District Not Recorded

Ahmed Abu Khatallah, aka Ahmed Mukatallah, made his first appearance today in the U.S. District Court for the District of Columbia on a federal terrorism offense arising from his alleged participation in the Sept. 11 through 12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of Ambassador J. Christopher Stevens, Sean Smith, Tyrone Woods and Glen Doherty.

Khatallah was indicted by a federal grand jury on the charge of conspiracy to provide material support and resources to terrorists, knowing and intending that these would be used in preparation for and in carrying out a killing in the course of an attack on a federal facility, and the offense resulted in death.

The investigation is ongoing and the Justice Department can bring additional charges as the case continues.

“Now that Ahmed Abu Khatallah has arrived in the United States, he will face the full weight of our justice system,” said U.S. Attorney General Eric Holder. “We will prove, beyond a reasonable doubt, the defendant’s alleged role in the attack that killed four brave Americans in Benghazi.”

“Capturing Ahmed Abu Khatallah and bringing him to the U.S. to face justice for his role in killing American citizens in Benghazi is a major step forward in our ongoing investigation,” said FBI Director James B. Comey. “Our work, however, is not over. This case remains one of our top priorities and we will continue to pursue all others who participated in this brazen attack on our citizens and our country.”

“Ahmed Abu Khatallah's capture and his appearance in court today were critical steps toward bringing him to justice for his role in the terrorist attacks on our diplomatic facilities in Benghazi,” said Assistant Attorney General for National Security John Carlin. “We will not rest in our pursuit of the others who attacked our facilities and killed the four courageous Americans who perished that day.”

“In a courtroom in our nation's capital, today we took the first step down the road to justice for the four American heroes killed in Benghazi,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “This prosecution is a reflection of our determination to honor the sacrifice of U.S. citizens who perish on foreign soil in service to our country. We will be steady, deliberate and relentless in seeking to hold accountable all who were responsible for this deadly act of terror.”

“The capture and return to the United States of Ahmed Abu Khatallah should be a warning to all those who want to harm the United States,” said Assistant Director in Charge of the FBI’s New York Field Office George Venizelos. “As alleged in the indictment, Khatallah participated in September 11-12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of four innocent Americans. Now he is in the United States to stand trial for his actions. The FBI will continue to pursue and bring to justice those who conduct such heinous acts no matter where they are located.”

Khatallah, a Libyan national approximately 43 years of age, was taken into custody earlier this month. He initially was charged in a criminal complaint that was filed under seal on July 15, 2013, and that became public on June 17, 2014. The Justice Department secured the defendant’s initial indictment on June 26, 2014, and the charging document was unsealed today.

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.

The case is being investigated by the FBI New York Office's 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 Columbia and the Counterterrorism Section of the Justice Department’s National Security Division.

Three manufacturers of polyurethane foam used to create interior components for automobiles pleaded guilty today to participating in a scheme to fix prices to customers, the Department of Justice announced.

Riverside Seat Co., Woodbridge Foam Fabricating Inc. and SW Foam LLC pleaded guilty to a one-count felony charge in the U.S. District Court for the Eastern District of New York in Brooklyn. According to the charge, the companies conspired with others to fix prices for polyurethane flexible slab stock automotive foam in the U.S. and elsewhere from at least as early as June 9, 2008 until at least April 20, 2009. The companies have agreed to pay a total of $6,148,800 in criminal fines and to cooperate with the department’s ongoing investigation.

“Today’s charges demonstrate the Antitrust Division’s commitment to holding companies accountable for conspiracies that affect components used in products that consumers rely on every day,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously prosecute companies that engage in price-fixing schemes that subvert normal competitive processes and defraud American consumers and businesses.”

Riverside Seat, Woodbridge, and SW Foam manufactured polyurethane flexible slab stock automotive foam – a low-density, slab stock, flexible foam used as a component of automotive interior parts, including seats, headliners, headrests, door panels and armrests. Polyurethane flexible slab stock automotive foam includes only the foam itself and does not include any automotive parts in which such foam may be a component.

According to the charge, the companies and their co-conspirators discussed polyurethane foam prices and agreed to coordinate the timing and amount of price increases to customers. The companies carried out the agreement and exchanged information for the purpose of monitoring and enforcing adherence to the agreement.

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

Today’s pleas are the result of an ongoing federal antitrust investigation being handled by the Antitrust Division’s New York Office, with assistance from the Cleveland Field Office of the FBI and the New York Field Office of the FBI. Anyone with information concerning price fixing or other anticompetitive conduct in the polyurethane foam industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

A patient recruiter for a Miami home health care agency pleaded guilty today in connection with a health care fraud scheme involving defunct home health care company Nestor’s Health Services Inc. (Nestor HH). The owner and operator of Nestor HH pleaded guilty to charges related to the scheme earlier this month.

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 Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.

On June 27, 2014, Euridice Borroto, 45, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Jonathan Goodman in the Southern District of Florida to one count of conspiracy to solicit and receive health care kickbacks and to defraud the United States. Sentencing is scheduled for Aug. 25, 2014.

According to court documents, Borroto was paid bribes and kickbacks for recruiting patients on behalf of Nestor HH, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. The owner and operator of Nestor HH operated Nestor HH for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

According to court documents, Borroto solicited and received kickbacks and bribes from the owner and operator of Nestor HH in return for recruiting and providing patients to Nestor HH for home health care and therapy services that were medically unnecessary and, in many instances, were not provided. Nestor HH would then fraudulently bill the Medicare program for home health care services on behalf of the recruited patients, in violation of federal criminal laws. Borroto knew that in many instances the patients she recruited for Nestor HH did not qualify for the services billed to Medicare.

From approximately March 2009 through at least January 2014, Nestor HH submitted more than $6.5 million in claims for home health services. Medicare paid Nestor HH more than $6.1 million for these fraudulent claims before the fraud was exposed.

In documents filed with the court, Borroto also acknowledged her involvement in similar fraudulent schemes at other Miami health care agencies.

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 Anne P. McNamara 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 Team (HEAT), go to: www.stopmedicarefraud.gov.

Roderick Neal, of Dothan, Alabama, was indicted for stolen identity refund fraud crimes, 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 announced today following the unsealing of the indictment. Neal was charged with conspiracy, wire fraud and aggravated identity theft.

According to the indictment, Neal worked as a bail bondsman in Dothan, and stole personal identifying information. Neal provided this information to another individual who, in turn, provided the stolen identities to Ivory Bolen, and she used those identities to file fraudulent tax returns with the Internal Revenue Service (IRS) claiming refunds.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Neal faces a statutory maximum sentence of 10 years in prison for conspiracy, a statutory maximum sentence of 20 years in prison for each wire fraud count and a mandatory sentence of two years in prison for the aggravated identity theft counts.

This case was investigated by special agents of the IRS - Criminal Investigation. Trial Attorneys Charles Edgar and Jason Poole of the Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama, in particular Assistant U.S. Attorney Todd Brown. 

Army Soldier Naeem Williams, 34, will receive a life sentence for murdering his five-year-old daughter, Talia Williams, after a federal jury in Honolulu, Hawaii, reported today it was unable to reach a unanimous decision on whether to impose the death penalty.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and United States Attorney Florence T. Nakakuni of the District of Hawaii made the announcement.

The jury previously found Williams guilty of killing his daughter on July 16, 2005, by engaging in child abuse that included beating and punching her at the family’s residence on Wheeler Army Airfield in Honolulu. Williams was also convicted of participating, along with his wife, Delilah Williams, in a pattern and practice of assault and torture from December, 2004, until July 16, 2005, that resulted in Talia’s death. In addition, Williams was convicted of conspiring to engage in a pattern and practice of assault and torture leading to death, obstructing justice, and making false statements to Army Criminal Investigation Division agents on the night of his arrest in July 2005.

The evidence presented at trial demonstrated that Naeem Williams and his wife Delilah Williams beat Talia Williams almost daily. Naeem Williams testified that the abuse was aimed at disciplining his daughter as a result of bathroom accidents and was exacerbated due to frustrations he was experiencing in his marriage. The evidence indicated the defendant’s physical abuse included punching Talia repeatedly, commanding her to eat her own feces, and using duct tape to bind her from head to toe to a bed post where she was whipped with a belt. In the hours preceding Talia’s death, Williams struck a frontal blow to Talia and her head slammed backwards against the floor. Talia then appeared to have a seizure.

This case was investigated by the FBI and the Army Criminal Investigation Division. The case was prosecuted by Trial Attorney Steve Mellin from the Capital Case Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Darren Ching.

WASHINGTON- The Department of Justice and the Office of the Director of National Intelligence (DNI) released the following statement Friday:

“On March 28, 2014, the Director of National Intelligence declassified and disclosed publically that the U.S. government had filed an application with the Foreign Intelligence Surveillance Court (FISC) seeking renewal of the authority to collect telephony metadata in bulk, and that, on March 28, 2014, the FISC renewed that authority. The DNI also announced that the Administration was undertaking a declassification review of the FISC’s March 28th Primary Order.

“On June 20, 2014, the DNI declassified and publically disclosed that the U.S. government had filed an application with the FISC seeking renewal of the authority granted in March to collect telephony metadata in bulk, and that, on June 19, 2014, the FISC renewed that authority. The DNI also announced that the Administration was undertaking a declassification review of the FISC’s June 19th Primary Order and an accompanying Memorandum Opinion.

“Following a declassification review by the Executive Branch, the DNI has released in redacted form the March 28, 2014 Primary Order, signed by Judge Rosemary M. Collyer. Separately, following a declassification review by the Executive Branch, the FISC published in redacted form the June 19, 2014 Primary Order and an accompanying Memorandum Opinion, signed by Judge James B. Zagel, re-authorizing the collection of bulk telephony metadata under Section 215. The most recent authorization expires on September 12, 2014. These Primary Orders and Memorandum Opinion re-affirm that the bulk telephony metadata collection is lawful.

“The June 19, 2014 Primary Order and Memorandum Opinion are available at the FISC’s website, www.uscourts.gov. The March 28, 2014 Primary Order along with the July 19, 2014 Primary Order and accompanying Memorandum Opinion are available at the website of the Department of Justice, www.justice.gov; the website of the Office of the Director of National Intelligence, www.dni.gov; and ODNI’s public website dedicated to fostering greater public visibility into the intelligence activities of the Government, IContheRecord.tumblr.com.”

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that five defendants who were witnesses in the  U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maric C. Edrosa aka “Cristina”, et al. trial were sentenced this week by Chief Judge Frances Tydingco-Gatewood, as follows:

1. Defendant JOSEPH MALLO, age 34, was sentenced on June 24, 2014, to 33 months incarceration, followed by three years of supervised release.  Defendant MALLO pled guilty to Felon in Possession of Firearms, in violation of 18 U.S.C. § 922(g)(1).   MALLO testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.

2. Defendant JERRICK UNCHANGCO, age 33, was sentenced on June 24, 1014, to time served of one year, 11 months and 29 days, and to three years supervised release.  Defendant UNCHANGCO pled guilty to Felon in Possession of Firearms, in violation of 18 U.S.C. § 922(g)(1).  UNCHANGCO testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.

3. Defendant ROMMEL WHITING, age 44, was sentenced on June 25, 2014, to time served, followed by three years of supervised release.  Defendant WHITING imported methamphetamine in violation of 21 U.S.C. §§ 841 and 846.  WHITING testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.

4. Defendant ELIZABETH AGUON, age 56, was sentenced on June 25, 2014, to two years imprisonment and five years supervised release.  Defendant AGUON pled guilty to conspiracy to distribute methamphetamine, in violation of  21 U.S.C. §§ 841 and 846.  AGUON testified she was a user of methamphetamine that she had obtained from Defendant Rudy Sablan.

5. Defendant JOSEPH CABALLERO, age 47, was sentenced on June 26, 2014, to two years imprisonment followed by five years of supervised release.  Defendant CABELLERO pled guilty to conspiracy to distribute, in violation of 21 U.S.C. §§ 841(a)(1) and 846.  CABELLERO testified he performed odd jobs for Defendant Mateo B. Sardoma, Jr., and that he was a user of methamphetamine and distributed less than one gram of methamphetamine.

U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine.  These cases illustrate the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”   These five defendants were witnesses in the U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maric C. Edrosa aka “Cristina”, et al., which is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, (OCDETF) a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

The investigations were conducted by Special Agents and Task Force Officers at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the U.S. Department of Homeland Security-Homeland Security Investigations (DHS-HSI) and the Drug Enforcement Administration (DEA).  The cases against Defendants UNCHANGCO and WHITING were prosecuted by Assistant U.S. Attorney Rosetta San Nicolas.  The cases against Defendants MALLO, AGUON and CABELLERO were prosecuted by Assistant U.S. Attorney Fred Black.

Kathryn Darlene Coryell, a Fresno, California, resident, pleaded guilty yesterday to conspiracy to defraud the Internal Revenue Service (IRS) and wire fraud, announced Deputy Assistant Attorney General Ronald A. Cimino for the Justice Department’s Tax Division and U.S. Attorney Melinda Haag for the Northern District of California.

According to the plea agreement, beginning around Feb. 28, 2008, and continuing through April 16, 2012, Coryell and her co-conspirator Noemi Baez participated in a scheme to obtain and help others to obtain payment of false claims for refunds from the IRS by electronically filing false federal income tax returns in their own names and in the names of others. Using the names and Social Security numbers of multiple individuals, Coryell and Baez created false income information and filed with the IRS materially false tax returns claiming refunds derived from tax credits, including the Earned Income Credit, the Additional Child Tax Credit and the Making Work Pay Credit. Coryell and Baez filed more than 150 false and fraudulent claims, with false claims totaling more than $400,000. Baez pleaded guilty to conspiracy and aggravated identity theft and was sentenced on Feb. 6, 2014, to serve 30 months in prison.

At time of her sentencing on Oct. 23, 2014, before U.S. District Judge D. Lowell Jensen, Coryell faces a maximum sentence of 30 years in prison, three years of supervised release and a fine of $500,000 or twice the gain or loss resulting from her offense, whichever is greater.

Deputy Assistant Attorney General Cimino and U.S. Attorney Haag commended the efforts of the special agents of IRS – Criminal Investigation, who investigated the case, and Trial Attorneys Charles O’Reilly, Erin S. Mellen and Sonia M. Owens of the Tax Division, who are prosecuting the case.

The Department of Justice announced today that it will require Martin Marietta Materials Inc. to divest one Oklahoma quarry and two Texas rail yards in order to proceed with its proposed $2.7 billion acquisition of Texas Industries Inc. The department said that, without the divestiture, the proposed acquisition likely would result in higher prices for purchasers of aggregate – crushed stone produced at quarries or mines – in parts of the Dallas metropolitan area.

The department's Antitrust Division and the state of Texas filed a civil antitrust lawsuit 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 department's competitive concerns alleged in the lawsuit.

"Today’s proposed settlement will help ensure that aggregate purchasers in parts of the Dallas metropolitan area will continue to receive the benefits of vigorous competition," said Bill Baer, Assistant Attorney General in charge of the department's Antitrust Division. “Without the divestiture obtained by the Antitrust Division, customers would have likely faced higher prices as a result of this acquisition."

Aggregate is used in a variety of applications, such as road construction, and for the production of ready mix concrete and asphalt.

The department said that the proposed merger would have likely resulted in increased prices for customers handling Texas Department of Transportation projects in parts of the Dallas metropolitan area. The Texas Department of Transportation – like many other state Departments of Transportation – sets specifications for the type of aggregate approved for use in those projects. In Dallas County and parts of the surrounding area, Martin Marietta and Texas Industries are two of the only three suppliers of Texas Department of Transportation-approved aggregate.

Under the terms of the proposed consent decree, Martin Marietta must divest its North Troy aggregate quarry in Mill Creek, Oklahoma, its rail yard in Dallas, and its rail yard in Frisco, Texas. All of these assets predominantly serve parts of the Dallas metropolitan area. Under the proposed settlement, the department's Antitrust Division must approve the buyer of the divested assets.

Martin Marietta Materials Inc. is incorporated in North Carolina with its headquarters in Raleigh, North Carolina. Martin Marietta produces, distributes and/or markets aggregate for the construction industry in 29 states and it produces aggregate in Nova Scotia, Canada, and the Bahamas for distribution and sale at numerous terminals and yards along the East Coast of the United States. In 2013, Martin Marietta had net sales of $2.1 billion.

Texas Industries Inc. is incorporated in Delaware with its headquarters in Dallas. Texas Industries produces, distributes and/or markets aggregate in five states – Texas, Oklahoma, Louisiana, Arkansas and California. Texas Industries also produces asphalt concrete, ready mix concrete and cement. In 2013, Texas Industries had net sales of $800 million.

As required by the Tunney Act, the proposed consent decree, along with the department's competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed decree during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Paul D. Stockler pleaded guilty today in the U.S. District Court in Anchorage, Alaska, to three counts of willful failure to file income tax returns, the Justice Department and Internal Revenue Service (IRS) announced.

According to the plea agreement, Stockler is an attorney who operated a law practice in Anchorage. For tax years 2006, 2008 and 2009, he earned gross income in excess of the filing threshold, but failed to file U.S. individual income tax returns reporting this income to the IRS. Stockler faces a statutory maximum sentence of one year in prison, one year of supervised release, and a fine of up to $100,000 for each count of willful failure to file an income tax return.

The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Kevin F. Sweeney and Katherine Wong of the Justice Department’s Tax Division are prosecuting the case.

Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, has agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries, the Justice Department announced today . Omnicare is headquartered in Cincinnati, Ohio.


“Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”

“Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility.”

The settlement resolves allegations that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider. The facilities were participating providers under agreements with Medicare and Medicaid. In addition to the facilities’ own claims for reimbursement from Medicare for short-term rehabilitation treatment rendered to patients, Omnicare submitted additional claims for reimbursement to Medicare and Medicaid for drugs Omnicare supplied. Of the $124.24 million to be paid by Omnicare, $8.24 million will go to various states which jointly funded the Medicaid programs impacted by Omnicare’s conduct.

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

The settlement resolves allegations brought in two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The first whistleblower, Donald Gale, a former Omnicare employee, will receive $ 17.24 million.

The settlement with Omnicare was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Ohio, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, and the National Association of Medicaid Fraud Control Units.

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 Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. 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 $19.5 billion through False Claims Act cases, with more than $13.9 billion of that amount recovered in cases involving fraud against federal health care programs.

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

Deputy Assistant Attorney General Ronald A. Cimino for the Tax Division of the Department of Justice and U.S. Attorney Preet Bharara for the Southern District of New York announced that Paul M. Daugerdas, 63, a tax attorney and certified public accountant, was sentenced today in Manhattan federal court to serve 15 years in prison for orchestrating a massive fraudulent tax shelter scheme in which he and his co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade over $1.6 billion in taxes owed to the Internal Revenue Service (IRS). The 20-year scheme, which Daugerdas hatched while working at the Arthur Andersen accounting firm and then continued while a partner at two law firms – Altheimer & Gray and then Jenkens & Gilchrist (J&G) – generated over $7 billion in fraudulent tax losses and yielded approximately $95 million in fees to Daugerdas personally. In October 2013, Daugerdas was convicted following a seven-week jury trial, presided over by U.S. District Judge William H. Pauley III, who also imposed today’s sentence.

“Paul Daugerdas used his legal and accounting expertise to cheat the system and unlawfully deprive the government of over $1.6 billion of tax revenue,” said U.S. Attorney Bharara. “With today’s sentence, Daugerdas’s giant tax fraud scheme has reached its just conclusion under the law, with a sentence of 15 years in prison.”

“Dishonest professionals who market tax fraud schemes to their clients need to sit up and take note of today’s sentence,” said Deputy Assistant Attorney General Cimino. “The Justice Department and IRS are committed to holding responsible those who would misuse their skills and expertise to help others to evade their lawful tax obligations.”

According to the evidence at trial and other documents filed in the case:

From 1994 through 2004, Daugerdas, who is a lawyer, a certified public accountant, and the former head of the Chicago office of J&G and its tax practice, participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters.

As part of the scheme, Daugerdas and others plotted to defraud the IRS by, among other things, corruptly endeavoring to prevent the IRS from: detecting their clients’ use of these shelters; understanding how the transactions operated to produce the tax results reported by the clients; learning that, rather than serving as legitimate investment transactions, the tax shelters lacked economic substance in that they were designed and marketed as cookie-cutter products intended exclusively to eliminate or reduce large tax liabilities; learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and learning that, from the outset, all of the clients intended to complete a pre-planned series of steps that had been designed to lead to the specific tax benefits they sought. Daugerdas and others created and assisted in creating transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits.

As part of the scheme, Daugerdas and his co-conspirators also fraudulently backdated some of the tax shelter transactions. In particular, Daugerdas and his co-defendants learned that certain tax shelter transactions had been implemented incorrectly during the year of the transactions in that they failed to produce the amount or type of tax losses requested by the clients. Rather than reporting those tax shelter results as they occurred – as required by the Internal Revenue Code – Daugerdas and others engaged in corrupt “correcting” transactions after the close of the pertinent tax years, and then backdated the tax shelter documents to make it appear that the amount and type of tax losses sought by the clients had in fact been generated during the pertinent tax years. Daugerdas also authored fraudulent tax opinion letters that falsely described when certain aspects of the transactions had actually occurred. As a result of the fraudulent backdating, Daugerdas and others caused tax shelter clients to file tax returns that falsely and fraudulently claimed tens of millions of dollars of tax losses to which the clients were not entitled.

As a result of the scheme, Daugerdas and his co-conspirators made millions of dollars in fees and bonuses. Daugerdas himself made $95 million in profits but used tax shelters to reduce the taxes he paid to less than $8,000; without the shelters, he would have owed over $32 million in taxes.

Daugerdas, of Wilmette, Illinois, was convicted of conspiring to defraud the IRS, to evade taxes, and to commit mail and wire fraud, and of corruptly endeavoring to obstruct and impede the internal revenue laws. He was also convicted of four counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud.

In addition to the prison term, Judge Pauley ordered Daugerdas to forfeit $164,737,500 in proceeds of the offenses, which included certain assets that had been seized and frozen at the time Daugerdas was indicted. The forfeited proceeds include a lakefront home on Lake Geneva in Wisconsin, and over $20 million in various securities and financial accounts. Judge Pauley also ordered Daugerdas to pay $371,006,397 in restitution to the IRS. At sentencing, Judge Pauley said that Daugerdas “was at the apex of tax shelter racketeers who tapped into the greed of the super wealthy who did not want to pay taxes.”

In connection with this scheme, David Parse, a former broker at Deutsche Bank, was convicted of various tax fraud charges in May 2011 after an 11-week jury trial, and was sentenced in March 2013 to serve 46 months in prison. Donna Guerin, a former lawyer at J&G’s Chicago tax practice, pleaded guilty in September 2012 to various tax fraud charges related to her role in the scheme. She was sentenced in March 2013 to serve eight years in prison.

Former J&G partner Erwin Mayer, former BDO Seidman vice chairman and board member Charles W. Bee Jr., former BDO principal and former member of BDO Seidman’s TSG and Tax Opinion Committee Michael Kerekes, former BDO Seidman vice chairman and TSG member Adrian Dicker, BDO Seidman partner Robert Greisman, and BDO Seidman partner Mark Bloom have all previously been convicted in connection with this scheme.

This case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Stanley J. Okula Jr. and Niketh Velamoor for the Southern District of New York and Assistant Chief Nanette L. Davis of the Tax Division are in charge of the prosecution.

WASHINGTON—On the one-year anniversary of the Supreme Court decision that struck down a key part of the Voting Rights Act, Attorney General Eric Holder pledged Wednesday that the Justice Department would remain aggressive in using Section 2 of the law—which was left intact by the Court’s decision—to guard against unjust voting restrictions.

Section 2, which prohibits barriers to voting that disadvantage minority groups, provided the basis for the department’s lawsuits last year against voting laws in North Carolina and Texas. It also formed the basis for a recent challenge to a voter ID statue in Wisconsin. In April, a federal district court sided with the plaintiffs in that case, declaring that the Wisconsin law violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.

Holder joined in criticizing the Wisconsin law in his message Wednesday.

“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest,” Holder said.

“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts,” he added.

A full copy of the Attorney General’s video message appears below.

“One year ago today, in the case of Shelby County, a narrowly split but deeply divided U.S. Supreme Court struck down a key part of the historic Voting Rights Act of 1965.

“This was a deeply flawed decision – and it effectively invalidated a cornerstone of American civil rights law.

“In the nearly five decades leading up to that ruling, a critical provision of the Voting Rights Act known as Section 5 – which enjoyed consistent support from Members of Congress and presidents of both parties – provided the Justice Department with a rigorous tool to fight unjust attempts to abridge voting rights.

“It required certain jurisdictions with histories of discrimination to seek “preclearance,” from the Department or a federal court, before new voting changes could take effect – so these proposals could be subjected to fair and thorough review.

“This empowered the Justice Department to protect the right of every American to cast a ballot – unencumbered by discriminatory rules, regulations, and procedures that, intentionally or not, discourage and disenfranchise.

“Indeed, not long before the Shelby County decision, a federal judge considering the Department’s objection to South Carolina’s voter ID law noted the ‘continuing utility’ of preclearance ‘in deterring problematic, and hence encouraging non-discriminatory, changes in state and local voting laws.’

“When the Shelby decision effectively denied us this tool, the Department’s Civil Rights Division shifted resources to the enforcement of other protections that remain on the books – including Section 2 of the Voting Rights Act, which prohibits barriers to voting that disadvantage minority groups.

“During the past year, we filed Section 2 challenges to specific laws in North Carolina and Texas that could disproportionately restrict access to the ballot box for minority citizens.
“Section 2 also provides a valuable tool to individual voters who seek to protect their voting rights.

“In April, a federal district court in Wisconsin ruled that Wisconsin’s unnecessarily restrictive voter-ID law, which disproportionately impacted the state’s African-American and Latino voters, violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.

“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest – because, as the judge found, and I quote, “The defendants could not point to a single instance of known voter impersonation occurring in Wisconsin at any time in the recent past.”

“By restricting access and decreasing voter participation, laws such as those in Wisconsin would shrink – rather than expand – access to the franchise.

“This is inconsistent not only with our history, but with our ideals as a nation – a nation founded on the principle that all citizens are entitled to equal opportunity, equal representation, and equal rights.

“And that’s why, across this country, the Department of Justice will continue to take aggressive steps to stand against disenfranchisement wherever it exists – and in whatever form.

“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts.

“We will not simply stand by as the voices of many citizens are shut out of the process of self-governance.

“And in the days ahead, we will continue to work with Congressional leaders to fill the void left by the Supreme Court’s ruling – and use every available tool to safeguard the most basic right of American citizenship.”

The video message is viewable online here: http://www.justice.gov/agwa.php

Eric Omuro, of Mountain View, California, a.k.a “Red,” was arrested today following his indictment by a federal grand jury on charges involving the use of the mail and the Internet to facilitate prostitution, and multiple counts of money laundering. Annemarie Lanoce, 40, of Rocklin, California, was also indicted and arrested today for use of the mail and the Internet to facilitate prostitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office, and Special Agent in Charge José M. Martinez of the San Francisco Office of the Internal Revenue Service, Criminal Investigation made the announcement.

As part of today’s operation, the FBI seized the domain names sfredbook.com and myRedBook.com, which were allegedly operated by Omuro, with Lanoce’s assistance to facilitate prostitution in the San Francisco Bay Area and throughout the West Coast region of the United States.

According to information available on the publically accessible website as of the date of its seizure by the FBI, myRedbook.com purported to provide “Escort, Massage, and Strip Club Reviews.” Instead, however, the websites were used to host advertisements for prostitutes, complete with explicit photos, lewd physical descriptions, menus of sexual services, hourly and nightly rates, and customer reviews of the prostitutes’ services. The websites used acronyms for numerous sex acts, which were defined in graphic detail in the websites’ “Terms and Acronyms” section. Although the websites could be accessed for free, myRedBook.com advertised fees for premier placement of prostitution advertisements and for “VIP Memberships,” which purportedly allowed customers access to “private forums” and heightened capabilities to search reviews of the prostitution services.

Omuro, 53, who allegedly used numerous aliases, also engaged in money transfers to move myredbook.com revenue into bank accounts which he controlled. According to the Indictment, Omuro engaged in more than twenty monetary transactions to launder the profits derived from the facilitation of prostitution. The Indictment seeks the forfeiture of more than $5 million in property and money derived from the facilitation of prostitution, as well as the Internet domain names myredbook.com and sfredbook.com .

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

This case was investigated by the FBI’s San Francisco Field Office, the IRS, and the Oakland Police Department. The case is being prosecuted by Trial Attorney Keith Becker of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorneys Elise Becker and Patricia Kenney of the Northern District of California. The Criminal Division’s Office of International Affairs provided assistance to the prosecution.

Attorney General Eric Holder announced today that the Obama administration, as part of successfully concluding negotiations on the E.U.-U.S. Data Protection and Privacy Agreement (DPPA), would seek to work with Congress to enact legislation that would provide E.U. citizens with the right to seek redress in U.S. courts if personal data shared with U.S. authorities by their home countries for law enforcement purposes under the proposed agreement is subsequently intentionally or willfully disclosed, to the same extent that U.S. citizens could seek judicial redress in U.S. courts for such disclosures of their own law enforcement information under the Privacy Act.

The Attorney General has been co-chairing the E.U./U.S. Justice and Home Affairs Ministerial in Athens, Greece. The agenda of the Ministerial is to advance E.U.-U.S cooperation against transnational crime and terrorism, with particular emphasis on foreign fighters traveling to and from Syria.

As part of that law enforcement cooperation, the Ministerial also discussed the ongoing negotiation of an "umbrella" DPAA, which would cover the exchange of law enforcement information between the E.U. and the U.S. The DPPA is an outgrowth of an initiative begun during the Bush Administration, and carried forward during the Obama Administration, to establish an enhanced commitment to share information transatlantically to fight crime and terrorism, while also protecting privacy.

In order to advance the DPPA negotiations, Attorney General Holder stated at the Ministerial that the Obama Administration is committed to seeking legislation that would ensure that, with regard to personal information transferred within the scope of the proposed DPPA, E.U. citizens would have the same right to seek judicial redress for intentional or willful disclosures of protected information, and for refusal to grant access or to rectify any errors in that information, as would a U.S. citizen under the Privacy Act.

“In a world of globalized crime and terrorism, we can protect our citizens only if we work together internationally, including through sharing law enforcement information with and by E.U. Member States and other close allies,” Attorney General Holder said. “At the same time, we must ensure that we continue our long tradition of protecting privacy in the law enforcement context. The step we are announcing today will help advance both goals.”

A copy of Holder’s full statement, as delivered in Athens, appears below:

“At the outset, I would like to thank our Greek hosts -- Minister Athanassiou and Minister Kikilias -- for their superb hospitality. And I would like to congratulate them on the highly successful Greek Presidency of the EU.

“Today, we have had the opportunity to discuss the wide range of justice and home affairs issues that bind together the EU, its Member States and the United States, in a common effort to protect all of our citizens. We have talked today about how we can increase our cooperation on countering violent extremism, and on responding to the critical issue of "Foreign Fighters" -- citizens from our countries, and other countries around the world, who are traveling to Syria to join terrorist groups, and who may return as trained and hardened terrorists. We discussed joint strategies for countering transnational crime, including trafficking in firearms and wildlife; and we talked about protecting victims of crime, as well as persons with disabilities. We dealt with the ever-increasing threat of cybercrime -- and announced that the United States would carry forward the important initiative begun by Commissioner Malmstrom, the Global Alliance Against Child Sexual Abuse Online.

“One consistent theme ran through all our discussions: in a world of globalized crime and terrorism, we can protect our citizens only if we work together, including through sharing law enforcement information. At the same time, we must ensure that we continue our long tradition of protecting privacy in the law enforcement context. We already have many mechanisms in place to do this, and we have -- on both sides of the Atlantic – an outstanding record of protecting the privacy of law enforcement information. But we can always do more, and for that reason, the EU and the United States have undertaken to negotiate an "umbrella" Data Protection and Privacy Agreement Regarding Police and Judicial Cooperation -- the DPPA.

“Vice President Reding and her Directorate have been our key partners in this endeavor. While I am sorry that other commitments made it impossible for Vice President Reding to be present today, I did want to state publicly my agreement with her view that we are close to concluding the Data Protection and Privacy Agreement.

“Indeed, I believe we should be able to finish this negotiation soon, since the remaining issues -- those regarding the legal framework for the transfer and use of information -- have already been addressed in our existing agreements, including our EU/U.S. Mutual Legal Assistance agreement and our bilateral treaties with all of the Member States thereunder. These prior agreements have been proven, through actual experience, to provide a high level of protection both for the safety of all our citizens and for their privacy, and we should incorporate their principles into the DPPA.

“Moreover, we should move forward quickly here to conclude our negotiations, since our DPPA negotiators have already reached agreement on additional, and comprehensive, administrative privacy protections that will come into effect when the DPPA enters into force. And today, I am happy to announce that, in support of our desire to bring the DPPA negotiations to conclusion, the Obama Administration is committed to seeking legislation that would ensure that, with regard to personal information transferred within the scope of our proposed DPPA Regarding Police and Judicial Cooperation, EU citizens would have the same right to seek judicial redress for intentional or willful disclosures of protected information, and for refusal to grant access or to rectify any errors in that information, as would a U.S. citizen under the Privacy Act.

“This commitment -- which has long been sought by the EU -- reflects our resolve to move forward not only on the DPPA itself, but on strengthening transatlantic ties.

“The work we do together is vital. Thank you again to our Greek hosts, to the Commission, and to the incoming Italian Presidency.”

Ning Qiu, a resident of Frisco, Texas, and an appraiser of Asian art, pleaded guilty today in federal court to participating in an illegal wildlife smuggling conspiracy in which rhinoceros horns and objects made from rhino horn and elephant ivory worth nearly $1 million were smuggled from the United States to China.

The guilty plea was announced by Sam Hirsch, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, John Malcolm Bales, U.S. Attorney for the Eastern District of Texas, and Dan Ashe, Director of the U.S. Fish and Wildlife Service (USFWS).

Qiu, 43, who has worked as an Asian antique appraiser for seven years, pleaded guilty today before U.S. Magistrate Judge Don D. Bush in Plano, Texas, to a one count information charging him with conspiracy to smuggle and violate the Lacey Act.

Qiu was identified as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

According to documents filed in federal court, Qiu admitted to acting as one of the three antique dealers in the United States paid by Zhifei Li, the admitted “boss” of the conspiracy, to help obtain wildlife items and smuggle them to Li via Hong Kong. Li was sentenced on May 27, 2014, in federal district court in Newark, New Jersey, to serve 70 months in prison for his leadership role in the smuggling conspiracy. Li arranged financing, negotiated the price and paid for rhino horn and elephant ivory. He also gave instructions on how to smuggle the items out of the United States and obtained the assistance of additional collaborators in Hong Kong to receive the smuggled goods and then smuggle them to him in mainland China.

“This is yet another step toward dismantling a sophisticated and global network of criminals whose greed is driving endangered animals to extinction,” said Acting Assistant Attorney General Hirsch. “We will continue to investigate and bring to justice those involved in the illicit trade of the world’s wildlife and will work with our international partners to battle the poaching, corruption, and transnational crime that goes along with it.”

“I am pleased that the Eastern District of Texas could be a part of the ‘Operation Crash’ investigation as well as the guilty plea today, and I congratulate the investigative team for a job well done,” said U.S. Attorney Bales. “The criminal activity undertaken by the defendant in this case is a stark reminder that this matter is not about serving Asian cultural and medicinal practices; it’s about greed, organized crime and the depletion of a species that – without our focused efforts to fight this trade – may not be around for our children to see.”

“This guilty plea by another participant in one of the largest criminal trafficking rings we’ve ever investigated – as well as the unprecedented jail time given to the rings’ leader last month – serves notice to other poachers and smugglers that we are clamping down hard on those who break international wildlife laws,” said U.S. Fish and Wildlife Service Director Ashe. “Working with the Department of Justice and other federal and international law enforcement agencies, we will continue to relentlessly pursue criminals whose greed and indifference to life are fueling the continued slaughter of rhinos and other vulnerable species in the wild.”

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

In pleading guilty, Qiu admitted that he worked at an auction house in Dallas as an appraiser of Asian artwork and antiques, specializing in carvings made from rhinoceros horn and elephant ivory. Qiu admitted to meeting Li in 2009 through his work at the auction house, and then entering into a conspiracy with Li whereby Qiu traveled throughout the U.S. to purchase raw and carved rhinoceros horns and elephant ivory for Li, often receiving specific instructions from Li on which items to buy and how much to pay. Upon purchasing the items, Li transferred funds directly into Qiu’s bank accounts in the U.S. and China. After acquiring the items for Li, Qiu arranged for them to be smuggled to a location in Hong Kong, which was provided by Li.

As part of his plea, Li admitted that he sold raw rhinoceros horns worth approximately $3 million – approximately $17,500 per pound – to factories in China where the horns are carved into fake antiques known as zuo jiu (which means “to make it as old” in Mandarin). In China, there is a centuries-old tradition of drinking from intricately carved “libation cups” made from rhinoceros horn. Owning or drinking from such a cup is believed by some to bring good health, and true antiques are highly prized by collectors. The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including recently carved fake antiques. The leftover pieces from the carving process were sold for alleged “medicinal” purposes even though rhino horn is made of compressed keratin, the same material in human hair and nails and has no proven medical value.

Between 2009 and 2013, Qiu purchased and smuggled to Hong Kong at least five raw rhinoceros horns weighing at least 20 pounds. Qiu smuggled the raw rhino horns by first wrapping them in duct tape, hiding them in porcelain vases and falsely describing them on customs and shipping documents, including by labeling them as porcelain vases or handicrafts.

As part of the plea agreement, having considered Qiu’s cooperation and assistance in securing a conviction for Li, the government agrees to recommend to the sentencing judge that Qiu serve a 25-month prison sentence and pay a $150,000 fine. Sentencing will be before District Court Judge Richard Schell on a date to be determined by the court.

The investigation is continuing and is being handled by the U.S. Fish & Wildlife Service’s Office of Law Enforcement, the U.S. Attorney’s Office for the Eastern District of Texas and the Justice Department’s Environmental Crimes Section. The government is represented by Assistant U.S. Attorney James Noble of the Eastern District of Texas and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.

The Justice Department announced today that it reached a settlement with the Delran Township School District in New Jersey under Title II of the Americans with Disabilities Act (ADA). The agreement resolves allegations that the school district violated the ADA by refusing to allow a student with autism and encephalopathy to have his service dog in school or at school-related activities. The service dog alerts to the student’s seizures, provides mobility and body support and mitigates the symptoms of his autism.

The department found that the student’s mother spent six months responding to burdensome requests for information and documentation, and still the school district refused to allow the student to be accompanied by his service dog. Despite her efforts, the student was even prevented from bringing his service dog with him on the bus for his school’s end of the year field trip. Instead, his mother followed the school bus with the service dog in her car.

Title II of the ADA prohibits discrimination on the basis of disability in public schools. Under the ADA, public schools must generally modify policies, practices or procedures to permit the use of a service dog by a student with a disability at school and school-related activities. Because service dogs must be under the control of a handler, students often act as the handler of their own service dog; when that is not possible, the family may provide an independent handler, as the family offered to do here.

The school district worked cooperatively with the department throughout the investigation. Under the agreement, the school district will pay $10,000 to the family to compensate them for the harm they endured as a result of the school district’s actions. In addition, the school district will adopt an ADA-compliant service animal policy and provide training to designated staff on the school district’s obligations under Title II of the ADA, including requirements related to service dogs.

“ The old view of service animals working only as guide dogs for individuals who are blind has given way to a new generation of service animals trained to perform tasks that further autonomy and independence for individuals with a myriad of disabilities , ” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Civil Rights Division will vigorously enforce the ADA to ensure that students who use service animals have a full and equal opportunity to participate in all school activities with their peers.”

Enforcing the ADA is a top priority of the Civil Rights Division. Those interested in finding out more about this settlement or the obligations of public entities schools under the ADA may call the department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access the ADA website . ADA complaints may be filed by email to ada.complaint@usdoj.gov .

The Civil Rights Division would like to thank the U.S. Attorney’s Office for the District of New Jersey for their assistance in this matter.

Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division and U.S. Attorney Walt Green for the Middle District of Louisiana announced today that a third former state corrections official has pleaded guilty to civil rights violations related to the beating of an inmate at the Louisiana State Penitentiary in Angola, Louisiana.

Mark Sharp, 33, of Amite, Louisiana, pleaded guilty today to one count of deprivation of rights under color of law and one count of making a false statement to the FBI.

Sharp’s charges were based on his conduct while employed as a captain at the Louisiana State Penitentiary. According to the factual basis filed in court in connection with his guilty plea, on Jan. 24, 2010, Sharp joined in a search to apprehend an inmate who had escaped from his assigned location. After the inmate was captured, Sharp and two other officers – Kevin Groom and C.B. – were ordered to escort the inmate, who was handcuffed behind his back, to the prison’s medical unit. The three officers got into the bed of a truck with the inmate. Sharp admitted that, during the drive to the medical unit, he repeatedly struck the inmate with a police baton. Sharp also saw C.B. kick the inmate in his head and shoulder area. Sharp then lied to the FBI during the federal civil rights investigation of the beating.

Two other former state corrections officials have been charged and convicted in connection with the attack on the inmate. Kevin Groom and Jason Giroir have both been charged and pleaded guilty to falsifying records in a federal investigation and making false statements to the FBI. Groom and Giroir await sentencing.

Sharp faces a statutory maximum sentence of 15 years in prison, a fine up to $500,000 and up to three years of supervised release following his prison term.

This matter is being handled by the the Civil Rights Division, the U.S. Attorney’s Office for the Middle District of Louisiana and the FBI. It is being prosecuted by Trial Attorney AeJean (Angie) Cha of the Civil Rights Division and Assistant U.S. Attorney Robert W. Piedrahita for the Middle District of Louisiana.

Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by one year of supervised release, for conspiracy to bribe public officials. Smith was ordered to forfeit $175,000.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations, and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.

On March 5, 2014, Smith pleaded guilty to a criminal information. According to court documents, Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command. In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr. In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.

As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity. According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.

Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme. On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others. On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery. On Feb. 19, 2014 and April 4, 2014, respectively, Smith’s associate, Michael P. McPhail, and another Smith associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.

On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two individuals in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command, and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command. The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to obstruct a criminal investigation and to tamper with a witness, and one count of obstruction of a criminal investigation. The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery. The trial on these charges is scheduled to begin on Sept. 30, 2014, before Chief Judge Rebecca Beach Smith. The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by the FBI, NCIS and DCIS. The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.

The Justice Department announced that Christopher Hall, a former sergeant for the Correctional Emergency Response Team (CERT) at Macon State Prison (MSP) in Oglethorpe, Georgia, and two former CERT officers, Ronald Lach and Delton Rushin, were convicted on Friday night by a federal jury on federal offenses related to the beating of an MSP inmate in 2010 and the cover-up that followed. Three other defendants, James Hinton, Derrick Wimbush and Tyler Griffin, were acquitted of related charges.

Ronald Lach was one of several MSP officers who participated in a retaliatory beating against an inmate as their form of punishment for the inmate’s prior misconduct. Lach was convicted of violating the inmate’s rights, conspiring to obstruct justice after the assault and obstruction of justice. Hall and Rushin were convicted of conspiring to obstruct justice and obstruction of justice.

In related cases, five former MSP officers have pleaded guilty to various charges in connection with a series of beatings of inmates in 2010 at Macon State Prison, and the cover-up that followed.

“Eight former corrections officials from Macon State Prison now stand convicted for their involvement in beating inmates and in the coordinated cover-ups that followed each assault,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “These officers betrayed the public trust by using their official positions to commit violent civil rights abuses and then tried to cover up their crimes. The Department of Justice will continue to prosecute vigorously corrections officers who use their power to violate federal law.”

These cases were investigated by the Macon Resident Agency of the FBI, with the support of the Georgia Bureau of Investigation. The cases were prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd for the Civil Rights Division, with the assistance of the U.S. Attorney’s Office in Macon.

The owner and operator of Nestor’s Health Services, Inc. (Nestor HH), a now-defunct Miami home health care agency, pleaded guilty today in connection with a $6.5 million health care fraud scheme.

Acting 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 Brian Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.

Cruz Sonia Collado64, of Homestead, Florida, pleaded guiltybefore U.S. District Judge Robert N. Scola in the Southern District of Florida to one count of conspiracy to offer and pay health care kickbacks and to defraud the United States, and to one count of offering and paying health care kickbacks.

Collado was an owner and operator of Nestor HH, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

According to court documents, Collado and her co-conspirators operated Nestor HH for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. As the owner and operator of Nestor HH, Collado paid kickbacks and bribes to patient recruiters, in return for those recruiters providing patients to Nestor HH for home health care and therapy services that were not medically necessary, and in many instances, were not provided. Collado would then fraudulently bill the Medicare program for home health care services on behalf of these recruited patients, which Collado knew was in violation of federal criminal laws.

From approximately March 2009 through at least January 2014, Nestor HH submitted more than $6.5 million in claims for home health services, and fraudulently obtained more than $6.1 million before the fraud was exposed.

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 Anne P. McNamara 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, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, has removed over 17,000 providers from the Medicare program since 2011.

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

A Massachusetts man pleaded guilty today to hacking into computer networks around the country – including networks belonging to law enforcement agencies, a local police department and a local college – to obtain highly sensitive law enforcement data and alter academic records. He also pleaded guilty to obtaining stolen credit, debit and payment card numbers.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Carmen M. Ortiz of the District of Massachusetts, Special Agent in Charge Vincent Lisi of the FBI’s Boston Division and Colonel Timothy P. Alben of the Massachusetts State Police made the announcement.

On June 2, 2014, Cameron Lacroix, 25, of New Bedford, Massachusetts, was charged by a criminal information with two counts of computer intrusion and one count of access device fraud. Lacroix entered his guilty plea today before U.S. District Court Judge Mark Wolf of the District of Massachusetts. He pleaded guilty to both counts in the information and agreed to serve a four-year prison sentence.

According to the plea agreement, b etween May 2011 and May 2013, Lacroix obtained and possessed payment card data for more than 14,000 unique account holders. For some of these account holders, Lacroix also obtained other personally identifiable information, including the account holders’ full names, addresses, dates of birth, social security numbers, email addresses, bank account and routing numbers and lists of merchandise the account holders had ordered.

Lacroix also admitted to hacking into a computer server operated by a local Massachusetts police department in September 2012, and then accessing an e-mail account belonging to its chief of police. Additionally, Lacroix admitted to repeatedly hacking into law enforcement computer servers containing sensitive information including police reports, arrest warrants, and sex offender information, between August 2012 and November 2012. Lacroix also admitted to using stolen credentials to access and change information in the servers of Bristol Community College on multiple occasions between September 2012 and December 2013.

Judge Wolf set Lacroix’s sentencing for Oct. 27, 2014.

The case was investigated by the FBI Boston Division Cyber Task Force. The case is being prosecuted by Senior Trial Attorney Mona Sedky from the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the District of Massachusetts. The Department of Justice and the U.S. Attorney’s Office would like to thank Bristol Community College for its cooperation during this investigation.

JC Stamps, a former union official, pleaded guilty today to embezzling more than $190,000 from two labor organizations he founded and an employee benefit plan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. for the District of Columbia andSpecial Agent in Charge Bill Jones of the U.S. Department of Labor’s Office of Inspector General - Office of Labor Racketeering and Fraud Investigations Washington Region made the announcement.

Stamps, 67, of Upper Marlboro, Maryland, pleaded guilty to one count of theft from an employee benefit plan. The Honorable Chief Judge Richard W. Roberts of the District Court for the District of Columbia scheduled sentencing for Sept. 17, 2014. Stamps has also agreed to pay $194,611 in restitution and is subject to a forfeiture money judgment in the amount of $84,745.

Stamps, a retired detective from the Metropolitan Police Department (MPD), founded two labor organizations based in Washington, D.C.: the National Union of Protective Services Associations, which represented private security guards, and the National Union of Law Enforcement Associations, which represented police officers. In addition, he founded a security guard firm, Stamps Associates, which also was based in Washington, D.C.

According to court documents, between 2004 and 2008, Stamps devised a scheme to defraud and embezzle money in several ways from the unions and the National Union of Protective Services and Employers Health and Welfare Fund (Health and Welfare Fund), an employee benefit plan for which Stamps was a trustee.

In 2007 and 2008, for example, Stamps used money from the Health and Welfare Fund’s bank account to pay American Express for a total of $48,541 in credit card charges for personal purchases and union expenses. None of these charges were related to the administration and operation of the Health and Welfare Fund. Instead, they paid for personal expenses, such as hotel stays, furniture, men’s fragrances, clothing, other retail purchases and online services, and for union expenses, including hotel rental charges (for a holiday party) and automobile rentals.

Also, according to court documents, from 2006 to 2008, Stamps caused the withdrawal of $36,203 from the Health and Welfare Fund’s bank account to pay an attorney for legal expenses incurred by the unions – and not for the fund’s intended purpose.

In addition to the theft and embezzlement from the Health and Welfare Fund, Stamps stole and embezzled at least $109,866 from the unions from 2004 to 2008. According to court documents, more than half of this money was used to cover debts of Stamps Associates, Stamps’ security guard company. Other money was used for personal expenses and fraudulent salary payments for Stamps’ close personal friend, who is identified as “Person A” in court documents. “Person A” was nominally the sole owner of Stamps Associates, although Stamps controlled the company.

The case was investigated by the Department of Labor’s Office of Inspector General and Office of Labor Management Standards and Employee Benefits Security Administration. The case was prosecuted by Trial Attorney Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Ellen Chubin Epstein of the U.S. Attorney’s Office for the District of Columbia.

The Justice Department announced today that U.S. District Court Judge Otis D. Wright II of the Central District of California entered a consent decree of permanent injunction against GM Manufacturing Inc. (GMM) and Mao L. Yang, Mary Chen and David Yang on Friday, June 20, 2014, to prevent the distribution of adulterated dietary supplements.

“Adulterated dietary supplements may pose a significant risk to the public health,” said Stuart F. Delery, Assistant Attorney General for the Department of Justice’s Civil Division. “The Department of Justice is committed to protecting the public from dietary supplements that are not manufactured in conformity with current good manufacturing practices as required by law.”

According to the complaint filed by the United States on June 2, 2014, GMM manufactured, labeled, prepared, packed, held and distributed dietary supplements from its facility in Gardena, California. As alleged in the complaint, in spections by the Food and Drug Administration (FDA) established that the dietary supplements manufactured and distributed by the defendants were adulterated, in that they were prepared, packed and held under conditions that do not comply with the current good manufacturing practice regulations for dietary supplements. For example, during an inspection in 2013, FDA observed that defendants failed to maintain, clean and sanitize, as necessary, equipment, utensils and other contact surfaces used to manufacture, package, label or hold components or dietary supplements.

As part of the permanent injunction, the defendants agreed to stop manufacturing, preparing and distributing dietary supplements. The defendants agreed to provide 90 days’ notice to FDA before seeking to resume operations. If the defendants seek to resume dietary supplement operations, they are required to comply with a series of remedial measures, including retaining an expert to inspect the company’s facility and provide a certification that all manufacturing deficiencies have been corrected. Also, the defendants must report to FDA all actions they have taken to correct the deviations. The defendants are not allowed to resume operations until FDA has re-inspected their facility and operations, and provided written notice to them.

According to the complaint, the defendants’ facility was inspected by FDA in 2012 and 2013. During the 2013 inspection, the FDA observed significant violations of the Federal Food, Drug, and Cosmetics Act and implementing regulations, including violations that were the same or similar to those observed during the 2012 inspection. Following the 2012 inspection, FDA issued a warning letter to Mao Yang informing him that the significant deviations documented by FDA during the 2012 inspection rendered defendants’ dietary supplements adulterated under the law. The warning letter from FDA cautioned that failure to promptly correct the deviations, and prevent future ones, could lead to additional regulatory action, including an injunction.

Despite the inspections and warning letter from FDA, the defendants continued to manufacture and distribute adulterated dietary supplements in violation of the law.

The permanent injunction entered by the district court requires the defendants to recall all dietary supplements that the defendants manufactured, prepared, processed, packed, labeled, held, and/or distributed at any time since Feb. 13, 2012. Defendants are then required to destroy all dietary supplements in their possession, custody and/or control.

Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Trial Attorney Lauren Fascett of the Civil Division’s Consumer Protection Branch, in conjunction with Assistant U.S. Attorney Brian Villarreal in the Central District of California and Associate Chief Counsel Leslie Cohen of the Office of General Counsel, Enforcement of the Food and Drug Division, Department of Health and Human Services, brought this case on behalf of the United States.

Attorney General Eric Holder on Monday said that the Justice Department will continue to investigate financial institutions that knowingly facilitate consumer scams, or that willfully look the other way in processing such fraudulent transactions. He acknowledged that multiple investigations were ongoing in this area, and said he expected several of those cases to be resolved in the coming months.

The department resolved the first such case in April, when Four Oaks of Bank of North Carolina agreed to pay penalties and a forfeiture for knowingly processing fraudulent transactions on behalf of a pyramid scheme. The Attorney General said the department is conducting a series of similar investigations involving allegations of banks enabling third-party payment processors to “siphon billions of dollars from consumers’ bank accounts in exchange for significant fees.”

“In the months ahead, we expect to resolve other investigations involving financial institutions that chose to process transactions even though they knew the transactions were fraudulent, or willfully ignored clear evidence of fraud,” Holder added.

A transcript of the Attorney General’s video message appears below:

“The Justice Department has made it a priority to fight consumer fraud of all kinds, from lottery scams to fake business opportunities to telemarketing fraud targeting Spanish-speaking customers. All too often, scammers and fraudulent vendors attempt to prey on vulnerable consumers by using sophisticated systems to commit crimes. But these fraudsters often can’t act alone. In many cases, they need access to the banking system to pilfer money from their victims. They frequently use third-party payment processers as intermediaries to route payments through financial institutions. And in some cases, these financial institutions – rather than working diligently to protect customers’ hard-earned savings – have knowingly facilitated fraud against their customers or consciously chosen to look the other way.

“We at the Justice Department are determined to stop these illegal and unacceptable practices. While we will not target businesses operating within the bounds of the law, and we have no interest in pursuing or discouraging lawful conduct, our Consumer Protection Branch in the Civil Division is leading a range of investigations into banks that illegally enable businesses to siphon billions of dollars from consumers’ bank accounts in exchange for significant fees.

“In April, for example, the Department of Justice reached a settlement with Four Oaks Bank of North Carolina. This institution permitted a third-party payment processor, which the bank knew was processing transactions reported as fraudulent, to originate $2.4 billion in debit transactions in exchange for over $850,000 in fees paid to the bank. As a result of our investigation, a federal court has entered an order requiring Four Oaks to pay penalties and forfeiture totaling more than a million dollars and to implement reforms that will prevent this kind of rampant fraud in the future.

“In North Carolina and elsewhere, the Justice Department’s efforts are sending a clear message that such activities are irresponsible. And they will not be tolerated. In the months ahead, we expect to resolve other investigations involving financial institutions that chose to process transactions even though they knew the transactions were fraudulent, or willfully ignored clear evidence of fraud.

“The goal of these investigations is quite simple: to protect consumers from scam artists and collaborating institutions – in every circumstance and industry. In the days ahead, the Justice Department will keep moving forward – guided by the facts and the law – to eliminate fraud targeting consumers while mitigating any impact on institutions not under investigation. We must enforce the law against both the fraudsters who prey on consumers and the financial institutions who choose to allow these crimes to occur. When we uncover evidence that financial institutions are knowingly assisting fraudsters, deliberately ignoring evidence of fraud, or intentionally disregarding obligations under federal law – we will not hesitate to act. We will hold them accountable. And we will never waver in our determination to protect honest, hardworking Americans from those who put their financial security in peril.”

The Attorney General’s video message can be viewed here: http://www.justice.gov/agwa.php.

Earlier today, William S. Gazafi, age 44, of Lusby, Maryland, was sentenced to 120 years in prison, for six counts of sexually exploiting a minor to produce child pornography.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI and Brigadier General Kevin J. Jacobsen, Commander of Air Force Office of Special Investigations. The sentence was imposed by U.S. District Judge Roger W. Titus of the District of Maryland.

According to the indictment, court documents and statements made at his plea hearing, on August 15, 2013, Gazafi engaged in a chat with an undercover officer on a website dedicated to incest discussions. During the chat, Gazafi discussed his sexual interest in children and advised that he had been drugging and molesting several children, including an infant. During the chat, Gazafi sent seven images to the undercover officer, three of which were child pornography Gazafi stated he produced after drugging the child. Gazafi was subsequently identified and arrested.

At the time of his arrest, Gazafi was carrying multiple digital media items. A forensic examination of those items, and others seized from his residence, revealed videos and images that Gazafi produced of children engaged in sexually explicit conduct, including one child as young as five months old. The images also depict children bound and handcuffed while sleeping. In addition to producing hundreds of images of five children, ranging in age from five months to seven years, Gazafi distributed the images he produced to others on the Internet. Gazafi was communicating with other child pornography producers, some of whom sent him images of children they were abusing. Thus far, three children have been identified as a result. Gazafi possessed over 15,000 images and videos of children being sexually abused, many of toddler and infant age. At the time of his arrest, Gazafi was a non-commissioned officer in the U.S. Air Force working at Andrews Air Force Base.

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

The case was investigated by the FBI, Air Force Office of Special Investigations and the Calvert County State’s Attorney’s Office. The case was prosecuted by Trial Attorney LisaMarie Freitas of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Thomas Sullivan of the District of Maryland.

During the past week, the FBI, its local, state, and federal law enforcement partners, and the National Center for Missing and Exploited Children (NCMEC) conducted Operation Cross Country VIII, a week-long enforcement action to address commercial child sex trafficking throughout the United States. This operation included enforcement actions in 106 cities across 54 FBI field divisions nationwide and resulted in 168 recoveries of children who were being victimized through prostitution. Additionally, 281 pimps were arrested on state and federal charges.

“Child sex traffickers create a living nightmare for their adolescent victims,” said Leslie R. Caldwell, Assistant Attorney General for the Criminal Division of the Department of Justice. “They use fear and force and treat children as commodities of sex to be sold again and again. This operation puts traffickers behind bars and rescues kids from their nightmare so they can start reclaiming their childhood.”

“Targeting and harming America’s children through commercial sex trafficking is a heinous crime, with serious consequences.” said FBI Director James B. Comey. “Every child deserves to be safe and sound. Through targeted measures like Operation Cross Country, we can end the cycle of victimization.”

Operation Cross Country is part of the Innocence Lost National Initiative that was established in 2003 by the FBI’s Criminal Investigative Division, in partnership with the Department of Justice and NCMEC, to address the growing problem of child prostitution.

“Operation Cross Country reveals that children are being targeted and sold for sex in America every day,” said John Ryan, President and CEO of NCMEC. “We’re proud to partner with the FBI and provide support to both law enforcement and victim specialists in the field as they help survivors take that first step toward freedom.”

To date, the FBI and its task force partners have recovered nearly 3,600 children from the streets. The investigations and subsequent 1,450 convictions have resulted in lengthy sentences, including 14 life terms and the seizure of more than $3.1 million in assets.

Task force operations usually begin as local enforcement actions that target truck stops, casinos, street “tracks,” and websites that advertise dating or escort services, based on intelligence gathered by officers working in their respective jurisdictions. Initial arrests are often violations of local and state laws relating to prostitution or solicitation. Information gleaned from those arrested frequently uncovers organized efforts to prostitute women and children across many states. FBI agents further develop this evidence in partnership with U.S. Attorney’s Offices and the U.S. Department of Justice’s Child Exploitation and Obscenity Section so that prosecutors can help bring federal charges in those cities where child prostitution occurs.

The Innocence Lost National Initiative partners with NCMEC to provide training for state and federal law enforcement agencies, prosecutors and social service providers from across the country.

The FBI thanks its local, state, and federal law enforcement partners representing 392 separate agencies for their ongoing enforcement efforts, and participation in Operation Cross Country VIII.

The following list denotes FBI divisions, not necessarily actual cities, where juveniles were recovered and pimps were arrested.

FBI Division

Juveniles Recovered

Pimps Arrested

Albany

0

0

Albuquerque

0

0

Anchorage

0

3

Atlanta

11

15

Baltimore

2

5

Birmingham

1

3

Boston

0

0

Buffalo

2

0

Charlotte

0

3

Chicago

13

4

Cincinnati

0

1

Cleveland

16

12

Columbia

1

2

Dallas

2

2

Denver

18

11

Detroit

5

6

El Paso

0

1

Houston

4

4

Indianapolis

4

3

Jackson

2

19

Jacksonville

0

1

Kansas City

2

7

Knoxville

0

1

Las Vegas

7

2

Little Rock

2

5

Los Angeles

10

12

Louisville

0

4

Memphis

2

5

Miami

3

4

Milwaukee

6

12

Minneapolis

1

9

Mobile

0

0

Newark

1

8

New Haven

1

1

New Orleans

3

17

New York

3

3

Norfolk

0

1

Oklahoma City

2

14

Omaha

1

2

Philadelphia

0

2

Phoenix

5

21

Pittsburgh

0

3

Portland

1

2

Richmond

0

2

Sacramento

9

7

Salt Lake City

0

0

San Antonio

6

3

San Diego

2

6

San Francisco

6

13

Seattle

4

13

Springfield

2

1

St. Louis

0

1

Tampa

8

3

WFO

0

2

Total

168

281

Owners of two home health agencies, a doctor, and a hospital employee who sold patient information were all sentenced today for their roles in an $3 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Cardwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson for the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office, Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

Valnita Turner, 48, Valdie Jackson, 43, Dr. Nick Patzakis, 86, and Jarvis Thomas, 40, were all sentenced today by U.S. District Judge Gray Miller in the Southern District of Texas.

On October 7, 2013, Valnita Turner, owner of Houston Compassionate Care, Inc., was convicted of one count of conspiracy to commit health care fraud and four counts of health care fraud. According to court documents, Turner and Valdie Jackson, owner of Jackson Home Healthcare, Inc., purchased stolen patient information from Jarvis Thomas, a hospital administrative employee. Turner and Jackson used the stolen patient information to submit fraudulent claims to Medicare for home health services purportedly provided by three home health agencies operating in the Houston area, Houston Compassionate Care, Inc., Jackson Home Healthcare, Inc., and Prestige Health Services, Inc.. Turner and Jackson also fraudulently billed Medicare for medically unnecessary home health services that were never ordered by a doctor and relied on doctors, including Dr. Nick Patzakis, to falsely sign medical documents.

Valnita Turner was sentenced to serve 151 months in prison. In addition to her prison term, Turner was sentenced to three years of supervised release and was ordered to pay $3,011,899.09 in restitution, jointly and severally with her co-defendants.

Valdie Jackson pleaded guilty to conspiracy to commit health care fraud on September 13, 2013. Jackson was sentenced to serve 12 months and one day in prison. In addition to his prison term, Jackson was sentenced to three years of supervised release and was ordered to pay $1,551,482.21 in restitution, jointly and severally with his co-defendants.

Dr. Nick Patzakis pleaded guilty to one count of false statements relating to health care matters on September 20, 2013. Dr. Patzakis was sentenced to time served and three years of supervised release. In addition, Dr. Patzakis was ordered to pay $95,947.57 in restitution, jointly and severally with his co-defendants.

Jarvis Thomas pleaded guilty to conspiracy to disclose individually identifiable health information on September 13, 2013. Thomas was sentenced to time served and three years of supervised release. Additionally, Thomas was ordered to pay $1,348,644.75 in restitution, jointly and severally with his co-defendants.

The case was prosecuted by Assistant Chief Robert Zink and Trial Attorneys Christopher Cestaro and Ashlee Caligone McFarlane of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG and MFCU and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is 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 .

Following the Supreme Court’s historic decision striking down Section 3 of the Defense of Marriage Act, Attorney General Eric Holder on Friday issued a formal report on the yearlong effort by the Justice Department and other federal agencies to implement the decision smoothly across the entire government.

“I am pleased to report that agencies across the federal government have implemented the Windsor decision to treat married same-sex couples the same as married opposite-sex couples for the benefits and obligations for which marriage is relevant, to the greatest extent possible under the law," Attorney General Holder wrote in the memorandum to President Obama. “The implementation of the Windsor decision across the entire federal government is an accomplishment that reflects countless hours of hard work, cooperation, and coordination across agencies. As additional issues arise, we will continue to work together to uphold this Administration’s fundamental commitment to equal treatment for all Americans, and to extend this fundamental equality to all Americans.”

At the President’s direction last year, a team of lawyers—led by Assistant Attorney General for the Civil Division Stuart Delery—began working with lawyers for other federal agencies to seek to extend federal benefits to same-sex marries couples, consistent with the Windsor decision. The department and the agencies have made many announcements on a rolling basis over the last several months. To date, for instance, the administration has announced that same-sex marriages will be recognized for all federal tax purposes, that health insurance and retirement benefits are available for same-sex spouses of all federal employees, and that the Defense Department will provide spousal benefits for same-sex spouses of military servicemembers.

In conferring these and other benefits, agencies have chosen to recognize marriages as valid based on the law of the jurisdiction where the marriage took place (the place of celebration), regardless of where the couple currently resides. As noted in the Attorney General’s report, however, two agencies—the Social Security Administration and Department of Veterans Affairs (VA)—are prohibited by federal statute from adopting a “place of celebration” rule for certain programs of critical importance to millions of Americans. The administration looks forward to working with Congress to fix these parts of the law to ensure that Americans who rely on these programs can obtain these essential benefits no matter where they live.

In the meantime, both the VA and Social Security Administration have sought to extend benefits to the absolute maximum extent, seeking out all legally available authority. As a result, for instance, the administration is able to announce today that the VA Acting Secretary has determined that he will exercise his broad statutory discretion in the area of burial benefits to designate any individual in a committed relationship for burial in a national cemetery, which will allow for the inclusion of same-sex spouses where the domicile provision would otherwise govern. In addition, SSA will extend survivor benefits, lump sum death benefits and aged spouse benefits to same-sex couples if one partner could inherit from the other partner on the same terms as a spouse under state law. This expands the number of states in which these benefits can be extended.

A full copy of the Attorney General’s report to the President is attached.

Related Materials:

Memo

The Justice Department and the Office of the Director of National Intelligence released the following joint statement Friday: Earlier this year in a speech at the Department of Justice, President Obama announced a transition that would end the Section 215 bulk telephony metadata program as it previously existed, and that the government would establish a mechanism that preserves the capabilities we need without the government holding this bulk data. As a first step in that transition, the President directed the Attorney General to work with the Foreign Intelligence Surveillance Court (FISC) to ensure that, absent a true emergency, the telephony metadata can only be queried after a judicial finding that there is a reasonable, articulable suspicion that the selection term is associated with an approved international terrorist organization. The President also directed that the query results must be limited to metadata within two hops of the selection term instead of three. These two changes were put into effect in February 2014. In addition to directing those immediate changes to the program, the President also directed the Intelligence Community and the Attorney General to develop options for a new approach to match the capabilities and fill gaps that the Section 215 program was designed to address without the government holding this metadata. After carefully considering the available options, the President announced in March that the best path forward is that the government should not collect or hold this data in bulk, and that it remain at the telephone companies with a legal mechanism in place which would allow the government to obtain data pursuant to individual orders from the FISC approving the use of specific numbers for such queries. The President also noted that legislation would be required to implement this option and called on Congress to enact this important change to the Foreign Intelligence Surveillance Act (FISA).

Consistent with the President’s March proposal, in May, the House of Representatives passed H.R. 3361, the USA FREEDOM Act, which would, if enacted, create a new mechanism for the government to obtain this telephony metadata pursuant to individual orders from the FISC, rather than in bulk. The bill also prohibits bulk collection through the use of Section 215, FISA pen registers and trap and trace devices, and National Security Letters. Overall, the bill’s significant reforms would provide the public greater confidence in our programs and the checks and balances in the system, while ensuring our intelligence and law enforcement professionals have the authorities they need to protect the Nation. The Administration strongly supports the USA FREEDOM Act. We urge the Senate to swiftly consider it, and remain ready to work with Congress to clarify that the bill prohibits bulk collection as noted above, as necessary.

Given that legislation has not yet been enacted, and given the importance of maintaining the capabilities of the Section 215 telephony metadata program, the government has sought a 90-day reauthorization of the existing program, as modified by the changes the President announced earlier this year. Consistent with prior declassification decisions, in light of the significant and continuing public interest in the telephony metadata collection program, the Director of National Intelligence, James Clapper, has declassified the fact that the government’s application to renew the program was approved yesterday by the FISC . The order issued yesterday expires on Sept. 12, 2014. The Administration is undertaking a declassification review of this most recent court order and an accompanying memorandum opinion for publication.

Kristopher Michael Montemayor, a county commissioner for Precinct 1 of the Webb County Commissioners Court in Texas, pleaded guilty to bribery today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson for the Southern District of Texas, and Special Agent in Charge Christopher H. Combs of the FBI’s San Antonio Division made the announcement.

Montemayor admitted that, while serving as county commissioner, he solicited and accepted bribes in exchange for promising to perform official acts. Specifically, Montemayor admitted that he accepted three separate bribe payments totaling $11,000, as well as over $2,700 in electronics equipment, from a businessman who, unbeknownst to Montemayor, was an undercover law enforcement agent. Montemayor admitted that, in exchange for the money and the equipment, he promised to take official action to promote the business interests of the undercover agent.

Additionally, Montemayor admitted to accepting the use of a new 2012 Ford F-150 truck, which costs approximately $37,015, in exchange for promising to provide government jobs to both the vehicle owner and his spouse. As a result of these job appointments, the vehicle owner and his wife received salaries of $26,000 and $45,553 from Webb County.

Montemayor is scheduled to be sentenced on Oct. 7, 2014 before U.S. District Judge Marina Garcia Marmolejo in Laredo, Texas.

This case is being investigated by special agents from the Laredo Resident Agency of FBI’s San Antonio Division. This case is being prosecuted by Trial Attorneys Emily Rae Woods and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section.

A former patient recruiter pleaded guilty today in Miami, Florida, for his role in a $205 million Medicare 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, Special Agent in Charge George Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.

Michael Mendoza, 45, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Jonathan Goodman in the Southern District of Florida to one count of conspiracy to commit health care fraud. Sentencing is scheduled for Aug. 28, 2014.

According to court documents, during the course of the conspiracy, Mendoza was the president of Network Resource Consultant Inc., a Florida corporation, and he served as a patient recruiter for American Therapeutic Corporation (ATC), a defunct partial hospitalization program located in Miami that purported to provide intensive psychiatric services. Mendoza made an agreement with Lawrence Duran, the owner of ATC, and others to refer residents living in assisted living facilities throughout the Southern District of Florida to ATC in exchange for illegal health care kickbacks. Mendoza’s referrals to ATC were for purported mental health services.

Throughout the course of the ATC conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and related companies could bill Medicare for more than $205 million in medically unnecessary services. ATC submitted approximately $436,450 in false and fraudulent claims to Medicare for Mendoza’s beneficiary referrals.

Duran pleaded guilty and was sentenced to serve 50 years in prison for his role in orchestrating the fraud scheme.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Assistant Chief Robert Zink and Trial Attorney Allan J. Medina 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, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is 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 Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced a settlement to resolve allegations that GE Capital Retail Bank, known as of this month as Synchrony Bank, engaged in a nationwide pattern or practice of discrimination by excluding Hispanic borrowers from two of its credit card debt-repayment programs. The settlement resolves claims by the department and the CFPB that GE Capital violated the Equal Credit Opportunity Act (ECOA) by excluding borrowers who indicated that they preferred communications to be in Spanish or had a mailing address in Puerto Rico from two credit card debt-repayment programs. The agreement is a joint fair lending enforcement action by the department and the CFPB and is the federal government’s largest credit card discrimination settlement in history.

The settlement provides $169 million in relief to approximately 108,000 borrowers in the form of monetary payments and the reduction, or complete waiver, of borrowers’ credit card balances. GE Capital itself identified and reported the discrimination to the CFPB, was proactive in taking steps toward providing relief to affected borrowers, and has worked closely with the department and the CFPB to further identify and compensate victims of the discrimination. Specifically, GE Capital has already provided the benefits of the offers or their equivalent value to approximately 84,000 borrowers, totaling $131.8 million in relief. Following the settlement, the bank will provide the remaining $37 million in payments, reductions and waivers to affected borrowers.

“The blatant discrimination that occurred here is unlawful and will not be tolerated,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “Borrowers have the right to credit card terms that do not differ based on their national origin, and the settlement today sends the message that the Justice Department can and will vigorously enforce the law against lenders who violate that right.”

“Discrimination has no place in the consumer financial marketplace,” said CFPB Director Richard Cordray. “No one should be excluded from credit opportunities simply because of where they live or the language they speak.”

According to the United States’ complaint, the department alleges that from January 2009 to March 2012, GE Capital excluded certain borrowers, due to their national origin, from the “Statement Credit Offer” – a program offering eligible borrowers a credit to their account if they met certain criteria – and the “Settlement Offer” – a program offering eligible borrowers the chance to settle their credit card debt if they paid a percentage of their remaining account balance, ranging from 25 percent to 55 percent. As a result of the exclusions, Hispanic borrowers experienced higher debt levels and longer periods of debt; some of these Hispanic borrowers may have suffered additional consequential economic damages, including increased risk of credit problems, default and repossession; having their accounts closed or “charged-off” and sold to a third party; and other damages, including emotional distress.

GE Capital’s settlement with the department, which is subject to court approval, was filed today in the U.S. District Court for the District of Utah in conjunction with the department’s complaint. GE Capital resolved the CFPB’s claims by entering into a public administrative settlement.

In addition to the $169 million dollars in relief, GE Capital has also agreed to eliminate negative credit reports for affected borrowers that occurred during periods of the alleged discrimination . GE Capital will also take affirmative steps to strengthen its fair lending compliance, and the department commends the efforts the bank has already taken to that end. These steps put in place strong review mechanisms and training to ensure borrowers are not discriminated against because of their national origin.

The department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division. Since the Fair Lending Unit was established in February 2010 , it has filed or resolved 34 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for more than $1 billion in monetary relief for impacted communities and individual borrowers. The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at the division website .

The Civil Rights Division and the CFPB are members of the 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 a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov .

Related Materials:

GE Capital Complaint
Consent Order

A federal grand jury in Houston, Texas, today indicted Philip Joseph Rivkin, a/k/a Felipe Poitan Arriaga, for offenses involving a federal renewable fuel program that allegedly netted him more than $29 million, the Justice Department’s Environment and Natural Resources Division announced. The 68-count indictment against Rivkin, 49, of Houston and most recently, Guatemala City, Guatemala, includes allegations of wire fraud, mail fraud, Clean Air Act false statements, and money laundering.

The indictment was unsealed late Thursday following Rivkin’s initial appearance in federal court in Houston. He was arrested on Wednesday evening when he arrived in Houston from Guatemala, which had deported him earlier in the day after learning that he had fraudulently secured Guatemalan citizenship.

The Energy Independence and Security Act of 2007 created or extended several federally-funded programs that created monetary incentives for the production of renewable fuels, including biodiesel, and to encourage the use of such fuels in the United States. Authorized biodiesel producers and importers could generate and attach credits—known as “renewable identification numbers” or “RINs”—to biodiesel they produced or imported. Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value.

The indictment alleges that beginning around February of 2009, Rivkin operated and controlled several companies in the fuel and biodiesel industries, including Green Diesel LLC, Fuel Streamers Inc., and Petro Constructors LLC, all based in Houston. It is alleged that Rivkin claimed to produce millions of gallons of biodiesel at the Green Diesel’s Houston facility and then generated and sold RINs based upon this claim. In reality, no biodiesel was ever produced at the Green Diesel facility. The indictment alleges that this scheme allowed the defendant to generate approximately 45 million RINs that were fraudulent, which were then sold to companies that needed to obtain them and resulted in millions of dollars in sales. Rivkin is also alleged to have caused fraudulent tax credit claims based on fictitious biodiesel production.

The indictment goes on to allege that the defendant created false records and made false statements to conceal his fraudulent claims of biodiesel production, importation and RIN generation. Finally, the indictment alleges that the defendant laundered the proceeds of his crimes, using banking institutions and complex financial transactions to benefit from the illegal funds he received, and to attempt to protect these funds from government enforcement. The indictment includes a notice of forfeiture to include: cash in excess of $29 million; three vehicles including a Lamborghini, Maserati, and a Bentley; a Canadair LTD airplane; and millions of dollars worth of artwork that was previously seized from Rivkin in 2012 and is now included in a civil action for forfeiture.

An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

The collaborative investigation that led to today’s indictment and yesterday’s arrest was the result of work by EPA’s Criminal Investigation Division, the United States Secret Service, Internal Revenue Service Criminal Investigation, and Homeland Security Investigations. The Guatemalan Special Investigations Unit worked with federal investigators to uncover the fraudulent nature of Rivkin’s Guatemalan citizenship, which led to his deportation back to the United States.

The case is being prosecuted by Trial Attorney Leslie E. Lehnert of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

A Florida man who was convicted of conspiracy to commit health care fraud was sentenced to serve 27 months in prison today in federal court in Tampa, Florida.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Acting Special Agent in Charge Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region, and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.

Jose Pascual, 36, previously pleaded guilty to an information charging him with conspiracy to commit health care fraud. In addition to his prison term, he was sentenced to serve three years of supervised release and ordered to pay $1,292,375 in restitution, jointly and severally with his co-conspirators.

According to documents filed in the case, in February 2007, Pascual purchased R&R Outpatient LLC, an outpatient physical therapy provider with locations in Fort Myers and Ocala, Florida. Pascual and his co-conspirators then caused reimbursement claims to be submitted on behalf of R&R Outpatient to Medicare fraudulently representing that physical and occupational therapy services had been legitimately prescribed by physicians and provided to Medicare beneficiaries. Pascual and his co-conspirators fabricated medical records to support the fraudulent claims. As a result of the fraudulent claims, Medicare paid approximately $1,124,826 to R&R Outpatient. Pascual and his co-conspirators also recycled Medicare beneficiary information from R&R Outpatient in order to submit fraudulent reimbursement claims to Medicare through other clinics.

This case was investigated by HHS-OIG and the FBI 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 Florida. The case was prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Simon Gaugush.

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 .

WASHINGTON – El Departamento de Justicia y la Oficina para la Protección Financiera del Consumidor [Consumer Financial Protection Bureau (CFPB)] anunciaron hoy un acuerdo conciliatorio en resolución de alegatos de que GE Capital Retail Bank, conocido a partir de este mes como Synchrony Bank, exhibió un patrón o práctica nacional de discriminación al excluir a prestatarios hispanos de dos de sus programas de cancelación de deudas de tarjeta de crédito. El acuerdo conciliatorio resuelve alegaciones por parte del departamento y la CFPB que GE Capital violó la Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act (ECOA)] al excluir a prestatarios que indicaron que preferían que las comunicaciones fueran en español o tenían dirección postal en Puerto Rico de dos programas de cancelación de deudas de tarjeta de crédito. El acuerdo es una acción de coacción de préstamos justos conjunto del departamento y la CFPB y es históricamente el mayor acuerdo conciliatorio de discriminación asociado a tarjetas de crédito del gobierno federal.

El acuerdo conciliatorio dispone el pago de 169 millones de dólares como reparación a alrededor de 108,000 prestatarios, en la forma de pagos monetarios, y la reducción o dispensa total de los saldos de las tarjetas de crédito de los prestatarios. El propio GE Capital identificó y reportó la discriminación a la CFPB, fue proactivo en tomar medidas para proporcionar reparación a los prestatarios afectados, y ha trabajado estrechamente con el departamento y la CFPB para identificar e indemnizar a otras víctimas de dicha discriminación. Específicamente, GE Capital ya ha provisto los beneficios de las ofertas o su valor equivalente a aproximadamente 84,000 prestatarios por un total de $131.8 millones en reparación. Según el acuerdo conciliatorio, el banco proveerá los $37 millones restantes en pagos, reducciones y dispensas a los prestatarios afectados.

"La evidente discriminación exhibida en este caso es ilegal y no será tolerada", señaló la Secretaria de Justicia Auxiliar Interina Jocelyn Samuels de la División de Derechos Civiles. "Los prestatarios tienen derecho a términos de tarjeta de crédito que no difieran según su origen nacional, y el acuerdo conciliatorio de hoy transmite el mensaje de que el Departamento de Justicia puede hacer valer la ley enérgicamente contra los prestamistas que violen dicho derecho, y así lo hará".

"La discriminación no tiene lugar en el mercado financiero de consumo. Nadie debe ser excluido de oportunidades de crédito simplemente debido a dónde vive o el idioma que habla", señaló el Director de la CFPB Richard Cordray.

De acuerdo con la demanda presentada por los Estados Unidos, el departamento alega que, entre enero de 2009 y marzo de 2012, GE Capital excluyó a ciertos prestatarios debido a su origen nacional, de su "Oferta de crédito de estado de cuenta" – un programa que ofrecía a prestatarios elegibles un crédito en su cuenta si cumplían con ciertos criterios – y la "Oferta de cancelación" – un programa que ofrecía a prestatarios elegibles la oportunidad de cancelar su deuda de tarjeta de crédito si pagaban un porcentaje del saldo pendiente de la cuenta, equivalente a entre el 25 y el 55 por ciento. Como resultado de las exclusiones, los prestatarios hispanos fueron objeto de niveles de deuda más altos y períodos más largos de deuda; algunos de estos prestatarios hispanos pueden haber sufrido daños económicos consecuenciales adicionales, incluidos mayor riesgo de problemas de crédito, insolvencia y reposesión, les pueden haber cerrado las cuentas, sus cuentas pueden haber sido contabilizadas como "incobrables" y vendidas a terceros, y pueden abrir sufrido otros daños, tales como sufrimiento emocional.

El acuerdo conciliatorio de GE Capital con el departamento, el que está sujeto a la aprobación del tribunal, fue presentado hoy en el Tribunal Federal de Distrito para el Distrito de Utah en conjunto con la demanda del departamento. GE Capital resolvió los alegatos del CFPB por medio de un acuerdo conciliatorio administrativo público.

Además de los 169 millones de dólares en reparación, GE Capital también ha aceptado eliminar los informes de crédito negativos de los prestatarios afectados, emitidos durante períodos de la supuesta discriminación. GE Capital también tomará medidas afirmativas para fortalecer su cumplimiento con las leyes de préstamos justos, y el departamento aplaude los esfuerzos del banco, realizados hasta el momento con dicha finalidad. Estos pasos implementan fuertes mecanismos de revisión y capacitación para garantizar que no se discrimine contra prestatarios debido a su origen nacional.

La coacción asociada a las leyes de otorgamiento justo de préstamos por parte del departamento es llevada a cabo por la Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles. Desde que se estableció la Unidad de Préstamos Justos en febrero de 2010, ésta ha entablado o resuelto 34 casos de préstamos bajo la Ley de Vivienda Justa, la ECOA y la Ley de Alivio Civil para los Miembros de las Fuerzas Armadas [Servicemembers Civil Relief Act]. Los acuerdos conciliatorios en estos casos proveen más de 1,000 millones de dólares en reparación monetaria para comunidades y prestatarios individuales afectados. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso bajo ECOA destacan los logros del departamento en el otorgamiento de préstamos justos y están disponibles en el portal de la división en Internet.

La División de Derechos Civiles y la CFPB son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama fundó la Fuerza de Tarea de Coacción contra el Fraude Financiero interagencial para generar una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de un amplio rango de agencias federales, autoridades regulatorias, inspectores generales y fuerzas del orden público estatales y locales quienes, trabajando juntos, ponen en uso un conjunto poderoso de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar las iniciativas en todo el poder ejecutivo federal y, junto con asociados estatales y locales, investigar y enjuiciar delitos financieros importantes, garantizar un castigo justo y eficaz para quienes cometen delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar ganancias para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.

El Departamento de Justicia anunció hoy un acuerdo conciliatorio con el Distrito Escolar del Condado de Clay en Alabama. Con la cooperación del distrito, el departamento llevó a cabo una revisión de cumplimiento del programa Aprendiz del Idioma Inglés [English Language Learner (ELL)] del distrito, para determinar si los estudiantes de ELL del distrito estaban recibiendo servicios exigidos por la Ley de Igualdad de Oportunidades Educativas [Equal Educational Opportunities Act of 1974 (EEOA)] de 1974.

El acuerdo conciliatorio de tres años de duración garantizará que este distrito rural tome medidas adecuadas para atender a su población pequeña pero creciente de estudiantes de ELL, incluidos: brindar más servicios para estudiantes de ELL, obtener instructores adicionales con certificación como instructores de inglés como segundo idioma, brindar oportunidades de desarrollo profesional significativas para docentes, brindar materiales y medios de apoyo adecuados para las salas de aula de estudiantes de ELL, monitorear del desempeño académico de estudiantes de ELL actuales y anteriores, y mejorar la comunicación accesible en términos idiomáticos con los padres con conocimientos limitados del idioma inglés.

"El Departamento de Justicia se compromete a asegurar que todos los aprendices del idioma inglés reciban los servicios que requieren para el éxito, inclusive en un distrito rural pequeño como el Distrito Escolar del Condado de Clay", señaló Jocelyn Samuels, Secretaria de Justicia Auxiliar Interina de la División de Derechos Civiles. "Aplaudimos la decisión del Distrito Escolar del Condado de Clay de realizar este importante acuerdo. Nos complacerá seguir trabajando en conjunto con el distrito en satisfacer las diversas necesidades de sus aprendices del idioma inglés".

Hacer valer la Ley de Igualdad de Oportunidades Educativas es una de las principales prioridades de la División de Derechos Civiles del Departamento de Justicia. Este año se cumplen 40 años de la promulgación de la EEOA. Para obtener información adicional sobre la División de Derechos Civiles del Departamento de Justicia, visite www.justice.gov/crt.

Documentos Relacionados:

• Acuerdo de Resolución entre los Estados Unidos y el Distrito Escolar del Condado de Clay

The Justice Department announced today a settlement agreement with the Clay County School District in Alabama. With the district’s cooperation the department conducted a compliance review of the district’s English Language Learner (ELL) program to determine whether the district’s ELL students were receiving services required by the Equal Educational Opportunities Act of 1974 (EEOA).

The three-year settlement agreement will ensure that this rural district takes appropriate action to serve its small but growing population of ELL students, including: increasing services for ELL students, obtaining additional English as a Second Language-certified instructors, conducting significant professional development for teachers, providing adequate materials and classroom supports for ELL students, monitoring the academic performance of current and former ELL students and improving language-accessible communication with limited English proficient parents.

“The Department of Justice is committed to ensuring that all English language learners are provided the services they need to succeed, including in a small rural district like the Clay County School District,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “We applaud the Clay County School District’s decision to enter into this important agreement and look forward to continuing to work cooperatively with the district to address the diverse needs of its English language learners.”

The enforcement of the Equal Educational Opportunities Act is a top priority of the Justice Department’s Civil Rights Division. This year marks the 40th anniversary of the EEOA. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt .

Related Materials:

Clay County Agreement

An office worker pleaded guilty today in connection with a health care fraud scheme involving Anna Nursing Services Corp. (Anna Nursing), a 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 Brian Martens of the Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.

Lizette Garcia, 37, of Miami, Florida, pleaded guilty before U.S. District Judge Joan A. Lenard in the Southern District of Florida to one count of payment of health care kickbacks. Sentencing is scheduled for Aug. 27, 2014.

Garcia was an office worker at Anna Nursing, a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries. According to court documents, Anna Nursing was operated for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were medically unnecessary and/or were not provided.

On behalf of the owners and operators of Anna Nursing, Garcia paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Anna Nursing for home health care and therapy services that were medically unnecessary and/or were not provided. Anna Nursing then billed the Medicare program on behalf of the recruited patients, which Garcia knew was in violation of federal criminal laws.

From approximately October 2010 through approximately April 2013, Anna Nursing was paid by Medicare approximately $7 million for fraudulent claims for home health care services that were medically unnecessary and/or were not provided.

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 McNamara of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, has removed over 17,000 providers from the Medicare program since 2011.

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

The Justice Department’s Civil Division announced today that RMCN Credit Services Inc. (RMCN), of McKinney, Texas, and the Texas residents who own it, Doug and Julie Parker, have agreed to settle a federal court case charging them with falsely disputing negative information on consumers’ credit reports and collecting illegal upfront fees from customers. The defendants have agreed to an order that puts an end to these practices, which are illegal under the Credit Repair Organizations Act (CROA), and pay civil penalties.

“This consent order sends a strong signal to the credit repair industry that we will enforce the law against companies that abuse the credit reporting system by flooding it with false disputes,” said Assistant Attorney General Stuart F. Delery of the Civil Division. “This conduct degrades the accuracy of credit reports and raises costs for all consumers.”

In a complaint filed on behalf of the Federal Trade Commission (FTC) in the U.S. District Court for the Eastern District of Texas, the United States alleged that the defendants operated a credit repair company that offered to improve consumers’ credit scores by disputing negative information on their credit reports. The complaint alleged that RMCN and Doug and Julie Parker lodged false disputes with credit bureaus by sending “consumer” letters raising fabricated disputes over negative information in its customers’ reports. For example, the letters made false statements such as “I was never late” or “This is not my account.” The government’s case further alleged that these letters were not written by consumers. According to the government’s court filings, RMCN sent more than a million dispute letters during the five-year period preceding the complaint (October 2006 to October 2011). This forced credit bureaus and creditors to incur costs responding to bogus letters, which ultimately raised the cost of credit for all consumers.

The complaint also alleged that RMCN charged their customers for credit repair services before those services were fully performed. In particular, the government alleged that defendants charged a significant portion of their fee before any credit repair work began.

The agreed order prohibits defendants from making any untrue or misleading statements to consumer reporting agencies or creditors, prohibits them from charging advance fees for credit repair services, and bars them from making misrepresentations in connection with the sale of any good or service. The order also imposes a civil penalty of $2.35 million. If the defendants pay $400,000, the remainder of the judgment will be suspended based on the defendants’ inability to pay the full amount of the penalty.

Congress enacted CROA to protect the public from unfair and deceptive advertising and business practices by credit repair organizations. CROA prohibits credit repair companies from making false statements, or statements they reasonably should have known were false, to credit bureaus and creditors concerning consumers’ credit standing or creditworthiness. CROA also forbids credit repair companies from charging customers for credit repair services before those services are fully performed.

In agreeing to settle this matter, defendants have not admitted that they knowingly violated CROA.

The case was handled by Trial Attorney Tim Finley of the Civil Division’s Consumer Protection Branch, Assistant U.S. Attorney Kevin McClendon of the U.S. Attorney’s Office for the Eastern District of Texas, and Tom Carter, Emily Robinson and Luis Gallegos of the FTC.

Ahmed Abu Khatallah, aka Ahmed Mukatalah, a Libyan national approximately 43 years of age, has been charged for his alleged participation in the Sept. 11, 2012, attack on the U.S. Special Mission and Annex in Benghazi, Libya, which resulted in the deaths of four Americans.

“Our nation’s memory is long, and our reach is far,” said U.S. Attorney General Eric Holder. “The arrest of Ahmed Abu Khatallah represents a significant milestone in our efforts to ensure justice is served for the heinous and cowardly attack on the U.S. diplomatic facility in Benghazi. Since that attack – which caused the deaths of Ambassador J. Christopher Stevens, Sean Smith, Tyrone Woods and Glen Doherty – we have conducted a thorough, unrelenting investigation, across continents, to find the perpetrators. The arrest of Khatallah proves that the U.S. government will expend any effort necessary to pursue terrorists who harm our citizens. Khatallah currently faces criminal charges on three counts, and we retain the option of adding additional charges in the coming days. Even as we begin the process of putting Khatallah on trial and seeking his conviction before a jury, our investigation will remain ongoing as we work to identify and arrest any co-conspirators. This is our pledge; we owe the victims of the Benghazi attack and their loved ones nothing less.”

“The terrorist attacks on our diplomatic facilities in Benghazi were an affront to our nation and heartbreaking for the families of the four courageous Americans who perished that day,” said John Carlin, Assistant Attorney General for the National Security Division. “Capturing Ahmed Abu Khatallah was a critical step toward bringing him to justice, and we will not rest in our pursuit of the others who attacked our facilities and killed our citizens.”

“In July 2013, Ahmed Abu Khatallah was charged in a sealed criminal complaint in the District of Columbia for his alleged role in the attacks that resulted in the murders of four American citizens, including Ambassador Christopher Stevens, in Benghazi, Libya,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “Khatallah will now face justice in an American courtroom. We remain committed to holding accountable all of those responsible for the murders of those brave U.S. citizens who were serving our country in Libya.”

The charges were announced upon the unsealing of a three-count criminal complaint. The lead count in the complaint is a death-eligible offense. The complaint, which was filed under seal on July 15, 2013, in the United States District Court for the District of Columbia, charges Khatallah with:

-- Killing a person in the course of an attack on a federal facility involving the use of a firearm and dangerous weapon and attempting and conspiring to do the same.

-- Providing, attempting and conspiring to provide material support to terrorists resulting in death.

-- Discharging, brandishing, using, carrying and possession of a firearm during and in relation to a crime of violence.
Khatallah is in U.S. custody, and upon his arrival to the U.S. he will be promptly presented before a federal judge in Washington, D.C., and appointed counsel.

Charges contained in criminal complaints are merely allegations that a defendant has committed a violation of criminal laws, and every defendant is presumed innocent until, and unless, proven guilty.

The case is being investigated by the FBI’s New York Field Office with substantial assistance from various other government agencies. The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the National Security Division of the U.S. Department of Justice.

Related Materials:

Complaint

Edwin Stigile III, formerly a lieutenant at the Roxbury Correctional Institution (RCI) in Hagerstown, Maryland, was sentenced today by U.S. District Court Judge James K. Bredar to serve 36 months in prison for obstruction of justice in connection with his involvement in a series of assaults against an inmate, Kenneth Davis, at RCI.

On Jan. 9, 2014, Stigile pleaded guilty to a charge of destruction of records. According to court documents filed in connection with his guilty plea, Stigile acknowledged that he intentionally used a magnetic device to erase incriminating surveillance video footage related to the RCI officers’ assaults of Davis. RCI officers from three different shifts assaulted Davis in March 2008, in retaliation for a prior incident in which Davis struck an officer. Stigile also instructed an officer to hide the magnetic device after the surveillance footage was destroyed. In September 2012, Stigile made false and misleading statements to federal authorities and a federal grand jury in an attempt to obstruct the federal investigation related to the assaults.

“The defendant participated in the cover-up of the assaults suffered by Mr. Davis, and then he lied to cover up this crime,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The defendant’s actions run completely counter to the responsibilities and trust given to a supervisor at a correctional facility. The Justice Department will continue to vigorously prosecute those officers who, like this defendant, try to cover up the misconduct of other officers.”

To date, 16 current or former officers at RCI were convicted in connection with the series of assaults that Davis suffered on March 8 through 9, 2008. One former officer still awaits sentencing.

The case was investigated by the Frederick Resident Agency of the FBI, and prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division, with the assistance of Assistant U.S. Attorney Michael Cunningham for the District of Maryland.

The Justice Department, Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB), along with 49 state attorneys general and the District of Columbia’s attorney general have reached a $968 million agreement with SunTrust Mortgage Inc. (SunTrust) to address mortgage origination, servicing, and foreclosure abuses.

The joint agreement is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), CFPB and state attorneys general across the country, and includes recoveries for both improper mortgage origination and servicing practices.

“SunTrust’s conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis,” Attorney General Eric Holder said. “From mortgage origination to servicing to securitization, the Department of Justice is attacking every facet of conduct that led to the Great Recession. We will continue to hold accountable financial institutions that, in the pursuit of their own financial interests, misuse public funds and cause harm to hardworking Americans. We expect that there will be more cases like this to come.”

“This agreement, which totals nearly $1 billion, not only holds SunTrust accountable for years of abusive practices mortgage origination practices; it also provides for restoration,” said Associate Attorney General Tony West. “By the terms of this resolution, SunTrust is required to provide $500 million in consumer relief for homeowners as well as abide by terms that will help to prevent the abuses of the past from being repeated. It's a result attained thanks to the close coordination among our enforcement agency partners throughout the government."

As part of the settlement, SunTrust has agreed to pay $418 million to resolve its potential liability under the federal False Claims Act for originating and underwriting loans that violated its obligations as a participant in the Federal Housing Administration (FHA) insurance program. As a participant in that program, SunTrust had the authority to originate, underwrite and certify mortgages for FHA insurance.

SunTrust admitted that between January 2006 and March 2012, it originated and underwrote FHA-insured mortgages that did not meet FHA requirements, that it failed to carry out an effective quality control program to identify non-compliant loans, and that it failed to self-report to HUD even the defective loans it did identify. SunTrust also admitted that numerous audits and other documents disseminated to its management between 2009 and 2012 described significant flaws and inadequacies in SunTrust’s origination, underwriting, and quality control processes, and notified SunTrust management that as many as 50 percent or more of SunTrust’s FHA-insured mortgages did not comply with FHA requirements. For example, a 2012 internal SunTrust document noted two “significant” issues that had been plaguing the company for years – a “Broken Loan Origination Process” coupled with a “Deficient Government Insuring Process.” Other reports received by SunTrust management described its quality control program as “severely flawed” and “ineffective.” These reports described to management that the volume of problems in the program was “excessive,” and that the error rates were “elevated” and at an “unacceptable level.”
“SunTrust’s irresponsible FHA lending practices caused grievous harm to homeowners and the housing market, as well as wasting hundreds of millions of dollars in taxpayer funds,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “As this settlement demonstrates, we will continue to hold accountable financial institutions that misuse public funds and ruin the lives of hardworking Americans in the pursuit of their own financial interests.”
The servicing portion of the agreement parallels the $25 billion National Mortgage Settlement (NMS) reached in February 2012 between the federal government, 49 state attorneys general and the District of Columbia’s attorney general and the five largest national mortgage servicers. Under the agreement announced today, SunTrust has agreed to provide $500 million in additional relief in the next three years directly to borrowers and homeowners in the form of reducing the principal on mortgages for borrowers who are at risk of default, reducing mortgage interest rates for homeowners who are current but underwater on their mortgages, and other relief. The settlement will likely provide direct benefits to borrowers far in excess of $500 million because SunTrust will not be permitted to claim credit for every dollar spent on the required consumer relief. SunTrust has also agreed to pay $50 million in cash to redress its servicing practices, $40 million of which will be distributed to borrowers and homeowners through the Borrower Payment Fund established by the NMS and administered by the states.
“This agreement with SunTrust is another step forward in the Obama Administration’s ongoing effort to hold mortgage lenders accountable,” said HUD Acting Deputy Secretary Helen Kanovsky. “By using the framework of the National Mortgage Settlement, we will ensure that SunTrust provides mortgage relief to struggling homeowners in the hardest hit communities and changes their worst practices. HUD will continue working with the Department of Justice, CFPB and state attorneys general to hold lenders accountable and require them to institute practices that are beneficial to borrowers and the FHA fund.”
“The culmination of this case today represents the long hours dedicated by auditors, investigators, counsel and the data analytics team in the Office of Inspector General to address the significant problems we identified in SunTrust’s underwriting,” said HUD Inspector General David A. Montoya. “The case begins and ends with the crucial work produced by this office and the commitment by my staff to work with the Department of Justice, HUD and others in a concerted effort to combat misrepresentation and fraud against vital government programs. My office will continue to aggressively seek out instances in which the FHA, and by extension the American taxpayer, are harmed by misconduct that should not be tolerated.”

“Deceptive and illegal mortgage servicing practices have pushed families into foreclosure and devastated communities across the nation,” said CFPB Director Richard Cordray. “Today’s action will help homeowners and consumers harmed by SunTrust’s unlawful foreclosure practices. The Consumer Bureau will continue to investigate mortgage servicers that mistreat consumers, and we will not hesitate to take action against any company that violates our new servicing rules.”

“Homeownership is the bedrock of the American dream, and we continue to address the many mortgage servicing nightmares that homeowners across the country experienced for years,” said Iowa state Attorney General Tom Miller. “State attorneys general are working across party lines with our federal partners to address past practices, and we’re trying to ensure that borrowers are treated more fairly in the future.”

The joint federal-state agreement also requires SunTrust to implement significant changes in how they service mortgage loans, handle foreclosures, and ensure the accuracy of information provided in federal bankruptcy court. The agreement requires new servicing standards which will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create dozens of new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court.

The new servicing standards ensure that foreclosure is a last resort by requiring SunTrust to evaluate homeowners for other loss mitigation options first. In addition, SunTrust is restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. SunTrust will also be required to simplify the process for homeowners needing help by creating a single point of contact for borrowers seeking information about their loans and—importantly—maintaining adequate staff to handle calls.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. Compliance with the agreement will be overseen by an independent monitor, Joseph A. Smith Jr., who is also the monitor for the NMS. Smith has served as the North Carolina Commissioner of Banks since 2002, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). The monitor will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement.

The agreement resolves potential violations of civil law based on SunTrust’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by SunTrust, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group of President Barack Obama’s Financial Fraud Enforcement Task Force. The agreement does not prevent the CFPB from pursing civil enforcement actions against SunTrust for violations of the CFPB’s new mortgage servicing rules that took effect on Jan. 10, 2014. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

SunTrust is a mortgage lender and servicer headquartered in Richmond, Virginia, and is a wholly-owned subsidiary of SunTrust Banks Inc., a bank and financial services company headquartered in Atlanta, Georgia.

The settlement announced today was the result of investigations conducted by the Civil Division and the U.S. Trustee Program of the Department of Justice, state attorney general offices throughout the country, HUD-OIG and HUD’s FHA, and the CFPB. The Department of the Treasury, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the Department of Veterans Affairs and the U.S. Department of Agriculture also made critical contributions.

The joint federal-state agreement is part of enforcement efforts 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.gov.

WASHINGTON—Attorney General Eric Holder released the following statement Tuesday regarding the arrest of Ahmed Abu Khatallah for his role in the attack on the U.S. facilities in Benghazi, Libya:

“Our nation’s memory is long and our reach is far. The arrest of Ahmed Abu Khatallah represents a significant milestone in our efforts to ensure justice is served for the heinous and cowardly attack on our facilities in Benghazi. Since that attack – which caused the deaths of Ambassador Christopher Stevens, Sean Smith, Tyrone Woods, and Glen Doherty – we have conducted a thorough, unrelenting investigation, across continents, to find the perpetrators. The arrest of Khatallah proves that the U.S. government will expend any effort necessary to pursue terrorists who harm our citizens. Khatallah currently faces criminal charges on three counts, and we retain the option of adding additional charges in the coming days. Even as we begin the process of putting Khatallah on trial and seeking his conviction before a jury, our investigation will remain ongoing as we work to identify and arrest any co-conspirators. This is our pledge; we owe the victims of the Benghazi attack and their loved ones nothing less.”

Russell Burroughs pleaded guilty today to aiding in the preparation of false tax returns in U.S. District Court for the Middle District of Alabama, the Justice Department and Internal Revenue Service (IRS) announced.

According to court documents, during the 2008 through 2010 tax seasons, Burroughs owned and operated Computer Services, a tax return preparation business located in Montgomery, Alabama. Burroughs admitted he falsified information for his clients on their tax returns in order to illegally generate higher tax refunds. He acknowledged that he intentionally included false items such as false business income or loss, false deductions, false real estate rental losses, false education credits and false energy credits in order to inflate his clients’ refunds.

As part of his plea, Burroughs agreed to pay restitution to the United States in the amount of $211,960 and to be to be permanently enjoined from preparing or filing federal tax returns for others in the future.

As a result of his plea, Burroughs faces a maximum sentence of three years in prison, a $250,000 fine and one year of supervised release.

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

Sonny Pilcher of Casper, Wyoming, pleaded guilty to tax fraud today in the U.S. District Court for the District of Wyoming, the Justice Department and Internal Revenue Service (IRS) announced. The sentencing hearing was set for Oct. 28, 2014 before U.S District Judge Alan B. Johnson.

According to the charging document, Pilcher attempted to obstruct and impede the IRS. Pilcher did this by claiming a false bad debt expense of $258,000 on his 2008 Form 1040 tax return, and by paying his employees in cash to evade paying employment taxes. Pilcher faces a statutory maximum sentence of 36 months in prison, a $250,000 fine and may be ordered to pay restitution to the IRS.

This case is being prosecuted by Trial Attorneys Lori A. Hendrickson and Ignacio Perez de la Cruz of the Justice Department’s Tax Division and was investigated by IRS – Criminal Investigation Special Agents in the Cheyenne, Wyoming, field office.

A man from Atlanta, Georgia, pleaded guilty today for his role in a Jamaican-based fraudulent lottery scheme.

Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division, Inspector in Charge David W. Bosch of the Postal Inspection Service Philadelphia Division and Acting Special Agent in Charge Jonathan Larson of the Internal Revenue Service-Criminal Investigations Newark Field Office made the announcement.

Dominic Smith, 26, a citizen of the United States, pleaded guilty in the Western District of North Carolina to one count of conspiracy to commit wire fraud. Sentencing will be scheduled at a later date.

Smith was charged in connection with a fraudulent lottery scheme based in Jamaica that induced elderly victims in the U.S. to send Smith thousands of dollars to cover purported fees for lottery winnings that victims had not won and never received. Smith acted as a middleman in the U.S., receiving money from victims via wire transfers, bank transfers, and mailings. Smith kept a portion of this victim money for his own benefit, and provided the rest to others participating in the scheme.

“This guilty plea demonstrates the Justice Department’s commitment to prosecute those responsible for fraudulent lottery schemes,” said Assistant Attorney General Delery. “Schemes targeting Americans from other countries often cannot fully succeed without assistance from co-conspirators in the U.S. who are willing to help them rip off people in this country.”

“These lottery scammers prey on older Americans, and convince them to send significant amounts of money based on false promises,” said Postal Inspector in Charge Bosch. “The Postal Inspection Service is committed to investigating and combating these international lottery schemes.”

“These fraudulent lottery schemes result in hundreds of thousands of dollars of victim money flowing through the hands of scammers within and outside of the U.S.,” said Acting Special Agent in Charge Larsen. “The IRS will continue to work with the Department of Justice and our law enforcement partners to stop the flow of illegal proceeds across the U.S. border.”

This prosecution is part of the Department of Justice’s effort working with federal and local law enforcement to combat fraudulent lottery schemes in Jamaica preying on American citizens. According to the U.S. Postal Inspection Service, Americans have lost tens of millions of dollars to fraudulent foreign lotteries.

Smith pleaded guilty to one count of conspiracy to commit wire fraud with enhanced penalties for telemarketing. As part of his guilty plea, Smith acknowledged that, had the case gone to trial, the U.S. would have proved beyond a reasonable doubt that, from December 2010 through at least April 2012, Smith was a member of a conspiracy that targeted victims in the United States by informing them that they had won cash and prizes in a lottery. Victims received a telephone call stating that they had won a sweepstakes or lottery and sometimes a new car. Victims were instructed to send thousands of dollars for “fees” or other expenses via wire transfers, direct bank transfers, and the mail in order to release their purported lottery winnings. Victims sent hundreds of thousands of dollars to Smith in the U.S. Smith acknowledged that the government would have proved that he knew there was no lottery and no winnings were paid, and that he, along with his coconspirators, kept the victims’ money for their own benefit.

Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service and the U.S. Internal Revenue Service. The case is being prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Lauren Fascett of the Civil Division and Assistant U.S. Attorney Mark Odulio of the Western District of North Carolina.

Federal inmate Kevin Marquette Bellinger, a former resident of Washington, D.C., and an inmate at the United States Penitentiary in Hazelton, West Virginia, was convicted this week for the murder of another inmate after a 5-day federal jury trial before U.S. District Judge Irene M. Keeley of the Northern District of West Virginia.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and United States Attorney William J. Ihlenfeld, II, for the Northern District of West Virginia made the announcement.

Bellinger was convicted by a federal jury on June 16, 2014, on one count of murder by a federal prisoner serving a life sentence and one count of second degree murder in a federal facility for his role in the Oct. 7, 2007, murder of inmate Jesse Harris.

According to evidence presented at trial, during a move of inmates from the recreation yard back to their cells, Bellinger and a co-defendant left the yard ahead of the others and traveled to an intersection of two corridors in the prison facility, where they confronted Harris and stabbed him with shanks in an orchestrated attack. In less than a minute, an officer approached, and the attackers fled. Officers apprehended Bellinger after a short pursuit, but they did not recover his weapon. Surveillance footage of the attack showed Bellinger and his co-defendant engaged in a verbal exchange with Harris, followed by the two attackers wielding weapons and physically assaulting Harris, who was unarmed and backing away from them.

At the time of the murder, Bellinger was serving a life sentence for an assault with intent to kill that took place in 2000, and his co-defendant was serving a life sentence for two separate homicides that took place in 1997 and 2000.

Bellinger, who is in custody pending sentencing, faces a mandatory penalty of life in prison for his conviction of murder by a federal prisoner serving a life sentence and a term of years up to life imprisonment for his conviction of second degree murder.

This case was investigated by the FBI and the U.S. Bureau of Prisons. The case was prosecuted by Trial Attorney Richard Burns from the Capital Case Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Brandon Flower.

A federal district judge in the U.S. District Court for the Southern District of Florida permanently barred Lazaro Jesus Toyos and his daughter Dilma Carida Garcia, aka Dilma Toyos Garcia, and their respective companies, L. Toyos Tax Service Inc. and Toyos Garcia Tax Service Inc., from preparing federal income tax returns for others, the Justice Department announced today.

The suit alleges that the defendants prepared thousands of tax returns and unlawfully understated income tax liabilities and overstated refunds by fabricating and/or exaggerating deductions and tax credits their clients were not eligible to take. The defendants’ practices, as alleged, include fabricating Schedule C losses for non-existent businesses, falsely claiming the First Time Homebuyer Credit for taxpayers who did not actually purchase a home and falsely claiming American Opportunity Credits for taxpayers who did not acquire education expenses or attend college. The government alleged that loss to the U.S. Treasury from the defendants’ activities may be in the millions of dollars.

In the past decade, the Justice 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 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. Lazaro Jesus Toyos, et al.
Permanent Injunction Against Defendant Lazaro Jesus Toyos and Defendant L. Toyos Tax Services, Inc., Submitted By Stipulation and Consent
Permanent Injunction Against Defendant Dilma Carida Garcia, AKA Dilma Toyos Garcia, and Defendant Toyos Garica Tax Service, Inc., Submitted By Stipulation and Consent

WASHINGTON, DC – U.S. Attorney General Eric Holder released the following statement Friday on the passing of actress Ruby Dee:

“I was deeply saddened to learn of the passing of Ruby Dee – a legendary actress and a lifelong champion for civil rights and social justice.

“Rising from humble origins to the heights of stardom, Ruby Dee broke down barriers and left her mark from Harlem, to Broadway, to Hollywood and far beyond. She was also an extraordinary role model for generations of Americans – and particularly for African-American women and girls – during a time when black stars were rare on both stage and screen.

“Tellingly, she was never content merely to advance her own remarkable career, lending her voice and her considerable fame to causes from the American Civil Rights Movement to the global campaign against Apartheid. She stood with Dr. King and other leaders at the 1963 March on Washington, and later spoke at his funeral. She won extensive recognition for her achievements on stage, on the radio, in film, and on television. And she never slowed down or let up, delivering powerful performances and speaking out against injustice – often alongside her late husband, the great Ossie Davis – over the course of a career spanning more than six decades.

“I will always remember Ruby Dee was a wonderful entertainer, a truly great actress, a fierce activist, and an indispensable leader in the fight for civil rights. She left an indelible impression on me when, as a young man, I saw her unforgettable performance in A Raisin in the Sun. Today, I join millions of Americans in expressing my heartfelt condolences, and deepest sympathies, to her family and friends. Her work, her example, and her memory will endure. But she will be dearly missed.”