SAIC’s work for the NRC.  The United States alleged that SAIC repeatedly and falsely certified that it had no such conflicting business relationships, when SAIC actually engaged in multiple business relationships with entities that had a financial interest in the outcome of the NRC’s rulemaking effort.   

“The NRC’s unique status as an independent agency dedicated to the protection of public health, safety, and the environment means that decision-making must be free from even the potential for bias,” said Mark A. Satorius, Executive Director for Operations at the NRC.  “This resolution shows that the NRC and Justice Department will work together to ensure that contractors who undermine the NRC’s commitment to decision-making that is free from bias will be held accountable.” 

In July 2008, after a five-week jury trial, the jury returned a verdict in favor of the United States that SAIC violated the False Claims Act and breached its contract with the NRC by engaging in undisclosed conflicts of interest.   On appeal, in December 2010, the U.S. Court of Appeals for the District of Columbia Circuit affirmed judgment for the United States on the breach of contract claim, but partially reversed the judgment on the False Claims Act claims based on two instructions given to the jury and remanded the case for a new trial on those claims. 

This matter was handled by the Civil Division in cooperation with the NRC.  The False Claims Act claims resolved by this settlement are allegations only, and there has been no determination of liability with respect to those claims.

The case is captioned U.S. v. SAIC, 04-cv-1543 (D.D.C.). 

Moves Allow NSD to Continue Focus on Today’s Threats while Positioning for Tomorrow’s Challenges

John P. Carlin, the Assistant Attorney General for National Security, announced strategic changes within the Justice Department’s National Security Division (NSD) designed to put additional focus on the protection of national assets from the threat of state-sponsored economic espionage and proliferation, including through cyberspace.  The announcement included new appointments within the NSD’s senior leadership, the creation of a new Deputy Assistant Attorney General Position focusing on protecting national assets and the re-designation of the Anti-Terrorism and Advisory Council (ATAC) Coordinator program as the National Security Coordinator/ATAC program, to better reflect its ongoing work on the full range of national security threats, and to empower United States Attorneys as they conduct outreach on these issues nationwide.

“The threat landscape we face is ever-changing and evolving, and while our top priority will always be combatting terrorism, we must also sharpen our focus and increase our attention on the emerging threats of economic espionage and proliferation,” said Assistant Attorney General Carlin.  “We have assembled a talented, dedicated and experienced team of seasoned professionals to launch this new phase for the National Security Division.  These changes will help us continue confronting today’s threats while readying the NSD workforce to engage what we see as the key emerging threats to our national security.”

The changes announced included the appointment of a new Principal Deputy Assistant Attorney General and a new Chief of Staff and Counselor, as well as the creation of a new Deputy Assistant Attorney General position to oversee NSD’s efforts to protect national assets, including its efforts to combat economic espionage, proliferation, and cyber-based national security threats, and its work on the Committee on Foreign Investment in the United States.  This position will oversee the work of the National Security Cyber Specialists (NSCS) Network, consisting of prosecutors in each of the U.S. Attorney’s Offices who focus on cyber threats to the national security. 

The new NSD leadership team members include Mary B. McCord to serve as the Principal Deputy Assistant Attorney General; Anita M. Singh as Chief of Staff and Counselor; and Luke Dembosky as the newest Deputy Assistant Attorney General.

Mary B. McCord, Principal Deputy Assistant Attorney General:  McCord joined NSD from the U.S. Attorney’s Office for the District of Columbia, where she served for nearly 20 years, most recently as the Criminal Division Chief.  In that capacity, McCord supervised the prosecution of all criminal matters in federal district court, and is highly regarded for her expertise in this area.  McCord also served for more than five years as a Deputy Chief in the Appellate Division, where she supervised and argued hundreds of cases in the U.S. and District of Columbia Courts of Appeals.  McCord graduated from Georgetown University Law School, and clerked for Judge Thomas Hogan of the U.S. District Court for the District of Columbia. 

Anita M. Singh, Chief of Staff and Counselor:  Singh was appointed Chief of Staff and Counselor after serving as the NSD Acting Chief of Staff for nearly a year and a half.  Singh joined NSD as Deputy Chief of Staff in 2011 after serving as Director for Intelligence Programs and Reform at the White House on the National Security Council staff, where she focused on cyber-related issues.  As NSD’s Chief of Staff, Singh focuses on strategic management issues, including the design of structural changes to support work in emerging threat areas.  Singh began her legal career through the DOJ’s Honors Program, serving in the Criminal Division’s Computer Crime and Intellectual Property Section, and later as a Counsel, focused on cybersecurity, to several Assistant Attorneys General.  Prior to entering government service, Singh was a management strategy consultant with the Boston Consulting Group.  She graduated with her J.D. and A.M. from the University of Pennsylvania Law School. 

Luke Dembosky, Deputy Assistant Attorney General:  Dembosky joins NSD from DOJ’s Computer Crime and Intellectual Property Section where he served as Deputy Chief for Litigation.  Dembosky previously served as the DOJ representative at the U.S. Embassy in Moscow, Russia, where he represented DOJ to Russia on matters of transnational crime, including cybercrime and IP crimes, and worked with Russian law enforcement and other government officials to build cooperation between the two countries.  Prior to working in Moscow, Dembosky was based in Pittsburgh as a member of DOJ’s Computer Hacking and Intellectual Property (CHIP) network of federal prosecutors.  He has been involved in some of the largest and most groundbreaking cybercrime prosecutions and disruptions in U.S. history, including the recent GameOver Zeus botnet disruption, coordination of the Silk Road takedown, and U.S. v. Max Ray Butler. Prior to entering government service, Dembosky worked in civil practice at a Philadelphia law firm.  He graduated from the University of Pittsburgh School of Law and clerked for Judge Richard L. Nygaard of the U.S. Court of Appeals for the Third Circuit.  Dembosky will manage NSD’s newly created portfolio covering protection of national assets, including efforts to combat economic espionage, proliferation, and cyber-based national security threats, and its work on the Committee on Foreign Investment in the United States.  He will also oversee NSD’s Office for Justice for Victims of Overseas Terrorism.

Re-designation: The Anti-Terrorism and Advisory Council (ATAC) Coordinator program will be re-designated as the National Security Coordinator/ATAC program, to better reflect its ongoing work on the full range of national security threats, including combating economic espionage and counterproliferation.

A Miami licensed physician assistant was sentenced today to serve 15 years in prison for participating in a Medicare fraud scheme involving approximately $200 million in fraudulent billings by American Therapeutic Corporation (ATC), a mental health company that was headquartered in Miami.

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

Roger Bergman, 65, of Miami, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida.  In addition to the prison sentence, Bergman was ordered to pay more than $85.3 million in restitution, both jointly and severally with his co-conspirators.

After a six-day trial, on July 18, 2014, a federal jury in the Southern District of Florida found Bergman guilty of one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to make false statements relating to health care matters.

Evidence at trial demonstrated that Bergman and his co-conspirators submitted false and fraudulent claims to Medicare through ATC, which operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando.  A PHP is a form of intensive treatment for severe mental illness.

Evidence at trial also demonstrated that Bergman and other medical professionals at ATC fabricated and signed fraudulent medical documentation and patient files in order to justify ATC’s fraudulent billings to Medicare.  Included in these false submissions to Medicare were claims for patients who were ineligible for PHP treatment because they were in neuro-vegetative states, in the late stages of diseases causing permanent cognitive memory loss, or had substance abuse issues and were living in halfway houses.  Many of these patients were forced by assisted living facility owners and halfway house owners to attend ATC, and they did not receive treatment for their actual medical conditions.    

ATC, an associated management company, and more than 20 individuals, including ATC’s owners, have all previously pleaded guilty or been convicted at trial.  Bergman has been in federal custody since his conviction.

The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Nicholas E. Surmacz and Kelly Graves of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A Las Vegas man was sentenced to serve 15 months in prison to be followed by three years of supervised release and ordered to pay $192,632 in restitution to 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 Daniel G. Bogden for the District of Nevada.

Damon Boswell pleaded guilty to conspiracy to submit false claims for federal income tax refunds on May 29.  He was sentenced yesterday by U.S. District Court Judge Jennifer A. Dorsey. 

According to the plea agreement, between April 2009 and May 2009, Boswell, along with others, conspired to defraud the United States by assisting in the filing of federal tax returns falsely claiming refunds based on the First-Time Home Buyers Credit.

Boswell obtained personal identifying information from individuals by falsely telling them that if they had not filed their 2008 federal income tax returns and did not owe back taxes, they were entitled to receive “Obama Stimulus” money.  The personal information, including names, dates of birth and social security numbers, was then used to file federal income tax returns claiming refunds to which the individuals were not entitled. The individuals did not authorize Boswell or anyone else to file or cause the filing of tax returns in their names.  Boswell’s co-conspirator, Cheryl Ramos, pleaded guilty on Jan. 24 and has been sentenced.

The case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Christina Brown and Trial Attorney Sonia M. Owens of the Tax Division.

The Department of Justice announced today that two cardiologists based in London, Kentucky, have agreed to pay $380,000 to resolve allegations that they violated the False Claims Act by entering into sham management agreements with Saint Joseph Hospital, also based in London, Kentucky, in exchange for the referral of cardiology procedures and other healthcare services to Saint Joseph.

“Physicians who place their financial interests above the well-being of their patients will be held accountable,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division.  “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public healthcare programs.”

Satyabrata Chatterjee and Ashwini Anand jointly owned Cumberland Clinic, a physician group that provided cardiology services.  The government alleged that St. Joseph Hospital entered into sham agreements with Chatterjee and Anand, under which the physicians were paid to provide management services but did not in fact do so.  The government further alleged that, in exchange for the sham agreements, Chatterjee and Anand agreed to enter into an exclusive agreement with St. Joseph to refer Cumberland Clinic patients to the hospital for cardiology and other services in violation of the Stark Law and the Anti-Kickback Statute.  The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare. 

“Financial relationships between healthcare providers that put profits over patients are a threat to the programs upon which millions of Americans depend,” said U.S. Attorney Kerry Harvey for the Eastern District of Kentucky.  “We will continue to use all the tools available to us to safeguard our federally funded healthcare programs from those who seek to profit from them through illegal means.” 

In addition to payment of the settlement amount, which was based on Chatterjee and Anand’s financial ability to pay, Chatterjee and Anand have agreed to enter into integrity agreements with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligate them to undertake substantial internal compliance reforms and to commit to a third-party review of their claims to federal health care programs for the next three years.

“Physicians who accept kickbacks in exchange for referrals undermine the integrity of the medical profession," said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta region.  “OIG will continue to protect both patients and taxpayers by holding physicians and hospitals accountable for improper claims."

The government previously entered into a $16.5 million settlement with Saint Joseph Hospital for the allegedly sham management contracts the hospital executed with Chatterjee and Anand, as well as for allegedly billing for unnecessary and excessive cardiology procedures by other members of Chatterjee and Anand’s cardiology practice.

The settlement announced today stems from a complaint filed by three Lexington, Kentucky, cardiologists pursuant to the whistleblower provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the United States.  The act permits the United States to intervene in the lawsuit and take over the allegations, as the government did in this case.  The three whistleblowers, Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina, will collectively receive $68,400. 

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 $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs. 

The investigation was conducted by the FBI, HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Kentucky.  The claims settled by this agreement are allegations only and there has been no determination of liability.

The lawsuit is captioned United States ex rel. Jones, Hollingsworth, and Rukavina v. St. Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.)

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that FRANCISCO A. JAVIER, age 50, of Waianae (Honolulu County), Hawaii, pled guilty on October 17, 2014, in the U.S. District Court, District of Hawaii, to one count of Theft of Government Money and one count of Forging Endorsements on Treasury Checks.  For each count, the maximum sentence under the statute is 10 years in prison and a $250,000 fine.  JAVIER had been previously charged on April 30, 2014 by a federal grand jury in the District of Guam with multiple counts of the above referenced offenses. JAVIER self-surrendered May 2, 2014 at the Federal Bureau of Investigation (“FBI”) Honolulu Division field office.  Sentencing for JAVIER in the District of Hawaii is scheduled for February 12, 2015.
According to court documents, JAVIER’s mother died in April 2002, but JAVIER, from June 2002 to May 2010, received Social Security retirement insurance and other related benefits intended for his mother.  The Social Security Administration, an agency of the United States, was unaware of the beneficiary’s death and continued to mail U.S. Treasury checks to the beneficiary at a post office box address in Guam.  JAVIER forged his mother’s signature and fraudulently endorsed the checks, cashed them and received payments totaling $80,343.
Alicia A.G. Limtiaco stated “the United States Attorney’s Office is committed to working with its law enforcement partners to help maintain the integrity of the Social Security Program for seniors and other beneficiaries who have rightfully earned these benefits.” This case is the result of an investigation conducted by the Social Security Administration, Office of the Inspector General and the FBI Guam Resident Agency. The prosecution was handled by Assistant U.S. Attorney Marivic David.

Assistant Attorney General for National Security  John Carlin, United States Attorney Preet Bharara for the Southern District of New York, Assistant Director-in-Charge George Venizelos of the New York Field Office of the Federal Bureau of Investigation (FBI), and Commissioner William J. Bratton of the New York City Police Department (NYPD), announced the extradition of Haroon Aswat from the United Kingdom to face charges of conspiring to provide and providing material support to al Qaeda and terrorists for attempting to establish a terrorist training camp in the United States. 

Aswat was arrested in Zambia in July 2005, and in August 2005, Aswat was deported from Zambia to the United Kingdom, where he was arrested pursuant to a provisional warrant that was issued in response to a request by the U.S. government in connection with this case.  On Sept. 4, 2014, the United Kingdom ordered Aswat extradited to the United States on the charges described below.  In coordination with British authorities, Aswat was extradited from the United Kingdom to the Southern District of New York on Oct. 21, 2014.  Aswat will make his first court appearance later today before U.S. District Judge Katherine B. Forrest.

According to the allegations contained in the Indictment, statements made at related court proceedings, and evidence presented at prior trials:

In late 1999, Aswat, along with co-defendants Mustafa Kamel Mustafa, aka Abu Hamza (Abu Hamza), Ouassama Kassir, and Earnest James Ujaama, attempted to create a terrorist training camp in the United States to support al Qaeda, which has been designated by the United States Secretary of State as a foreign terrorist organization.  Aswat conspired with Abu Hamza, Kassir and Ujaama to establish the terrorist training camp on a rural parcel of property located in Bly, Oregon.  The purpose of the Bly, Oregon, camp was for Muslims to receive various types of training – including military-style jihad training – in preparation to fight jihad in Afghanistan.  As used by the conspirators in this case, the term “jihad” meant defending Islam against purported enemies through violence and armed aggression, including, if necessary, by using murder to expel non-believers from Muslim holy lands.

In a letter faxed from Ujaama, in the United States, to Abu Hamza, in the United Kingdom, the property in Bly was described as a place that “looks just like Afghanistan,” and the letter noted that the men at Bly were “stock-piling weapons and ammunition.”  In late 1999, after transmission of the faxed letter, Abu Hamza directed Aswat and Kassir, both of whom resided in London, England, and attended Abu Hamza’s mosque there, to travel to Oregon to assist in establishing the camp.  On Nov. 26, 1999, Aswat and Kassir arrived in New York, and then traveled to Bly.

Aswat and Kassir traveled to Bly for the purpose of training men to fight jihad.  Kassir told witnesses that he supported Usama Bin Laden and al Qaeda, and that he had previously received jihad training in Pakistan.  Kassir also possessed a compact disc that contained instructions on how to make bombs and poisons.  After leaving Bly, Aswat and Kassir traveled to Seattle, Washington, where they resided at a mosque for approximately two months.  While in Seattle, Kassir, in Aswat’s presence, provided men from the mosque with additional terrorist training lessons – including instructions on different types of weapons, how to construct a homemade silencer for a firearm, how to assemble and disassemble an AK-47, and how an AK-47 could be altered to be fully automatic and to launch a grenade.  On another occasion, with Aswat sitting by his side, Kassir announced to the men in Seattle that he had come to the United States for martyrdom and to destroy, and he informed his audience that some of them could die or get hurt.

In September 2002, special agents from the FBI recovered a ledger, among other items, from an al Qaeda safe house in Karachi, Pakistan.  The ledger listed a number of individuals associated with al Qaeda, including Aswat. The al Qaeda safe house was used by Khalid Sheikh Mohammed, al Qaeda’s chief operational planner and the alleged planner of the terrorist attacks of Sept. 11, 2001.

*                              *                             *

The indictment charges Aswat, 40, a British citizen, with four offenses that carry the following maximum penalties:

Charge

Statutory Violation

Maximum Prison Term

Conspiracy to provide material support to terrorists

18 U.S.C. § 371

Five years

Providing material support to terrorists

18 U.S.C. §§ 2339A, 2

10 years

Conspiracy to provide material support to a foreign terrorist organization (al Qaeda)

18 U.S.C. §2339B

10 years

Providing material support to a foreign terrorist organization (al Qaeda)

18 U.S.C. §§ 2339B, 2

10 years

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.

On May 12, 2009, after a four-week jury trial in the Southern District of New York, Kassir was found guilty of charges relating to his efforts to establish the terrorist training camp in Bly, and his operation of several terrorist websites.  On Sept. 15, 2009, U.S. District Judge John F. Keenan sentenced Kassir to life in prison.

On May 19, 2014, after a four-week jury trial in the Southern District of New York, Abu Hamza was found guilty of charges relating to his role in the conspiracy to establish the terrorist training camp in Bly, as well as his role in a hostage-taking in Yemen in 1998 that resulted in four deaths, and his support of violent jihad in Afghanistan in 2000 and 2001.  Abu Hamza is scheduled to be sentenced on Jan. 9, 2015, before U.S. District Judge Katherine B. Forrest.

U.S. Attorney Bharara praised the outstanding efforts of the FBI’s Manhattan-based Joint Terrorism Task Force, which principally consists of agents and detectives of the FBI and the NYPD, the United States Marshals Service, and the Metropolitan Police Department of London, England.  U.S. Attorney Bharara also thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, and the United States Department of State for their ongoing assistance.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys John P. Cronan and Ian McGinley are in charge of the prosecution.

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

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

The indictment, filed today in U.S. District Court for the Northern District of California in San Francisco, California, charges Northern California real estate investors Joseph Giraudo, Raymond Grinsell, Kevin Cullinane, James Appenrodt and Abraham Farag with participating in conspiracies to rig bids and schemes to defraud mortgage holders and others.  The indictment alleges that the defendants agreed to stop bidding or to refrain from bidding for properties at public foreclosure auctions in San Mateo County, California, in return for payoffs and concealing the fact that monies were diverted from mortgage holders, homeowners and others to co-schemers.  Additionally, Giraudo, Grinsell and Appenrodt were charged with bid rigging and fraud in San Francisco County, California.  To date, 47 individuals have agreed to plead or have pleaded guilty, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

“These defendants corrupted the public foreclosure auctions in San Mateo and San Francisco counties, and they did so to line their pockets with money that rightfully belonged to mortgage holders and others,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program.  “As these charges demonstrate, the Antitrust Division will continue to pursue bidders at foreclosure auctions who violated the Sherman Act and defrauded mortgage holders and others.”

The indictment alleges, among other things, that beginning no later than August 2008 and continuing until January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in San Mateo and San Francisco counties, paid others not to bid, accepted payoffs not to bid and, in the process, defrauded mortgage holders, other holders of debt secured by the auctioned properties and, in some cases, the defaulting homeowners.

“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 victim if either amount is greater than $1 million.

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, 93 U.S. Attorneys’ offices and state and local partners, it is 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.

A federal court in San Antonio has permanently barred a Texas man and his business, Cardenas Income Tax Service, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order, to which John Andrew Cardenas consented, was signed by Judge Orlando L. Garcia of the U.S. District Court for the Western District of Texas.

The complaint alleged that Cardenas individually and through Cardenas Income Tax Service, which had offices in Uvalde, Crystal City, Kingsville and Corpus Christi, Texas, prepared federal tax returns for customers using fraudulent Schedule C businesses on the return to inappropriately reduce customers’ federal tax liabilities.  The suit alleges that the harm caused to the U.S. Treasury may exceed $900,000.  Cardenas, who previously pleaded guilty to one count of aiding and abetting the preparation of a false and fraudulent tax return, agreed to the permanent injunction and admitted the allegations in the government’s complaint.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Related Materials:

United States v. John Andrew Cardenas, etc.
Agreed Stipulated Judgment of Permanent Injunction Against John Andrew Cardenas

A federal jury in Houston today convicted the president of Riverside General Hospital (Riverside), his son, and two others for their participation in a $158 million Medicare fraud scheme involving false claims for mental health treatment.  Ten defendants have now been convicted in connection with the Riverside fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service – Criminal Investigation’s (IRS-CI) Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.  U.S. District Judge Lee H. Rosenthal of the Southern District of Texas presided over the trial.

“The former president of Riverside hospital, his son, and their co-conspirators systematically defrauded Medicare, treating mentally ill and disabled Americans like chits to be traded and cashed out to pad their own pockets,” said Assistant Attorney General Caldwell.  “For over six years, the Gibsons and their co-conspirators stuck taxpayers with millions in hospital bills, purportedly for intensive psychiatric treatment. But the ‘treatment’ was a sham – some patients just watched television all day, others had dementia and couldn’t understand the therapy they supposedly received, and other patients never even went to the hospital at all.  Today’s verdict sends another powerful message that the department will hold accountable anyone who seeks personal profits at the expense of America’s most vulnerable citizens.”

Earnest Gibson III, 70, the former president of Riverside, Earnest Gibson IV, 37, the operator of one of Riverside’s satellite locations, and Regina Askew, 49, a group home owner, were each convicted of conspiracy to commit health care fraud and conspiracy to pay kickbacks, as well as related counts of paying and receiving illegal kickbacks.  Robert Crane, 58, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks.  Gibson III and Gibson IV were also convicted of conspiracy to commit money laundering.  Gibson III was acquitted of two substantive counts of paying and receiving illegal kickbacks.

According to evidence presented at trial, Gibson III, Gibson IV, and Askew operated a scheme to defraud Medicare beginning in 2005 and continuing until June 2012.  The defendants caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital.  A PHP is a form of intensive outpatient treatment for severe mental illness. 

Specifically, evidence at trial demonstrated that the Medicare beneficiaries for whom Riverside and its satellite locations billed Medicare for PHP services did not qualify for or need PHP services.  Moreover, the Medicare beneficiaries rarely saw a psychiatrist and did not receive intensive psychiatric treatment.  In fact, some of the Medicare beneficiaries were suffering from Alzheimer’s and could not actively participate in any treatment even if they actually qualified to receive PHP services.  Nevertheless, Gibson III, Gibson IV and Askew submitted claims for reimbursement to Medicare claiming that PHP services were provided to the Medicare beneficiaries. 

Evidence presented at trial also showed that Earnest Gibson III paid kickbacks to patient recruiters and to owners and operators of group care homes, including Askew, in exchange for those individuals delivering ineligible Medicare beneficiaries to the hospital’s PHPs.  Gibson IV also paid patient recruiters, including Crane and others, in exchange for those individuals delivering ineligible Medicare beneficiaries to the specific PHP operated by Gibson IV. 

Approximately $158 million in claims to Medicare were submitted for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.  The proceeds from the health care fraud were used to promote the fraud scheme by paying kickbacks to patient recruiters and group home owners in exchange for their sending Medicare beneficiaries to the hospital’s PHPs.

Gibson III, Gibson IV, Askew and Crane are scheduled to be sentenced on Feb. 17, 2015. 

Others involved in the fraudulent scheme have already pleaded guilty and are awaiting sentencing.  Mohammad Khan, an assistant administrator at the hospital, who managed many of the hospital’s PHPs, pleaded guilty to conspiracy to commit health care fraud, conspiracy to defraud the United States and to pay illegal kickbacks, and five counts of paying illegal kickbacks.  William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie, and Sharonda Holmes, who were all involved in paying or receiving kickbacks, have also pleaded guilty to their roles in the scheme. 

The case was investigated by the FBI, IRS-CI, and Texas MFCU, with assistance from the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Dallas Regional Office, the Railroad Retirement Board, Office of Inspector General’s Chicago Field Office and the Office of Personnel Management’s Office of Inspector General, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.  The case is being prosecuted by Assistant Chiefs Laura M.K. Cordova and Jennifer L. Saulino and Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers. 

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

The owner and president of a wholesale and retail perfume store in Laredo, Texas, was indicted by a federal grand jury today on 44 counts of causing his business to fail to report cash transactions of more than $10,000. 

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

The indictment alleges that Virender Sharma, 59, of Laredo, Texas, was the owner and president of T.M. Perfumes, and was responsible for complying with the cash reporting requirements for the company.  Despite knowing of his filing obligations since 2006, Sharma allegedly caused the business to fail to report at least 44 cash transactions exceeding $10,000 between June 2009 and July 2010, which totaled more than $1.6 million.

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

The case was investigated by the Internal Revenue Service – Criminal Investigation and the Drug Enforcement Administration.  The case is being prosecuted by Trial Attorney Keith Liddle of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Ted Imperato of the Southern District of Texas.

A Hampton, New Hampshire, man pleaded guilty today in the U.S. District Court for the District of New Hampshire to filing a false federal income tax return for tax year 2009, the Justice Department and Internal Revenue Service (IRS) announced. 

According to court documents, Menashe Cohen, an oriental carpet dealer, and his sister maintained an undeclared bank account at UBS in Switzerland that had a balance of approximately $1.3 million.  Cohen also maintained bank accounts in Israel and in Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy, France.  Although Cohen’s return for tax year 2009 reported that he had a financial interest in a bank account in Jersey, the return failed to report that he had financial interests in the accounts located in Switzerland and Israel.  In addition, Cohen’s return only reported $350 in interest income, when in fact he had received approximately $66,500 in interest income during 2009.

In total, for tax years 2006 through 2009, Cohen failed to report approximately $170,000 in income earned from offshore bank accounts.  In addition, Cohen filed a false and fraudulent Report of Foreign Bank and Financial Accounts (FBAR) for 2009, wherein Cohen reported he had bank accounts in Israel and Jersey on the FBAR, but failed to report his financial interest in the UBS account in Switzerland.

According to the law, U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns (Forms 1040).  Additionally, U.S. citizens and residents must file a FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest or signature or other authority.

Cohen faces a statutory potential maximum sentence of three years in prison and a maximum fine of $250,000 at his Jan. 26, 2015, sentencing.  In addition, Cohen has agreed to resolve his civil liability for failing to report his financial interest in the UBS account on a FBAR by paying a 50 percent civil penalty to the IRS based on the high balance of his one-half interest in the account.

This case was investigated by special agents of IRS-Criminal Investigation and is being prosecuted by Senior Litigation Counsel John E. Sullivan of the department’s Tax Division and Assistant U.S. Attorney Robert M. Kinsella for the District of New Hampshire.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax/.

A mechanic who specializes in repairing exotic foreign cars and other high-end luxury vehicles was arrested on Friday after being indicted on tax charges by a grand jury in Detroit, the Justice Department announced.

Terry Myr, a resident of Smith’s Creek, Michigan, was charged with tax evasion and failure to file tax returns.  If convicted, Myr faces a maximum sentence of nine years in prison and a $650,000 fine.

According to the indictment, the Internal Revenue Service (IRS) assessed Myr approximately $195,000 in taxes, interest and penalties for his failure to report all of his income for the years 2000 through 2003.  To avoid the IRS collecting this money, Myr transferred property that he owned to a third party, used nominee companies to conceal his income and assets, and otherwise dealt in cash.  The indictment alleges that Myr failed to file tax returns from 2002 through 2010. 

The case was investigated by special agents of the IRS – Criminal Investigation.  Trial Attorneys Tiwana Wright and Kenneth Vert from the Justice Department’s Tax Division are prosecuting the case. 

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

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

Un jurado en Miami condenó a un hombre de Lima, Perú, por 26 cargos de delitos mayores de conspiración, fraude e intento de extorsión, cometidos a partir de sus centros de llamadas en Perú, que mintieron y amenazaron a víctimas de habla hispana para que pagaran arreglos fraudulentos, anunció hoy el Departamento de Justicia.

Juan Alejandro Rodríguez Cuya, 35, fue condenado por un jurado después de menos de dos horas de deliberación después de un juicio de dos semanas de duración ante la Jueza Federal de Distrito Patricia A. Seitz en el tribunal federal de Miami. A mitad del enjuiciamiento, su codemandada en el juicio, María Luzula, 52, de Miami, se declaró culpable de todos los cargos contra su persona. Luzula es la madre de Cuya.

Cuya y Luzula ambos enfrentan un máximo legal de 20 años en prisión por cada cargo. Ambos demandados deben permanecer detenidos hasta que se dicten sus sentencias el 22 de enero de 2015 y el 18 de diciembre, respectivamente.

"Los demandados se aprovecharon de la comunidad de habla hispana específicamente – y el daño causado a las víctimas individuales por el fraude cometido es desgarrador", señaló la Secretaria de Justicia Auxiliar Interina Joyce R. Branda de la División Civil del Departamento de Justicia. "El Departamento de Justicia se compromete a enjuiciar a quienes defrauden a los consumidores para su propio lucro personal".

De acuerdo con las pruebas presentadas en el juicio, los empleados de los demandados en Perú utilizaron llamadas telefónicas para amenazar a víctimas de habla hispana en los Estados Unidos. Los llamantes peruanos falsamente acusaron a las víctimas de haberse negado al envío de ciertos productos y alegaron que las víctimas debían miles de dólares en multas y que serían enjuiciadas. En realidad, las víctimas nunca habían pedido estos productos y no se les había enviado nada.

Pruebas adicionales en el juicio establecieron que los empleados de Luzula y Cuya alegaron que los consumidores podían resolver las multas si pagaban de inmediato un "cargo de resolución". Se les dijo a los clientes que disputaron estos cargos de resolución que, si no pagaban, podrían ser arrestados, deportados o su propiedad podría ser confiscada. Miles de víctimas sucumbieron ante estas amenazas y pagaron cargos que no debían. Una sala telefónica en Miami cobró los cargos.

Las víctimas que atestiguaron en el enjuiciamiento mencionaron el nivel de ansiedad que las llamadas les provocaron. Las víctimas tenían tanto miedo de las amenazas que pagaron cargos a los que ni siquiera podían hacer frente.

La Secretaria de Justicia Auxiliar Interina Branda elogió al Servicio de Inspección Postal de EE.UU. por su labor de investigación y agradeció a la Fiscalía Federal para el Distrito Sur de Florida por sus aportes al caso. El caso penal fue enjuiciado por el Abogado Litigante Phil Toomajian y el Director Auxiliar Richard Goldberg de la Oficina de Protección del Consumidor de la División Civil.

Two Connecticut men pleaded guilty today to bribery charges, admitting that they participated in a scheme to obtain confidential, internal law enforcement documents and information from a former FBI Special Agent in White Plains, New York.

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

Johannes Thaler, 51, of Fairfield County, Connecticut, and Rizve Ahmed, aka “Caesar,” 35, of Danbury, Connecticut, pleaded guilty today in White Plains, New York, federal court to bribery and conspiracy to commit honest services and wire fraud before U.S. District Judge Vincent L. Briccetti of the Southern District of New York.  Both Thaler and Ahmed admitted to participating in a bribery scheme with Robert Lustyik, a former FBI Special Agent in White Plains who worked on the counterintelligence squad. 

In pleading guilty, Thaler and Ahmed admitted that between September 2011 and March 2012, Thaler and Lustyik solicited bribes from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI Special Agent.  Thaler was Lustyik’s friend, and Ahmed, a native of Bangladesh, was an acquaintance of Thaler.  Ahmed sought confidential law enforcement information, including a Suspicious Activity Report, pertaining to a Bangladeshi political figure who was affiliated with a political party opposing Ahmed’s views.  Thaler and Ahmed admitted that Ahmed requested the confidential information to help Ahmed locate and harm his intended victim and others associated with the victim.  Ahmed also sought assistance in having criminal charges against a different Bangladeshi political figure dismissed. 

Thaler and Ahmed admitted that they exchanged various text messages in furtherance of the scheme, including text messages about a “contract” that would require Ahmed to pay a $40,000 “retainer” and $30,000 “monthly.”  In return, Lustyik and Thaler agreed to “give [Ahmed] everything [they] ha[d] plus set up [the victim] and get the inside from the party.”

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

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

Sentencing hearings for Thaler and Ahmed are scheduled for Jan. 23, 2015.

Lustyik is scheduled for trial on Nov. 17, 2014.  The charges contained in an indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. 

This case was investigated by the Department of Justice’s Office of the Inspector General and is being prosecuted by Trial Attorney Emily Rae Woods of the Justice Department’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the White Plains Division of the U.S. Attorney’s Office for the Southern District of New York.

Two groups of Houston-based diagnostic centers have agreed to pay the United States a total of more than $2.6 million to settle allegations that they violated the False Claims Act, announced Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.  The settlements were finalized without an admission of liability and without commencement of litigation.

One group of centers, which operates under the name One Step Diagnostic and is owned and controlled by Fuad Rehman Cochinwala, has agreed to pay $1.2 million.  The payment is being made to settle allegations that it violated the Stark Statute and the False Claims Act by entering into sham consulting and medical director agreements with physicians who referred patients to One Step Diagnostic Centers.

The other group of centers, which is owned and controlled by Rahul Dhawan, has agreed to pay $1,457,686.  This group consists of Complete Imaging Solutions LLC doing business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston MRI & Diagnostics LLC.  The United States alleged that these centers engaged in improper financial relationships with referring physicians and improperly billed Medicare using the provider number of a physician who had not authorized them to do so and had not been involved in the provision of the services being billed.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician's judgment about the patient's true health care needs and drive up health care costs for everyone,” said Acting Assistant Attorney General Branda.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“These settlements totaling more than $2.6 million represent the continuing commitment of our office in combatting health care fraud,” said U.S. Attorney Magidson.  “The U.S. takes these accusations seriously.  Working within the whistleblower laws, we will continue to bring these cases to public view where tax payer money is being used improperly.”  

The settlements announced today arose from a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act.  Under that act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.

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 $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.

The case, United States ex rel. Holderith, et al. v. One Step Diagnostic, Inc., et al., Case No. 12-CV-2988 (S.D. Tex.), was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas and Department of Health and Human Services - Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

The Justice Department announced today that it has filed a lawsuit against the owners and operators of the Twin Oaks Mobile Home Park, a 230-lot mobile home park, in Whitewater, Wisconsin, for refusing to allow families with children to live in certain areas of the park, in violation of the Fair Housing Act. 

The lawsuit, filed in U.S. District Court in Madison, Wisconsin, alleges that the owner of Twin Oaks, Twin Oaks Mobile Home Park, Inc. and its managers—Merrill Eugene Gutzmer and Dennis Hansen—violated the Fair Housing Act by maintaining and enforcing a policy of not allowing families with children to reside in an area that includes approximately 60 of the 230 lots within the park.  The park does not limit residency to older persons.  The complaint further alleges that, under the policy described above, the defendants refused to approve the application for residency of a single woman who planned to purchase the home of a former resident and live there with her then two-year-old child.  The single woman and the mobile home owner who was trying to sell her mobile home subsequently filed a complaint with the Department of Housing and Urban Development (“HUD”).  After conducting an investigation, HUD found that the defendants had violated the Fair Housing Act, and referred the matter to the Department of Justice.  

“For over twenty-five years, the Fair Housing Act has prohibited housing providers from refusing to rent or sell housing to families with children,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.  “Many parents are already struggling to find affordable housing for their families, and they should not also have to face discrimination because they have children.”

“This office is committed to ensuring that all residents in this district, including families with children, are afforded equal opportunity to rent and live where they choose under the Fair Housing Act,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin.  “Discrimination based on familial status will not be tolerated in this district.”           

“HUD and the Department of Justice will continue to enforce the Fair Housing Act to ensure that the housing options of families are not illegally limited because they have children,” said HUD Assistant Secretary Gustavo Velasquez for Fair Housing and Equal Opportunity.

The suit seeks a court order requiring the defendants to bring their policies and practices into compliance with the Fair Housing Act, as well as monetary damages for persons harmed and civil penalties to the United States.  Anyone with information about potential discrimination against families with children at Twin Oaks should call the Justice Department at 1-800-896-7743, mailbox #9997, or call the U.S. Attorney’s Office for the Western District of Wisconsin, at (608) 264-5158.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status, and disability.  Among other things, the Fair Housing Act makes it illegal to refuse to rent housing and to discriminate in the terms or conditions of housing rentals because of familial status, except in specified categories of housing that are reserved for older persons.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt.

Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777 or through www.hud.gov.

The complaint is an allegation of unlawful conduct.  The allegations in the complaint must still be proven in federal court.

A jury in Miami convicted a Lima, Peru, man on 26 felony charges of conspiracy, fraud and attempted extortion arising from his operating call centers in Peru that lied to and threatened Spanish-speaking victims into paying fraudulent settlements, the Department of Justice announced today. 

Juan Alejandro Rodriguez Cuya, 35, was convicted by a jury after less than two hours of deliberation following a two-week trial before U.S. District Court Judge Patricia A. Seitz in Miami federal court. His co-defendant at trial, Maria Luzula, 52, of Miami, pleaded guilty to all of the charges against her midway through the trial.  Luzula is Cuya’s mother.

Cuya and Luzula both face a statutory maximum of 20 years in prison on each count. Both defendants remain in custody pending their sentencing on Jan. 22, 2015, and Dec. 18, respectively.

“The defendants targeted and preyed upon the Spanish-speaking community – and the evidence of the harm that their fraud caused on individual victims is heart-wrenching,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “The Justice Department is committed to prosecuting those who defraud consumers for their own personal gain.”

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

Additional evidence at trial established that Luzula’s and Cuya’s employees claimed that the consumers could resolve the fines if they immediately paid a “settlement fee.”  Consumers who contested these settlement fees were told that failure to pay could lead to arrest, deportation or forfeiture of property.  Thousands of victims succumbed to these threats and paid fees that they did not owe.  A phone room in Miami collected the fees.

Victims who testified at trial spoke of how anxious the calls made them.  The victims were so afraid of the threats that they paid fees they simply could not afford.

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

Attorney General Eric Holder announced today that the federal government will recognize same-sex marriages taking place in the states affected by the Supreme Court’s recent decision to decline to review rulings from three federal appeals courts that had struck down bans on same-sex marriage. The Attorney General added that the Department of Justice will work with agencies across the administration to ensure that all applicable federal benefits are extended to those couples as soon as possible. 

“We will not delay in fulfilling our responsibility to afford every eligible couple, whether same-sex or opposite-sex, the full rights and responsibilities to which they are entitled. With their long-awaited unions, we are slowly drawing closer to full equality for lesbian, gay, bisexual, and transgender Americans nationwide,” Attorney General Holder said.

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

“Last week, the Supreme Court declined to review rulings from three federal appeals courts that had struck down bans on same-sex marriage in five states across the country.  Going forward, marriage equality will be the law in those states.

“The practical consequences of the Court’s decision are profound for families throughout the nation.  Within hours of the decision, same-sex couples in Indiana, Oklahoma, Utah, Virginia, and Wisconsin were able to have their unions recognized in the states where they live—to stand with their partners, and with their children, as loving and committed families with the full protection of the law.

“I am pleased to announce that the federal government will recognize the same-sex marriages now taking place in the affected states, and I have directed lawyers here at the Department of Justice to work with our colleagues at agencies across the Administration to ensure that all applicable federal benefits are extended to those couples as soon as possible.  We will not delay in fulfilling our responsibility to afford every eligible couple, whether same-sex or opposite-sex, the full rights and responsibilities to which they are entitled.

“With their long-awaited unions, we are slowly drawing closer to full equality for lesbian, gay, bisexual, and transgender Americans nationwide.  By letting the lower-court decisions stand, the Supreme Court expanded the number of states allowing same-sex marriage from 19 to 24, along with the District of Columbia.  Just one day after the Supreme Court’s action, the U.S. Court of Appeals for the Ninth Circuit joined the other courts that have invalidated bans, extending marriage rights even further.  In the past eight days, at least half a dozen additional states have recognized marriage equality.  And even more states covered by the lower-court rulings will almost certainly be joining them in short order. 

“The steady progress toward LGBT equality we’ve seen – and celebrated – is important and historic.  But there remain too many places in this country where men and women cannot visit their partners in the hospital, or be recognized as the rightful parents of their own adopted children; where people can be discriminated against just because they are gay.  Challenges to marriage restrictions are still being actively litigated in courts across the country.  And while federal appeals courts have so far been unanimous in finding that bans on same-sex marriage are unconstitutional, if a disagreement does arise, the Supreme Court may address the question head-on.  If that happens, the Justice Department is prepared to file a brief consistent with its past support for marriage equality. 

“In the meantime, we will continue to extend federal benefits to same-sex couples to the fullest extent allowed by federal law.  And we will continue to work—to the very best of our ability—to bring about a more equal future for all Americans nationwide.”

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

The Department of Justice announced today that it has filed its complaint in intervention in a case against defendants Sikorsky Aircraft Corporation and two of its subsidiaries, Sikorsky Support Services Inc. and Derco Aerospace Inc., for violating the False Claims Act.  Sikorsky Aircraft Corporation is a wholly owned subsidiary of United Technologies Corporation, with headquarters in Stratford, Connecticut. 

The government’s complaint alleges that Sikorsky Aircraft Corporation approved an illegal cost-plus-a-percentage-of-cost subcontract between Sikorsky Support Services Inc., and Derco Aerospace.  A cost-plus-a-percentage-of-cost contract is one where the cost of performance is unknown in advance and compensation is determined based on the cost of performance plus an agreed-to percentage of such costs.  Such contracts are prohibited because they give contractors no incentive to control the cost of performance.  The complaint further alleges the defendants used this illegal subcontract to overcharge the Navy on parts and materials that were used to maintain Navy aircraft.

“Those who contract with the federal government and accept taxpayer dollars, must follow the rules,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Today’s complaint demonstrates, once again, that the Department of Justice will not tolerate contractors who engage in schemes to defraud the armed forces or any other agency of the United States.”

“The claims in the civil complaint that we have filed reflect our focused and purposeful investigative work in identifying and seeking remedies for false claims in government contracting,” said U.S. Attorney James L. Santelle for the Eastern District of Wisconsin.  “Under the authority of the False Claims Act, we pursue fraud of this sort to ensure that taxpayer dollars are spent lawfully and that overcharges and other types of contracting misconduct are addressed.”

The complaint was filed in a case brought under the qui tam provisions of the False Claims Act by Mary J. Patzer, a former employee of Derco.  Under the False Claims Act, a private citizen, called a “relator,” may bring suit on behalf of the United States and share in any recovery.  The government may intervene in the case, as the government has done here.  The False Claims Act allows the government to recover treble damages and penalties from those who violate it.

The case is being handled jointly by the Civil Division and the U.S. Attorney’s Office for the Eastern District of Wisconsin.

The case is captioned United States ex rel. Patzer v. United Technologies Corporation, et al., No. 11-C-560 (E.D. Wis.).  The claims made in the complaint are allegations only, and there has been no determination of liability. 

Two former Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) derivative traders – including the bank’s former Global Head of Liquidity & Finance in London – have been charged in a superseding indictment for their alleged roles in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR), a benchmark interest rate to which trillions of dollars in interest rate contracts were tied, the Justice Department announced today.  Six former Rabobank employees have now been charged in the Rabobank LIBOR investigation.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.

Earlier today, a federal grand jury in the Southern District of New York returned a superseding indictment charging Anthony Allen, 43, of Hertsfordshire, England; and Anthony Conti, 45, of Essex, England, with conspiracy to commit wire fraud and bank fraud and with substantive counts of wire fraud for their participation in a scheme to manipulate the USD and Yen LIBOR rate in a manner that benefitted their own or Rabobank’s  financial positions in derivatives that were linked to those benchmarks. 

The indictment also charges Tetsuya Motomura, 42, of Tokyo, Japan, and Paul Thompson, 48, of Dalkeith, Australia, who were charged in a prior indictment with Paul Robson, a former Rabobank LIBOR submitter.  In addition to adding as defendants Allen and Conti, the superseding indictment alleges a broader conspiracy to manipulate both the USD LIBOR and the Yen LIBOR. 

Robson and Takayuki Yagami, a former Rabobank derivatives trader, each pleaded guilty earlier this year to one count of conspiracy in connection with their roles in the scheme.

“Today, we have charged two more members of the financial industry with influencing Dollar LIBOR and Yen LIBOR to gain an illegal advantage in the market, unfairly benefitting their own trading positions in financial derivatives,” said Assistant Attorney General Caldwell.  “LIBOR is a key benchmark interest rate that is relied upon to be free of bias and self-dealing, but the conduct of these traders was as galling as it was greedy.  Today’s charges are just the latest installment in the Justice Department’s industry-wide investigation of financial institutions and individuals who manipulated global financial rates.”

“With today’s charges against Messrs. Allen and Conti, we continue to reinforce our message to the financial community that we will not allow the individuals who perpetrate these crimes to hide behind corporate walls,” said Deputy Assistant Attorney General Snyder.  “This superseding indictment, with its charges against Mr. Allen, makes an especially strong statement to managers in financial institutions who devise schemes to undermine fair and open markets but leave the implementation – and often the blame – with their subordinates.”

“With today’s indictments the FBI’s investigation into Rabobank’s manipulation of LIBOR benchmark rates expands in scope to include the U.S. Dollar,” said Assistant Director in Charge McCabe. “I would like to thank the special agents, forensic accountants, and analysts, as well as the prosecutors who have worked to identify and stop those who hide behind complex corporate and securities fraud schemes.”

According to the superseding indictment, at the time relevant to the charges, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believed they would be charged if borrowing from other banks.   LIBOR was published by the British Bankers’ Association (BBA), a trade association based in London.  LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for U.S. Dollar and Yen currency for a specific maturity was the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank. 

LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. 

Rabobank entered into a deferred prosecution agreement with the Department of Justice on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

According to allegations in the superseding indictment, Allen, who was Rabobank’s Global Head of Liquidity & Finance and the manager of the company’s money market desk in London, put in place a system in which Rabobank employees who traded in derivative products linked to USD and Yen LIBOR regularly communicated their trading positions to Rabobank’s LIBOR submitters, who submitted Rabobank’s LIBOR contributions to the BBA.  Motomura, Thompson, Yagami and other traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they asked Conti, Robson, Allen and others to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions.  Conti, who was based in London and Utrecht, Netherlands, served as Rabobank’s primary USD LIBOR submitter and at times acted as Rabobank’s back-up Yen LIBOR submitter.  Robson, who was based in London, served as Rabobank’s primary submitter of Yen LIBOR.  Allen, in addition to supervising the desk in London and money market trading worldwide, occasionally acted as Rabobank’s backup USD and Yen LIBOR submitter.  Allen also served on a BBA Steering Committee that provided the BBA with advice on the calculation of LIBOR as well as recommendations concerning which financial institutions should sit on the LIBOR contributor panel. 

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

The investigation is being conducted by special agents, forensic accountants and intelligence analysts in the FBI’s Washington Field Office.  The prosecution is being handled by Senior Litigation Counsel Carol L. Sipperly and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antitrust Division.  The Criminal Division’s Office of International Affairs has provided assistance in this matter.

The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad.  The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the LIBOR investigation.  The Securities and Exchange Commission also has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.   The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of Rabobank.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.com. 

Ten alleged members of the violent Almighty Imperial Gangsters Nation gang have been indicted by a federal grand jury in the Southern District of Florida for their roles in various murders in Miami, Chicago, and East Chicago.  Fifteen alleged members of the gang have now been charged by the Justice Department in this case.

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 Robert J. Holley of the FBI’s Chicago Field Office, and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.

The second superseding indictment returned by a federal grand jury on Oct. 9, 2014, and unsealed today, charges Robert Martinez, aka “Trap,” 20, of Miami, along with Rogelio Perez, aka “Popeye,” 40, Eddie Camacho, aka “NeNe,” 35, Miguel Pedraza, aka “Fuzzy,” 33, Ryan Perez, aka “Lil Dk,” 32, Carlos Mena, aka “Rollo,” 33, Carlos Gomez, aka “Lokes,” 35, and Guillermo Sinisterra, aka “Memo,” 26, all of Chicago, with conspiracy to participate in racketeering activity, including murder.  Piero Benitez, aka “Bam Bam,” 27, of Skokie, Illinois, was charged with murder in aid of racketeering, and Santiago Salcedo, aka “Chino,” 25, of Miami, was charged with conspiracy to commit murder in aid of racketeering.  Alleged fellow gang members Jose Herrera, aka “Spyro,” 27, Leonel Carrera, aka “Leo,” 25, Victor Lopez, aka “Magic,” Ramon Madruga, aka “Porky” 28, and Alex Enrique Somarriba, aka “A-Rock,” 28, all of Chicago, were previously charged in the superseding indictment unsealed in this case on Aug. 4, 2014, and remain charged in the second superseding indictment. 

According to the second superseding indictment, all fifteen defendants are members of the Almighty Imperial Gangsters Nation, which is a nationally-known organized street gang that originated in the near northwest side of Chicago and spread to other regions of the United States, including South Florida.  Members and associates of the Almighty Imperial Gangsters Nation allegedly engaged in acts of violence, including murder, attempted murder, battery, aggravated battery, and aggravated assault, as well as narcotics distribution and other criminal activities.  Specifically, the indictment charges that the gang is responsible for twelve murders in Miami, Chicago and East Chicago, Indiana between 1985 and 2011, including the murder of a state prosecution witness whose cooperation with law enforcement ultimately led to the conviction of the gang’s South Florida leader, Victor Lopez, on cocaine distribution charges.

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

This case is being investigated by the FBI field offices in Chicago, Miami, and Merrillville, Indiana, and the Bureau of Alcohol, Tobacco, Firearms and Explosives field office in Merrillville, Indiana, along with the Miami-Dade Police Department, the City of Miami Police Department, the Chicago Police Department, the Franklin Park, Illinois, Police Department, and the East Chicago, Indiana Police Department.  The Florida Department of Corrections and the Broward County Sheriff’s Office also assisted with this case.

The case is being prosecuted by Joseph A. Cooley and Rebecca A. Staton of the Criminal Division’s Organized Crime and Gang Section, as well as the Forfeiture Section of the U.S. Attorney’s Office for the Southern District of Florida, with the assistance of the U.S. Attorneys’ Offices for the Northern District of Indiana and the Northern District of Illinois, as well as the State Attorneys’ Offices for Miami-Dade and Broward Counties in Florida and Cook County in Illinois.

A Romanian man was sentenced today to 24 months in prison for his role in receiving and sending overseas approximately $320,000 in illicit proceeds derived from an international fraud scheme involving online marketplace websites.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Rivera of the Middle District of Tennessee made the announcement.  U.S. District Judge Aleta A. Trauger of the Middle District of Tennessee imposed the sentence. 

Alexandru Stanciu, 36, of Bucharest, Romania, was indicted by a federal grand jury in August 2013 and pleaded guilty to one count of conspiracy to commit bank and wire fraud in February 2014.  In addition to his prison term, Stanciu was ordered to pay $305,106 in restitution.

According to statements at his plea hearing, Stanciu’s co-conspirators fraudulently listed vehicles for sale at online marketplaces such as eBay.  When victims expressed interest in purchasing the vehicles, co-conspirators responded with emails directing the victims to wire payments to specified bank accounts.  These bank accounts were opened by Stanciu, using false identities and fraudulent documents, including counterfeit passports, between December 2011 and July 2013.  In total, 17 victims sent approximately $321,389 to accounts opened by Stanciu.  Stanciu subsequently sent the bulk of the money to co-conspirators located overseas. 

The case is being investigated by the FBI and the Tennessee Bureau of Investigation and prosecuted by Senior Counsel Mysti Degani of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Byron M. Jones of the Middle District of Tennessee. 

Akba Jihad Jordan, 22, of Raleigh, North Carolina, pleaded guilty before United States Magistrate Judge Robert B. Jones to conspiracy to provide material support to terrorists.  Jordan and co-defendant Avin Marsalis Brown, 21, also of Raleigh, were arrested on March 19, 2014, and charged initially in a criminal complaint.  On April 1, 2014, a federal grand jury returned an indictment charging Jordan and Brown with conspiring to provide material support to terrorists.

United States Attorney Thomas G. Walker stated, “This investigation is a sober reminder that we must remain vigilant in our efforts to prosecute extremists who conspire to provide material support to foreign terrorist organizations.”

“Akba Jordan turned his back on his own country and was willing to fight side by side with terrorist groups in Yemen and Syria who wish to do us harm,” said John Strong, Special Agent in Charge of the FBI in North Carolina.  “American citizens who offer support to terrorist organizations pose a grave threat to our national security and will face serious consequences for their actions.”

As set forth in the affidavit supporting the complaint, Brown initiated contact online with an undercover employee of the Federal Bureau of Investigation (FBI).  Brown requested assistance in traveling overseas for “fisabilillah” – a phrase commonly utilized by Islamic Extremists to refer to joining extremist groups in violence overseas.  Subsequently, both Brown and Jordan engaged in numerous discussions with an FBI  confidential source in which they expressed a desire to travel overseas to join certain groups in fighting the “kuffar” (non-Muslims) and “munafiq” (Muslims considered to be hypocrites), primarily in either Syria or Yemen.  These groups included al-Qaeda in the Arabian Peninsula (AQAP), the Islamic State of Iraq and Sham (ISIS), and jabhat al-Nusrah (JAN).  They also talked frequently about weapons and the use of weapons in fighting the kuffar, both overseas and in the United States.  Jordan specifically discussed with Brown the weapons he had in his possession, including an AK-47, and described how he would not hesitate to use them.  The affidavit describes a meeting at Jordan’s apartment on Dec. 30, 2013, during which Jordan showed Brown how to break down the AK-47.

On March 19, 2014, Brown was arrested at Raleigh Durham International Airport prior to boarding a flight with a final destination in Turkey.  Brown stated in an interview that he intended to travel from Turkey into Syria.  Once overseas, Brown intended to meet with a member of ISIS whom he had befriended online.  Once established, and after Jordan had obtained his own passport and enough funds to purchase a ticket, Brown could then assist Jordan in entering Syria from Turkey to additionally join Brown.

Jordan, who had not yet obtained a passport, was also arrested on March 19.  Jordan admitted that he had made an appointment to obtain a passport so that so that he could go to Syria and fight.  A search warrant executed that day at Jordan’s apartment recovered the AK-47 and several other weapons.  On Aug.12, 2014, Brown pleaded guilty to the indictment.  His sentencing is currently set for Nov. 6, 2014.

Investigation of this case was conducted by the Federal Bureau of Investigation, Charlotte Division, Resident Agency Joint Terrorism Task Force (JTTF).  The Raleigh JTTF consists of the following agencies: FBI, DHS-H.S.I., Raleigh Police Department, Durham Police Department, Cary Police Department, NC State Bureau of Investigation, and the NC State Highway Patrol.  The prosecution is being handled by Assistant United States Attorney Jason Kellhofer and Trial Attorney Michael Dittoe of the Counterterrorism Section in the Justice Department’s National Security Division.

News releases are available on the U.S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.

Grand Jury Returns Superseding Indictment as Investigation Continues

A federal grand jury in the District of Columbia returned a superseding indictment today charging Omar Gonzalez with three additional offenses stemming from a recent incident in which he ran into the White House while armed with a folding knife.

The superseding indictment was announced by U.S. Attorney Ronald C. Machen Jr. and Special Agent in Charge Kathy A. Michalko of the U.S. Secret Service Washington Field Office.

Gonzalez, 42, formerly of Copperas Cove, Texas, initially was indicted on Sept. 30, 2014, in the U.S. District Court for the District of Columbia. He was charged at that time with unlawfully entering a restricted building or grounds while carrying a deadly or dangerous weapon, a federal offense; carrying a dangerous weapon outside a home or place of business, a District of Columbia offense; and unlawful possession of ammunition, also a D.C. offense.

The superseding indictment includes those three charges.  It also adds two federal counts of assaulting, resisting, or impeding certain officers or employees, and one District of Columbia count of unlawful possession of a large capacity ammunition feeding device.

According to the government’s evidence, on Sept. 19, 2014, at about 7:19 p.m., Gonzalez climbed over the north fence of the White House.  An officer with the U.S. Secret Service ran toward him and yelled at him to stop.  Gonzalez, however, ran toward the White House.  Moments later, he went through the north doors and entered the building.

He was apprehended inside the White House after he allegedly assaulted, resisted or impeded two U.S. Secret Service officers, the basis for the new federal charges filed today.  Gonzalez was searched and a black folding knife was discovered in his right front pants pocket.  The knife had a serrated blade that was three and one-half inches long.

After Gonzalez’s arrest, he gave oral consent to search his vehicle, which was located on Constitution Avenue NW.  The vehicle contained hundreds of rounds of ammunition, both in boxes and in magazines, two hatchets and a machete.  The newly-filed District of Columbia charge involves the recovery of gun magazines that held more than 10 rounds. 

Gonzalez is scheduled to appear in court on Oct. 21, 2014.  He has been in custody since his arrest on Sept. 19, 2014.

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

This case is being investigated by the U.S. Secret Service.  It is being prosecuted by Assistant U.S. Attorneys David Mudd and Thomas A. Gillice, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia.

Under a settlement agreement with the United States,  ATP Infrastructure Partners LP (ATP-IP) will pay a $1 million civil penalty and perform corrective measures to resolve claims by the U.S. under the Clean Water Act and the Outer Continental Shelf Lands Act (OCSLA) of unauthorized discharges of oil and chemicals from an oil platform into the Gulf of Mexico, announced the Department of Justice, the Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) and the U.S. Environmental Protection Agency (EPA).  This is the first joint judicial enforcement action involving BSEE and EPA claims in response to alleged violations of both the Clean Water Act and OCSLA.

The United States’ complaint, which was filed in February 2013 in the U.S. District Court for the Eastern District of Louisiana, alleges that oil and an unauthorized chemical dispersant were discharged into the Gulf of Mexico from ATP-IP’s oil and gas production platform known as the ATP Innovator.  A BSEE inspection of the ATP Innovator in 2012 revealed alleged unlawful discharges of oil and a piping configuration that routed an unpermitted chemical dispersant into the facility’s wastewater discharge pipe to mask excess oil being discharged into the ocean.  At the time of the discovery, ATP Oil & Gas Corporation (ATP) was the operator of the facility, and ATP-IP was, and remains, the owner.  The ATP Innovator was operating in the Mississippi Canyon, approximately 45 nautical miles offshore of southeastern Louisiana.  Earlier this year, the ATP Innovator was removed from the deepwater production site and towed to port in Corpus Christi.

The United States filed suit against ATP and ATP-IP seeking Clean Water Act penalties and corrective measures under the Clean Water Act and OCSLA.  ATP-IP’s motion to dismiss the claims against it and a related motion for appeal were both denied by the court in 2013.  In addition to the penalty and corrective measures, ATP-IP will conduct enhanced reporting to address safety and environmental concerns.  The Clean Water Act and OCSLA claims against ATP are not part of this settlement with ATP-IP and remain pending before the district court for future resolution.

“The Justice Department is committed to protecting public health and marine ecosystems like the Gulf from unlawful and unsafe practices,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “This joint enforcement action demonstrates our resolve to hold non-operating owners of oil production facilities and their operators accountable for unlawful discharges from their facilities, and will result in important steps to help prevent future unlawful discharges of oil and chemicals from the ATP facility.”

“Our mission is to ensure offshore operations are conducted safely and in accordance with federal regulations to protect workers and the environment,” said BSEE Director Brian Salerno.  “When violations occur, we will exercise our full authority, and leverage the authorities of our sister agencies, to hold companies accountable.  We appreciate the EPA’s and the Justice Department’s assistance in bringing these claims to resolution.”

“EPA and its federal partners are committed to ensuring that offshore energy production is done safely and responsibly,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance.  “Discharging oil illegally can foul water, harm wildlife and is unfair to companies that follow the law.  It is our obligation to protect local communities and companies playing by the rules.”

Under the Clean Water Act it is illegal to discharge oil or hazardous substances into or upon waters of the contiguous zone or in connection with activities under OCSLA in quantities that may be harmful to the environment or public health or welfare.  The penalty paid for these violations will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Fund Center.  The Oil Spill Liability Trust Fund is used to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances.

Although ATP-IP took the Innovator out of operation earlier this year, it must perform corrective measures to ensure safe and lawful future operations.  In particular, ATP-IP must remove and seal the connection on the wastewater discharge outfall pipe that was used to inject chemical dispersants, thereby permanently eliminating the access point for improperly injecting dispersants into the wastewater discharge pipe.  Additionally, prior to any future use of the ATP Innovator for exploration, development, or production activities in U.S. waters, ATP-IP will have to certify to EPA, BSEE and DOJ that:

• the facility has sufficient wastewater treatment equipment and operational plans to meet and maintain Clean Water Act permit discharge limits and prevent unlawful discharge of pollutants to offshore waters at all times;

• the facility’s surface production-safety systems will be maintained in a manner that provides for protection of the environment under BSEE regulations; and

• all facility operations will be performed in a safe and workmanlike manner in accordance with BSEE regulations. 

As a further safeguard, ATP-IP will be required to have the ATP Innovator’s wastewater treatment operations and surface production-safety systems independently audited for Clean Water Act and OCSLA compliance if the facility is used or leased in the future by ATP-IP or a related entity.

The proposed consent decree, lodged in the Eastern District of Louisiana, is subject to a 30-day public comment period and court review and approval.  A copy of the consent decree is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html

The Justice Department announced today that it reached an agreement with Constructor Services Inc. (CSI), a construction company headquartered in the Atlanta, Georgia metropolitan area.  The agreement resolves a claim that the company engaged in discriminatory documentary practices during the employment eligibility verification process in violation of the Immigration and Nationality Act (INA).   

The department’s investigation found that CSI required non-U.S. citizens, but not similarly-situated U.S. citizens, to produce specific documentary proof of their immigration status for the purpose of verifying their employment eligibility.  The INA’s anti-discrimination provision prohibits employers from making additional and unauthorized documentary demands based on citizenship status or national origin when verifying or re-verifying an employee’s employment eligibility. 

 “Employers must make sure that they are not erecting unlawful discriminatory barriers in their employment eligibility verification policies and practices,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.  “The division is committed to identifying and tearing down these illegal barriers.”

Under the settlement agreement, CSI will pay $18,000 in civil penalties to the United States, undergo training on the anti-discrimination provision of the INA, revise its employment eligibility reverification policies, and be subject to monitoring of its employment eligibility verification practices for twenty-four months.

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

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

Applicants or employees who believe they were subjected to: 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.

A Cincinnati federal grand jury returned a one-count indictment against a former executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to allocate markets and fix prices of pinion-assist type electric powered steering assemblies, the Department of Justice announced today.

The indictment, filed yesterday in the U.S. District Court for the Southern District of Ohio charges Akira Wada, a former executive of Showa Corporation, with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate markets, and to fix, stabilize, and maintain the prices of pinion-assist type electric powered steering assemblies sold to Honda in the United States and elsewhere.  Wada was the Manager and then General Manager of Sales Department 1 at Showa from at least as early as 2003 until at least June 2009.  In 2013 Wada became a Director and Operating Officer of Showa. 

“Yesterday’s indictment again demonstrates that antitrust violations are not just corporate offenses but also crimes by individuals,” said Bill Baer, Assistant Attorney General for the Antitrust Division.  “The division will continue to vigorously prosecute executives who circumvent the law in order to maximize profits by harming consumers.”

The indictment alleges, among other things, that from at least as early as 2007 and continuing until at least September 2012, Wada and his co-conspirators participated in meetings, conversations, and communications to discuss the market allocation scheme and price quotations to be submitted to Honda in the United States and elsewhere.  It alleges that Wada and his co-conspirators submitted price quotations in accordance with the agreements reached at these meetings.  Wada also directed, authorized, or consented to the participation of subordinate employees in the price fixing conspiracy.

Showa is a Japanese company with its principal place of business in Saitama, Japan.  Showa was engaged in the business of manufacturing and selling pinion-assist type electric powered steering.  On June 10, 2014, Showa pleaded guilty and agreed to pay a $19.9 million criminal fine for its role in the conspiracy.

Including Wada, 44 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the auto parts industry.  Twenty-six of these individuals have pleaded guilty and have been sentenced to serve prison terms ranging from a year and one day to two years.  Additionally, 29 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of nearly $2.4 billion in fines.

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

Yesterday's indictment is the result of an ongoing federal antitrust investigation into market allocation, price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office.  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 Cincinnati Field Office at 513-421-4310.

Attorney General Eric Holder released the following statement Thursday after Deputy Attorney General James M. Cole announced his plans to depart the Justice Department in the coming months:

“Over the past four years, Jim Cole has been my indispensable partner in leading the U.S. Department of Justice and extending the promise of equality under the law for everyone in this country.  Jim's leadership and ingenuity have been critical in attaining historic results on behalf of the American people.  During times of great challenge and unprecedented resource constraints, I have relied upon Jim to ensure that the Justice Department operates as effectively and efficiently as possible.  His guidance and wise counsel have made him an irreplaceable advisor, a proven and trusted leader, and a champion for the cause of justice.  I have been proud to count him as a colleague and a friend for nearly four decades.  I thank him for his tireless work and faithful service over the years.  And although he will be dearly missed by dedicated public servants at every level of the Justice Department, I’m happy that we’ll be able to work together in the coming months.”

Attorney General Eric Holder announced on Thursday Lisa Foster as the Director of the Access to Justice Initiative (ATJ).  Founded in 2010 by Attorney General Holder, ATJ seeks to address the access-to-justice crisis in the criminal and civil justice system by working within the department, across federal agencies, and with state, local and tribal justice system stakeholders to increase access to counsel and legal assistance and to improve the systems that serve people who are unable to afford lawyers.  By supporting the right to counsel in state and local courts, educating the defender community, supporting defender services in tribal courts, strengthening the juvenile justice system, and enhancing federal programs though civil legal aid, ATJ staff work to help the justice system efficiently deliver outcomes that are fair and accessible to all, irrespective of wealth and status. 

“Lisa is a staunch defender of due process, a champion of the rights of all Americans, and a passionate advocate for equal justice under law,” said Attorney General Eric Holder.  “Throughout her impressive career – from her earliest days in public interest law, to her work as a legal aid provider and her distinguished service on the bench – she has consistently demonstrated superior judgment, impeccable integrity, and a steadfast commitment to the high ideals that the Access to Justice Initiative is charged with protecting.  I have no doubt that, under Lisa’s leadership, this important initiative will continue to expand its groundbreaking work to build the more effective justice system – and the more just society – that all Americans deserve.”

Prior to joining the department, Foster served for ten years as a California Superior Court Judge in San Diego presiding over criminal, civil and family law departments.  Foster began her legal career as a Staff Attorney at the Center for Law in the Public Interest in Los Angeles and later joined the Legal Aid Foundation of Los Angeles.  Following her service at the Legal Aid Foundation of Los Angeles, Foster served as the Executive Director of California Common Cause before becoming an Adjunct Professor at the University of San Diego Law School and later joining the law firm of Phillips & Cohen as Of Counsel.  For the past year, Foster was a judicial fellow in the Office of Senator Edward J. Markey where she advised Senator Markey on a variety of issues including judicial nominees, patent legislation, regulatory reform and international law and policy.  She received a B.A. in American Studies from Stanford University and J.D., magna cum laude, from Harvard Law School. 

“The Access to Justice Initiative does critical work to increase access to counsel and legal assistance for all,” said Acting Associate Attorney General Stuart F. Delery.  “We are privileged to have a person like Lisa, who has dedicated her career to supporting a justice system that is fair and accessible to everyone, guiding this important effort.  I am confident that, with Lisa’s leadership, the initiative will continue to build on the outstanding work done by Deborah Leff, Karen Lash, and the dedicated team working with them.”

Last month, as part of ATJ’s work with the Civil Rights Division, the department filed a statement of interest with the Supreme Court of the State of New York, Albany County, in Hurrell-Harring v. State of New York.  In this class action litigation, the plaintiffs allege that, due to systemic failures in four New York counties, indigent criminal defendants have been constructively denied the right to counsel.  And in April, ATJ launched the Legal Aid Interagency Roundtable Toolkit.  This online resource located on ATJ’s website is the product of collaboration with the White House Domestic Policy Council and 18 federal agencies dedicated to examining current programs and practices in order to create better outcomes. 

To learn more about the Access to Justice Initiative, visit http://www.justice.gov/atj/.  

CONCORD – Rafael Humberto Celaya Valenzuela, 41, formerly of Sonora, Mexico, was convicted following a jury trial of conspiracy to distribute controlled substances, including cocaine, heroin and methamphetamine, announced United States Attorney John P. Kacavas.

Celaya Valenzuela and his co-conspirators were members of the Sinaloa drug cartel, led by represented the Sinaloa Cartel, led by the notorious drug lord Joaquin Guzman-Loera, also known as “Chapo.”  The cartel was seeking new cocaine distribution routes from South America to Europe, Canada and the United States.  Beginning in early 2010 and continuing through August 2012, undercover FBI agents posing as members of a European organized crime syndicate met with the cartel representatives.  Many of the meetings were audio and video recorded and portions of those recordings were played for the jury.  The recordings showed Celaya Valenzuela and several co-conspirators attending meetings in Miami, Boston, Madrid, Spain, and in Portsmouth and New Castle, New Hampshire.

Celaya Valenzuela held himself out as an attorney and financial planner working on behalf of Chapo and the cartel.  Manuel Gutierrez Guzman, a co-conspirator and first cousin of Chapo, held himself out as his cousin’s representative in the negotiations.  The cartel representatives offered to deliver thousands of kilograms of cocaine by containerized cargo vessels to various ports on the northeastern seaboard of the United States and in Europe.  They further represented that the cocaine would come from any number of source countries, including Bolivia, Panama, Belize and Colómbia.  The deal was consummated by a face-to-face meeting with Chapo and several telephone calls in which he himself discussed details of the intended shipments.

On July 27, 2012, the conspirators delivered 346 kilograms of cocaine, more than 750 pounds worth millions of dollars, to a port in Algeciras, Spain.  The cocaine was shipped via cargo container in boxes that purportedly held glassware.  The FBI seized the cocaine, and Celaya Valenzuela, Gutierrez Guzman, Samuel Zazueta Valenzuela and Jesus Palazuelos Soto were arrested by Spanish law enforcement in Madrid on Aug. 7, 2012.  The defendants were then extradited to New Hampshire. 

Manuel Gutierrez Guzman, Samuel Zazueta Valenzuela and Jesus Palazuelos Soto pleaded guilty before trial.  A sentencing hearing for Soto is scheduled for Dec. 22, 2014.  Sentencing hearings for Manuel Gutierrez Guzman and Samuel Zazueta Valenzuela are scheduled for Jan. 15, 2015.  Celaya Valenzuela’s sentencing is scheduled for Jan. 22, 2015.  All the defendants face a mandatory minimum sentence of 10 years and a maximum sentence of life imprisonment. 

The cartel’s leader, Joaquin “Chapo” Guzman-Loera, was arrested by Mexican authorities in February 2014.  He is under indictment in multiple jurisdictions in the United States, including the District of New Hampshire. 

“Today’s guilty verdict, together with the guilty pleas of the defendant’s co-conspirators, demonstrates the Department of Justice’s commitment to disrupting and dismantling international drug trafficking organizations wherever they seek to peddle their poison,” said U.S. Attorney Kacavas.  “Whether along our southwest border, in major American cities, or in bucolic New Hampshire, we will use every law enforcement and prosecutorial tool at our disposal to bring international drug traffickers to justice.  I want to thank our federal law enforcement partners, especially the FBI agents who went undercover at significant risk to their personal safety, and the Spanish National Police for their assistance in foiling this far-reaching scheme.”

The case was investigated by the Federal Bureau of Investigation, and the Justice Department’s Office of International Affairs provided assistance with the extradition.  The case was prosecuted by First Assistant United States Attorney Don Feith.