District Not Recorded

Attorney General Eric Holder released the following statement Wednesday on the resignation of U.S. Attorney Jenny Durkan for the Western District of Washington:

"As United States Attorney for Western Washington, Jenny has served as a tireless advocate for the American people, for the citizens of Washington state, and for the cause of justice.

“Over the years, she has demonstrated remarkable skill in guiding complex litigation, fostering interagency coordination, and combating a wide range of criminal activities. Jenny has been an exceptional leader in the Justice Department’s fight against cyber-crime and our work to protect the civil rights of all Americans. And with a strong focus on education, prevention, treatment, and community outreach, she launched one of the first federal drug courts.

“Jenny Durkan exemplifies the highest standards of personal integrity and professional excellence. For the past five years, I have been grateful for Jenny’s dedicated service and her wise counsel. I am certain that the people of Western Washington will continue to benefit from her service for years to come. And although I wish her the very best as she takes the next step in her career, I will miss her leadership, her contributions, and her friendship.”

The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the West Virginia Department of Environmental Protection (WVDEP) today announced a settlement with Trans Energy Inc., requiring the oil and gas company to restore portions of streams and wetlands at 15 sites in West Virginia that were polluted by the company’s unauthorized discharge of dredge or fill material. Trans Energy will pay a penalty of $3 million to be divided equally between the federal government and the WVDEP. The Clean Water Act requires a company to obtain a permit from EPA and the U.S. Army Corps of Engineers prior to discharging dredge or fill material into wetlands, rivers, streams and other waters of the United States.

“Today’s agreement requires that Trans Energy take important steps to comply with state and federal laws that are critical to protecting our nation’s waters, wetlands and streams,” said Sam Hirsch, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “We will continue to ensure that the development of our nation’s domestic energy resources, including through the use of hydraulic fracturing techniques, complies with the Clean Water Act and other applicable federal laws.”

“As part of our commitment to safe development of domestic energy supplies, EPA is working to protect wetlands and local water supplies on which communities depend,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “By enforcing environmental laws, we’re helping to ensure a level playing field for responsible businesses."

In addition to the penalty, the company will reconstruct impacted aquatic resources or otherwise address impacts at each of the 15 sites, provide appropriate compensatory mitigation for impacts to streams and wetlands, and implement a comprehensive compliance program to ensure future compliance with Section 404 of the Clean Water Act and applicable state law. Among other requirements, the company will work to ensure that all aquatic resources are identified prior to starting work on any future projects in West Virginia, and that appropriate consideration is given at the design stage to avoid and minimize impacts to aquatic resources. It is estimated that Trans Energy will spend more than $13 million to complete the restoration and mitigation work required by the consent decree.

The federal government and the WVDEP allege that the company impounded streams and discharged sand, dirt, rocks and other materials into streams and wetlands without a federal permit in order to construct well pads, impoundments, road crossings and other facilities related to natural gas extraction. The government alleges that the violations impacted approximately 13,000 linear feet of stream and more than an acre of wetlands.

Filling wetlands illegally and damming streams can result in serious environmental consequences. Streams, rivers and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.

EPA discovered the violations in 2011 and 2012 through information provided by WVDEP and the public, and through routine field inspections. In summer 2014, the company conducted an internal audit and ultimately disclosed to EPA alleged violations at eight additional locations, which are also being resolved through this Consent Decree.

The settlement also resolves alleged violations of state law brought by the WVDEP.

The consent decree has been lodged in the Northern District of West Virginia and is subject to a 30-day public comment period and court approval. The settlement can be viewed at www.justice.gov/enrd/Consent_Decrees.html .

Three residents of Montgomery, Alabama, each pleaded guilty during the past week to one count of conspiracy to defraud the government and one count of aggravated identity theft, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama. 

Cruz Castillo Burnett, Jacorey Giddens and Rodrickus Howard were indicted on May 1.  According to court documents, the defendants conspired to acquire the means of identification of individuals, including names, Social Security numbers and dates of birth, of other persons without their knowledge or consent.  From March 2011 to April 2013, the defendants used these stolen identities to file more than 500 false tax returns, and each return claimed fraudulent refunds from the Internal Revenue Service (IRS).  The defendants received the fraudulent refunds in various forms, including U.S. Treasury checks, direct deposits to bank accounts and direct deposits onto prepaid debit cards in the names of identity theft victims. 

The three defendants each face a statutory maximum sentence of 10 years in prison for the conspiracy count, followed by up to three years of supervised release.  The defendants will each be required to serve a statutory mandatory sentence of two years in prison for the aggravated identity theft count.

The case was investigated by special agents of the IRS-Criminal Investigation.  The case is being prosecuted by Trial Attorneys Greg Bailey and Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama.       

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

A Maryland MS-13 gang member pleaded guilty today to conspiracy to participate in a racketeering enterprise known as the La Mara Salvatrucha, or MS-13, and acknowledged his involvement in attempted murder and extortion in furtherance of MS-13.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement ’s (ICE) Homeland Security Investigations (HSI), Chief Mark A. Magaw of the Prince George’s County Police Department, Prince George’s County State’s Attorney Angela D. Alsobrooks, Chief J. Thomas Manger of the Montgomery County Police Department, Chief Alan Goldberg of the Takoma Park Police Department, and Montgomery County State’s Attorney John McCarthy made the announcement.

Roni Arriola-Palma, 24, of Greenbelt, Maryland, pleaded guilty before U.S. District Judge Roger W. Titus. Sentencing is scheduled for March 9, 2015.

According to the statement of facts filed with Arriola-Palma’s plea agreement, MS-13 is a national and international gang composed primarily of immigrants or descendants from El Salvador.  Branches or “cliques” of MS-13, one of the largest street gangs in the United States, operate throughout Prince George’s County and Montgomery County, Maryland.  MS-13 members are required to commit acts of violence both to maintain membership and discipline within the gang and against rival gangs.

The statement of facts states that from 2009 until at least 2012, Arriola-Palma was a member and leader of the Peajes Locos Salvatrucha clique of MS-13. Arriola Palma and other MS-13 members in the Peajes clique and other MS-13 cliques committed crimes to further the interests of the gang, including murder, assault, robbery, extortion by threat of violence, obstruction of justice, witness tampering and witness retaliation.

Arriola-Palma admitted that from January 2010 through at least May 2011, he attended MS-13 leadership meetings in Maryland as the representative and leader of the Peajes clique.  

According to the plea agreement, on Jan. 13, 2011, Arriola-Palma attended a Peajes clique meeting with other MS-13 members near the Greenbelt Metro Station.  Another MS-13 member spoke at the meeting, criticizing members of the clique for not committing enough violent crimes on behalf of MS-13 and encouraging clique members to find rival gang members and commit acts of violence against them.  

Arriola-Palma admitted that after the meeting ended, he drove other MS-13 members in a minivan. Near the Fort Totten Metro Station, they saw a person who they believed was an associate of a rival gang. MS-13 members attacked the victim and dragged him back into the minivan, where they continued to assault him. After later stopping and departing the minivan, Arriola-Palma and other MS-13 members forcefully stripped the victim of all clothing and stabbed him.  After the assault, two MS-13 members dragged the victim into the woods and one of the gang members strangled the victim with his belt.  When they returned from the woods, they informed the other members that the victim was dead.  Arriola-Palma then drove the group of MS-13 members away from the scene.  The victim, however, survived the attack.

From March to November 2011, members of the Peajes clique threatened to place a “greenlight,” or order to kill, on a former MS-13 associate unless he paid them a weekly or bi-weekly “rent” or “tax,” which gang members collected from the victim.  Arriola-Palma admitted that he accepted payments that he knew were proceeds from the extortion scheme from two other MS-13 members.

This case was investigated by HSI Baltimore, the Prince George’s County and Montgomery County Police Departments, the Prince George’s County State’s Attorney’s Office, the Takoma Park Police Department and the Montgomery County State’s Attorney’s Office, with assistance from the Prince George’s County Sheriff’s Office, HSI Baltimore’s Operation Community Shield Task Force and the Maryland Department of Corrections Intelligence Unit. The case is being prosecuted by Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William D. Moomau of the District of Maryland.

The Justice Department announced today that it reached an agreement with Culinaire International, a catering and restaurant management company headquartered in Houston, Texas, resolving a claim that Culinaire engaged in citizenship discrimination during the employment eligibility reverification process in violation of the Immigration and Nationality Act (INA).

The Justice Department’s investigation found that Culinaire required lawful permanent resident employees to produce a new Permanent Resident Card when their prior card expired, even though the Form I-9 and E-Verify rules prohibit this practice. Lawful permanent residents have permanent work authorization in the United States, even after their permanent resident cards expire. The INA’s anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the employment eligibility verification process based on their citizenship status.

“Employers cannot discriminate against workers by requiring them to produce more documents than necessary in the employment eligibility verification and reverification processes,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “The department applauds Culinaire’s willingness to resolve this matter expeditiously and its commitment to changing its past documentary practices.”

Under the settlement agreement, Culinaire will pay $20,460 in civil penalties to the United States; undergo training on the anti-discrimination provision of the INA; establish a $40,000 back pay fund to compensate potential economic victims; revise its employment eligibility reverification policies; and be subject to monitoring of its employment eligibility verification practices for 20 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.

Omni Surgical L.P., doing business as Spine 360, a manufacturer of devices used in spinal surgery, and Dr. Jamie Gottlieb, an Indiana spinal surgeon, have agreed to pay $2.6 million to the United States to settle allegations that Spine 360 paid illegal kickbacks to Gottlieb to induce him to use the company’s products.  Spine 360 is based in Austin, Texas.

“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 everybody,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.   “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The Anti-Kickback Statute restricts the financial relationships that medical device manufacturers may have with doctors who use or prescribe their products.  It is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based upon the best interests of the patient.

The settlement announced today involved payments that Spine 360 made between 2007 and 2009 to an entity controlled by Gottlieb.  Although the payments were purportedly made pursuant to a series of intellectual property agreements, the United States contended that those agreements were shams, and that the payments were intended to compensate Gottlieb for using Spine 360 products in his surgeries.

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 Commercial Litigation Branch of the department’s Civil Division , the U.S. Attorney’s Office for the Northern District of Indiana and the U.S. 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 the filing of a lawsuit with the Executive Office for Immigration Review against Louisiana Crane Company LLC (Louisiana Crane), which is headquartered in Eunice, Louisiana. 

The complaint alleges that Louisiana Crane violated the Immigration and Nationality Act’s (INA) anti-discrimination provision by creating hurdles for immigrants during the employment eligibility verification process because of their citizenship status. Specifically, the complaint states that, from at least January 2013 until at least September 2013, Louisiana Crane required employees who it believed to be non-U.S. citizens to present specific documentation for the Form I-9 and/or E-Verify, but allowed believed to be U.S. citizens the flexibility to present a variety of documents. The INA’s anti-discrimination provision prohibits employers from discriminating against people with permission to work in the United States because of their citizenship status.

“The law protects people who have permission to work from facing discriminatory obstacles during employment eligibility verification,” said Molly Moran, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “It is important that all people who have permission to work in the United States face an equal playing field when proving their work authorization.”

The Office of Special Counsel for Immigration-Related Unfair Employment 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.

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.

The former chief executive officer (CEO) of ArthroCare Corporation was sentenced to serve 20 years in prison, and the former chief financial officer (CFO) was sentenced to serve 10 years in prison today for their leading roles in a $750 million securities fraud scheme. Two other former senior vice presidents of ArthroCare were also sentenced to prison terms for their roles in the scheme.  

Principal Deputy Assistant Attorney General Marshall L. Miller of the Department of Justice’s Criminal Division and Special Agent in Charge Christopher H. Combs of the FBI’s San Antonio Field Office made the announcement. U.S. District Judge Sam Sparks in the Western District of Texas imposed the sentences.

“Earlier today, in federal court in Austin, Texas, we witnessed the culmination of an epic tale of greed,” said Principal Deputy Assistant Attorney General Miller. “The CEO, CFO and two vice presidents of ArthroCare sentenced today ran a successful business, but they wanted more. Their greed led to fraud, and their fraud caused investors to lose hundreds of millions of dollars.   At the Criminal Division of the Department of Justice, we are committed to prosecuting individuals who commit crimes to make money, whether they do so on street corners or in corner offices.  The aggressive pursuit of corporate executives  who commit fraud is at the core of our mission to  pursue justice and protect the American public.”  

“This scheme of betrayal and deceit was carried out by the defendants without regard to the deep-reaching and irreparable harm their actions caused to thousands of victims, here in Texas, and throughout the United States,” said FBI Special Agent in Charge Combs. “While it is important to recognize the financial losses sustained by all victims, which includes individual investors and institutional investment firms, many of the victims will never recover from the financial ruin caused by the defendants’ greed.  Many of the victims worked hard their entire lives, saving money for retirement or their children’s’ college funds.  Some were already living on fixed incomes and are now struggling to make ends meet.  The FBI will continue to aggressively work to uncover these fraud schemes in an effort to prevent future victimization and to protect the integrity of the securities and commodities market.”

On June 2, 2014, former ArthroCare’s CEO Michael Baker, 55, and former CFO Michael Gluk, 56, were convicted by a jury of wire fraud, securities fraud, and conspiracy to commit wire and securities fraud; Baker was also convicted of making false statements. On June 24, 2013, John Raffle, 46, the former Vice President of Strategic Business Units, pleaded guilty to conspiracy to commit securities, mail and wire fraud, and two false statements charges. On May 9, 2013, David Applegate, 55, the former Senior Vice President of the Spine Division, pleaded guilty to conspiracy to commit securities, mail and wire fraud, and a false statements charge. At sentencing, the court found that investors lost approximately $756 million as a result of the defendants’ scheme to artificially inflate the share price of ArthroCare stock through sham transactions.

According to court documents, between 2005 and 2009, Baker, Gluk, Raffle and Applegate executed a scheme to artificially inflate sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors. Products were shipped to distributors at quarter end based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. ArthroCare then fraudulently reported these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to appear to meet or exceed internal and external earnings forecasts. ArthroCare’s distributors agreed to accept these shipments of millions of dollars of excess inventory in exchange for lucrative concessions from ArthroCare, such as upfront cash commissions, extended payment terms, and the ability to return products. In some cases, like that of ArthroCare’s largest distributor, DiscoCare, the defendants agreed ArthroCare would acquire the distributor and the inventory so that the distributor would not have to pay ArthroCare for the products at all.   

Between December 2005 and February 2009, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results to reflect the results of an internal investigation and account for the defendants’ fraud, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. On Dec.19, 2008, ArthroCare again announced publicly that it had identified more accounting errors and possible irregularities related to the defendants’ fraud. That day, the price of ArthroCare shares dropped from approximately $16.23 to approximately $5.92 per share.

In addition to the underlying conduct, Baker was convicted of lying to the U.S. Securities and Exchange Commission during its investigation of the conduct. The court further found, as part of sentencing, that Baker and Gluk each lied under oath during their trial testimony, in which they attempted to escape responsibility for their actions.

In addition to their prison terms, Baker and Gluk were sentenced to serve five years of supervised release. In addition, the court ordered Gluk and Baker to forfeit $22,165,030, the amount of their profits from the scheme.

John Raffle was sentenced to serve 80 months in prison followed by three years of supervised release. David Applegate was sentenced to serve 60 months in prison followed by three years of supervised release.

The case was investigated by the FBI’s San Antonio Field Office. The case was prosecuted by Deputy Chief Benjamin D. Singer and Trial Attorneys Henry P. Van Dyck and William S.W. Chang of the Criminal Division’s Fraud Section. The Department recognizes the substantial assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section and the U.S. Securities and Exchange Commission, as well as the critical role of the U.S. Attorney’s Office for the Western District of Texas, which provided invaluable support to the prosecution team during all phases of the litigation.

A leader of a street gang that operated on the east side of Detroit was found guilty today by a federal jury of aiding and abetting an armed robbery.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Special Agent in Charge Steven Bogdalek of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in Detroit made the announcement.

Christopher LaJuan Tibbs, 39, was convicted after a three-day jury trial before U.S. District Judge Bernard A. Friedman.

The evidence at trial established that Tibbs, also known as Chief Fatah, was the leader of the Michigan branch of the Mafia Insane Vice Lords – a violent street gang that operated primarily on the east side of Detroit. The Mafia Insane Vice Lords was a local faction of the national Vice Lord gang that originated in Chicago. Tibbs helped plan an armed robbery of a Little Caesars restaurant in Redford, Michigan, in September 2013. Tibbs sent subordinate members of the gang to commit the crime and took a majority of the proceeds from the robbery.

The case was investigated by ATF, with assistance from the Redford, Michigan, Police Department, the Detroit Police Department, and the Chicago Police Department. The case was prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorney Louis Gabel of the Eastern District of Michigan.

Today, the United States won court approval of a settlement agreement to reform the ways in which the Portland Oregon Police Bureau (“PPB”) interacts with individuals with actual or perceived mental illness. The agreement was entered jointly by the United States and the city of Portland, Oregon, with the approval of the Albina Ministerial Alliance Coalition for Justice and Police Reform (“AMA Coalition”) and Portland Police Association (“PPA”). The agreement addresses constitutional claims in a civil action filed by the United States pursuant to the Violent Crime Control and Law Enforcement Act of 1994. In today’s order, the court approved the agreement with the requirement that the parties appear for periodic hearings to provide the court progress on implementation of the agreement.

The agreement requires changes—many of which PPB has already begun to implement—in PPB’s policy, training, supervisory oversight, community-based mental health services, crisis intervention, employee information systems, officer accountability and community engagement and oversight. The agreement also calls for innovative new mechanisms for ongoing community involvement in the implementation of reforms. In addition, the agreement establishes an independent compliance officer and community liaison (“COCL”), who will be responsible for synthesizing data related to PPB’s use of force, reporting to the city council, the Justice Department and the public and gathering input from the public related to PPB’s compliance with the agreement. Finally, the agreement lays the framework for a community oversight advisory board (“COAB”), which will be a crucial mechanism for civil engagement in the reform process.

“We are committed to continuing to work with our partners in the community throughout the reform process to ensure full implementation of the settlement agreement,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “We applaud the city’s efforts to implement portions of the settlement agreement during the pendency of the litigation. We are pleased to provide the court information about reforms through ongoing periodic hearings. We are also appreciative of the continued collaboration with the AMA Coalition and the participation of the PPA to resolve these issues to enable the entry of the settlement agreement. We look forward to the positive changes that these civil rights reforms will bring about for the people of Portland.”

“Today’s decision is the culmination of significant work on the part of all parties to reach such a groundbreaking resolution for the citizens of Portland ,” said U.S. Attorney Amanda Marshall for the District of Oregon. “We are very grateful to the court for entering this order, and look forward to continued collaboration with the city of Portland, the Portland Police Bureau, the Portland Police Association, the Albina Ministerial Alliance Coalition for Justice and Police Reform , and all citizens of Portland to ensure the letter and the spirit of this agreement are upheld.”

The United States’ complaint followed an investigation, launched on June 8, 2011, and conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the District of Oregon. The investigation focused on whether PPB engages in unconstitutional or unlawful policing through the use of excessive force, with a specific focus on the use of force against people with actual or perceived mental illness or in mental health crisis.

In a September 2012 findings letter detailing the outcome of the 14-month investigation, the Justice Department found that most uses of force by PPB officers were lawful and reasonable, but it also found reasonable cause to believe that PPB engages in a pattern or practice of excessive force, in violation of the Fourth Amendment of the U.S. Constitution and the Violent Crime Control and Law Enforcement Act of 1994, in certain contexts. Following the release of the findings letter, the United States and the city engaged in settlement negotiations resulting in the settlement agreement, which the city council voted to approve. The city fully cooperated with the United States throughout its investigation and was eager to address problems identified in the United States’ findings letter regarding Portland Police Bureau’s policies, practices, training and supervision through entry of the settlement agreement.

On Dec. 17, 2012, the United States initiated a lawsuit against the city and, with the city’s cooperation, concurrently filed a joint motion asking the court to approve the negotiated settlement agreement and conditionally dismiss the case. Specifically, the United States’ complaint alleged that PPB engages in a pattern or practice of using excessive force on individuals with actual or perceived mental illness by: (1) too frequently using a higher level of force than necessary; (2) using electronic control weapons (“ECWs”), commonly referred to as “Tasers,” in circumstances when such force is not justified, or deploying ECWs more times than necessary on an individual; and (3) using a higher degree of force than justified for low-level offenses.

Both PPA and the AMA Coalition subsequently moved to intervene in the suit, seeking to join the case as parties and objecting to the proposed settlement agreement. The court partially granted PPA’s motion to intervene and granted the AMA Coalition enhanced amicus status, allowing the AMA Coalition to participate in the litigation. The court then ordered all parties to mediation to attempt to resolve PPA’s and the AMA Coalition’s objections to the settlement agreement. Such mediation efforts have resulted in a memorandum of understanding with PPA and a separate agreement previously reached with the AMA Coalition.

Following a fairness hearing on the settlement agreement, the court previously found that the settlement agreement is substantively fair, reasonable and adequate. The court found, however, that it needed a procedure to receive information on the city’s implementation of reforms on at least an annual basis. In today’s ruling, the court required the parties and COCL to file quarterly reports with the court and required the parties to appear for periodic hearings to describe to the court the progress being made toward achieving substantial compliance with all provisions of the settlement agreement and any obstacles or impediments toward that end, and to respond to the court’s questions on these issues.

The assigned attorneys in the United States Attorney’s Office in Portland were Bill Williams, Adrian Brown and David Knight. From the Civil Rights Division of the Department of Justice in Washington, D.C., the assigned attorneys were Laura Coon, Jonas Geissler and Michelle Jones.

For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns specific to this matter, please feel free to contact us at community.portland@usdoj.gov or 1-877-218-5228.

The United States has partially intervened against defendants in two whistleblower lawsuits in the Federal District Court for the District of Colorado alleging Evercare Hospice and Palliative Care (Evercare) submitted false claims for the Medicare hospice benefit.  Evercare is now known as Optum Palliative and Hospice Care, which provides hospice services across the United States.  One of the suits names Evercare’s parent companies, including UnitedHealth Group Inc.

“The hospice benefit is designed for patients who are terminally ill and need end-of-life care,” said Assistant Attorney General Stuart F. Delery for the Department of Justice’s Civil Division.  “We will continue to protect the ability of Medicare recipients to receive appropriate treatment by ensuring that entities providing hospice care are only treating, and billing for, qualified patients.”

The Medicare hospice benefit is available for patients who elect palliative care (medical care focused on providing patients with relief from pain, symptoms or stress) for a terminal illness, and have a life expectancy of six months or less if their illness runs its normal course.  When a Medicare patient is admitted to hospice, that individual is no longer entitled to Medicare coverage for care designed to cure his or her illness.

The lawsuits, filed by former employees of Evercare, allege that defendants violated the False Claims Act by knowingly submitting false claims for hospice benefits for patients who did not have a life expectancy of six months or less.  The complaints include allegations that management pressured employees and physicians to admit and retain patients who were not terminally ill and challenged or disregarded physicians’ decisions that patients should be discharged.  

“Hospice care plays a critical role in our healthcare system, providing for end-of-life care as opposed to curative life care,” said U.S. Attorney John Walsh for the District of Colorado.  “When companies systematically overbill Medicare by keeping people in hospice when they don’t need to be there, it jeopardizes this important benefit for others under the program.  We will not tolerate such conduct.  The District of Colorado and the Civil Fraud Section of the Department of Justice deserve substantial credit for pursuing that mission in these Evercare Hospice cases.” 

“The decision to provide hospice services should be prompted by a patient’s terminally ill medical condition and desire for palliative care, not a hospice provider’s desire to boost its profits,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency is dedicated to safeguarding both the Medicare program and Medicare patients.”

The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims to the government.  The private plaintiffs are entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act authorizes the United States to intervene in a whistleblower lawsuit and take over primary responsibility for litigating it as the United States has done here, and permits the government to recover three times its damages plus civil penalties.  The United States has notified the court that it intends to file its own complaint. 

The government’s intervention in these actions is part of the government’s emphasis on combating health care fraud and another step 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.

This matter was investigated 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 Department of Health and Human Services’ Office of Inspector General.  The claims asserted against defendants are allegations only, and there has been no determination of liability.

The lawsuits are consolidated and captioned United States ex rel. Fowler and Towl v. Evercare Hospice, Inc., et al., No. 11-cv-00642 (D. Colo.); United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.).

The owner of a Florida mortgage company, seven employees of the company and two real estate developers were indicted in the Southern District of Florida in connection with an alleged $50 million mortgage fraud scheme.

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 and David A. Montoya, Inspector General for the Department of Housing and Urban Development (HUD) made the announcement.

Hector Hernandez, 56, of Miami, Florida, the owner and operator of Great Country Mortgage Bankers (Great Country), a mortgage lender in Miami, was charged with one count of conspiracy to commit wire fraud affecting a financial institution and 25 counts of wire fraud affecting a financial institution. Great Country loan officers Durand Deeb, 43, of Miami, Frank Carino, 48, of Apollo Beach, Florida, and Fabian Perez, 39, of Miami; Great Country loan processors Juliette Del Rio, 37, of Miami, and Julissa Saavedra, 43, of Miami,; Great Country underwriters Olga Hernandez, 58, of Lake Mary, Florida, and Olga Rodriguez, 53, of Miami; and real estate developers Armando Bravo, 42, of Coral Gables, Florida, and Aleida Fontao, 61, of Miami, were also indicted for conspiracy to commit wire fraud affecting a financial institution and varying counts of wire fraud affecting a financial institution.

According to the indictment, beginning in January 2006 and continuing through September 2008, Hernandez and others allegedly obtained mortgage loans insured by the Federal Housing Administration (FHA), a division of HUD, for unqualified borrowers by exaggerating the borrowers’ income and otherwise misrepresenting their financial condition.

Specifically, Hernandez and others allegedly created false documents on behalf of borrowers who could not otherwise qualify for FHA-insured loans due to insufficient income, high levels of debt, and outstanding collections. These documents included bogus earnings statements that inflated the borrowers’ income and false verification of employment forms that overstated their work histories.

In addition to creating these false documents, Hernandez and others allegedly offered the unqualified borrowers cash back after closing as an incentive to purchase condominiums. These secret payments were not disclosed in the loan applications and were omitted from loan closing documents so that HUD and the financial institutions that subsequently purchased the loans would not know of their existence.

By later selling the fraudulent loans to financial institutions, Great Country transferred the risk of loss to those institutions The vast majority of the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans. When the loans went into foreclosure, HUD, which insured the loans, was required to pay the outstanding balances to the financial institutions, resulting in losses in excess of $50 million to the agency.

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

This case is being investigated by HUD’s Office of Inspector General with assistance from the U.S. Marshals Service, Miami-Dade Police Department Warrants Bureau and Miami-Dade State Attorney’s Office – Public Corruption Task Force. This is being prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section.

Today, the Justice Department asked a federal court to dismiss the injunction to address civil rights violations at Saint Elizabeths Hospital in Washington, D.C., because the District of Columbia and the Department of Behavioral Health have significantly improved the care and treatment of persons confined to Saint Elizabeths Hospital. Saint Elizabeths is the district’s facility for treating individuals with mental health conditions. The reforms, which were implemented following requirements under a court order, have ensured that persons at Saint Elizabeths Hospital are discharged to the community with adequate supports to live in integrated settings. Further, the reforms resulted in important improvements in integrated treatment planning, psychological and psychiatric services, nursing care and protection from assault.

In 2006, the department notified the district that conditions at Saint Elizabeths Hospital violated the constitutional and federal statutory rights of individuals at the hospital. In 2007, the department and the district entered into a court enforceable settlement agreement to implement the necessary reforms. Since entering the settlement agreement, the department, with the help of a team of experts, has monitored the implementation of the reforms and provided technical assistance to facility officials.

Under the settlement agreement, district officials have made steady progress toward improving the care and treatment at Saint Elizabeths Hospital. By June 2014, the district had achieved and maintained substantial compliance with all required remedial measures by replacing a dangerous facility through the construction of a new hospital and increased clinical staff as well as reforming the discharge planning and community placement process. Further, the district lowered the population at Saint Elizabeths Hospital by nearly 50 percent. The district will continue its partnership with the local protection and advocacy group, University Legal Services, after dismissal of the lawsuit. The parties have filed a notice with the court detailing the ongoing monitoring that will be conducted by University Legal Services.

“We commend the district and the Department of Behavioral Health for their commitment to reform the clinical practices at Saint Elizabeths Hospital,” said Molly Moran, Acting Assistant Attorney General for Civil Rights. “The leadership of the Department of Behavioral Health and of Saint Elizabeths Hospital have made significant and often difficult decisions to change the clinical culture at Saint Elizabeths Hospital and ensure that persons confined to hospital were appropriately discharged and integrated into the community with adequate supports. They strongly supported the required changes and provided the time, energy and resources necessary to achieve reform.”

The department initiated the investigation of Saint Elizabeths Hospital under the Civil Rights of Institutionalized Persons Act and the Americans with Disabilities Act. These statutes give the Department of Justice authority to protect the constitutional and federal statutory rights of individuals with mental health conditions confined to mental health hospitals. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt

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The former Secretary-Treasurer of Security Police Fire Professionals of America Local 287 pleaded guilty today to theft from a labor organization in violation of his fiduciary responsibilities as a union officer.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and District Director Mark Wheeler of the Department of Labor, Office of Labor-Management Standards, Washington District Office made the announcement.

Milton Hilliard, 47, of Fort Washington, Maryland, was the Secretary-Treasurer of Local 287, which represents security guards employed by Coastal International Security at various locations in Washington, D.C. At the plea hearing, he acknowledged that, between September 2008 and December 2010, he made dozens of unauthorized personal purchases using union funds. Specifically, he used the Local 287 debit card to purchase $11,303.92 in personal items at places such as Bed Bath & Beyond, Best Buy, Maryland Speedy Tag & Title, DARCARS Toyota, H&R Block, Golden Corral, Five Below and others. During the same period, Hilliard made 29 unauthorized cash withdrawals, totaling $23,308.50, from the Local 287 treasury.

Hillard pleaded guilty before U.S. District Judge Tanya S. Chutkan in the District of Columbia. Sentencing is set for Nov. 18, 2014.

The investigation was conducted by the Department of Labor, Office of Labor-Management Standards, Washington District Office. The case is being prosecuted by Trial Attorney Vincent J. Falvo Jr. of the Criminal Division’s Organized Crime and Gang Section.

A former disc jockey for high school parties was sentenced to serve 40 years in prison today in the District of Puerto Rico for sexually exploiting minors.

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 Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in San Juan made the announcement .

According to court records, Eduardo Santiago-Rivera, 45, was a disc jockey who met his victims at area high school parties and on various social networking sites. Santiago-Rivera admitted that in June and July 2012, he caused at least three minors, who ranged in age from 12 to 15, to engage in sexual activity for the purpose of creating videos. Santiago-Rivera used “ooVoo,” an Internet-based video chat program, to direct and coerce the minors to undress and to engage in various sexual acts. Santiago-Rivera also recorded himself engaging in sexual acts with one of the minors.

At the sentencing hearing before U.S. District Judge Jay A. Garcia-Gregory of the District of Puerto Rico, Santiago-Rivera was additionally ordered to serve a 15-year term of supervised release following his release from prison, during which his access to computers, the Internet and minors will be restricted, and he will be obligated to register as a sex offender. Judge Garcia-Gregory will issue an order for restitution to be paid by Santiago-Garcia to the families of the victims in 60 days. Santiago-Rivera pleaded guilty on Jan. 13, 2014, before U.S. Magistrate Judge Camille L. Vélez Rivé in the District of Puerto Rico to nine counts of sexual exploitation of children and one count of possession of child pornography. He was charged by superseding indictment on May 13, 2013.

The investigation was conducted by ICE HSI. The case was prosecuted by Criminal Division Trial Attorneys Amy E. Larson of the Child Exploitation and Obscenity Section and Mark Angehr of the Public Integrity Section, and Assistant U.S. Attorney Marshal Morgan of the District of Puerto Rico.

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

A Detroit -area man was indicted today for obstruction of justice in connection with his alleged attempts to conceal evidence relevant to his upcoming trial for an alleged health care fraud scheme with estimated losses exceeding $30 million.

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

Zafar Mehmood, 48, of Ypsilanti, Michigan, is currently awaiting trial for his alleged role in a health care fraud scheme involving, among other allegations, the submission of fraudulent claims to Medicare for services that were medically unnecessary or never provided. Mehmood allegedly used at least four home health agencies in the Detroit area, including Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. and All State Home Care Inc., to perpetrate his fraud.

According to today’s indictment, on July 25, 2014, and again on July 28, 2014, Mehmood attempted to alter and conceal records and documents, which included several patient files, with the intent to impair their integrity and availability for use in his upcoming trial.

An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This 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 Eastern District of Michigan. This case is being prosecuted by Trial Attorneys Nathan Dimock, Niall O’Donnell, and A. Brendan Stewart 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 and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Ahmad Ibrahim Al-Ahmad made his initial appearance today in federal court in Phoenix, Arizona, on federal terrorism offenses, announced John P. Carlin, Assistant Attorney General for National Security, John S. Leonardo, U.S. Attorney for the District of Arizona and Douglas G. Price, Special Agent in Charge, FBI Phoenix Division. The charges stem from Al-Ahmad’s alleged participation in a conspiracy to use improvised explosive devices (IEDs) to attack U.S. military personnel in Iraq from approximately 2005 to 2010.

Al-Ahmad was originally charged under seal with terrorism-related offenses in May 2011. He was subsequently arrested in Turkey on May 17, 2011, based upon those charges and an Interpol Red Notice, and was detained there pending completion of extradition proceedings. Al-Ahmad was extradited from Turkey yesterday and arrived in Arizona on the same day.

Following his appearance, Al-Ahmad was placed in custody of the U.S. Marshals Service, pending a status conference on the issue of detention on Sept. 8, 2014.  A trial date is set for Oct. 7, 2014.

On Aug. 12, 2014, a federal grand jury in the District of Arizona returned a superseding indictment charging Ahmad Ibrahim Al-Ahmad, a Syrian national, with multiple charges related to Al-Ahmad’s alleged participation in a conspiracy, from approximately 2005 to 2010, to supply component parts to the 1920 Revolution Brigades – an Iraqi insurgent group – for use in IEDs that were employed against U.S. military personnel in Iraq during that time period. The charges include conspiracy to use a weapon of mass destruction (IEDs); conspiracy to maliciously damage or destroy U.S. government property by means of an explosive; possession of a destructive device during a crime of violence and aiding and abetting; conspiracy to commit extraterritorial murder of a U.S. national, and providing material support to terrorists.

If convicted of the offenses alleged in the indictment, Al-Ahmad would face a statutory maximum sentence of life in prison.

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

This case is being investigated by the FBI Phoenix Division Joint Terrorism Task Force with substantial assistance from various other government agencies. The case is being prosecuted by the U. S. Attorney’s Office for the District of Arizona and the Counterterrorism Section of the Justice Department’s National Security Division. The Justice Department’s Office of International Affairs also provided significant assistance in this matter.

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The Department of Justice and U.S. Environmental Protection Agency (EPA) announced today a settlement with E.I. du Pont de Nemours and Company (DuPont) at its Belle, W. Va. facility for eight alleged releases of harmful levels of hazardous substances between May 2006 and January 2010. Several of the releases posed significant risk to people or the Kanawha River. One DuPont worker died after exposure to phosgene, a toxic gas released due to DuPont’s failure to comply with industry accident prevention procedures.

DuPont will pay a $1.275 million penalty and will take corrective actions to prevent future releases to resolve the alleged violations of the general duty clause and risk management provisions of the Clean Air Act, and the emergency response provisions of Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act, and Section 304 of the Emergency Planning and Community Right-to-Know Act.

“Failing to follow laws meant to prevent accidents can have fatal consequences – as was tragically the case here,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today’s settlement holds DuPont accountable for its failure to prevent hazardous releases and requires improvements to its risk management operations and emergency response systems that could prevent future tragedies and damage to the environment.”

“Producing toxic and hazardous substances can be dangerous, and requires complying with environmental and safety laws,” said Cynthia Giles, Assistant Administrator for Enforcement and Compliance Assurance at EPA. “Today's settlement with DuPont will ensure that the proper practices are in place to protect communities and nearby water bodies.”

Through this settlement, DuPont will implement enhanced risk management operating procedures to improve its process of responding to alarms triggered by releases of hazardous substances. DuPont will also develop an enhanced operating procedure to improve its management of change process, which is a best practice used to ensure that safety, health and environmental risks are controlled when a company makes changes to their processes. In addition, DuPont will improve procedures so federal, state, and local responders are notified of emergency releases, and will conduct training exercises to prepare employees to make such notifications. DuPont estimates that it will spend approximately $2,276,000 to complete the required improvements to its safety and emergency response processes.

Previously, on March 18, 2010, the U.S. EPA issued an administrative order to DuPont to undertake corrective measures related to the releases. DuPont estimates that it has spent approximately $6,828,750 to comply with the administrative order.

On Jan. 22, 2010, at DuPont’s chemical manufacturing plant in Belle, West Virginia operators discovered that more than 2,000 pounds of methyl chloride had leaked into the atmosphere and employees failed to respond to alarms triggered by the release. On the morning of January 23, workers discovered a leak in a pipe containing the toxic gas oleum. Later that day, a hose containing phosgene, a highly toxic gas, ruptured resulting in the fatality of a worker exposed to phosgene.

The alleged risk management violations on January 22 and 23 include failing to:

• identify hazards that may result from accidental releases;
• design and maintain a safe facility;
• minimize consequences of accidental releases that do occur;
• follow recognized industry safety practices;
• train employees on how to respond to potential risks;
• frequently inspect and test equipment consistent with good engineering practices and manufacturer recommendations; and
• follow the company’s own procedures for responding to alarms indicating potential problems and implementing safety protocol for the phosgene process.

In addition, there were five incidents identified through EPA inspections and extensive review of DuPont’s records that do not comply with the Comprehensive Environmental Response, Compensation, and Liability Act and t he Emergency Planning and Community Right-to-Know Act.

In these incidents, EPA alleged the company released harmful quantities of hazardous substances and then did not report the releases to the National Response Center, State Emergency Response Commission and Local Emergency Planning Committee in a timely manner. The largest of these was the release of 80 tons of methanol into the Kanawha River on Sept. 21, 2010.

For more information about the Clean Air Act’s Risk Management Program requirements, see http://www.epa.gov/compliance/monitoring/programs/caa/112r.html and http://www.epa.gov/oem/content/rmp/

For information about RMP*eSubmit or to view a Checklist for Submitting Your Risk Management Plan (RMP) for Chemical Accident Prevention and the RMP*eSubmit Users’ Manual, visit http://www.epa.gov/emergencies/rmp ).

The consent decree, lodged in the U.S. District Court for the Southern District of West Virginia, is subject to a 30-day public comment period and approval by the federal court.

Two New York residents pleaded guilty today in connection with importing more than 100,000 counterfeit and hazardous children’s toys from China for sale in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Special Agent in Charge James T. Hayes Jr. of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York, Director Robert E. Perez of Customs and Border Protection (CBP) New York Field Operations, Chairman Elliot F. Kaye of the Consumer Product Safety Commission (CPSC) and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

“In a criminal twist on a toy story, the defendants made millions importing dangerous, knock-off toys that put children in harm’s way,” said Assistant Attorney General Caldwell. “The defendants used a continuously shifting series of corporate entities in an effort to stay one step ahead of law enforcement. But their game has now come to an end. The Department of Justice is committed to stopping those who would smuggle hazardous, counterfeit goods into the United States.”

“For eight years, the defendants lined their pockets while putting at risk the health of our children by smuggling dangerous and copyright-infringing toys into the United States,” said U.S. Attorney Lynch. “Today’s guilty pleas signify the end of this dangerous pipeline from China. We will continue to be vigilant and prosecute those who would smuggle dangerous and unlawful items into our country and neighborhoods.”

“The United States has some of the strongest toy standards and lowest lead limits in the world, specifically to keep children safe,” said CPSC Chairman Kaye. “We have no more important mission than protecting children. For that reason, the CPSC will continue to work with our federal partners to enforce toy safety requirements at the ports and in the marketplace.”

“The defendants in this case endangered thousands of American children by manufacturing for sale counterfeit toys made with unsafe amounts of lead and other hazardous chemicals,” said Special Agent in Charge Hayes Jr. “HSI focuses its efforts to protect intellectual property, first and foremost, on those counterfeit goods that present health and safety hazards to consumers.”

Chenglan Hu, 52, and Hua Fei Zhang, 53, of Bayside, New York, pleaded guilty in connection with importing children’s toys with copyright-infringing images and counterfeit trademarks of popular children’s characters, as well as unsafe lead levels, small parts that presented risks of choking or ingestion, easily-accessible battery compartments, and other potential hazards. Hu and Zhang were the last of nine defendants to plead guilty in this investigation; Guan Jun Zhang, Jun Wu Zhang, and five corporations – Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc. – previously pleaded guilty to Consumer Product Safety Act (CPSA) and trademark counterfeiting charges. In pleading guilty to trafficking in hazardous consumer goods in violation of CPSA, Hu and Zhang also agreed to forfeit $700,000 and more than 120,000 unsafe children’s toys. The government previously seized three luxury vehicles and six bank accounts, and filed lis pendens against two real properties owned by Zhang in Queens, New York.

According to court filings and facts presented at the plea hearings, from July 2005 through January 2013, Hu, Zhang, and the other individual defendants used the companies they owned to import and sell toys from China from a storefront and warehouse in Ridgewood, New York, and other locations in Brooklyn, New York and Queens, New York. According to the indictment, CBP seized toys imported by the defendants from shipping containers entering the United States from China on 33 separate occasions. Seventeen of the 33 seizures contained toys prohibited from import into the United States because of excessive lead content, excessive phthalate levels, small parts that presented risks of choking, aspiration or ingestion, and easily-accessible battery compartments. Sixteen of the 33 seizures contained toys bearing copyright-infringing images and counterfeit trademarks, including a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, and Pokémon, as well as those from movies such as “Cars,” “Toy Story” and “High School Musical.”

Hu, Zhang, and the other individual defendants changed their use of the companies, sometimes even forming new companies, and alternated their formal titles in order to conceal their continued importation and distribution of the hazardous and counterfeit toys.

Hu and Zhang pleaded guilty before U.S. Magistrate Judge James Orenstein of the Eastern District of New York. Sentencing will be announced at a later date.

The case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Task Force, with the assistance of CBP and CPSC. The case was prosecuted by Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Campos and Claire Kedeshian of the Eastern District of New York.

Political consultant Gregory Naylor, 66, of Philadelphia, pleaded guilty today to making false statements to federal agents and misprision of a felony in connection with his role in attempting to conceal two campaign finance-related fraud schemes.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania, Special Agent in Charge Edward Hanko of the FBI’s Philadelphia Field Office and Special Agent in Charge Akeia Conner of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement. The plea was entered by U.S. District Court Judge Harvey Bartle III of the Eastern District of Pennsylvania.

According to court documents, the charges stem from Naylor’s participation in two campaign finance-related schemes initiated by a long-time friend and former employer, identified in the information as Elected Official A. In the first scheme, Naylor helped conceal the theft of federal grant funds and private charitable funds that were used to repay an illegal campaign debt incurred by Elected Official A during a 2007 campaign for elected office.

Specifically, Naylor was aware that large amounts of money from an unexplained source were being spent on Elected Official A’s campaign, and Naylor helped to conceal the source of those funds by preparing a false invoice for services rendered by his consulting firm. Naylor subsequently learned that Elected Official A and others orchestrated the theft of federal grant funds to repay the outstanding balance of the campaign debt, and he agreed to the falsification of campaign finance reports to further conceal Elected Official A’s activities.

Also according to court documents, in the second scheme, Naylor conspired with Elected Official A to pay down portions of the college debt of Elected Official A’s son using federal and local campaign funds. Some of the payments originated directly from the local campaign fund, and some were illegally sourced from Elected Official A’s federal campaign election committee and passed through the local campaign fund account to Naylor. Naylor made approximately $22,000 in improper payments between August 2007 and April 2011 at Elected Official A’s request. Naylor also falsely claimed on IRS forms that the payments made towards the college debt were earned income to Elected Official A’s son for services rendered as an independent contractor to Naylor’s consulting firm. When confronted by federal agents in investigative interviews about the payments, Naylor lied on two occasions and repeated his cover story that the son of Elected Official A was an independent contractor working for his political consulting firm.

Sentencing is scheduled for Dec. 2, 2014.

The case was investigated by the FBI and the IRS-CI with assistance provided by the NASA Office of the Inspector General. This case is being prosecuted by Assistant U.S. Attorney Paul L. Gray of the Eastern District of Pennsylvania and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section.

An owner of an electrical contracting company pleaded guilty today to falsifying disclosure documents required under the Employee Retirement Income Security Act (ERISA), by intentionally under-reporting hours worked by employees to avoid contractually required contributions to employee benefit plans.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Bill Jones of the Department of Labor Office of Inspector General, Office of Labor Racketeering and Fraud Investigations for the Washington, D.C. Regional Office and Director Mark Machiz of the Department of Labor’s Employee Benefits Security Administration Philadelphia Regional Office made the announcement.

At the plea hearing, Michael E. Sewell, 50, of Street, Maryland, admitted that the union agreement between his company, MESCO Inc., and the International Brotherhood of Electrical Workers Local 24 required him to make monthly contributions to seven employee health, welfare and pension benefit plans, and to file monthly remittance reports with the administrators of those plans.

Beginning in January 2009, however, Sewell began paying some wages earned by MESCO employees from the payroll of a second company he owned, Michael E. Sewell and Associates Inc., and failed to report those wages in monthly remittance reports to the administrator of the benefit plans. In addition, Sewell failed to make the required contributions to the employee benefit plans for those unreported wages. As a result, Sewell failed to contribute over $199,000 to the employee benefit plans. Sentencing is scheduled for Oct. 30, 2014.

This case was investigated by the Department of Labor and is being prosecuted by Trial Attorney Vincent Falvo Jr. of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Martin J. Clarke of the District of Maryland.

The Department of Justice announced today that it will require Tyson Foods Inc. to divest Heinold Hog Markets, its sow purchasing business, in order to proceed with its $8.5 billion acquisition of The Hillshire Brands Company. The department said that, without the required divestiture, the transaction would have combined companies that account for more than a third of sow purchases from U.S. farmers, thereby likely reducing competition for purchases of sows from farmers.

Three state attorneys general – of Illinois Iowa, and Missouri – joined the department in the civil lawsuit filed today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the department’s lawsuit.

“Farmers are entitled to competitive markets for their products. Today’s proposed settlement will help ensure that hog breeders in the United States will continue to receive the benefits of vigorous competition when selling sows,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division. “Without the divestiture, the proposed acquisition would have eliminated a significant customer for farmers’ sows and likely would have resulted in less competition in this important agricultural market.”

Sows are sold by farmers for processing into sausage. Both Tyson’s Heinold Hog Markets and Hillshire buy sows from U.S. farmers. Heinold Hog Markets buys sows from farmers, sorts the sows at buying stations and resells and trucks the sows to sausage producers. Hillshire buys sows directly from farmers, which it then makes into sausage sold under the Jimmy Dean and Hillshire Farm brands. The acquisition of Hillshire by Tyson Foods Inc. would combine two major purchasers of sows from farmers in the United States and eliminate the benefit farmers have received from the competition between Hillshire and Tyson’s Heinold Hog Markets.

Under the terms of the proposed settlement, Tyson must divest Heinold Hog Markets in its entirety to a buyer approved by the Antitrust Division.

Tyson Foods Inc. is a Delaware corporation with its principal place of business in Springdale, Arkansas. Tyson is one of the world’s largest meat companies. It produces, distributes and markets chicken, beef, pork and prepared food products. Tyson Hog Markets Inc., a subsidiary of Tyson and Tyson Fresh Meats Inc., buys and resells sows through its Heinold Hog Markets division. In 2013, Tyson had total revenues of approximately $34.4 billion; Heinold Hog Markets had overall revenues of approximately $270 million.

The Hillshire Brands Company is a Maryland corporation with its principal place of business in Chicago, Illinois. Hillshire is a manufacturer and marketer of brand name food products for the retail and foodservice markets, including sausage, hot dogs and luncheon meats. Its brand names include Jimmy Dean, Ball Park and Hillshire Farm. Hillshire’s total revenues were approximately $3.9 billion for the year ended June 29, 2013.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy, and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed final judgment upon finding that it is in the public interest.

Acting Assistant Attorney General Molly Moran for the Justice Department’s Civil Rights Division and U.S. Attorney Andrew M. Luger for the District of Minnesota today announced the filing of a lawsuit against the city of St. Anthony Village for an alleged violation of the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA). Specifically, the lawsuit seeks injunctive relief requiring St. Anthony Village to allow the Abu Huraira Islamic Center to maintain a worship space in the basement of the St. Anthony Business Center.

“Religious freedom is one of our most cherished rights, and there are few aspects of that right more central than the ability of communities to establish places for collective worship,” said Acting Assistant Attorney General Moran.

“Freedom of religion and the right to peaceably assemble are enshrined for all Americans in the Bill of Rights,” said U.S. Attorney Luger. “This office conducted a thorough investigation of the circumstances surrounding the City Council’s decision to deny Abu Huraira the right to worship in the St. Anthony Business Center. We aggressively sought to resolve this matter without a lawsuit. However, it is a solemn duty of all United States Attorneys to uphold the Constitution. The people of Abu Huraira have a right to peaceably assemble – they have a right to practice their religion, and it’s our job to enforce that right.”

The complaint, filed in the U.S. District Court in Minneapolis, alleges that the St. Anthony Village City Council treated an application for a conditional use permit to assemble in the St. Anthony Business Center filed by Abu Huraira on less than equal terms as other, non-religious, conditional use permits for assembly. The denial of the necessary permit for the worship center unlawfully disfavored a religious use, because the light industrial zone where the building is located allowed “assemblies, meeting lodges and convention halls,” including a union hall with banquet facilities available to be rented by the public.

In addition to Abu Huraira’s treatment on less than equal terms to similarly situated secular organizations, the denial of Abu Huraira’s permit substantially burdens its members in practicing their faith. Abu Huraira members’ ability to exercise their religion is limited by their current worship site options, including, but not limited to the fact that members in the northern Twin Cities are burdened from praying together based on the length of time it takes to travel to the worship centers in south Minneapolis. Moreover, prayer space at locations in south Minneapolis are too small to accommodate members, many of whom often have to pray in hallways or entryways, and hold multiple prayer sessions in shifts to accommodate crowds.

After conducting a search for adequate prayer space lasting nearly three years, Abu Huraira entered into a purchase agreement for the St. Anthony Business Center. The business center is an ideal location for Abu Huraira because it is centrally located, has a basement measuring approximately 11,600 square feet and has ample parking. The business center is in the “light industrial” zone of St. Anthony, conditional uses for which included “assemblies, meeting lodges, and convention halls.”

In February 2012, after consulting St. Anthony Village officials, Abu Huraira applied for a conditional use permit for assembly in the light industrial zone. It was denied on June 12, 2012, by a St. Anthony Village City Council vote of 4-1, despite the professional St. Anthony City Planning Staff recommending approval, despite the St. Anthony Village City Planning Commission recommending approval and despite members of Abu Huraira attending each meeting of the Council and Planning Commission to address any concerns held by the city.

The lawsuit filed by the department seeks to enforce Abu Huraira’s constitutional rights under RLUIPA by requiring St. Anthony Village to grant the conditional use permit to allow Abu Huraira to assemble for the purpose of worship.

Assistant U.S. Attorneys Bahram Samie, Ana Voss, and Greg Brooker as well as Justice Department attorneys from the Civil Rights Division are representing the United States in this matter.

RLUIPA, enacted in 2000, contains multiple provisions prohibiting religious discrimination and protecting against unjustified burdens on religion exercise. Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. More information about RLUIPA, including a report on the first ten years of its enforcement, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php .

A former Iowa State Senator pleaded guilty today to concealing payments he received from a presidential campaign in exchange for switching his support and services from one candidate to another and to obstructing a subsequent investigation into his conduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Assistant Director in Charge Timothy A. Gallagher of the FBI’s Washington Field Office made the announcement.

“An elected official admitted that he accepted under-the-table payments from a campaign committee to secure his support and services for a candidate in the 2012 presidential election,” said Assistant Attorney General Caldwell. “Campaign finance reports should be accurate and transparent, not tools for concealing campaign expenditures. Lying by public officials – whether intended to obstruct the FEC or federal investigators – violates the public trust and the law, and the Department of Justice does not tolerate it.”

“Today, Mr. Sorenson has taken responsibility for his crimes,” said Acting Assistant Director in Charge Gallagher. “Exploiting the political process for personal gain will not be tolerated, and we will continue to pursue those who commit such illegal actions.”

Kent Sorenson, 42, of Milo, Iowa, pleaded guilty today to one count of causing a federal campaign committee to falsely report its expenditures to the Federal Election Commission (FEC) and one count of obstruction of justice in connection with the concealed expenditures. The guilty plea was taken by Chief Magistrate Judge Celeste F. Bremer of the Southern District of Iowa for later review by Senior District Court Judge Robert W. Pratt. Sentencing will be scheduled at a later date.

According to a statement of facts filed with the plea agreement, Sorenson admitted that he had supported one campaign for the 2012 presidential election, but from October to December 2011, he met and secretly negotiated with a second political campaign to switch his support to that second campaign in exchange for concealed payments that amounted to $73,000. On Dec. 28, 2011, at a political event in Des Moines, Iowa, Sorenson publicly announced his switch of support and work from one candidate to the other.

The payments included monthly installments of approximately $8,000 each and were concealed by transmitting them to a film production company, then through a second company, and finally to Sorenson and his spouse. In response to criticism of his change of support for the candidates, Sorenson gave interviews to the media denying allegations that he was receiving any money from the second campaign committee, and noted that the committee’s FEC filings would show that the committee made no payments to him.

In his plea agreement, Sorenson also admitted that he gave false testimony to an independent counsel appointed at the request of the Iowa Senate Ethics Committee, which was investigating allegations from a former employee of the first presidential campaign. Sorenson testified falsely to the independent counsel about the concealed payments, in part to obstruct investigations that he anticipated by the FBI and FEC .

The case is being investigated by the FBI’s Washington Field Office, with assistance from the Omaha Field Office and the Des Moines Resident Agency. The case is being prosecuted by Election Crimes Branch Director Richard C. Pilger and Trial Attorney Robert J. Higdon Jr. of the Criminal Division’s Public Integrity Section.

Steven A. Murray, 54, of Pelham, Alabama, and his company, Bio-Tech Management Inc., were sentenced today in federal court in Macon, Georgia, after pleading guilty to charges of conspiracy, unlawful use of pesticides, false statements and mail fraud in connection with the misapplication of pesticides in Georgia nursing homes, announced Acting Assistant Attorney General Sam Hirsch of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

Murray was sentenced by District Judge Marc T. Treadwell to two years in prison, one year of supervised release and to pay a fine of $7,500. Bio-Tech was sentenced to three years of probation and to pay a fine of $50,000.

From October 2005 to June 2009, Murray and Bio-Tech provided monthly pest control services to hundreds of nursing homes in several southern states including Georgia, South Carolina, North Carolina and Alabama by spraying pesticides in and around their clients’ facilities. Bio-Tech employees routinely applied the pesticide Termidor indoors, contrary to the manufacturer’s label instructions, and then created false service reports to conceal that illegal use. After the Georgia Department of Agriculture made inquiries regarding Bio-Tech’s illegal use of Termidor and other pesticides, Murray directed several of his Bio-Tech employees to alter company service reports with the intent to obstruct the investigation.

“Today’s sentence is fair and just punishment for Murray and his company’s abuse of pesticides in nursing homes, their fraud against their clients, and their concealment of crimes from state and federal investigators,” said Acting Assistant Attorney General Hirsch. “Companies must abide by the laws that protect the public from the harmful effects of improperly applied pesticides.”

“This case is particularly disturbing because of the defendants’ intentional disregard for the wellbeing of a vulnerable group of victims whose safety was entirely in the defendants’ hands,” said U.S. Attorney Moore. “This sentence is a just punishment for them and a stern warning to others who might be similarly tempted in the future.”

“Today’s sentence highlights the importance of using pesticides in a safe and legal manner, especially around vulnerable populations,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in Georgia. “The defendant exposed patients to harmful pesticides which jeopardizing their health and safety and tried to cover it up by submitting false reports. EPA and its partner agencies are committed to holding these kinds of dangerous actions accountable to the law.”

The case was prosecuted by Trial Attorneys Richard J. Powers and Adam Cullman of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, with assistance from the U.S. Attorney’s Office Middle District of Georgia. U.S. EPA-CID Region 4 in Atlanta conducted the investigation.

A co-owner of Professional Medical Home Health LLC was sentenced today to serve 70 months in prison and ordered to pay $6.2 million in restitution for her participation in a health care fraud scheme involving the now defunct home health care company .

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 Acting Special Agent in Charge Reginald France of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office made the announcement. U.S. District Judge Federico A. Moreno of the Southern District of Florida imposed the sentence.

According to court documents, Annarella Garcia, 44, of Hialeah, Florida, was a co-owner of Professional Medical Home Health, a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries. Between December 2008 and February 2014, Garcia and others engaged in a scheme to bill the Medicare Program for expensive physical therapy and home health care services that were not medically necessary or were not provided. During that time, Professional Medical Home Health was paid approximately $6.25 million by Medicare for the fraudulent claims.

Specifically, Garcia and her co-conspirators paid kickbacks and bribes to patient recruiters in return for their providing patients to Professional Medical Home Health for home health and therapy services that were not medically necessary or were not provided. In furtherance of the scheme, Garcia and her co-conspirators falsified patient documentation to make it appear that beneficiaries qualified for and received home health care services, when, in fact, many of the beneficiaries did not actually qualify for such services and did not receive such services.

Garcia pleaded guilty to conspiracy to commit health care fraud on June 25, 2014.

The case was 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. This case is being prosecuted by Trial Attorneys A. Brendan Stewart and Anne P. McNamara of the Criminal Division’s Fraud Section.

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

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

The United States filed a complaint in federal court in Chicago to bar Laurie G. Helfer, aka Laurie G. Powell, individually and through her businesses Laurie’s Freelance & Tax Preparation Services and Tax Lady Laurie Inc., from preparing federal tax returns for others, the Justice Department announced today.

The complaint alleges that Helfer prepares and files amended tax returns for individuals claiming refunds that they are not legally entitled to receive. According to the complaint, Helfer has prepared hundreds of amended tax returns for customers in the Chicago area and the tax loss to the U.S. Treasury as a result of her fraudulent conduct could exceed $3 million.

According to the civil injunction complaint, Helfer promises her customers that she can obtain tax refunds for them by amending their tax returns from prior years. To do this, Helfer allegedly fabricates expenses from businesses that do not exist and enters those expenses on a Schedule C-Profit or Loss From Business that she files with her customers’ amended tax returns. The complaint alleges that the expenses offset her customers’ income from prior years and illegally generates a refund. The complaint further alleges that Helfer also prepares original returns for customers during tax-filing season using this same scheme to generate a refund. In an attempt to avoid detection by the Internal Revenue Service (IRS), Helfer stopped signing the tax returns that she prepares and also frequently changes the locations in which she prepares customers’ tax returns, including various Chicago-area hotel rooms, the complaint alleges.

Return preparer fraud is one of the 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 department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the department’s 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. Laurie G. Helfer, etc. et al.
Complaint for Permanent Injunction and Other Relief

The former acting director of cyber security at the U.S. Department of Health and Human Services was convicted by a federal jury in the District of Nebraska today of engaging in a child exploitation enterprise, conspiracy to advertise and distribute child pornography, and accessing a computer with intent to view child pornography in connection with his membership in a child pornography website.

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

Timothy DeFoggi, 56, formerly of Germantown, Maryland, is the sixth individual to be convicted as part of an ongoing investigation targeting three child pornography websites. The three websites were run by a single administrator, who has since been convicted in the District of Nebraska of engaging in a child exploitation enterprise in connection with his administration of the sites.

According to evidence presented at trial, DeFoggi registered as a website member on March 2, 2012, and maintained his membership and activity until Dec. 8, 2012, when the website was taken down by the FBI. Through the website, DeFoggi accessed child pornography, solicited child pornography from other members, and exchanged private messages with other members where he expressed an interest in the violent rape and murder of children. DeFoggi even suggested meeting one member in person to fulfill their mutual fantasies to violently rape and murder children.

The jury reached its verdict following a four-day trial before U.S. Chief District Judge Laurie Smith Camp. Sentencing is scheduled for Nov. 7, 2014.

This case is a result of investigative efforts led by the FBI’s Omaha Field Office, Violent Crimes Against Children Section, Major Case Coordination Unit, and Digital Analysis and Research Center. This case was prosecuted by Trial Attorneys Keith Becker and Sarah Chang of the Criminal Division’s Child Exploitation and Obscenity Section, along with Assistant U.S. Attorney Michael P. Norris of the U.S. Attorney’s Office for the District of Nebraska.

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

ExxonMobil Pipeline Company (ExxonMobil) has agreed to pay a civil penalty for an alleged violation of the Clean Water Act stemming from a 2012 crude oil spill from ExxonMobil’s “North Line” pipeline near Torbert, Louisiana, the Department of Justice and the Environmental Protection Agency (EPA) announced today. Under the consent decree lodged today in federal court, ExxonMobil will pay $1,437,120 to resolve the government’s claim.

The United States’ complaint, which was also filed today in the U.S. District Court for the Middle District of Louisiana, alleges that ExxonMobil discharged at least 2,800 barrels (or 117,000 gallons) of crude oil in violation of Section 311 of the Clean Water Act. On April 28, 2012, ExxonMobil’s 20/22-inch-diameter pipeline ruptured near Torbert, about 20 miles west of Baton Rouge, and crude oil spilled into the surrounding area and flowed into an unnamed tributary connected to Bayou Cholpe.

“Oil spills into our nation’s waters endanger public health and the environment and warrant concerted enforcement efforts,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today’s settlement achieves a just result and furthers our enforcement mission.”

“All businesses have an obligation to protect their workers, the local community and the environment in which they operate,” said Cynthia Giles, Assistant Administrator for Enforcement and Compliance Assurance at EPA. “EPA is committed to protecting communities by enforcing laws that reduce pollution in local waterways.”

The $1.4 million penalty is in addition to the costs incurred by ExxonMobil to respond to the oil spill and to replace the segment of ruptured pipeline. ExxonMobil is completing cleanup actions pursuant to an administrative order issued by the Louisiana Department of Environmental Quality. The company also continues to do follow-up work and to operate under a Corrective Action Order issued by the United States Department of Transportation, Pipeline and Hazardous Materials Safety Administration.

The Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the United States or adjoining shorelines in quantities that may be harmful to the environment or public health. The penalty paid for this spill 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 to waters of the United States or adjoining shorelines.

The proposed consent decree, lodged in the Middle 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 Department of Justice released today its second report to Congress entitled Indian Country Investigations and Prosecutions, which provides a range of enforcement statistics required under the Tribal Law and Order Act of 2010, as well as information about the progress of the Attorney General’s initiatives to reduce violent crime and strengthen tribal justice systems.

The report, based on data compiled from the case management system used by U.S. Attorney’s Offices (USAO), shows prosecutors in 2013 continued to bring substantial numbers of cases to federal court (a 34 percent increase over FY 2009 numbers) and prosecute a substantial majority of all cases referred to them. Of the cases that were declined for federal prosecution, most were declined for insufficient evidence or because they were referred to another prosecuting authority, such as the tribe, for potential prosecution.

“As detailed in this report, the Department of Justice is making good on our commitment to strengthen cooperation with sovereign tribes, reduce violent crime, and ensure justice for every individual,” said Attorney General Eric Holder. “From our work to empower Indian women under the landmark Violence Against Women Reauthorization Act, to the task force we established to safeguard children in Indian country from violence and abuse, we have made significant strides – in close partnership with tribal nations – to bolster the safety and security of all American Indian and Alaska Native communities. As we move forward, we will continue to expand on this critical work; to deepen our ongoing efforts; and to reaffirm our dedication to the promise of equal rights, equal protection, and equal justice for all.”

Although declination rates are an imperfect means of evaluating the effectiveness of criminal justice in Indian country or elsewhere, the report shows that with few exceptions, areas where the largest populations of American Indian people live and suffer from the most serious crime rates, such as the Southwest and the northern plains states (which together handled approximately 70 percent of the 2,542 cases resolved in 2013), federal declination rates were the lowest in the nation. For instance, South Dakota had the second to highest number of cases resolved in the country last year, 470 cases, and one of the lowest declination rates of 26 percent. Arizona resolved the highest number of cases, 733 cases, and had a declination rate of 28 percent.

Associate Attorney General Tony West announced the findings in remarks to the Four Corners Indian Country Conference today on the Navajo Nation in Flagstaff, and met separately with the Attorney General’s advisory subcommittee on Native American issues to discuss the report, among other matters.

“We are witnessing an unprecedented era of collaboration among U.S. Attorneys’ offices and tribal law enforcement and prosecutors across the country,” said Associate Attorney General West. “This report shows the fruits of this continuing partnership between the federal government and American Indian tribes, including enhancing training and capacity building for tribal court systems and improving responses to victims in Indian country.”

“Over the past five years, the Justice Department and our tribal partners have taken important steps forward on our journey toward a safer Indian Country,” said Timothy Purdon, U.S. Attorney for the District of North Dakota and chair of the Attorney General’s advisory subcommittee on Native American issues. “Vigorous enforcement of federal laws is vitally important to strengthening public safety on American Indian reservations. We are pleased to see in this report that U.S. Attorney’s Offices across the country continue to work hard to remove the most dangerous offenders and work closely with tribal law enforcement and prosecutors. These promising numbers are the direct result of this enhanced communication and collaboration.”

“The FBI continues to be committed to public safety in Indian Country,” said FBI Assistant Director Joseph S. Campbell. “Our partnership with federal, state, local, and tribal agencies remains strong as we continue to aggressively address violent crime and victimization in tribal communities.”

The information contained in the report shows the following:

• The Justice Department’s prioritization of Indian country crime has continued to result in substantial numbers of prosecutions, despite resource constraints that impacted the U.S. Attorney community in 2013. Between FY 2009 and FY 2012, the number of cases the department filed against defendants in Indian country increased nearly 54 percent. In FY 2013, due to fiscal challenges, overall case filings in Indian country declined somewhat compared to FY 2012, but still remained 34 percent above the number of cases filed when the department first began its department-wide tribal justice initiative in 2009. Notwithstanding the fiscal impact of the sequester, reduced budgets, and a hiring freeze, federal agents and prosecutors continued to focus their efforts on improving public safety in Indian country.
• A substantial majority of Indian country criminal investigations opened by the FBI were referred for prosecution.
• A substantial majority of Indian country criminal cases opened by the United States Attorneys’ Offices were prosecuted.
• USAO data for CY 2013 show that 34 percent (853) of all Indian country submissions for prosecution (2,542) were declined for prosecution. In CY 2012, USAOs declined approximately 31 percent (965) of all (3145) Indian country submissions for prosecution. USAO data for CY 2011 indicate that just under 37 percent (1,041) of all Indian country submissions for prosecution (2,840) were declined.
• The most common reason for declination by USAOs was insufficient evidence (56 percent in CY 2013, 52 percent in CY 2012, and 61 percent in CY 2011).
• The next most common reason for declination by USAOs was referral to another prosecuting authority (21 percent in CY 2013, 24 percent in CY 2012, and 19 percent in CY 2011).

The most common reason FBI Indian country investigations were closed administratively without referral for prosecution was that the investigation concluded that no federal crime had occurred.

• For instance, all but 30 of the 164 death investigations the FBI closed administratively in CY 2013 were closed because the FBI established that the death was due to causes other than homicide – i.e., accidents, suicide, or death from natural causes.

Other important developments in FY 2013:

VAWA Pilot Projects

The fight against domestic violence in Indian country has been an especially important priority for the Department of Justice, and in 2013, Congress and this administration took an historic step forward with the passage of the Violence Against Women Reauthorization Act of 2013 (VAWA 2013), which the President signed into law on March 7, 2013.

Congress, in VAWA 2013, provided new tools to fight domestic violence in Indian country, and the department spared no time utilizing them. From the date the act took effect, March 7, 2013, through the end of fiscal year 2013, U.S. Attorneys with prosecutorial responsibilities in Indian country have charged defendants with the amended provisions of the federal assault statutes that strengthened penalties for domestic assault offenses, such as strangulation and stalking. And, while the new law’s tribal criminal jurisdiction provision takes effect generally on March 7, 2015, under VAWA 2013’s “Pilot Project” provisions, the department recently approved three tribes’ applications voluntary “Pilot Project” to begin exercising special domestic violence criminal jurisdiction sooner. These tribes – the Pascua Yaqui Tribe of Arizona, the Umatilla Tribes of Oregon, and the Tulalip Tribes of Washington – will be the first tribes in the nation to exercise special criminal jurisdiction over crimes of domestic and dating violence, regardless of the defendant’s Indian or non-Indian status, under VAWA 2013.

Strengthening Partnerships and Support for Tribal Self-Governance

Strengthening partnerships and tribal self-governance was a major theme of the Attorney General’s message to tribal leaders on Nov.13, 2013, at the White House Tribal Nations Conference, where he announced a proposed statement of principles to guide the department’s work with federally recognized tribes. As the Attorney General said, “ As a result of these partnerships – and the efforts of everyone here – our nation is poised to open a new era in our government-to-government relationships with sovereign tribes.”

U.S. Attorneys’ offices around the country are engaged in an unprecedented level of collaboration with tribal law enforcement, consulting regularly with them on crime-fighting strategies in each district. One important example of this is the department’s enhanced Tribal Special Assistant U.S. Attorney (SAUSA) program. Tribal SAUSAs are cross-deputized tribal prosecutors who are able to prosecute crimes in both tribal court and federal court as appropriate. These Tribal SAUSAs serve to strengthen a tribal government’s ability to fight crime and to increase the USAO’s coordination with tribal law enforcement personnel. The work of Tribal SAUSAs can also help to accelerate a tribal criminal justice system’s implementation of TLOA and VAWA 2013.

Read the entire report at www.justice.gov/tribal/tloa.html

Read about the Justice Department’s efforts to increase public safety in Indian County at www.justice.gov/tribal/accomplishments.html

Associate Attorney General Tony West today announced $3 million dollars in grants from the Office on Violence Against Women (OVW) to increase local and tribal capacity to prosecute crimes of violence against women and provide services to victims of sexual assault, domestic violence and stalking in the Bakken Region of North Dakota and Montana.

Associate Attorney General West made the announcement at the Four Corners Indian Country Conference today taking place on the Navajo Nation near Flagstaff, Arizona. The grants are part of the Justice Department’s ongoing commitment to protecting women from violence and strengthening the capacity of communities to respond to domestic and sexual violence.

OVW’s Bakken Region special initiative launched in April 2014 and is the first large scale project targeting resources to support the expansion of services to victims of sexual assault, domestic violence and stalking as well as aid the local criminal justice system in responding to these crimes in the Bakken region.

“Victims of sexual assault, domestic violence, and stalking living in a vast rural region like the Bakken face unique challenges in accessing critical, life-saving services,” said Associate Attorney General Tony West. “With this new, targeted funding, tribes and local communities will be better equipped to respond to the increased need for mental health services, legal assistance, housing, and training.”

The five grantees supported by OVW’s Bakken Region Initiative are: Fort Peck Assiniboine and Sioux Tribes, Poplar, Montana; First Nations Women’s Alliance, Devils Lake, North Dakota; Montana Coalition Against Domestic and Sexual Violence, Helena, Montana; North Dakota Council on Abused Women’s Services, Bismarck, North Dakota; and Three Affiliated Tribes of the Fort Berthold Reservation, New Town, North Dakota.

With Justice Department funding these grantees will be able to enhance responses to domestic violence, dating violence, sexual assault, and stalking, and expand mental health counseling, advocacy, legal assistance, prevention education, sexual assault forensic examiner programs, Sexual Assault Response Teams, and law enforcement training.

In addition, the Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation in Montana and the Three Affiliated Tribes of the Fort Berthold Reservation in North Dakota are each receiving a three-year $450,000 grant to support the salary, travel, and training costs of a tribal prosecutor, who will be cross-designated to serve as a tribal Special Assistant United States Attorney (SAUSA) in the local U.S. Attorney’s Office.

“OVW grant funds have made a marked difference in the lives of countless victims and survivors, and we are eager to provide dedicated funding that will support desperately needed services,” said Bea Hanson, OVW’s Principal Deputy Director. “These grants represent the Department’s recognition that to combat violence against women, especially in Indian country, we must be responsive to emerging issues.”

For more information on OVW and its programs, please visit: www.justice.gov/ovw .

Adam Michael Webber, of Salt Lake County, Utah, was indicted on Friday by a federal grand jury in the District of Utah, the Justice Department announced. The indictment, which was made public today, charges Webber with one count of dealing in firearms without a license, one count of smuggling goods from the United States and six counts of filing false tax returns.

According to the indictment, no later than 2007, Webber established a business that sold firearms and firearms’ parts and accessories, largely through the Internet. The business operated under the name HK Parts, using the website www.hkparts.net , and was solely owned and operated by Webber. In 2009, Webber incorporated the business as HK Parts Inc., which used the same website. Webber was the sole shareholder of HK Parts Inc.

According to the indictment, on or about June 20, 2007, Webber signed a stipulated settlement agreement with the United States in which he agreed never to apply for a federal firearms license or be a responsible person for any federal firearms licensee or business, and that he would not engage in the business of manufacturing, importing or dealing in firearms. However, during the years 2007 through 2012, Webber individually and through HK Parts and HK Parts Inc., sold firearms and firearms parts and accessories.

Webber is charged with filing false individual income tax returns for 2007 through 2010, which underreported the gross receipts of the business, and with filing false income tax returns for an S Corporation for 2009 and 2010, which also underreported the gross receipts of the business.

A trial date has not been scheduled. If convicted, Webber faces a statutory maximum sentence of 33 years in prison and may be subject to fines.

This case was investigated by IRS-Criminal Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case is being jointly prosecuted by the U.S. Attorney’s Office for the District of Utah and the Justice Department’s Tax Division.

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

Related Materials:

United States v. Adam Michael Webber
Indictment
Exhibit A

A U.S. citizen living in Amsterdam, Netherlands, was sentenced today to serve 35 years in prison for sexually exploiting a minor in California and elsewhere and producing images of that abuse.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Benjamin B. Wagner of the Eastern District of California and Special Agent in Charge Monica M. Miller of the FBI’s Sacramento Division made the announcement.

Christopher David Robinette, 44, pleaded guilty on April 21, 2014, to eight counts of sexual exploitation of a minor and one count of transporting a minor in interstate or foreign commerce for purposes of engaging in criminal sexual activity. According to court documents, between September 2004 and August 2006, Robinette traveled to Fresno, California, to sexually exploit a minor and produce digital still and video images of the abuse. The sexual abuse took place in California, including the Fresno area, as well as in Nevada, Mexico and Costa Rica. Robinette’s crimes were detected shortly after he uploaded images of child pornography, including images he produced, to a Microsoft SkyDrive account.

In addition to his prison sentence, Senior U.S. District Judge Anthony W. Ishii of the Eastern District of California, ordered Robinette to serve a lifetime of supervised release following his prison term, during which his access to computers, the Internet and minors will be restricted, and he will be obligated to register as a sex offender.

This case was investigated by the FBI’s Sacramento Division and FBI in The Hague, Netherlands, with assistance from the Korps Landelijke Politie Diensten (Dutch National Police), the Amsterdam Amstelland Police Department (Amsterdam local police), and the Fresno Police Department. The National Center for Missing & Exploited Children assisted in coordinating information for a law enforcement response. The case was prosecuted by Trial Attorney Maureen Cain of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney David Gappa of the Eastern District of California.

The Department of Justice’s Office of International Affairs and CEOS, as well as the Dutch Ministry of Security and Justice, assisted in coordinating Robinette’s extradition to Fresno. The U.S. Marshals Service returned Robinette to Fresno, and he has been detained as a flight risk and danger to the community since his initial court appearance on Dec. 26, 2012.

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

Sixteen former Puerto Rico police officers have pleaded guilty for their roles in a criminal organization run out of the police department. The officers used their affiliation with law enforcement to commit robbery and extortion, to manipulate court records in exchange for bribes, and to sell illegal narcotics.

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.

“These 16 police officers were charged with fighting crime, protecting lives and property, and improving the quality of life in Puerto Rico,” said Assistant Attorney General Caldwell. “Instead, they used their badges and guns to do the opposite, committing crimes, endangering lives, and stealing property under the veil of police authority. This prosecution demonstrates the Justice Department’s commitment to holding all criminals accountable – including those who wear a badge. We will use every tool at our disposal, including the RICO laws, to rid our communities of corruption.”

The following 13 defendants pleaded guilty to conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act: Osvaldo Vazquez-Ruiz, 38; Orlando Sierra-Pereira, 37; Danny Nieves-Rivera, 35; Roberto Ortiz-Cintron, 35; Yovanny Crespo-Candelaria, 34; Jose Sanchez-Santiago, 32; Miguel Perez-Rivera, 35; Nadab Arroyo-Rosa, 33; Jose Flores-Villalongo, 52; Luis Suarez-Sanchez, 36; Eduardo Montañez-Perez, 29; Carlos Laureano-Cruz, 40; and Carlos Candelario-Santiago, 47. Three defendants, Ruben Casiano-Pietri, 36, Christian Valles-Collazo, 28, and Ricardo Rivera Rodriguez, 39, pleaded guilty to robbery and extortion charges. Several of the defendants also pleaded guilty to firearms charges in connection with the use of their police-issued firearms in furtherance of their crimes. At the time of their criminal conduct, Flores-Villalongo and Candelario-Santiago were sergeants with the Police of Puerto Rico (POPR), and the other defendants were police officers. Sentencing hearings are scheduled for December 2014.

According to court documents, over the course of the conspiracy, the officers worked together to conduct traffic stops and enter the homes of suspected criminals to steal money, property and drugs for their own personal enrichment. They planted evidence to make false arrests, and then extorted money from their victims in exchange for their release from custody. Additionally, in exchange for bribe payments, the officers gave false testimony, manipulated court records and failed to appear in court when required so that criminal cases would be wrongfully dismissed. The officers also sold and distributed wholesale quantities of narcotics.

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

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

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

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

Three Puerto Rico police officers, Erick Rivera Nazario, Angel Torres Quinones and Antonio Rodriguez Caraballo today pleaded guilty to federal civil rights charges in connection with the fatal beating of 19-year-old Jose Luis Irizarry Perez, announced Acting Assistant Attorney General Molly Moran for the Civil Rights Division, United States Attorney Rosa Emilia Rodriguez-Velez for the District of Puerto Rico, and Special Agent in Charge Carlos Cases of the FBI San Juan Field Office.

These pleas, in conjunction with other recent pleas by Jimmy Rodriguez Vega, David Colon Martinez and Miguel Negron Vazquez brings the total number of Puerto Rico police officers pleading guilty to charges related to this incident to six.

According to documents filed in connection with the guilty pleas, former officer Rodriguez Vega and Lieutenant Rivera Nazario struck Irizarry Perez with their police batons while former officer Colon Martinez physically restrained Irizarry Perez during an election evening celebration at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008.

Rivera Nazario pleaded guilty to one count of depriving Irizarry Perez of his civil rights by striking him with his police baton. Torres Quinones pleaded guilty to obstruction of justice for providing misleading information to the local Puerto Rico prosecutor that initially investigated the matter. Former Sergeant Rodriguez Caraballo pleaded guilty to one count of perjury for making a false statement to the federal grand jury.

On Aug. 22, 2014, guilty pleas were entered by Colon Martinez and Negron Vazquez for their role in the case. Colon Martinez pleaded guilty to one count of making a false statement to the FBI and one count of perjury for making a false statement to the federal grand jury that investigated the incident. Negron Vazquez pleaded guilty to making a false statement to the FBI.

Rodriguez Vega pleaded guilty on March 8, 2013, to one count of depriving Irizarry Perez of his civil rights by striking him with his police baton.

“This case reflects the department’s commitment to ensuring that those officers who violate their oath by using excessive force or obstructing a federal investigation will be held accountable,” said Acting Assistant Attorney General Moran. “While the vast majority of police officers serve with the highest distinction, the Justice Department stands ready to investigate and prosecute those officers who cross the line and engage in criminal conduct.”

“We rely upon our police officers to protect and serve the community, but through their illegal actions, these officers abused their power and violated the public trust,” said U.S. Attorney Vélez. “I am hopeful that today’s pleas bring a measure of justice and closure to the victim’s family and the entire community.”

Rodriguez Vega and Rivera Nazario each face a maximum penalty of 10 years in prison and a fine of $250,000 for their convictions for violating Irizarry Perez’s civil rights.

Colon Martinez faces a maximum penalty of five years in prison and a $250,000 fine for each conviction of making a false statement to the FBI and making a false declaration to the federal grand jury.

Negron Vazquez faces a maximum penalty of five years in prison and a $250,000 fine for his conviction of making a false statement to the FBI.

Torres Quinones faces a maximum penalty of 20 years in prison and a fine of $250,000 for his conviction for obstruction of justice by providing misleading information to the local prosecutor.

Rodriguez Caraballo faces a maximum penalty of five years in prison and a $250,000 fine for his conviction for making a false declaration to the federal grand jury.

This case was investigated by the San Juan Division of the FBI and is being prosecuted by Senior Litigation Counsel Gerard Hogan and Trial Attorneys Shan Patel and Olimpia E. Michel from the Civil Rights Division of the U.S. Department of Justice and Assistant U.S. Attorney Jose A. Contreras from the U.S. Attorney’s Office for the District of Puerto Rico.

The Justice Department announced today that Massillon, Ohio landlords John and Mary Ruth have agreed to pay $850,000 to settle lawsuits filed by the Justice Department and other parties alleging that the Ruths discriminated on the basis of race and familial status at properties they formerly owned in Massillon. The settlement must still be approved by United States District Judge John R. Adams in the Northern District of Ohio.

The proposed settlement would resolve a lawsuit filed by the department on October 31, 2011, alleging that the Ruths and the companies through which they manage their properties had discriminated against African Americans and families with children at Yorkshire Apartments, Thackeray Ledges and Wales Ridge— three apartment complexes located in Massillon, Ohio. The settlement would also resolve related lawsuits raising similar allegations filed by Stark County, the Ohio Civil Rights Commission and several former property managers and tenants at the complexes. In an order issued on March 31, 2014, the court noted that 10 of Mr. Ruth’s former employees had testified that they were instructed to discriminate against African Americans and that other former employees had testified that they been instructed to discriminate against families with children. The court ruled that the department had presented sufficient evidence of a pattern or practice of unlawful discrimination by the defendants for the case to go to trial before a jury.

Under the terms of the settlement, the defendants will pay:

· $650,000 in damages and attorney’s fees to the plaintiffs in the lawsuits filed by the Ohio Civil Rights Commission, Stark County and several former residents and property managers;

· $175,000 in damages to 11 additional former residents and employees identified by the United States who had been harmed by the defendants’ discrimination; and

· $25,000 in a civil penalty to the United States.

“It is a sad fact that decades after the passage of the Fair Housing Act, many people still face unlawful discrimination when looking for housing,” said Molly Moran, Acting Assistant Attorney General for the Civil Rights Division. “The magnitude of this settlement makes clear that the Department of Justice will vigorously pursue violations of the Fair Housing Act.”

“The freedom of every family to live where they wish, without regard to their race or if they have kids, is basic to who we are in this country,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio. “When landlords deny that basic right, there will be consequences. We will continue to work hard to ensure that this fundamental right is protected in Ohio and across the nation.”

The settlement also requires that the defendants hire an independent management company to manage all of their rental properties, receive training on the requirements of the Fair Housing Act and report to the department for a period of three years on their compliance with the settlement. The settlement also requires the defendants to hire a third party to periodically test their properties to ensure compliance with the Fair Housing Act.

Fighting illegal housing discrimination is a top priority of the Department of Justice. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov , or contact HUD at 1-800-669-9777 or through its website at http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp .

A Louisiana psychiatrist was sentenced in federal court in Baton Rouge, Louisiana, today to serve 86 months in prison for his role in a $258.5 million Medicare fraud scheme involving partial hospitalization psychiatric services. He was further ordered to pay $43.5 million in restitution and to forfeit all proceeds from the fraudulent scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney J. Walter Green of the Middle District of Louisiana, Special Agent in Charge Mike Fields of the Dallas Region of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), Special Agent in Charge Michael Anderson of the FBI’s New Orleans Division and Louisiana State Attorney General James D. “Buddy” Caldwell made the announcement. Chief U.S. District Court Judge Brian A. Jackson of the Middle District of Louisiana imposed the sentence.

According to documents filed in the case, Zahid Imran, M.D., 56, of Baton Rouge, served as the medical director of Shifa Community Mental Health Center of Baton Rouge, and co-owned Serenity Center of Baton Rouge and Shifa Community Mental Health Center of Texas. As part of the scheme, Imran admitted mentally ill patients to the facilities, some of whom were inappropriate for partial hospitalization, and then re-certified the patients’ appropriateness for the program in an effort to continue to bill Medicare for services. To support the fraudulent Medicare billing, Imran and others falsified patient treatment records to reflect services on dates when no such services were provided. Imran pleaded guilty on May 13, 2014, to conspiracy to commit health care fraud.

Law enforcement’s 2011 investigation into the three community mental health centers has resulted in 17 convictions of individuals employed by the facilities, including therapists, marketers, administrators, owners and the medical director. The companies billed Medicare for partial hospitalization program services for the mentally ill that were unnecessary or never provided over a period of approximately seven years. The companies, collectively, submitted more than $258 million in claims to Medicare during this period. Medicare paid approximately $43.5 million on those claims.

The case is being investigated by HHS-OIG, the FBI and the Medicaid Fraud Control Unit of the Louisiana Attorney General’s Office, 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 Middle District of Louisiana. The case is being prosecuted by Trial Attorneys Abigail Taylor and Dustin M. Davis of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shubhra Shivpuri of the Middle District of Louisiana.

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 and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Justice Department today announced the U.S. District Court for the Eastern District of Michigan’s termination of the consent judgment relating to the Detroit Police Department’s (DPD) use of force and arrest and witness detention practices. The Justice Department and the city of Detroit jointly sought the termination of the consent judgment and approval of a Transition Agreement maintaining federal oversight of the DPD for an additional 18 months. The transition agreement starts a new chapter of reform and accountability for the DPD as it works in collaboration with the Justice Department to better ensure constitutional policing, promote community confidence, and improve public safety in the city of Detroit. The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Michigan have worked cooperatively throughout the duration of this matter.

The consent judgment was entered in 2003 and required comprehensive reforms of the DPD to remedy its patterns and practices of use of excessive force and unlawful detentions and arrests identified by the Justice Department following a two-and-a-half-year investigation. A second, concurrent consent judgment was also entered addressing unconstitutional conditions of confinement in the DPD’s holding cells. A court-appointed monitor was selected to evaluate the city’s compliance with both judgments.

Through substantial compliance with the consent judgment, the DPD has significantly reformed its use of force and witness detention practices. The DPD has effectively eliminated the unconstitutional practices that made the consent judgment necessary through comprehensive policy revision; enhanced training, supervision and investigative practices; and improved accountability systems, including the development of a comprehensive risk management system. The effects of these changes are evident in the reduction of the DPD’s officer-involved shootings and other uses of force, and the abolition of its past practice of detaining witnesses during investigations of serious crimes.

"Today's transition agreement with the Detroit Police Department is yet another example that law enforcement agencies can change to better serve their communities when they commit to meaningful reform," said Attorney General Eric Holder. "The Department of Justice has entered into agreements with police departments large and small across the country over the past five years and I applaud Detroit for setting an example by showing that these agreements can create the constitutional and community policing models that all communities deserve."

“The court’s order today to terminate the consent judgment and move to a transition agreement is an important step, but does not end the Department of Justice’s oversight of the Detroit Police Department,” said U.S. Attorney Barbara McQuade for the Eastern District of Michigan. “We are pleased that the Detroit Police Department has made fundamental changes in its practices and procedures, but we will continue to monitor for an additional 18 months to ensure that these changes are sustained and that the people of Detroit receive the constitutional policing that they deserve.”

Although the DPD is greatly improved, and the city had substantially complied with the requirements of the consent judgment, the Justice Department and the city acknowledged that additional work remains to be done to ensure that the consent judgment’s reforms are fully realized and maintained. The transition agreement approved today by the court provides an opportunity for the DPD to continue that work and demonstrate to the Justice Department and the people of Detroit that it can satisfy its mission of promoting public safety in a manner that is fair, just and constitutional.

The other concurrent consent judgment relating to the conditions of confinement in DPD holding cells was terminated earlier this year after the city, which had fully complied with that judgment’s terms, completed the transfer of custodial responsibility for all DPD detainees to the Michigan Department of Corrections.

Under the 1994 Violent Crime Control and Law Enforcement Act, the Justice Department has the authority to file civil suits against law enforcement agencies that engage in a pattern of misconduct. The department also has the authority to file suit against law enforcement agencies that receive federal funds and engage in a pattern of discrimination. For more information on the Justice Department’s Civil Rights Division or the Detroit consent judgments, visit www.justice.gov/crt or call the U.S. Attorney’s Office Civil Rights hotline at (313) 226-9151. Community members may also email the Civil Rights Division at community.detroit@usdoj.gov .

The former Hanover Corporation chief financial officer and a former Hanover salesman were sentenced today to serve 60 months in prison and 70 months in prison respectively, and ordered to pay $14,454,999.19 in restitution, for their roles in an $18 million Ponzi scheme. Hanover’s former chief executive officer was previously sentenced to 14 years in prison and ordered to pay $14,784,983.75 in restitution in this case.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney David Rivera of the Middle District of Tennessee, Special Agent in Charge Todd McCall of the FBI’s Memphis Division and Special Agent in Charge Christopher Henry of the Internal Revenue Service-Criminal Investigation (IRS-CI) in Nashville made the announcement today after the sentences were handed down by U.S. District Judge Todd J. Campbell in the Middle District of Tennessee.

According to court documents, Daryl Bornstein, 55, of Kinston Springs, Tennessee, a former Hanover salesman, and Robert Haley, 55, of Lebanon, Tennessee, the former Hanover CFO, colluded with Hanover CEO, Terry Kretz, to steal $18 million of investors’ money in a Ponzi scheme. Specifically, Kretz and Bornstein solicited investors with the promise that the monies would be invested in stock options and startup companies. More than half of the money, however, was actually used to repay earlier investors, to pay Hanover’s salaries and overhead, and to benefit the defendants personally. Such personal benefits included golf memberships and $100,000 in cash for Bornstein. Kretz and Bornstein also issued Hanover promissory notes to reimburse individuals who had previously lost money investing in ventures recommended by Bornstein before he joined Hanover. In some cases, these former investors contributed new money to Hanover, therefore unwittingly paying off their old investment losses with their new investments.

Haley furthered the fraud by sending investors checks for purported “interest,” knowing that they were simply monies recently taken in from new investors. He also prepared a false balance sheet that overstated Hanover’s financial health to be shown to investors.

The case was investigated by the FBI, IRS-CI, Tennessee Bureau of Investigation, and Tennessee Department of Commerce and Insurance. The case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Scarlett S. Nokes of the Middle District of Tennessee.

A Lighthouse Point, Florida, man was sentenced today to serve 12 months and one day in prison for filing a false claim for a tax refund with the Internal Revenue Service (IRS), Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney Wifredo Ferrer for the Southern District of Florida announced.

Bradley Bowman was also ordered to pay $300,403 in restitution to the IRS and to serve three years of supervised release. According to court documents, in 2009, Bowman submitted to the IRS a false individual income tax return for tax year 2005 that fraudulently claimed a refund of $299,024. Bowman engaged Penny Jones, who is currently serving 12 years in prison in a related case involving more than 380 false returns, to prepare this false return. Bowman fraudulently claimed his gross income was $447,036 and then falsely claimed that all of his income was withheld to satisfy his income tax liabilities. Bowman pleaded guilty to this charge on May 27.

The case was investigated by special agents of the IRS-Criminal Investigation. The case is being prosecuted by Trial Attorney Greg Bailey of the Tax Division and Assistant U.S. Attorney Bertha Mitrani for the Southern District of Florida.

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

Four members of the Two Six Nation street gang and four of their associates have been indicted for their roles in a racketeering conspiracy spanning more than 20 years, as well as murder and drug trafficking charges.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney David A. Capp of the Northern District of Indiana, Special Agent in Charge Carl Vasilko of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Chicago Field Division, Special Agent in Charge Jack Riley of the Drug Enforcement Administration’s (DEA) Chicago Field Division and Special Agent in Charge W. Jay Abott of the FBI’s Indianapolis Division made the announcement.

“Today’s action reflects the most recent in the department’s continuing efforts to free communities within East Chicago, Gary and Chicago from the scourge of gang violence and drug dealing,” said Assistant Attorney General Caldwell. “Over the years, the U.S. Attorneys’ Offices and the Criminal Division have partnered to use RICO and other federal charges to disrupt and dismantle violent gangs like the Imperial Gangsters, the Latin Kings and now the Two Six Nation. These rolling prosecutions of violent gangs in this region demonstrate the department’s commitment to ensure that no gang is able to maintain a foothold in these communities.”

“This is our third use of the federal RICO statute against violent street gangs operating in northwest Indiana,” said U.S. Attorney Capp. “This indictment was the result of extensive federal-local law enforcement work on both sides of the state border. Our investigations continue and we will not hesitate to utilize the power of the RICO statute to remove these individuals from the streets.”

The second superseding indictment returned by a federal grand jury on Aug. 21, 2014, and unsealed today, charges Adron Herschel Tancil, aka “Awol,” 36, of East Chicago, Indiana; Jesus Valentin Fuentes, aka “Chu Chu,” 39, of Gary, Indiana; Frank Perez Jr., aka “Pumpkin,” 33, of Verona, Pennsylvania; and Anthony Cresencio Aguilera, aka “P-nut,” 35, of Portage, Indiana with RICO conspiracy and conspiracy to engage in drug trafficking, including marijuana, cocaine, crack cocaine, heroin and ecstasy. Also charged in the narcotics conspiracy are Oscar Cosme, aka “Cos,” 41, of East Chicago; Ester Carrera, aka “Mama D,” 61, of Gary; Paul Brock, aka “Big Brock,” 27, of Gary; and Alma Delia Carrera, 28, of Gary. Both the RICO and narcotics conspiracies allege criminal conduct spanning more than 20 years, from January 1992 to the present.

The indictment further charges defendants Tancil, Fuentes and Cosme with the May 16, 2003, homicide of Julio Cartagena in East Chicago. Kiontay Kyare Pennington has already pleaded guilty to murder in aid of racketeering for his role in this homicide.

In addition, the indictment charges Frank Perez with the July 13, 1999, murder of Jose Pena Jr. in Whiting, Indiana.

The charges contained in an indictment are merely accusations and all persons charged are presumed innocent until and unless proven guilty in court.

This case is being investigated by the ATF, DEA, FBI, East Chicago Police Department and Whiting Police Department, with assistance from the Chicago Police Department, Gary Police Department, Hammond Police Department, Highland Police Department and the Lake County High Intensity Drug Trafficking Area task force. Assistance was also provided by the U.S. Attorney’s Office for the Western District of Pennsylvania.

This case is being prosecuted by Assistant U.S. Attorney David J. Nozick for the Northern District of Indiana and Trial Attorney Andrew L. Creighton of the Criminal Division’s Organized Crime and Gang Section.

A northern California man who served as an information and document vendor in the identity theft and credit card fraud ring known as “Carder.su” was sentenced yesterday to serve 100 months in federal prison. He was further ordered to pay approximately $50.5 million in restitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Assistant Special Agent in Charge Michael Harris of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Las Vegas made the announcement. U.S. District Judge Andrew P. Gordon of the District of Nevada imposed the sentence.

“Carder.su is a criminal organization, and we used the same mob-busting laws and investigative techniques we’ve used with other organized crime networks to dismantle the fraud ring,” said Assistant Attorney General Caldwell. “The new face of organized crime is largely cyber-based, and this case demonstrates the department’s ability to pursue members of these organizations wherever we find them.”

“The structure of the Carder.su organization was sophisticated and designed to prevent attack by rival organizations and to avoid detection by law enforcement,” said U.S. Attorney Bogden. “Its members had defined roles and were responsible for the theft of over $50 million. We are working diligently with our law enforcement partners to ensure that the people who commit these high-tech crimes are put out of business.”

“As this multi-year sentence makes clear, individuals like this defendant who traffic in stolen identities and compromised credit card information should expect to face the full weight of the law,” said HSI Assistant Special Agent in Charge Harris. “This type of fraud has reached epidemic proportions and the economic fallout from these crimes affects us all. HSI will continue to work closely with its law enforcement partners to see that those involved are brought to justice.”

Makyl Haggerty, aka “Wave” and “G5,” 24, of Oakland, Calif., admitted in his plea agreement that in December 2009, he became associated with the Carder.su organization, a criminal enterprise whose members trafficked in compromised credit card account data and counterfeit identifications, and committed money laundering, narcotics trafficking, and various types of computer crime. Specifically, Haggerty operated as a vendor on the organization’s websites using the “Wave” and “G5” nicknames, and sold approximately 1,000 counterfeit identification documents and counterfeit credit cards to other Carder.su members. Haggerty manufactured and sold counterfeit driver’s licenses for at least 15 states and British Columbia.

Fifty-six individuals were charged in four separate indictments in Operation Open Market, which targeted the Carder.su organization. To date, 25 individuals have been convicted and the rest are either fugitives or are pending trial. Haggerty pleaded guilty in February to one count of participation in a racketeer influenced corrupt organization.

The cases were investigated by HSI and the U.S. Secret Service, and are being prosecuted by Trial Attorney Jonathan Ophardt of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Kimberly M. Frayn and Andrew W. Duncan of the District of Nevada.

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 .

A federal court has permanently barred William Naes of St. Charles, Missouri, from preparing federal tax returns for others, the Justice Department announced today. The permanent injunction order, to which Naes consented, was entered by U.S. District Judge E. Richard Webber of the U.S. District Court for the Eastern District of Missouri.

The government alleged that Naes prepared returns that fraudulently claimed tax deductions for his customers, including bogus deductions for charitable contributions and unreimbursed employee business expenses. According to the complaint, Naes also fabricated business expenses on Schedules C-Profit or Loss From Business, concocted a fake business for at least one customer and failed to properly identify himself as the paid preparer on many of the returns he prepared. As a result of his conduct, many of Naes’ customers paid less in taxes than they owed or improperly received tax refunds.

Return preparer fraud is one of the 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 department’s Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the 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. William Naes
Stipulated Order for Permanent Injunction Against William Naes

A Tennessee Bloods gang member was sentenced today to serve 10 years in prison, to be followed by three years of supervised release for his role in a violent racketeering conspiracy.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney David Rivera of the Middle District of Tennessee and Special Agent in Charge Glenn N. Anderson of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Nashville Field Division made the announcement. The sentence was imposed by U.S. District Judge Aleta Trauger of the Middle District of Tennessee.

Kenneth Gaddie, aka “K.G.,” 24, of Nashville, Tennessee, pleaded guilty on May 23, 2014, and was the last of 37 gang members to be convicted in the Middle District of Tennessee for involvement in the Bloods gang.

According to court documents, from 2006 through December 2011, Gaddie was a member of the Bloods gang. He and other Bloods gang members committed multiple acts of murder, robbery and narcotics trafficking on behalf of the gang.

Gaddie and other Bloods gang members met at various locations in the Nashville area, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center, on a regular basis to report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members and initiate or “jump in” new members by beating them.

Further, according to court documents, on June 25, 2008, Gaddie shot and wounded an individual on behalf of the gang. Less than one month after this incident, on July 17, 2008, Gaddie and others shot at another individual.

The investigation was conducted by the ATF; the Metropolitan Nashville Police Department; the U.S. Marshals Service; the La Vergne, Tennessee, Police Department; and the Davidson County, Tennessee, Sheriff’s Office. The case was prosecuted by Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Scarlett S. Nokes of the Middle District of Tennessee.

Attorney General Eric Holder and Associate Attorney General Tony West announced today that the Department of Justice has reached a $16.65 billion settlement with Bank of America Corporation – the largest civil settlement with a single entity in American history ­— to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution.

“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” said Attorney General Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force and its Residential Mortgage-Backed Securities (RMBS) Working Group, which has recovered $36.65 billion to date for American consumers and investors.

“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General West. “But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.”

The Justice Department and the bank settled several of the department’s ongoing civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of RMBS, collateralized debt obligations (CDOs), and the bank’s practices concerning the underwriting and origination of mortgage loans. The settlement includes a statement of facts, in which the bank has acknowledged that it sold billions of dollars of RMBS without disclosing to investors key facts about the quality of the securitized loans. When the RMBS collapsed, investors, including federally insured financial institutions, suffered billions of dollars in losses. The bank has also conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

Of the record-breaking $16.65 billion resolution, almost $10 billion will be paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America will pay a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion will be paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion will be paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million will be paid to settle claims by the Securities and Exchange Commission. In addition, $300 million will be paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York.

Bank of America will provide the remaining $7 billion in the form of relief to aid hundreds of thousands of consumers harmed by the financial crisis precipitated by the unlawful conduct of Bank of America, Merrill Lynch and Countrywide. That relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes. It will also include new loans to credit worthy borrowers struggling to get a loan, donations to assist communities in recovering from the financial crisis, and financing for affordable rental housing. Finally, Bank of America has agreed to place over $490 million in a tax relief fund to be used to help defray some of the tax liability that will be incurred by consumers receiving certain types of relief if Congress fails to extend the tax relief coverage of the Mortgage Forgiveness Debt Relief Act of 2007.

An independent monitor will be appointed to determine whether Bank of America is satisfying its obligations. If Bank of America fails to live up to its agreement by Aug. 31, 2018, it must pay liquidated damages in the amount of the shortfall to organizations that will use the funds for state-based Interest on Lawyers’ Trust Account (IOLTA) organizations and NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. The organizations will use the funds for foreclosure prevention and community redevelopment, legal assistance, housing counselling and neighborhood stabilization.

As part of the RMBS Working Group, the U.S. Attorney’s Office for the District of New Jersey conducted a FIRREA investigation into misrepresentations made by Merrill Lynch to investors in 72 RMBS throughout 2006 and 2007. As the statement of facts describes, Merrill Lynch regularly told investors the loans it was securitizing were made to borrowers who were likely and able to repay their debts. Merrill Lynch made these representations even though it knew, based on the due diligence it had performed on samples of the loans, that a significant number of those loans had material underwriting and compliance defects - including as many as 55 percent in a single pool. In addition, Merrill Lynch rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools. Merrill Lynch also disregarded its own due diligence and securitized loans that the due diligence vendors had identified as defective. This practice led one Merrill Lynch consultant to “wonder why we have due diligence performed” if Merrill Lynch was going to securitize the loans “regardless of issues.”

“In the run-up to the financial crisis, Merrill Lynch bought more and more mortgage loans, packaged them together, and sold them off in securities – even when the bank knew a substantial number of those loans were defective,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “The failure to disclose known risks undermines investor confidence in our financial institutions. Today’s record-breaking settlement, which includes the resolution of our office’s imminent multibillion-dollar suit for FIRREA penalties, reflects the seriousness of the lapses that caused staggering losses and wider economic damage.”

This settlement also resolves the complaint filed against Bank of America in August 2013 by the U.S. Attorney’s Office for the Western District of North Carolina concerning an $850 million securitization. Bank of America acknowledges that it marketed this securitization as being backed by bank-originated “prime” mortgages that were underwritten in accordance with its underwriting guidelines. Yet, Bank of America knew that a significant number of loans in the security were “wholesale” mortgages originated through mortgage brokers and that based on its internal reporting, such loans were experiencing a marked increase in underwriting defects and a noticeable decrease in performance. Notwithstanding these red flags, the bank sold these RMBS to federally backed financial institutions without conducting any third party due diligence on the securitized loans and without disclosing key facts to investors in the offering documents filed with the SEC. A related case concerning the same securitization was filed by the SEC against Bank of America and is also being resolved as part of this settlement.

“Today’s settlement attests to the fact that fraud pervaded every level of the RMBS industry, including purportedly prime securities, which formed the basis of our filed complaint,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “Even reputable institutions like Bank of America caved to the pernicious forces of greed and cut corners, putting profits ahead of their customers. As we deal with the aftermath of the financial meltdown and rebuild our economy, we will hold accountable firms that contributed to the economic crisis. Today’s settlement makes clear that my office will not sit idly while fraud occurs in our backyard.”

The U.S. Attorney’s Office for the Central District of California has been investigating the origination and securitization practices of Countrywide as part of the RMBS Working Group effort. The statement of facts describes how Countrywide typically represented to investors that it originated loans based on underwriting standards that were designed to ensure that borrowers could repay their loans, although Countrywide had information that certain borrowers had a high probability of defaulting on their loans. Countrywide also concealed from RMBS investors its use of “shadow guidelines” that permitted loans to riskier borrowers than Countrywide’s underwriting guidelines would otherwise permit. Countrywide’s origination arm was motivated by the “saleability” of loans and Countrywide was willing to originate “exception loans” (i.e., loans that fell outside of its underwriting guidelines) so long as the loans, and the attendant risk, could be sold. This led Countrywide to expand its loan offerings to include, for example, “Extreme Alt-A” loans, which one Countrywide executive described as a “hazardous product,” although Countrywide failed to tell RMBS investors that these loans were being originated outside of Countrywide’s underwriting guidelines. Countrywide knew that these exception loans were performing far worse than loans originated without exceptions, although it never disclosed this fact to investors.

“The Central District of California has taken the lead in the department’s investigation of Countrywide Financial Corporation,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Countrywide’s improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions. We are pleased that this investigation has resulted in a multibillion-dollar recovery to compensate the United States for the losses caused by Countrywide’s misconduct.”

In addition to the matters relating to the securitization of toxic mortgages, today’s settlement also resolves claims arising out of misrepresentations made to government entities concerning the origination of residential mortgages.

The U.S. Attorney’s Office for the Southern District of New York, along with the Federal Housing Finance Agency’s Office of Inspector General and the Special Inspector General for the Troubled Asset Relief Program, conducted investigations into the origination of defective residential mortgage loans by Countrywide’s Consumer Markets Division and Bank of America’s Retail Lending Division as well as the fraudulent sale of such loans to the government sponsored enterprises Fannie Mae and Freddie Mac (the “GSEs”). The investigation into these practices, as well as three private whistleblower lawsuits filed under seal pursuant to the False Claims Act, are resolved in connection with this settlement. As part of the settlement, Countrywide and Bank of America have agreed to pay $1 billion to resolve their liability under the False Claims Act. The FIRREA penalty to be paid by Bank of America as part of the settlement also resolves the government’s claims against Bank of America and Countrywide under FIRREA for loans fraudulently sold to Fannie Mae and Freddie Mac. In addition, Countrywide and Bank of America made admissions concerning their conduct, including that they were aware that many of the residential mortgage loans they had made to borrowers were defective, that many of the representations and warranties they made to the GSEs about the quality of the loans were inaccurate, and that they did not self-report to the GSEs mortgage loans they had internally identified as defective.

“For years, Countrywide and Bank of America unloaded toxic mortgage loans on the government sponsored enterprises Fannie Mae and Freddie Mac with false representations that the loans were quality investments,” said U.S. Attorney Preet Bharara for the Southern District of New York. “This office has already obtained a jury verdict of fraud and a judgment for over a billion dollars against Countrywide and Bank of America for engaging in similar conduct. Now, this settlement, which requires the bank to pay another billion dollars for false statements to the GSEs, continues to send a clear message to Wall Street that mortgage fraud cannot be a cost of doing business.”

The U.S. Attorney’s Office for the Eastern District of New York, together with its partners from the Department of Housing and Urban Development (HUD), conducted a two-year investigation into whether Bank of America knowingly made loans insured by the FHA in violation of applicable underwriting guidelines. The investigation established that the bank caused the FHA to insure loans that were not eligible for FHA mortgage insurance. As a result, HUD incurred hundreds of millions of dollars of losses. Moreover, many of Bank of America’s borrowers have defaulted on their FHA mortgage loans and have either lost or are in the process of losing their homes to foreclosure.

“As a Direct Endorser of FHA insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta E. Lynch for the Eastern District of New York. “It is a gatekeeper entrusted with the authority to commit government funds earmarked for facilitating mortgage lending to first-time and low-income homebuyers, senior citizen homeowners and others seeking or owning homes throughout the nation, including many who live in the Eastern District of New York. In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not just secured a meaningful remedy for the bank’s conduct, but have sent a powerful message of deterrence.”

“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, Regional Director of the SEC’s Atlanta Office. “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”

“Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro. “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.”

“Bank of America and the banks it bought securitized billions of dollars of defective mortgages,” said Acting Inspector General Michael P. Stephens of the FHFA-OIG. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from Bank of America, Countrywide and Merrill Lynch not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit.”

The attorneys general of California, Delaware, Illinois, Kentucky, Maryland and New York also conducted related investigations that were critical to bringing about this settlement. In addition, the settlement resolves investigations conducted by the Securities and Exchange Commission (SEC) and litigation filed by the Federal Deposit Insurance Company (FDIC).

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by Director Geoffrey Graber and five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Investigations were led by Assistant U.S. Attorneys Leticia Vandehaar of the District of New Jersey; Dan Ryan and Mark Odulio of the Western District of North Carolina; George Cardona and Lee Weidman of the Central District of Carolina; Richard Hayes and Kenneth Abell of the Eastern District of New York; and Pierre Armand and Jaimie Nawaday of the Southern District of New York.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov

Related Materials:

Settlement Agreement
Annex 1 - Statement of Facts
Annex 2 - Consumer Relief
Annex 2 - Exhibit 1 - Loan List
Annex 2 - Exhibit 2 - Model VA Agreement
Annex 3 - Tax Fund
Annex 4 - Transaction List
Exhibit A--FDIC
Exhibit B - SEC Bank of America Settlement Documents

A greater Detroit-area owner of three home health agencies pleaded guilty today 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 Acting Special Agent in Charge Jarod Koopman of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.

According to information contained in plea documents, Muhammad Aamir, 43, of Bloomfield Hills, Michigan, admitted that, beginning in 2008 and continuing through January 2013, he conspired with others to bill Medicare for home health care services that were not actually rendered, not medically necessary, and procured through paying illegal kickbacks.

Aamir admitted that he and his conspirators at three home health agencies – Prestige Home Health Services Inc. and Platinum Home Health Services Inc., both located in Troy, Michigan, and Empirical Home Health Care Inc., located in Farmington Hills, Michigan – paid kickbacks to patient recruiters to obtain identifying information of Medicare beneficiaries and then fraudulently billed Medicare. Aamir and others fabricated and falsified medical documents reflecting or supporting purported physical therapy and other services – including home health certifications and plans of care, therapy notes, evaluations, recertifications, discharges and other records – making it appear that the services had been provided and were medically necessary, when in fact they were not. The three home health care agencies then billed Medicare for those services.

Aamir admitted that he submitted or caused the submission of false claims to Medicare, which in turn caused Medicare to pay approximately $15,118,254. According to court records, the conspiracy resulted in the submission of fraudulent claims that caused Medicare to pay more than $22 million.

Aamir pleaded guilty before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud and one count of filing a false or fraudulent tax statement. Sentencing has been scheduled for Jan. 13, 2015.

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 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 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The United States has asked a federal court in Miami to permanently bar a South Florida man and his two Miami businesses, Ebenezer Tax Services Inc. and Primo Tax Service Inc., from preparing federal income tax returns for others, the Justice Department announced today. He is alleged to have defrauded the government out of more than $20 million.

Ernice Joseph, of Broward County, Florida, and his businesses are alleged to have prepared federal income tax returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes. The complaint alleges that Joseph and his businesses prepared returns that unlawfully claim the Earned Income Tax Credit by reporting fictitious businesses or business income on clients’ Schedule C – Profit or Loss From Business. Joseph and his businesses prepare returns that claim education and other credits to which the taxpayers are not entitled in order to overstate their refunds. According to the complaint, the Internal Revenue Service (IRS) examined 76 returns prepared by Joseph and/or Ebenezer Tax Services and found that 74 contained a deficiency. The complaint alleges that, altogether, Joseph and Ebenezer Tax Service’s activities may have caused more than $20 million in loss to the U.S. Treasury. In addition, the complaint alleges that the revenue lost from Primo Tax Service’s activities could exceed $25 million.

Return-preparer fraud is one of the 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 fraudulent 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. Ernice Joseph, et al.
Complaint for Permanent Injunction

The Justice Department today announced that it has reached an agreement with the city of Baltimore, Maryland, to end hiring practices that discriminate against people with disabilities. The agreement, filed as a consent decree along with a complaint in the U.S. District Court for the District of Maryland, resolves allegations by the department that the city engaged in a pattern or practice of discrimination under the Americans with Disabilities Act (ADA). Title I of the ADA prohibits employers from discriminating against individuals on the basis of disability in various aspects of employment, including hiring.

The department alleges that the city required job applicants, including an individual complainant, to submit to a medical examination and answer disability-related inquiries before the city made conditional offers of employment. Under the ADA, employers may not require applicants to submit to medical exams or answer disability-related inquiries before making conditional offers of employment. The department also alleges that the city refused to hire the complainant for a fire dispatcher position because of her disability, even though she was already working successfully as a dispatcher elsewhere and required no accommodations.

The consent decree must be approved by the court, and requires the city to:

· pay $65,000 to the complainant in compensatory damages;

· adopt new policies and procedures regarding the administration of pre-employment medical examinations and inquiries;

· provide training on the ADA to all employees who participate in making personnel decisions related to pre-employment medical examinations and inquiries;

· ensure that the city’s contract with any medical examiner provides that the examiner is required to comply with the ADA in conducting medical examinations and certify that it has reviewed ADA training materials;

· provide periodic reports to the department on compliance; and

· designate an employee to address ADA compliance matters.

“The Justice Department will not tolerate discriminatory, outdated stereotypes that prevent individuals with disabilities from being hired for positions for which they are qualified,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.

Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.

Berkshire Hathaway Inc. has agreed to pay an $896,000 civil penalty to settle charges that it violated premerger reporting and waiting requirements when it acquired voting securities of USG Corp., the Department of Justice announced today.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Berkshire Hathaway for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the department filed a proposed settlement that, if approved by the court, will settle the charges.

Berkshire Hathaway is a Delaware corporation with its headquarters in Omaha, Nebraska. As a result of its acquisition of USG voting securities in December 2013, Berkshire Hathaway held approximately 28 percent of USG voting securities, valued at more than $950 million.

USG is a Delaware corporation with its headquarters in Chicago, Illinois.

The HSR Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review.

Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the Department of Justice. For a party in violation of the HSR Act the maximum civil penalty is $16,000 a day.

Samsung Electronics America Inc. (Samsung) has agreed to pay $2.3 million to resolve allegations that it caused the submission of false claims for products sold on General Service Administration (GSA) Multiple Award Schedule (MAS) contracts in violation of the Trade Agreements Act of 1979 (TAA), the Justice Department announced today. Samsung is an electronics distributor and marketer headquartered in Ridgefield Park, New Jersey.

“The Department of Justice is committed to protecting public funds and guarding against abuse of federal procurement programs,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “This settlement upholds important trade priorities by ensuring that the United States only uses its buying power to purchase from countries that trade fairly with us.”

MAS contracts are contracts awarded by GSA to multiple companies supplying comparable products and services. Once GSA negotiates and awards the contract, any federal agency may purchase under it. Like many other federal procurement contracts, GSA MAS contracts require the vendor to certify that all products it offers for sale comply with the TAA. The TAA generally requires the United States to purchase products made in the United States, or another designated country with which the United States has a trade agreement.

Samsung has authorized resellers who hold GSA MAS contracts. Samsung certifies to the authorized resellers that Samsung will provide TAA compliant products and the resellers in turn list those products on the resellers’ GSA MAS contracts. The settlement resolves allegations that, from January 2005 through August 2013, Samsung caused resellers of its products to sell items on their GSA MAS contracts in violation of the TAA by knowingly providing inaccurate information to the resellers regarding the country of origin of the goods. The United States alleges that Samsung represented to the resellers, who in turn represented to federal agencies, that the specified products were made in TAA designated countries, generally Korea or Mexico, when the specified products were in fact manufactured in China, which is not a TAA designated country.

“It is unacceptable to sell unauthorized foreign electronics to the United States,” said GSA Acting Inspector General Robert C. Erickson. “We expect all companies doing business with the federal government to comply with contracting laws.”

The allegations resolved by the settlement were originally brought in a lawsuit filed by Robert Simmons, a former Samsung employee, under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery. Mr. Simmons’ share of the settlement has not yet been determined.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the District of Maryland, the Commercial Litigation Branch of the Justice Department’s Civil Division and the GSA’s Office of Inspector General.

The case is United States ex rel. Simmons v. Samsung Electronics America, Inc. et al., No. AW-11-2971 (D. Md.). The claims resolved by the settlement are allegations only and there has been no determination of liability.