District Not Recorded

The Justice Department and the Environmental Protection Agency (EPA) today announced a settlement agreement with Fayat S.A.S. and nine of its subsidiaries — BOMAG GmbH, Bomag Americas Inc., BOMAG (China) Construction Machinery Co. Ltd., MARINI S.p.A., RAVO B.V., Charlatte of America Inc., PTC S.A.S., Secmair S.A.S. and MATHIEU S.A. — for alleged violations of the Clean Air Act’s mobile source emission standards regulations.

The complaint alleges that, between 2014 and 2018, Fayat and its subsidiaries illegally imported and sold hundreds of pavers, rollers and other nonroad equipment containing diesel engines that failed to meet Clean Air Act emission requirements. The complaint also alleges that Fayat failed to comply with Clean Air Act labeling and reporting requirements. The agreement requires Fayat to pay a civil penalty of $11 million and requires the company to complete a project to reduce the harm caused by excess nitrogen oxides and particulate matter emissions.

“Fayat failed to ensure that the equipment it introduced into the United States market complied with Clean Air Act requirements designed to protect the public’s health from harmful emissions,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division (ENRD). “We will not tolerate violations of Clean Air Act standards. The settlement requires both a substantial civil penalty and a project that will reduce emissions in the Mobile, Alabama, area and contribute to improved public health.”

“Fayat’s import of nonroad vehicles with outdated diesel engines violates the Clean Air Act standards for emissions from mobile sources and threatened exposure to harmful diesel air emissions,” said Acting Assistant Administrator Cecil Rodrigues for EPA’s Office of Enforcement and Compliance Assurance. “Today’s announcement demonstrates that EPA will hold accountable companies that put outdated equipment into commerce that pollutes the air and risks exposing communities to toxic air pollutants.”

In addition to paying a civil penalty, Fayat will, as part of the agreement, undertake a project to reduce the harm from the emissions. The company will retrofit a tugboat currently in service in Mobile, Alabama. Retrofitting the tugboat includes removing and destroying two engines and two auxiliary generators and replacing them with two new engines and two new generators that meet current emission controls.

More information regarding this settlement is available from the Fayat Clean Air Act Violations Settlement Summary. 

The proposed consent decree, lodged in the U.S. District Court for the District of Columbia, is subject to a public comment period and final court approval. Information on submitting comment and access to the settlement agreement is available at www.justice.gov/enrd/consent-decrees.

EPA investigated the case.

Attorneys with the ENRD’s Environmental Enforcement Section are handling the case.

Nota: El titular original fue actualizado para cumplir con el limite de caracteres

El Departamento de Justicia anunció hoy un acuerdo con la Oficina del Sheriff del Condado de Sangamon (SCSO), el Sistema Central de Despacho del Condado de Sangamon (SCCDS) y el Condado de Sangamon, Illinois, para resolver una investigación de discriminación por motivos de raza y discapacidad en la prestación de servicios de policía y despacho.

El Departamento inició su investigación con base en quejas e informes sobre un incidente en el que Sonya Massey, una mujer negra que estaba experimentando una crisis de salud mental, fue disparada mortalmente por un adjunto de la SCSO mientras respondía a la llamada de 911 de auxilio de la Sra. Massey. La División de Derechos Civiles del Departamento de Justicia investigó el cumplimiento por parte de las entidades con el Título VI de la ley de Derechos Civiles de 1964 (Título VI), las disposiciones antidiscriminatorias de la ley General de Control de Delitos y Calles Seguras (ley de Calles Seguras) y el Título II de la ley de Estadounidenses con Discapacidades (ADA, por sus siglas en inglés). El Título VI y la ley de Calles Seguras prohíben, en su conjunto, la discriminación por motivos de raza, color de piel, origen nacional, sexo o religión por parte de entidades que reciben apoyo financiero federal, tal como la SCSO. El Título II de la ADA prohíbe que las entidades públicas discriminen por motivos de discapacidad. 

«La muerte de Sonya Massey fue una terrible tragedia para una mujer que estaba en medio de una crisis de salud mental, para su familia y para toda la comunidad del Condado de Sangamon», afirmó Kristen Clarke, la Fiscal General Auxiliar de la División de Derechos Civiles del Departamento de Justicia. «Este acuerdo refleja el compromiso del Condado de Sangamon de instituir reformas y tomar medidas que ayudarán a mejorar la seguridad pública y restaurar la confianza de la comunidad en el camino futuro».

En respuesta a la investigación, la Oficina del Fiscal Estatal para el Condado de Sangamon trabajó en cooperación con el Departamento para alcanzar un acuerdo conciliatorio para garantizar que la SCSO tenga las herramientas y la formación para llevar a cabo sus actividades de vigilancia policial de forma no discriminatoria y que el Condado y el SCCDS proporcionen servicios de despacho de forma no discriminatoria.

En virtud del acuerdo, las entidades revisarán y actualizarán los procedimientos, políticas y reglas y proporcionarán capacitaciones sobre una variedad de temas, incluida la vigilancia policial no discriminatoria y las interacciones con personas con discapacidades de salud del comportamiento. El acuerdo requiere el desarrollo y la implementación de un programa de equipo de crisis móvil, que incluirá personal capacitado en la salud del comportamiento que responda oportunamente a las personas que necesitan asistencia urgente en lo que se refiere a su salud del comportamiento. El acuerdo también prevé el desarrollo de un plan de compromiso con la comunidad para garantizar la resolución colaborativa de problemas y la ausencia de discriminación en la vigilancia policial, así como para aumentar la transparencia y la confianza de la comunidad. El acuerdo establece un marco para la recopilación de datos y la presentación de informes durante un período de dos años de supervisión departamental, entre otras disposiciones. El acuerdo no constituye ninguna admisión de responsabilidad por parte de las entidades, y el Departamento no ha llegado a un hallazgo de discriminación.

La no discriminación en virtud del Título VI, la ley de Calles Seguras y la ADA es una de las principales prioridades de la División de Derechos Civiles. Hay más información disponible sobre la División de Derechos Civiles en www.justice.gov/crt.

Los miembros del público pueden denunciar posibles infracciones de los derechos civiles en civilrights.justice.gov/report/. 

The Justice Department today filed a civil injunction suit in federal court in Tampa, Florida, to enjoin Darryl J. Madison, Malik F. Eugene, Yvette Madison, Marlesa J. Brown and Madison & Sons Enterprises — doing business as Madison Tax Services — from owning or operating a tax return preparation business and preparing tax returns for others.

The complaint alleges that Darryl Madison operated and prepared returns through Madison Tax Services. The complaint alleges that Madison and his contractors — Eugene, Yvette Madison and Brown — prepared and filed tax returns that falsely reduced their customers’ taxable income and improperly increased their customers’ refunds through a variety of schemes, including inflating real estate expenses, falsifying charitable donation deductions, fabricating or inflating business losses and falsely claiming residential energy credits to which their customers were not entitled. 

Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers guidance on the credentials and qualifications that taxpayers should seek from their return preparer.

In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $79,000. For individuals whose income is over that threshold, IRS Free File offers electronic federal tax forms that can be filled out and filed online for free. The IRS has tips on how seniors and individuals with low to moderate income can get other help or guidance on tax return preparation, too.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

The Justice Department announced today that it has entered into a settlement agreement with the Orange County, California, District Attorney on the use of custodial informants at the Orange County jails in California. The agreement resolves the department’s civil investigation finding that custodial informant activity by the Orange County District Attorney’s Office (OCDA) from 2007 through 2016 with the Orange County Sheriff’s Department (OCSD) violated criminal defendants’ right to counsel under the Sixth Amendment and right to due process of law under the 14th Amendment to the U.S. Constitution.    

Under the agreement, the District Attorney agrees to continue implementing reforms to protect against misuse of custodial informants at the Orange County jails and to disclose to criminal defendants exculpatory evidence about custodial informants, in accordance with constitutional guarantees to a fair trial and right to counsel. Specifically, the District Attorney agrees to maintain changes to OCDA policies, training, document and information systems and internal audits, as well as to engage with representatives of the Orange County criminal justice system on additional improvements. The department will also have full and direct access to independently validate that the reforms have taken hold at OCDA and are achieving their intended results.

“Under the Sixth Amendment, law enforcement cannot use custodial informants as their agents to elicit incriminating statements from defendants represented by counsel,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “We commend the District Attorney and his staff for initiating corrective action at OCDA to comply with constitutional requirements. The District Attorney’s proactive efforts, together with today’s agreement, will not only protect the constitutional rights of individual defendants; they will also help restore the public’s confidence in the fundamental fairness of the criminal justice system in Orange County.”

The out-of-court agreement is the result of extensive cooperation from the District Attorney and members of OCDA following the release of the department’s investigative findings in October 2022. The agreement is also the result of systemic improvements initiated by the District Attorney, including suspending the use of custodial informants without his express, prior approval in 2016.

The department opened its investigation into OCDA and OCSD in 2016. The evidence uncovered by the department revealed that custodial informants in the Orange County Jail system acted as agents of law enforcement to elicit incriminating statements from defendants represented by counsel and that, for years, Orange County sheriff deputies maintained and concealed systems to track, manage and reward those custodial informants. The evidence also revealed that Orange County prosecutors failed to seek out and disclose exculpatory information regarding custodial informants to defense counsel.

The Civil Rights Division’s Special Litigation Section conducted the investigation pursuant to 34 U.S.C. § 12601. The statute prohibits state and local governments from engaging in a pattern or practice of conduct by law enforcement officers that deprives individuals of rights protected by the Constitution or federal law. The department’s negotiations with the Orange County Sheriff on remedial measures at OCSD are ongoing.

Since January 2021, the division has opened 12 investigations into law enforcement agencies. The section is enforcing 15 agreements with law enforcement agencies and two post-judgment orders. The department also reached a court enforceable agreement with Louisville and Minneapolis to resolve its findings. Both are pending review by the court.

The department’s investigative findings from October 2022 can be found here.

Information about the Civil Rights Division is available at www.justice.gov/crt.

A grand jury in Seattle returned an indictment today charging a Washington man and his company with conspiracy and for violating the Lacey Act by transporting birds that had been hunted in violation of the Migratory Bird Treaty Act (MBTA).

The indictment alleges that, from August 2022 to January 2023, Branden Trager, 46, of Brush Prairie, Washington, and his guiding company, Mayhem Services LLC, guided three hunting parties in Canada to hunt waterfowl when Trager was not permitted under Canadian law to do so.

According to the indictment, Trager and Mayhem Services took hunters across the U.S.-Canadian border near Blaine, Washington. The hunts targeted the harlequin duck (Histrionicus histrionicus), a small sea duck with a habitat ranging from Alaska to California. Hunters prize the harlequin as a trophy and as part of a challenge to hunt 41 North American waterfowl species. Washington closed harlequin hunting for the 2022-2023 season, but limited hunting remained open in British Columbia.

The indictment alleges that the hunters paid Trager thousands of dollars to guide them in Canada, and Trager falsely told Canadian and Homeland Security authorities that he was hunting with friends. Trager allegedly conspired with a Canadian taxidermist to have the hunted birds shipped back to the United States in violation of the Lacey Act.

The Lacey Act is the nation’s oldest wildlife trafficking law. It prohibits, among other things, transporting wildlife that had been illegally taken under federal, state, tribal or foreign law. The MBTA is a U.S. law that implemented treaties with Canada and other nations to ensure sustainable populations of migratory birds. The MBTA imposed regulations on bird hunting, such as limits on the quantity and hunting methods allowed to take migratory birds.

An initial appearance hearing in federal court is scheduled for Jan. 23. The maximum penalty for both the conspiracy and Lacey Act charges is five years in prison and a $250,000 fine, or twice the economic gain or loss.

Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division (ENRD) and Deputy Assistant Director Keith Toomey of the U.S. Fish and Wildlife Service (USFWS)’s Office of Law Enforcement made the announcement.

The USFWS’ Office of Law Enforcement led the investigation along with Homeland Security Investigations, British Columbia Conservation Officer Service and Washington Department of Fish & Wildlife.

Senior Trial Attorney Ryan Connors and Trial Attorney Sarah Brown of ENRD’s Environmental Crimes Section are prosecuting the case with assistance from the U.S. Attorney’s Office for the Western District of Washington.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Settlements and judgments under the False Claims Act exceeded $2.9 billion in the fiscal year ending Sept. 30, 2024, Principal Deputy Associate Attorney General Benjamin C. Mizer and Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, announced today. The government and whistleblowers were party to 558 settlements and judgments, the second highest total after last year’s record of 566 recoveries, and whistleblowers filed 979 qui tam lawsuits, the highest number in a single year. Settlements and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $78 billion.

“The Department’s enforcement of the False Claims Act this past year demonstrates its continued commitment to pursuing those who seek to defraud the American taxpayers,” said Principal Deputy Associate Attorney General Mizer. “The False Claims Act and its whistleblower provisions remain a critical tool in protecting the public fisc and ensuring that taxpayer funds serve the purposes for which they were intended.”

“The Department places a high priority on fighting fraud and abuse in federal programs,” said Principal Deputy Assistant Attorney General Boynton, head of the Justice Department’s Civil Division. “The results announced today highlight once again that such conduct will not be tolerated, and that those who knowingly misuse taxpayer funds will be held accountable.”

The False Claims Act imposes treble damages and penalties on those who knowingly and falsely claim money from the United States or knowingly fail to pay money owed to the United States. The False Claims Act thus safeguards government programs and operations that provide access to medical care, support our military and first responders, protect American businesses and workers, help build and repair infrastructure, offer disaster and other emergency relief, and provide many other critical services and benefits. The resolutions in fiscal year 2024 also reflect the Department’s focus on key enforcement priorities, including combating health care fraud, the opioid epidemic, fraud in pandemic relief programs, and violations of cybersecurity requirements in government contracts and grants.

Of the more than $2.9 billion in False Claims Act settlements and judgments reported by the Justice Department this past fiscal year, over $1.67 billion related to matters that involved the health care industry, including managed care providers, hospitals and other medical facilities, pharmacies, pharmaceutical companies, laboratories, and physicians. The amounts included in the $1.67 billion reflect recoveries arising only from federal losses, but in many of these cases, the Department was instrumental in recovering additional amounts for state Medicaid programs.

The Justice Department continued its commitment to use the False Claims Act to deter and redress fraud by individuals as well as corporate entities. Such efforts deter future fraud, incentivize changes in both corporate and individual behaviors, ensure that the proper parties are held responsible, and promote the public’s confidence in our justice system.

The Department also remained committed to incentivizing and rewarding entities and individuals that self-disclose misconduct, demonstrably cooperate in the course of an investigation, and take effective remedial measures. Multiple settlements over the last year acknowledged such cooperative measures and reflected credits afforded to the defendants in the form of reduced penalties or damage multiples in connection with the resolution, including several of the matters discussed in more detail below. These cooperative measures included self-disclosures, assistance with the determination of government losses, disclosures of internal investigations and facts not known to the government, and remedial measures such as implementing tracking system enhancements or terminating or separating employees.

In 1986, Congress strengthened the False Claims Act by increasing incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government. These whistleblowers, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed. Qui tam cases may be pursued by the government or the whistleblower, and this past year, significant recoveries were obtained by both. When a qui tam action is successful, the whistleblower, also known as the relator, typically receives a portion of the recovery ranging between 15% and 30%. The 979 qui tam suits filed in fiscal year 2024 breaks the prior record set in 2013, and this past year, the Justice Department reported settlements and judgments exceeding $2.4 billion in these and earlier-filed qui tam suits.

The $2.9 billion in settlements and judgments announced today does not include two significant settlements occurring just after the end of the fiscal year.

On Oct. 10, 2024, Teva Pharmaceuticals USA Inc., the largest generic drug manufacturer in the country, agreed to pay $425 million to resolve allegations that it violated the False Claims Act by paying copays for Medicare patients for the multiple sclerosis drug Copaxone while steadily raising the drug’s price. Teva further agreed to pay $25 million to resolve allegations that it conspired with other generic drug manufacturers to fix prices for certain drugs and that the benefits Teva received under its price fixing scheme constituted illegal kickbacks. This is the seventh resolution arising from the Department’s investigation of price fixing by generic drug manufacturers.

On Oct. 16, 2024, Raytheon Company paid $428 million to resolve allegations that it knowingly provided false cost and pricing data when negotiating with the Department of Defense for numerous government contracts and double billed on a weapons maintenance contract, leading to Raytheon receiving profits in excess of negotiated rates. This is the second largest government procurement fraud recovery under the False Claims Act in history.

Representative examples of False Claims Act matters pursued by the government and whistleblowers this past fiscal year are discussed below.

HEALTH CARE FRAUD

In fiscal year 2024, health care fraud remained a leading source of False Claims Act settlements and judgments. These recoveries restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families. But just as important, in many cases, enforcement of the False Claims Act also protects patients from medically unnecessary or potentially harmful actions. As in years past, the act was used to pursue matters involving a wide array of health care providers, goods, and services.

Opioid Epidemic

The Justice Department continued its pursuit of health care providers, pharmaceutical companies and pharmacies that contributed to and exacerbated the opioid crisis.

Endo Health Solutions, which is in bankruptcy, agreed that the United States has an allowed, unsubordinated, general unsecured claim of $475.6 million in the bankruptcy to resolve, among other things, allegations relating to losses to federal healthcare programs that paid for Opana ER, an opioid drug sold and marketed by Endo. The Department alleged that Endo used an aggressive scheme that marketed Opana ER to high-volume prescribers of opioids, including many prescribers that Endo knew were prescribing Opana ER or other opioids for non-medically accepted indications.

Rite Aid Corporation and 10 subsidiaries and affiliates paid $7.5 million and agreed to provide to the United States an allowed, unsubordinated, general unsecured claim of $401.8 million in Rite Aid’s bankruptcy case to resolve allegations that Rite Aid knowingly dispensed unlawful prescriptions for controlled substances that lacked a legitimate medical purpose, were not issued in the usual course of professional practice and/or were not valid prescriptions, or were not for a medically accepted indication. The unlawful prescriptions included prescriptions for the dangerous, highly diverted combination of drugs known as “the trinity,” and prescriptions for excessive quantities of opioids, such as highly addictive oxycodone and fentanyl.

Dr. Gregory Gerber agreed to a consent judgment that, among other things, requires him to pay $4.7 million arising from allegations that he unlawfully issued prescriptions without a legitimate medical basis for opioids and other controlled substances, that one patient died from an overdose of fentanyl patches prescribed by Gerber, and that Gerber received kickback payments from a drug manufacturer. Gerber was also sentenced to 42 months in prison and one year of home confinement in a related criminal case.

A chain of substance use disorder treatment clinics called Crossroads paid $863,934 to resolve allegations that the clinics defrauded the Medicaid program by billing for treatment services they did not provide by, for example, billing for comprehensive medical examinations when only a regular check-in visit occurred.

Unnecessary Services and Substandard Care

The Justice Department also pursued and resolved matters in which providers billed federal health care programs for medically unnecessary services and substandard care.

Strauss Ventures LLC, doing business as The Grand Health Care System, and 12 affiliated skilled nursing facilities agreed to pay $21.3 million to resolve allegations that they knowingly billed federal health care programs for therapy services that were unreasonable, unnecessary or unskilled, or that simply did not occur as billed. As part of the settlement, the company admitted it had implemented quotas relating to beneficiaries’ length of stay and to the percentages of beneficiaries billed at the highest reimbursement rate, resulting in some Medicare beneficiaries staying on therapy longer than was reasonable and medically necessary.

Acadia Healthcare Company Inc. paid $16.6 million to resolve allegations that six of its health facilities billed for medically unnecessary inpatient behavioral health services and failed to properly discharge beneficiaries when they no longer needed inpatient treatment and had improper and excessive lengths of stay. The United States further alleged that Acadia failed to provide adequate staffing, training and/or supervision of staff, which resulted in assaults, elopements, suicides and other harm resulting from these staffing deficiencies, and failed to provide active treatment, to develop and/or update individualized assessments and treatment plans, to provide adequate discharge planning, and to provide required individual and group therapy.

Daniel Hurt, who owned and/or operated Fountain Health Services LLC, Verify Health, Landmark Diagnostics LLC, First Choice Laboratory LLC, and Sonoran Desert Pathology Associates LLC, agreed to pay over $27 million, based on his ability to pay, to resolve allegations that he and his companies received payments from Medicare for cancer genomic tests that were not medically necessary and were procured through illegal kickbacks.

Medicare Advantage Matters

The Justice Department continued to pursue cases alleging false claims in the Medicare Advantage (or Medicare Part C) program. As Medicare Part C is now the largest component of Medicare, both in terms of federal dollars spent and the number of beneficiaries impacted, the work of the Justice Department in this area is of critical importance.

Oak Street Health, a wholly-owned subsidiary of CVS Health since 2023, paid $60 million to resolve allegations that it paid kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street’s primary care clinics. Under the Medicare Advantage Program, Medicare beneficiaries have the option to obtain their health care through privately-operated insurance plans known as MA plans, some of which contract with health care providers, including Oak Street, to provide their plan members with primary care services. The United States alleged that the Oak Street Health payments to the agents improperly incentivized them to base their referrals and recommendations on the financial motivations of Oak Street Health and of the agents rather than the best interests of seniors.

In addition to this matter, the Justice Department continued to litigate a number of other cases involving the Medicare Advantage program, including actions against UnitedHealth Group, Elevance Health (formerly Anthem), and the Kaiser Permanente consortium.

Unlawful Kickbacks and Stark Law Violations

Kickbacks paid or received by health care providers undermine the integrity of federal health care programs by tainting medical decision-making, increasing health care costs, and adversely affecting competition. Federal law prohibits the willful solicitation or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health care program. The Stark Law seeks to safeguard the integrity of the Medicare program by prohibiting billing for certain services when the referring physician and the entity submitting the claim have a financial relationship that does not satisfy one of the statute’s exceptions.

Community Health Network Inc. (Community) paid $345 million to resolve allegations that it submitted claims to Medicare for services that were referred in violation of the Stark Law. The United States alleged that the compensation Community paid to certain physician groups was well above fair market value, and that Community awarded bonuses to physicians that were tied to the number of their referrals. The United States alleged that senior management at Community embarked on an illegal scheme to recruit physicians for employment for the purpose of capturing their lucrative “downstream referrals.”

DaVita Inc. paid $34.5 million to resolve allegations that it paid kickbacks to a competitor to induce referrals to a former subsidiary that provided pharmacy services for dialysis patients. As part of the improper arrangement, the United States alleged that DaVita agreed to acquire certain European dialysis clinics and agreed to purchase dialysis products from the competitor. The United States also alleged that DaVita paid additional kickbacks to nephrologists and vascular physicians to induce referrals to DaVita’s dialysis centers.

Prema Thekkek, her management company Paksn Inc., and six skilled nursing facilities owned by Thekkek and/or operated by Paksn entered into a $45.6 million consent judgment to resolve allegations they paid kickbacks to physicians in the form of medical directorships to induce patient referrals.

RDx Bioscience Inc. (RDx) and its owner and Chief Executive Officer Eric Leykin paid $10.3 million to resolve allegations that they paid kickbacks in the form of commissions based on the volume and value of referrals to independent contractor marketers to arrange for and recommend that healthcare providers order RDx laboratory tests, as well as purported management services organization (MSO) payments to physicians, which were disguised as investment returns but actually were offered to induce the provider to order RDx laboratory tests. To date the government has recovered over $53 million relating to conduct involving MSO kickbacks to healthcare providers, including False Claims Act settlements with 48 physicians.

Innovasis and two senior executives agreed to pay $12 million to resolve allegations that they paid kickbacks to spine surgeons in the form of consulting fees, intellectual property acquisition and licensing fees, registry payments, performance shares in Innovasis, travel to a luxury ski resort, and lavish dinners and holiday parties to induce use of the company’s spinal implants, devices, and other equipment in medical procedures performed on Medicare beneficiaries.

The Justice Department filed claims against Murphy Medical Center, Inc., doing business as Erlanger Western Carolina Hospital, and Chattanooga-Hamilton County Hospital Authority doing business as Erlanger Health System and Erlanger Medical Center (collectively, Erlanger), alleging that Erlanger knowingly submitted claims to Medicare for services that were referred in violation of the Stark Law. The complaint alleged that Erlanger paid its physicians compensation that was well above fair market value and that Erlanger knew that the claims for services referred by those physicians were not eligible for payment.

The Justice Department also filed claims against Rick Nassenstein, formerly the president, chief financial officer, and co-owner of Cardiac Imaging Inc., a provider of mobile cardiac positron emission tomography (PET) scans. The complaint alleges that Nassenstein played a central role in a scheme whereby CII paid above-fair market value fees to doctors who referred patients to CII for cardiac PET scans, which was the subject of a $85 million settlement with Cardiac Imaging and its founder last year.

Other Health Care Fraud

Rite Aid Corporation (Rite Aid) and Rite Aid subsidiaries, Elixir Insurance Company, RX Options LLC, and RX Solutions LLC (Elixir), which offered Medicare drug plans and pharmacy benefit manager (PBM) services, agreed to pay $101 million and to grant the United States an additional, allowed, unsubordinated, general unsecured claim of $20 million in Rite Aid’s bankruptcy to resolve allegations that they failed to accurately report drug rebates to the Medicare Program. The United States alleged that these Rite Aid entities improperly reported portions of rebates they received from manufacturers as bona fide service fees, even though manufacturers did not negotiate with the defendants to pay such fees.

Walgreens Boots Alliance Inc. and Walgreen Co. (together, Walgreens) agreed to pay $106.8 million to resolve allegations that they billed government health care programs for prescriptions that were processed but never picked up by beneficiaries.

Columbus LTACH, doing business as Silver Lake Hospital, and certain of its investors, agreed to pay over $30 million to resolve allegations that Silver Lake claimed excessive Medicare cost outlier payments, a form of supplemental reimbursement to hospitals in cases where the cost of care is unusually high. The settlement also resolved allegations under the Federal Debt Collection Procedures Act that Silver Lake transferred millions of dollars of the hospital’s money to its investors without receiving equivalent value in return, at a time when the hospital had reason to believe that it would not be able to repay its debts to the Medicare program.

Gentiva, successor to Kindred at Home, paid $19.4 million to resolve allegations that Kindred at Home and related entities submitted claims and retained overpayments for hospice services provided to patients who were ineligible to receive hospice benefits.

The Justice Department filed claims against Regeneron Pharmaceuticals Inc., alleging that the company fraudulently inflated Medicare reimbursement rates for Eylea, a medication used to treat neovascular Age-Related Macular Degeneration. The complaint alleges that Regeneron knowingly submitted false average sales price reports, on which Medicare reimbursements are set, to the government that did not take into account certain price concessions.

The Justice Department also filed claims against six health plans (Brighton Marine Health Center, CHRISTUS Health Services, Johns Hopkins Medical Services Corporation, Martin’s Point Health Care, Pacific Medical Center, and St. Vincent’s Catholic Medical Centers of New York) participating in the Uniformed Services Family Health Plan program, as well as their trade group, alleging they knowingly retained inflated payments for healthcare services provided to retired military members and their families. The United States further alleged that after learning of the calculation errors, the plans took steps to conceal the overpayments from the government and continued to submit invoices at the inflated payment rates. The government resolved related claims against Kennell and Associates, an actuarial firm, for $779,951 plus contingent payments, based on its inability to pay.

MILITARY PROCUREMENT FRAUD

The government continued its pursuit of fraud matters involving the purchase of goods and services by the military services. Fraud in these programs not only squanders government funds, but also can deprive servicemembers of critical resources and potentially put them at risk.

Sikorsky Support Services Inc and Derco Aerospace Inc. paid $70 million to resolve allegations they overcharged the U.S. Navy for spare parts and materials needed to repair and maintain the primary aircraft used to train naval aviators. The United States alleged that these entities, which were owned by the same parent company, entered into an improper subcontract that resulted in the Navy paying inflated costs for parts.

Austal USA LLC paid $811,259 to resolve allegations that it knowingly supplied valves that did not meet military specifications. The United States alleged that under a U.S. Navy contract Austal invoiced for military grade valves to be installed on certain combat ships when Austal knew the valves had not met the testing requirements to be deemed military grade.

The Department brought claims against Insect Shield LLC and the Estate of Richard Lane, the founder, majority owner and chief operating officer of the company, for allegedly causing the submission of false claims to the Department of Defense under contracts to provide Army Combat Uniforms. The United States alleges that Insect Shield and Lane falsified the results of the insect repellant testing to conceal failing test results, including by inappropriately combining results from different rounds of testing, re-labeling test samples to hide the true origin of the samples, and performing re-tests of uniforms in excess of what the contract permitted.

PANDEMIC FRAUD

In response to the COVID-19 crisis, Congress authorized historic levels of emergency funding for federal agencies to provide direct financial assistance to individuals, businesses, and state, local, and Tribal governments. The Justice Department’s efforts in this area have included the pursuit of cases involving improper payments under the Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA), and alleged fraud affecting Medicare and other federal healthcare programs for services related to COVID-19 testing and treatment. During fiscal year 2024, the Department obtained more than 250 False Claims Act settlements and judgments, which collectively exceeded more than $250 million, resolving allegations of pandemic-related fraud.

Now-bankrupt financial technology company Kabbage Inc., doing business as KServicing, agreed to resolve allegations that it submitted, and caused the submission of, thousands of false claims for PPP loan forgiveness, loan guarantees, and processing fees to the SBA. The United States alleged that Kabbage systemically inflated PPP loans, causing the SBA to guarantee and forgive loans in amounts that exceeded what borrowers were eligible to receive, and that Kabbage failed to implement appropriate fraud controls. As part of the resolution, the United States will receive an allowed, unsubordinated, general unsecured claim in the bankruptcy proceeding of up to $120 million.

West Coast Dental Administrative Services LLC (formerly West Coast Dental Services Inc.) and its founders and former owners Drs. Soleyman Cohen-Sedgh, Farid Pakravan and Farhad Manavi paid $6.3 million to resolve allegations that the company and affiliated dental offices received seven improper second-draw PPP loans, which were limited to businesses with 300 employees or less. The United States alleged the companies falsely certified that they qualified for these loans.

Hemisphere GNSS (USA) Inc., which was purchased by CNH Industrial in 2023, paid $2.6 million to resolve allegations that it provided false information with a PPP loan and forgiveness of that loan. To obtain the loan, the company certified that no entity created in or organized under the laws of the People’s Republic of China owned or held 20% or more of an economic interest in the company, and that it did not have a board member who was a resident of the People’s Republic of China. The United States alleged that at the time the company applied for the loan, both of those certifications were false.

Andrew Maloney and the clinical laboratory that he owned, Capstone Diagnostics, paid $14.3 million to resolve allegations that, among other things, they sought to profit from the COVID-19 pandemic by paying volume-based commissions to independent contractor sales representatives to recommend respiratory pathogen panel tests to senior communities interested only in COVID-19 tests and to generate orders using forged signatures of physicians that did not reflect the medical conditions of the senior community residents receiving the tests. In a similar matter, the government obtained a $26.3 million default judgment against Provista Health LLC and its owner Patrick Britton-Harr for billing during the height of the pandemic for medically unnecessary respiratory pathogen panel tests and tests that were not performed.

City Medical of the Upper East Side, PLLC, Summit Medical Group, P.A., Summit Health Management, LLC, and Village Practice Management Company LLC, which collectively do business as CityMD, agreed to pay $12 million to resolve allegations for false claims for COVID-19 testing to a Health Resources and Services Administration (HRSA) program for uninsured patients arising from CityMD’s failure to adequately confirm that the individuals had health insurance coverage before submitting their claims to the Uninsured Program.

CYBERSECURITY INITIATIVE

The Department’s effort to combat cybersecurity threats includes its Civil Cyber-Fraud Initiative. The Initiative is dedicated to using the False Claims Act to promote cybersecurity compliance by government contractors and grantees by holding them accountable when they knowingly violate applicable cybersecurity requirements.

The Justice Department filed claims against Georgia Institute of Technology and Georgia Tech Research Corp. alleging that those defendants failed to meet cybersecurity requirements in connection with Department of Defense (DoD) contracts. The complaint alleges that a research lab at Georgia Tech failed to develop and implement a system security plan, as required by DoD cybersecurity regulations, and submitted a false cybersecurity assessment score to DoD for the Georgia Tech campus. The complaint also alleges that the lab failed to install, update or run anti-virus or anti-malware tools on desktops, laptops, servers and networks at the lab.

Guidehouse Inc. paid $7.6 million and Nan McKay agreed to pay $3.7 million to resolve allegations they failed to meet cybersecurity requirements in a contract with New York funded by a federal grant intended to secure online environments for New York residents to apply for federal rental assistance during the Covid-19 pandemic. Guidehouse and McKay admitted that neither satisfied their obligation to complete the required testing of the online site used to house applicants’ information, and the site was shut down within twelve hours after certain applicants’ personally identifiable information had been compromised.

Insight Global LLC paid $2.7 million to resolve allegations it failed to implement adequate cybersecurity measures to protect health information obtained during Covid-19 contact tracing. The United States alleged that the Pennsylvania Department of Health hired the company to provide staffing for Covid-19 contact tracing using funds from the U.S. Centers for Disease Control and Prevention and that the company failed to keep the health information confidential and secure.

OTHER FRAUD RECOVERIES

The judgments, settlements, and lawsuits announced during fiscal year 2024 involved a variety of other programs and schemes that reflect the range of the government’s False Claims Act enforcement efforts.

Gen Digital Inc. (formerly known as Symantec Corp.) paid $55.1 million to satisfy a judgment that it made knowingly false claims to the United States when it misrepresented its commercial sales practices during the negotiation and subsequent performance of a General Services Administration (GSA) contract. The court found after a four-week bench trial that the false disclosures induced GSA to accept and then continue to pay higher prices than it would have had it known of Symantec’s actual commercial pricing practices. The court also found that Symantec continuously violated the Price Reduction Clause, a standard term in these types of contracts that requires the contractor throughout performance of the contract to maintain GSA’s price position in relation to an identified customer or category of customer agreed upon in contract negotiations.

The City of Los Angeles paid $38.2 million to resolve allegations that it failed to meet federal accessibility requirements when it sought and used Department of Housing and Urban Development (HUD) grant funds for multifamily affordable housing. The United States alleged that the city failed to make its affordable multifamily housing program accessible to people with disabilities. The United States further alleged that the city failed to maintain a publicly available list of accessible units and their accessibility features and the city, on an annual basis, falsely certified to HUD that it complied with related grant requirements.

Hilcorp San Juan L.P. paid $34.6 million to resolve allegations that it underpaid royalties owed on oil and natural gas produced from federal lands. The United States alleged that the company made payments to the federal government based on estimated volumes and prices without indicating that the payments were based on estimates and without subsequently adjusting its payments in the following months to account for actual volumes and values, resulting in the underpayment of royalties to the United States. In another case based on allegations of the underpayment of royalties owed on natural gas, XTO Energy Inc. paid $16 million to resolve allegations that the company improperly deducted costs necessary to put the gas in marketable condition, improperly deducted costs of transporting carbon dioxide, and failed to pay royalties on carbon dioxide.

Hahn Air Lines GmbH and Hahn Air USA Inc. paid $26.8 million to resolve allegations that Hahn Air failed to remit to the United States certain travel fees collected from commercial airline passengers flying into or within the United States.

Consolidated Nuclear Security LLC paid $18.4 million to resolve allegations that it billed for time not worked at the National Nuclear Security Administration’s Pantex Site near Amarillo, Texas.

AECOM paid $11.8 million to resolve allegations that it submitted false claims to the Federal Emergency Management Agency for the replacement of certain educational facilities located in Louisiana that were damaged by Hurricane Katrina. The United States alleged that AECOM submitted to FEMA fraudulent requests for disaster assistance funds and did not correct applications that included materially false design, damage and replacement eligibility descriptions. Combined with settlements with other entities involved in the alleged conduct, the government recovered over $25 million in connection with the disaster assistance applications prepared by AECOM.

RECOVERIES IN WHISTLEBLOWER SUITS

Of the $2.9 billion in settlements and judgments reported by the government in fiscal year 2024, over $2.4 billion arose from lawsuits that were filed under the qui tam provisions of the False Claims Act and pursued by either the government or whistleblowers. During the same period, the relator shares for the individuals who exposed fraud and false claims by filing qui tam actions exceeded $400 million.

The number of lawsuits filed under the qui tam provisions of the act has grown significantly since 1986, with an average of more than 18 new cases filed every week during this past year.

“Whistleblowers play a critical role in identifying fraud schemes,” said Principal Deputy Assistant Attorney General Boynton. “We continue to be grateful for their efforts and often substantial sacrifices to uncover and report these schemes.”

In 1986, Senator Charles Grassley and Representative Howard Berman led the successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud. In 2009 and 2010, further improvements were made to the False Claims Act and its whistleblower provisions.

***

On behalf of the Civil Division, Principal Deputy Assistant Attorney General Boynton expressed appreciation for the many public servants over the past year who supported the Department’s enforcement efforts. “The accomplishments announced today are a result of the tireless efforts of civil servants who work to protect taxpayer dollars and the important programs that they support,” said Principal Deputy Assistant Attorney General Boynton. “These individuals serve at offices across the country, including the Fraud Section of the Civil Division, the U.S. Attorneys’ Offices, the agency Offices of Inspector General and Offices of General Counsel, and many other federal and state agencies that contribute to this important work.”

Except where indicated, the government’s claims in the matters described above are allegations only and there has been no determination of liability. The numbers contained in this press release may differ slightly from the original press releases due to accrued interest.

View the statistics sheet here.

Hagatña, Guam – SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on January 13, 2025, defendant Joselito Lumanlam Cura, age 58, was sentenced in the U.S. District Court of Guam to 151 months imprisonment.  A jury previously found him guilty of three counts of Distribution of Methamphetamine Hydrochloride and one count of Possession with Intent to Distribute Methamphetamine Hydrocholoride, in violation of 21 U.S.C. § 841(a)(1).  The Court also ordered five years of supervised release and a mandatory $400 special assessment fee.  In addition, defendants convicted of a federal drug offense may no longer qualify for certain federal benefits.

Between July 27, 2021, to September 7, 2021, Cura delivered 355 grams of methamphetamine over the course of three controlled purchases by a government informant. The drugs had an average purity of 97 percent and a street value of $44,375 to $62,125.  On October 12, 2021, law enforcement executed a search warrant at Cura’s residence, where they found $22,051 in currency, digital scales, a money counter, firearms, and other drug paraphernalia.

“Drugs and firearms are a dangerous combination,” stated United States Attorney Anderson.  “Armed drug dealers will always attract the attention federal law enforcement. Combatting this activity remains a high priority for our office.  I applaud the work of our federal and local partners in holding Cura accountable.”

The Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Guam Police Department conducted this investigation.

Assistant United States Attorney Stephen F. Leon Guerrero prosecuted the case in the District of Guam.

A Texas doctor was sentenced today to 10 years in prison and ordered to pay $26,622,522.82 in restitution for his role in a scheme to defraud Medicare by prescribing durable medical equipment and cancer genetic testing without seeing, speaking to, or otherwise treating patients.

According to court documents and evidence presented at trial, David M. Young M.D., 61, of Fredericksburg, signed thousands of medical records and prescriptions for orthotic braces and genetic tests that falsely represented that the braces and tests were medically necessary and that he diagnosed the beneficiaries, had a plan of care for them, and recommended that they receive certain additional treatment. Young prescribed braces and genetic tests for over 13,000 Medicare beneficiaries, including undercover agents posing as different Medicare beneficiaries, many of whom he did not see, speak to, or otherwise treat. Young’s false prescriptions were then used by brace supply companies and laboratories to bill Medicare more than $70 million. Young was paid approximately $475,000 in exchange for signing the fraudulent prescriptions.

In May 2024, a jury convicted Young of one count of conspiracy to commit health care fraud and three counts of false statements relating to health care matters.

Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division; Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Dallas Regional Office; and Chief William Marlowe of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

HHS-OIG and MFCU investigated the case.

Assistant Chief Brynn Schiess and Trial Attorney Ethan Womble of the Criminal Division’s Fraud Section prosecuted the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,400 defendants who collectively have billed federal health care programs and private insurers more than $27 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

The Justice Department today announced that Gina Allery has been appointed to serve as the Director of the Office of Tribal Justice (OTJ). Attorney General Merrick B. Garland swore Allery in to the office on Monday afternoon. In this role, Allery will lead OTJ and serve as the principal advisor on Tribal matters to the Attorney General and other Department leaders.

“Gina Allery’s experience and leadership on Indian law and Tribal issues in a variety of roles across the Justice Department will make her an incredible asset to the Office of Tribal Justice,” said Attorney General Garland. “I am confident that Gina will skillfully lead the Department’s efforts to partner with Tribal Nations in the pursuit of justice and safety for Tribal communities. I am grateful that she has agreed to continue her public service in this important role.”

OTJ was initially formed in 1995 in response to requests from Tribal leaders for a dedicated point of contact for Indian country-specific legal and policy matters. The office was made permanent on July 29, 2010, with the passage of the Tribal Law and Order Act.

OTJ is the program and legal policy advisor to the Attorney General on the treaty and trust relationship between the United States and Indian Tribes. The office also serves as a primary point of contact for federally recognized Tribal governments and Tribal organizations on Department policies and programs, as well as issues relating to public safety and justice in Indian country. OTJ also coordinates with other bureaus, agencies, offices, and divisions within the Justice Department on issues and initiatives that affect Tribes and American Indian and Alaska Native people.

Prior to her appointment, Allery served as Deputy Assistant Attorney General for the Tribal Resources and Land Acquisition Sections of the Department’s Environment and Natural Resources Division (ENRD), beginning in 2022. From 2018-2021, Allery served as a Special Assistant U.S. Attorney in the U.S. Attorney’s Office for the District of Minnesota where she prosecuted violent crimes in Indian country. Previously, she served for six years as Deputy Director of OTJ, where she worked on a variety of legal and policy issues impacting Indian Tribes. Allery began her career with the Justice Department as an attorney in ENRD, where she litigated cases on behalf of Tribes, including land-into-trust, reservation boundary, treaty rights, and gaming cases. She served for three years as ENRD’s Senior Counsel for Indian Affairs, providing legal advice to the Assistant Attorney General on variety of Indian law issues. She is a recipient of the John Marshall Award, the Department’s highest award for attorneys for contributions and excellence in specialized areas of legal performance. Prior to working at the Justice Department, Allery worked in private practice. Allery earned a bachelor’s degree in biochemistry from the University of Minnesota and a J.D. from Columbia Law School.

Daron Carreiro, who has been serving as the Acting Director of OTJ since March 2024, will return to his role as Section Chief in ENRD’s Tribal Resources Section.

“Daron Carreiro has been an excellent leader and advisor since beginning as Acting Director of OTJ,” said Attorney General Garland.  “I thank him for his dedicated public service and for his ongoing contributions to the Department’s work alongside our Tribal partners.”

COEUR D’ALENE – Joshua Jay Downer, 39, of Moscow, was sentenced to 15 years in federal prison for distribution of child sexual abuse material, U.S. Attorney Josh Hurwit announced today.

According to court records, in early 2024, law enforcement received Cybertips from an email provider indicating that somebody who was using their email service was distributing child sexual abuse material from multiple related email addresses.  Law enforcement traced the email addresses to a Moscow address where Downer, a registered sex offender on federal supervision for a prior conviction related to child sexual abuse material, lived.  In February 2024, law enforcement searched Downer’s home and found a tablet in Downer’s bedroom. Downer was prohibited from possessing this tablet while on federal supervision.  A forensic analysis of the tablet revealed numerous images and videos of child sexual abuse material, as well as evidence indicating that Downer was using the tablet to distribute child sexual abuse material to others.

Chief U.S. District Judge David C. Nye ordered Downer to serve a lifetime of supervised release following his prison sentence and to pay $12,000 in restitution to four victims in the images he possessed.  Downer will be required to continue to register as a sex offender as a result of the conviction.

“The defendant in this case earned every day of his sentence,” said U.S. Attorney Hurwit.  “Together with our law enforcement partners, our office remains focused not only on holding accountable anyone who would distribute child sexual abuse materials, but also supporting victims and seeking restitution on their behalf.”

“Every time child sexual abuse material is shared and viewed on the internet, it revictimizes the child,” said Acting Special Agent in Charge Albert Kelly of the Salt Lake City FBI. “Any form of child abuse leaves a profound and enduring effect on an innocent victim. The FBI and our partners are committed to protecting children from such harm and exploitation.”

U.S. Attorney Hurwit commended the work of Moscow Police Department, the Latah County Sheriff’s Office, the Lewiston Police Department, the Nez Perce County Sheriff’s Office, and the Federal Bureau of Investigation, which led to the charges.  Assistant U.S. Attorney Adam Johnson prosecuted this case.

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

###

Today, the Justice Department’s Antitrust Division and Department of Labor, Occupational Safety and Health Administration (OSHA), jointly affirmed that corporate non-disclosure agreements (NDAs) that deter individuals from reporting antitrust crimes undermine the goals of whistleblower protection laws, including the Criminal Antitrust Anti-Retaliation Act of 2019 (CAARA). CAARA prohibits employers from discharging or otherwise retaliating against a worker for (1) reporting potential criminal antitrust violations and related crimes to their employer or the federal government or (2) assisting a federal government investigation or proceeding.

NDAs that undermine CAARA or otherwise interfere with employees’ freedom to report potential crime will cost the employer when the Antitrust Division makes its charging decisions and sentencing recommendations. Companies should also be aware that using NDAs to obstruct or impede an investigation may also constitute separate federal criminal violations. Any company that so interferes with its employees’ cooperation would jeopardize its ability to satisfy its obligations under the Antitrust Division’s leniency policy, which requires an applicant to “use its best efforts to secure the timely, truthful, continuing, and complete cooperation of all current and former employees.” And the Antitrust Division’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations guidelines consider a company’s policies around NDA and anti-retaliation training in assessing the effectiveness of the company’s compliance program.

“Members of the public are often best positioned to detect and blow the whistle on antitrust crimes,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “The Antitrust Division values this information and works to ensure that individuals are free to report misconduct without fear of retaliation or retribution.”

“By working jointly with partner agencies to break down barriers to employee reporting, OSHA is committed to strengthening our enforcement of whistleblower laws and protecting workers’ voices,” said Deputy Assistant Secretary for Occupational Safety and Health Jim Frederick. “This collaboration fosters a culture of accountability and upholds the integrity of worker rights.”

What Companies Should Know

Whistleblower Protections for Reporting Antitrust Crimes

Antitrust crimes hurt consumers, workers, and taxpayers — and threaten our free-market economy and democratic institutions. For over 130 years, criminal prosecutors have used antitrust laws as a charter of economic freedom to protect and promote competition.

Members of the public are often best positioned to detect and blow the whistle on antitrust crimes. Leads from the public about potentially illegal conduct enable the Antitrust Division and its law enforcement partners to uncover antitrust cartels and monopolization schemes, prosecute those crimes and protect competition. The Antitrust Division values this information and works to ensure that members of the public are free to report misconduct without fear of retaliation or retribution. The Antitrust Division protects to the fullest extent of the law the identity of those who report antitrust violations.

CAARA protects company employees, contractors, subcontractors or agents who report certain criminal antitrust violations. CAARA prohibits employers from discharging or otherwise retaliating against a worker for (1) reporting potential criminal antitrust violations and related crimes to their employer or the federal government or (2) assisting a federal government investigation or proceeding. Therefore, CAARA helps to incentivize the reporting of antitrust crimes and supports the Antitrust Division’s criminal enforcement program.

NDAs and Contractual Restrictions on Reporting May Conflict with Antitrust Enforcement and CAARA

Individuals who seek to report antitrust violations must not be deterred or prevented from coming forward for fear of adverse employment consequences.

The Antitrust Division’s work prosecuting antitrust crimes is compromised when NDAs deter individuals from providing law enforcers with relevant information on wrongdoing. When individuals believe that a corporate NDA may prevent them from reporting illegal conduct to enforcers, crimes go undetected and competition suffers. For example, some NDAs are worded so broadly as to suggest that people who report potential crimes or cooperate with law enforcement could face lawsuits and adverse employment consequences as severe as termination.  This fear of retribution leads to less reporting of illegal activity and less vigorous antitrust enforcement.

NDAs that discourage individuals from reporting wrongdoing or cooperating with an antitrust investigation also undermine CAARA’s goal of protecting whistleblowers. Even the mere implication that an NDA would bar employees from reporting illegal conduct or assisting an investigation or proceeding clashes with the basic principles behind CAARA that encourage self-reporting and disclosure of wrongdoing to the government.

NDAs that Deter Reporting Will Cost Companies at Charging and Sentencing

CAARA encourages individuals to provide tips to law enforcement and cooperate in antitrust investigations, incentivizes companies to promote compliance and complements leniency and cooperation credit policies. For these reasons, NDAs that undermine CAARA or otherwise interfere with employees’ freedom to report potential crime will cost the employer when the Antitrust Division makes its charging decisions and its sentencing recommendations. Companies should also be aware that using NDAs in efforts to obstruct or impede an investigation may also constitute separate federal criminal violations. And of course, a company that interferes with its employees’ cooperation would jeopardize its ability to fulfill its obligations under the Antitrust Division’s leniency policy, which requires an applicant to “use its best efforts to secure the timely, truthful, continuing, and complete cooperation of all current and former employees.”

The Antitrust Division’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations guidelines, which prosecutors use to assess the effectiveness of compliance programs when making charging decisions and sentencing recommendations, make clear that the sufficiency and efficacy of a compliance program depends on the existence of “reporting mechanisms that employees can use to report potential antitrust violations anonymously or confidentially and without fear of retaliation.” The questions prosecutors ask in evaluating a compliance program include:

• Whether a company has an anti-retaliation policy;
• Whether it trains employees, managers and supervisors on the provisions of CAARA;
• Whether the company’s use of NDAs is consistent with ensuring that employees can report antitrust violations without fear of retaliation;
• Whether NDAs are used in a way that deters whistleblowers or violates CAARA; and
• Whether NDAs and other employee policies make clear that employees can report antitrust violations, including to government authorities.

Companies that fail to address retaliation, CAARA and NDAs in their policies and compliance structure risk losing out on the benefits associated with maintaining an effective compliance program when the Antitrust Division is making charging decisions and sentencing recommendations.

To report potential antitrust crimes to the Antitrust Division, contact the Complaint Center. If your complaint relates to potential antitrust crimes affecting government procurement, grant or program funding, contact the Procurement Collusion Strike Force Tip Center.

If you feel that you have been a victim of retaliation or would like to learn more about protections for whistleblowers, please see OSHA Fact Sheet. 

The Justice Department today filed a civil lawsuit against KKR & Co. Inc. and over a dozen of its investment advisors and funds (collectively, KKR) for repeatedly flouting the premerger antitrust review process. Filed in the U.S. District Court for the Southern District of New York, the complaint alleges that KKR senior executives, deal teams and investment funds evaded antitrust scrutiny for at least 16 separate transactions by failing to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

“KKR’s rinse-and-repeat failures to provide complete and accurate information about its mergers and acquisitions were systemic,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Through document omissions, alterations, and failures to report deals, KKR threatened the integrity of the Division’s premerger reviews and, in some cases, obscured the market impact of its deals and serial acquisitions.”

The HSR Act requires parties to a merger, acquisition, or other transaction above a certain size to submit a premerger filing to the Justice Department’s Antitrust Division and the Federal Trade Commission to aid in the agencies’ enforcement of merger law. As a sophisticated private equity firm in the business of buying and selling companies, KKR is familiar with the HSR Act and its requirements. Since 2021, KKR was required to make more than 100 premerger filings under the HSR Act.

The department’s complaint alleges that over the course of two years — 2021 and 2022 — KKR failed to make complete and accurate premerger filings for at least 16 transactions. Specifically, KKR violated the HSR Act by:

• Altering documents in HSR filings for at least eight transactions. For example, in April 2021, a KKR partner instructed a deal team member to edit a portion of an Investment Committee report in advance of the HSR review process by circling the “Competitive Behavior” section of a diligence chart and writing “[need to revise for HSR purposes]” in the document. The KKR deal team member did not merely revise the language but deleted it entirely before submitting the altered document to the Antitrust Division.
• Failing to make any HSR filing for at least two transactions. KKR did not submit an HSR filing prior to consummating an acquisition valued at $6.9 billion. It also did not submit a filing prior to consummating an acquisition worth between $376 million and $919 million.
• Systematically omitting required documents in HSR filings for at least 10 transactions. KKR repeatedly certified that it had complied with the HSR Act but did not include required documents in those filings. In many cases, KKR only identified such documents in response to an Antitrust Division investigation.

The complaint cites internal documents that reveal a pervasive culture of noncompliance with the HSR Act at KKR. One KKR employee who omitted and altered multiple documents from an HSR Act filing described KKR’s approach to its premerger filing obligations: “I’ve always been told less is more ?.” In response, a more senior executive replied, “I believe in less is more too….”

As alleged in the complaint, KKR’s conduct allowed it to repeatedly evade legally mandated scrutiny of its investment business and reap millions of dollars in revenues from closing transactions without proper prior review by the federal antitrust agencies. In some cases, KKR’s misconduct obscured the threat its deals posed to competition, including serial acquisitions affecting important markets. By preventing the federal antitrust agencies from effectively investigating the potential anticompetitive effects of KKR’s transactions, KKR imperiled competition and potentially harmed consumers across the nation.

The HSR Act authorizes civil penalties for violations of the Act at more than $50,000 per day per violation. As a result, the maximum penalty for KKR’s alleged violations exceeds $650 million. The complaint also seeks structural relief as well as other equitable relief, including compliance measures.

KKR is a global investment firm headquartered in New York. It is one of the world’s largest investment firms with over $500 billion in total assets under management.

Four defendants pleaded guilty in the District of Maryland for their roles in schemes to rig bids, defraud the government and pay and receive bribes in connection with the sale of IT products and services to federal government purchasers, including the Department of Defense (DoD). The charges were previously announced on Oct. 29, 2024.  

These are the first guilty pleas in the Justice Department’s ongoing investigation into IT manufacturers, distributors and resellers who sell products and services to government purchasers, including to the intelligence community.

On Nov. 7 and 13, 2024, Brandon Scott Glisson, a government contractor, and Lawrence A. Eady, a federal government official, both pleaded guilty to separate counts of bribery. According to public documents, between August 2019 and October 2020, Glisson paid approximately $630,000 in bribes to Eady from Glisson’s company, Alpha Greatness Omega (AGO). In exchange for the bribe payments, Eady ensured that the U.S. government purchased IT products from one of their co-conspirators’ companies at artificially inflated, non-competitive prices, and then diverted the inflated portion of the payments to AGO, which Glisson used for personal luxury purchases and to pay Eady bribes.

Antwann C.K. Rawls, an on-site government IT consultant, and Scott A. Reefe, an IT sales executive, also pleaded guilty in related cases. On Jan. 8, Reefe pleaded guilty to conspiracy to defraud the United States and conspiracy to commit wire fraud and, on Jan. 13, Rawls pleaded guilty to conspiracy to defraud the United States. According to public documents, from at least 2018 until at least May 2019, Rawls, Reefe and their co-conspirators used their positions of trust to learn sensitive, confidential procurement information, including procurement budgets for large U.S. government IT contracts. They and their co-conspirators used that inside information to rig bids for U.S. government IT procurements at artificially determined, non-competitive and non-independent prices, ensuring one of their co-conspirators’ companies would win the procurement. The defendants submitted their collusive bids despite knowing the government sought independent, competitive bids for these valuable contracts, causing the U.S. government to suffer at least $1,300,000 in losses.

“These convictions bring to justice individuals who cheated and defrauded the United States government for their own personal gain,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Holding these individuals accountable shows that rigging bids for government contracts will not go unnoticed or unpunished.”

“These guilty pleas underscore the grave consequences of engaging in bid-rigging and bribery in government IT procurement,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “The defendants’ actions not only violated public trust but also diverted taxpayer dollars meant for essential services. The FBI remains vigilant in identifying and holding accountable those who exploit the system for personal gain, ensuring fairness and transparency.”

“Today’s outcome demonstrates our commitment to aggressively investigate those who enrich themselves with federal procurement dollars while cheating taxpayers,” said Special Agent in Charge Christopher Dillard of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office. “DCIS is proud to work with our law enforcement partners to protect the integrity of the procurement process, including when it impacts the intelligence community.”

Sentencing hearings will be set at a later date. Glisson and Eady each face a maximum penalty of 15 years in prison. Reefe faces a maximum penalty of 20 years in prison and Rawls faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

DCIS, FBI’s Baltimore Field Office, Central Intelligence Agency Office of Inspector General and National Security Agency Office of Inspector General are investigating the case.

Trial Attorneys Michael Sawers, Zachary Trotter and Elizabeth French of the Antitrust Division’s Washington Criminal Section and Assistant U.S. Attorneys Sean M. Delaney and Darren Gardner for the District of Maryland are prosecuting the case.

In November 2019, the Justice Department created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government — federal, state and local. To learn more about the PCSF, or to report information on bid rigging, price fixing, market allocation and other anticompetitive conduct related to government spending, go to www.justice.gov/procurement-collusion-strike-force. Anyone with information in connection with this investigation can contact the PCSF at the link listed above.

A Virginia man pleaded guilty today to filing false tax returns underreporting the income he received through his construction company.

According to court documents and statements made in court, Timothy Agnew owned and operated Red Hill Construction (RHC), which was located in Hillsville, Virginia. RHC repaired and installed roofs, remodeled homes and built home additions. Between 2017 and 2021, Agnew filed false personal tax returns that substantially underreported his gross receipts, and thus his income, from RHC. Specifically, Agnew omitted over $2,000,000 in gross receipts earned from construction projects for which the customers did not directly report those payments to the IRS, through IRS Form 1099. In all, Agnew caused a tax loss to the IRS of over $375,000.

Agnew is scheduled to be sentenced on April 3. He faces a maximum penalty of three years in prison as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Zachary T. Lee for the Western District of Virginia made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Brian Flanagan of the Tax Division and Assistant U.S. Attorney Lee Brett for the District of Western District of Virginia are prosecuting the case.

Hagatña, Guam – SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announces that, Joseul Sanchez Usana, age 29, from Yigo, Guam, was sentenced to 120-months imprisonment in the U.S. District Court of Guam for Attempted Enticement of a Minor, in violation of 18 U.S.C. § 2422(b). The Court also ordered Usana to serve five years of supervised release, comply with sex offender registration requirements, and pay a $100 mandatory assessment fee.

In May of 2024, Air Force Office of Special Investigation and Homeland Security Investigations conducted a joint undercover operation to identify and target individuals who were seeking to contact and engage in sexual activity with minor children. Agents created multiple personas on several social networking applications and posted in online forums.

On May 30, 2024, Josuel Sanchez Usana, a civilian employee of a military contractor with access to Andersen Air Force Base, contacted the undercover persona. Within the first few messages, the undercover persona said that she was 14 years old and still in school. Despite being told multiple times that the undercover persona was underage, Usana continued to communicate with the undercover persona, including conversations related to sex. Usana indicated that he wanted to have sex with the underage undercover persona, describing his plan in detail. Usana agreed to meet the undercover persona at the Andersen Air Force Base front gate for this purpose. Investigators him at that location upon his arrival.

“This case is another reminder of the risks to children in our islands,” stated United States Attorney Anderson.  “Parents must remain vigilant against the dangers of online activity in their homes. Innocuous messaging can quickly develop into harmful physical contact.  We will continue to work closely with our law enforcement partners to identify and combat these threats.”

The investigation was conducted by Air Force Office of Special Investigation Detachment 602 and Homeland Security Investigations.

Assistant United States Attorney Benjamin K. Petersburg prosecuted the case in the District of the Guam.

This was a Project Safe Childhood (PSC) case, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys' Offices and CEOS, PSC marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about PSC, please visit Justice.gov/PSC.

The Justice Department announced today that it secured an agreement with a Minnesota-based restaurant group doing business as Brick & Bourbon. The agreement resolves the department’s determination that the restaurant group routinely discriminated against lawful permanent residents when verifying their permission to work in the United States by requiring them to provide more documents than necessary.

“It is unlawful for employers to impose additional or unnecessary requirements on employees because of their citizenship status when checking their permission to work,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Discriminatory treatment during any step of the employment process harms workers who are lawfully participating in our economy and can deprive employers of their talents.”

After conducting an investigation, the Civil Rights Division’s Immigrant and Employee Rights Section (IER) concluded that Brick & Bourbon had a longstanding practice of requiring additional and unnecessary documentation from lawful permanent residents, even after they had presented sufficient proof of their permission to work, because of their citizenship status.

Lawful permanent residents are sometimes referred to as “green card holders,” but they can show their permission to work using different types of documentation. As explained in the department’s recently-released fact sheet for lawful permanent residents, the Immigration and Nationality Act (INA) protects lawful permanent residents from discrimination when an employer is verifying their permission to work. The INA prohibits employers from asking for specific or unnecessary documents because of a worker’s citizenship, immigration status or national origin. Employers must allow workers to present whatever acceptable documentation the workers choose and cannot reject valid documentation that reasonably appears to be genuine and to relate to the worker.

Under the terms of the settlement, Brick & Bourbon will pay a $95,000 civil penalty to the United States, train its employees on the INA’s requirements, revise its employment policies and be subject to departmental monitoring.

IER is responsible for enforcing the INA’s anti-discrimination provision. This law prohibits discrimination based on citizenship status and national origin in hiring, firing or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation.

IER’s website has more information on lawful permanent residents’ rights under the INA and how employers can avoid unlawful discrimination when verifying someone’s permission to work. Learn more about IER’s work and how to get assistance through this brief video. Applicants or employees who believe they were discriminated against based on their citizenship, immigration status or national origin in hiring, firing, recruitment or during the employment eligibility verification process (Form I-9 and E-Verify), or subjected to retaliation, may file a charge. The public can also call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); email IER@usdoj.gov; sign up for a live webinar; watch an on-demand presentation; or visit IER’s English and Spanish websites. Sign up for email updates from IER.

A Florida man was sentenced today to 21 months in prison for obstructing the IRS in connection with his use of the “Note Program,” a tax fraud scheme.

According to court documents and statements made in court, from 2015 to 2018, Arthur Grimes, of Ocoee and Orlando, was a client of a tax fraud scheme promoted by Jasen Harvey and Christopher Johnson. The scheme involved Harvey and Johnson filing false tax returns for clients that claimed that large nonexistent income tax withholdings had been paid to the IRS and sought substantial refunds based on those purported withholdings. 

Grimes participated in the scheme by causing four false income tax returns prepared by Harvey to be filed that sought refunds totaling $627,587 of which the IRS paid approximately $270,000. When the IRS attempted to recover a refund issued to Grimes based on one of those returns, Grimes made false statements and submitted false documents to an IRS revenue officer and transferred funds to a nominee bank account.

Harvey and Johnson previously pleaded guilty to conspiring to defraud the IRS and were respectively sentenced to 48 months in prison and 37 months in prison.

In addition to his prison sentence, U.S. District Judge Roy B. Dalton Jr. for the Middle District of Florida ordered Grimes to serve one year of supervised release and to pay approximately $238,973 in restitution to the United States.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Roger B. Handberg for the Middle District of Florida made the announcement.

IRS Criminal Investigation investigated the case.

Trial Attorneys Melissa Siskind, Jeffrey McLellan and Caroline Pearson of the Tax Division and Assistant U.S. Attorney Diane Hu for the Middle District of Florida prosecuted the case.

El Departamento de Justicia ha anunciado hoy que llegó a un acuerdo con un grupo de restaurantes de Minnesota que opera bajo el nombre de Brick & Bourbon. El acuerdo resuelve la determinación del Departamento de que el grupo de restaurantes discriminaba sistemáticamente a los residentes permanentes legales a la hora de verificar su permiso para trabajar en los Estados Unidos, exigiéndoles más documentos de los necesarios.

“Es ilegal que los empleadores impongan requisitos adicionales o innecesarios a los empleados debido a su estatus de ciudadanía cuando verifican su permiso para trabajar”, dijo la fiscal general auxiliar Kristen Clarke, de la División de Derechos Civiles del Departamento de Justicia. “El trato discriminatorio durante cualquier paso del proceso de empleo perjudica a los trabajadores que participan legalmente en nuestra economía y puede privar a los empleadores de su talento”.

Tras llevar a cabo una investigación, la Sección de Derechos de Inmigrantes y Empleados (IER, por sus siglas en inglés) de la División de Derechos Civiles concluyó que Brick & Bourbon tenía la práctica habitual de exigirles documentación adicional e innecesaria a los residentes permanentes legales, incluso después de que hubieran presentado pruebas suficientes de su permiso para trabajar, debido a su condición de ciudadanía.

A los residentes permanentes legales se les denomina a veces “titulares de la tarjeta verde”, pero pueden demostrar su permiso para trabajar usando distintos tipos de documentación. Como se explica en la hoja informativa para residentes permanentes legales publicada recientemente por el Departamento, la Ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) protege a los residentes permanentes legales de la discriminación cuando un empleador verifica su permiso para trabajar. La INA les prohíbe a los empleadores solicitar documentos específicos o innecesarios debido a la ciudadanía, el estatus migratorio o la nacionalidad de origen del trabajador. Los empleadores deben permitir que los trabajadores presenten cualquier documentación aceptable que elijan y no pueden rechazar documentación válida que parezca razonablemente auténtica y relacionada con el trabajador.

Según los términos del acuerdo, Brick & Bourbon pagará una multa civil de $95,000, capacitará a sus empleados sobre los requisitos de la INA, revisará sus políticas de empleo y se someterá a supervisión departamental.

La IER es responsable de hacer cumplir la disposición contra la discriminación de la INA. Esta ley prohíbe la discriminación por motivos de estatus de ciudadanía y nacionalidad de origen en la contratación, el despido o el reclutamiento o recomendación por comisión; las prácticas documentales injustas y las represalias y la intimidación.

El sitio web de la IER tiene más información sobre los derechos de los residentes permanentes legales según la INA y cómo los empleadores pueden evitar la discriminación ilegal al verificar el permiso de trabajo de alguien. Aprenda más sobre el trabajo de la IER y cómo obtener ayuda a través de este breve video. Los solicitantes o empleados que crean haber sido discriminados por razón de su ciudadanía, estatus migratorio o nacionalidad de origen en la contratación, despido, reclutamiento o durante el proceso de verificación de elegibilidad de empleo (Formulario I-9 y E-Verify), o sometidos a represalias, pueden presentar una denuncia. El público también puede llamar a la línea directa  de la IER para trabajadores al 1-800-255-7688 (1-800-237-2515, número de TTY para personas con discapacidad auditiva); llamar a la línea directa de la IER para empleadores al 1-800-255-8155 (1-800-237-2515, número de TTY para personas con discapacidad auditiva); enviar un correo electrónico a IER@usdoj.gov; inscribirse en un seminario web en vivo; ver una presentación a pedido; o visitar los sitios web de la IER en inglés y español. Inscríbase para recibir actualizaciones por correo electrónico de la IER. 

Note: View the agreement here.

The Justice Department announced today that the United States entered into an agreement to transfer approximately $52.88 million in forfeited assets to the Federal Republic of Nigeria in recognition of Nigeria’s assistance to the department in an investigation into corruption in the Nigerian oil industry.

“This agreement recognizes the close law enforcement relationship between the United States and Nigeria and Nigeria’s vital assistance that contributed to the successful forfeiture of millions of dollars of corruption proceeds,” said Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division. “Our strong coordination with international partners to trace and recover assets leaves corrupt actors few places to hide their ill-gotten gains. Today’s agreement to return nearly $53 million in forfeited funds to support Nigeria and its people through electrification projects and cross-border efforts to combat terrorism demonstrates forfeiture’s power as a tool to help remediate the harms of corruption and to invest in our global fight against terrorism.”

“The FBI remains steadfast in its commitment to the global fight against corruption,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “By ensuring these forfeited funds are repatriated to Nigeria to benefit the Nigerian people through critical projects and counterterrorism efforts, the FBI reaffirms our dedication to promoting transparency and dismantling the systems that enable corruption to thrive.”

“The repatriation of these funds to Nigeria to benefit the citizens of Nigeria is one of the primary goals of the Kleptocracy Asset Recovery Initiative,” said Chief Guy Ficco of IRS Criminal Investigation (IRS-CI). “IRS-CI is proud to partner with the global law enforcement community in this initiative to restore these vital resources to the projects and programs that promote Nigeria’s continued prosperity.”

These assets were forfeited as part of an investigation by the Kleptocracy Asset Recovery Initiative of the International Unit of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), a dedicated team that seeks to forfeit the proceeds of foreign official corruption and, where appropriate, repatriate those assets to the countries harmed by corruption for the benefit of their people. According to court documents, from 2011 to 2015, Nigerian businessmen Kolawole Akanni Aluko and Olajide Omokore conspired with others to pay bribes to Nigeria’s former Minister for Petroleum Resources, Diezani Alison-Madueke. In return, Alison-Madueke used her influence to steer lucrative oil contracts to companies owned by Aluko and Omokore. Proceeds from the scheme of more than $100 million were then laundered into and through the United States and used to purchase various assets, including luxury real estate in California and New York as well as the Galactica Star, a 65-meter superyacht. The real estate was also used as collateral for loans to Aluko and shell companies he controlled. As part of the forfeiture process, those lien holders were paid. The assets were forfeited as a result of corruption, bribery, money laundering, and other illegal acts in violation of Nigerian and U.S. law. The Federal Repubic of Nigeria provided crucial assistance to the United States leading to the forfeitures, including providing extensive evidentiary and investigative support.

The agreement was signed in Abuja, Nigeria, today by Attorney General of the Federation and Minister of Justice of Nigeria Lateef O. Fagbemi, SAN, and U.S. Ambassador to Nigeria Richard M. Mills Jr. Under the agreement, $50 million of the recovered funds will be dedicated to an expansion of the Distributed Access Through Renewable Energy Scale-Up project, an existing electrification project funded, in part, by the International Development Association and implemented by the Nigerian Rural Electrification Agency. This program is intended to increase access to electricity services in Nigeria with renewable energy generation. Approximately $2.88 million of the forfeited funds will be used towards Nigeria’s contribution to the International Institute for Justice and the Rule of Law (IIJ) and used to support capacity-building for criminal justice sector practitioners and relevant stakeholders in the region, including through activities focused on countering the financing of terrorism, development and implementation of the Counter-Terrorism Academic Curriculum of the IIJ, and institutional support for the IIJ particularly in the North, West, and East Africa regions.

The agreement contains key measures designed to promote transparency and accountability. Under the agreement, the $50 million dedicated to electrification programs will be managed and disbursed through a World Bank trust fund, subject to World Bank oversight controls, auditing, and publication requirements. Similarly, the IIJ counterterrorism and rule of law programs will be subject to external auditing, periodic progress reporting, and public reporting.

These forfeiture actions were prosecuted by MLARS’ International Unit. The FBI and IRS-CI investigated the case. The Justice Department’s Office of International Affairs provided critical assistance.

The Criminal Division, through MLARS’ International Unit, administers the Justice Department’s international asset forfeiture sharing program. Pursuant to federal law, and in coordination with the Departments of the Treasury and State, the Attorney General may share proceeds of successful forfeiture of property with foreign countries that participate in the seizure or forfeiture of the property.

Matthew W. Cheney has been appointed by Attorney General Merrick B. Garland as the Acting U.S. Trustee for Maryland, South Carolina, Virginia, West Virginia and the District of Columbia (Region 4) effective Jan. 11. Cheney replaces Gerard R. Vetter, who continues to serve as the Assistant U.S. Trustee for the Baltimore office of the U.S. Trustee Program (USTP).

Cheney joined the USTP in 2015 as the Assistant U.S. Trustee for the office in Grand Rapids, Michigan, and will remain in that role while overseeing Region 4. He is co-chair of the USTP’s Quarterly Fees Working Group, which develops guidance for the USTP’s collection of quarterly fees in chapter 11 bankruptcy cases and provides support for litigation involving chapter 11 fee issues. He also serves the Program as a member of the Data Integrity Group, which monitors the accuracy and integrity of the USTP’s information collection systems. Previously, as an attorney in private practice in Washington, D.C., and Baltimore, Cheney represented clients including a private chapter 7 trustee and creditors in complex bankruptcy cases and other litigation.

Cheney received a bachelor’s degree in social science from Michigan State University and a law degree from Ohio Northern University, where he was managing editor of the law review. After law school, Cheney clerked for Judges E. Stephen Derby and James F. Schneider of the U.S. Bankruptcy Court for the District of Maryland.

The Executive Office for U.S. Trustees made the announcement.

The USTP’s mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C. Learn more about the USTP at www.justice.gov/ust.  

The Justice Department filed a civil antitrust lawsuit today to stop Global Business Travel Group Inc. (Amex GBT), the largest business travel management company in the world, from acquiring its rival, CWT Holdings LLC (CWT), the third-largest business travel management company in the world. The complaint, filed today in the U.S. District Court for the Southern District of New York, alleges that the proposed $570 million transaction — Amex GBT’s fifth acquisition of another travel management company since 2018 — would harm competition for business travel management services to U.S. global and multinational businesses.

“American businesses rely on travel management companies to connect employees, control travel costs, make travel booking and expense management easier, and ensure their employees’ safety during travel,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “This acquisition is the latest in a series of acquisitions by Amex GBT that will further consolidate an already consolidated market with only a handful of competitive options capable of serving customers with the most need for travel management services. American businesses will face the consequences, seeing higher prices, less innovation and fewer choices.”

As alleged in the complaint, Amex GBT and CWT anticipated that the proposed acquisition would harm competition and benefit the merged firm at the expense of its customers. The complaint alleges that senior Amex GBT executives viewed the acquisition as an opportunity for “consolidation” of the market for business travel management services for global and multinational customers and a respite from its recent customer losses to CWT. The complaint further alleges that Amex GBT recognized that its valuation of the proposed acquisition should reflect the financial benefit of avoiding future loss business to CWT. For example, its CEO wrote to its president that the company “need[ed] to consider how much we might lose to [CWT] each year in a [business as usual] scenario.” During deal negotiations, CWT’s owners likewise believed Amex GBT should pay a higher price for CWT in recognition of the increased revenues Amex GBT would enjoy post-merger due to the reduction in “price pressure” from “removing [a] big competitor.”

The complaint alleges that the combination of Amex GBT and CWT would combine two of the three largest players in business travel management services for global and multinational companies located in the United States, giving the combined firm a significant share in a market that one of the largest owners of CWT has acknowledged is “oligopolistic.” Few other companies can effectively provide travel management services to global and multinational companies located in the United States at the scale of Amex GBT and CWT.

Today, Amex GBT and CWT compete fiercely to provide travel management services for large businesses and those with complex travel needs. CWT had recently begun pursuing new and innovative strategies to improve service and reduce prices in order to win over business from Amex GBT. As a result, Amex GBT recently lost several significant bid opportunities for large business customers to CWT. If Amex GBT is permitted to acquire CWT, this intense competition would be lost, risking higher prices, less innovation and fewer choices — costs that will be borne by the many businesses and employees for whom these services are critical to their productivity and operations.

Amex GBT is a publicly traded Delaware corporation with its principal executive office located in New York City and its operational headquarters located in London. In 2023, Amex GBT managed a total transaction value of approximately $28.2 billion, earning revenues of $2.29 billion.

CWT is a privately held company headquartered in Minnetonka, Minnesota. In 2023, CWT managed a total transaction volume of approximately $14 billion, earning revenues of about $850 million.

Note: View Assistant Attorney General Kristen Clarke's remarks here. 

The Justice Department issued a report today on the Tulsa Race Massacre. The report documents the department’s findings, made during its review and evaluation of the Tulsa Race Massacre, undertaken pursuant to the Emmett Till Unsolved Civil Rights Crimes Act. The Civil Rights Division previously announced it was undertaking this review during a Cold Case Convening held on Sept. 30, 2024.

“The Tulsa Race Massacre stands out as a civil rights crime unique in its magnitude, barbarity, racist hostility and its utter annihilation of a thriving Black community,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “In 1921, white Tulsans murdered hundreds of residents of Greenwood, burned their homes and churches, looted their belongings, and locked the survivors in internment camps. Until this day, the Justice Department has not spoken publicly about this race massacre or officially accounted for the horrific events that transpired in Tulsa. This report breaks that silence by rigorous examination and a full accounting of one of the darkest episodes of our nation’s past. This report lays bare new information and shows that the massacre was the result not of uncontrolled mob violence, but of a coordinated, military-style attack on Greenwood. Now, more than 100 years later, there is no living perpetrator for the Justice Department to prosecute. But the historical reckoning for the massacre continues. This report reflects our commitment to the pursuit of justice and truth, even in the face of insurmountable obstacles. We issue this report with recognition of the courageous survivors who continue to share their testimonies, acknowledgement of those who tragically lost their lives and appreciation for other impacted individuals and advocates who collectively push for us to never forget this tragic chapter of America’s history.”   

The report documenting the department’s findings on the Tulsa Race Massacre, examines events that occurred between on May 31 and June 1, 1921, when white Tulsans mounted a concerted effort to destroy a vibrant Black community, remembered today as Black Wall Street. During the massacre, hundreds of Black residents were murdered, their businesses and homes burned to the ground and their money and personal property stolen. Survivors were left without resources or recourse. In the aftermath, the City of Tulsa resisted offers of meaningful help to the victims and utterly failed to provide necessary aid or assistance, and efforts to seek justice through the courts foundered.

Despite the gravity of the department’s findings, it is clear that no avenue of prosecution now exists for crimes that occurred during the massacre — the youngest potential defendants would today be more than 115 years old, and the relevant statutes of limitations expired decades ago. Nevertheless, as the federal government’s first thorough reckoning with this devastating event, our review officially acknowledges, illuminates and preserves for history the horrible ordeals of the massacre’s victims. As antilynching advocate Ida B. Wells said, “The way to right wrongs is to turn the light of truth upon them.” This report aims to do just that.

The Nature of the Review

A team of career lawyers and investigators from the Emmett Till Cold Case Unit of the Criminal Section of the Civil Rights Division conducted the review. Members of the unit spoke with survivors and with descendants of survivors, examined firsthand accounts of the massacre given by individuals who are now deceased, studied primary source materials, spoke to scholars of the massacre and reviewed legal pleadings, books, and scholarly articles relating to the massacre. The team produced a thorough, 123-page, sourced report.

Factual Findings

The review revealed that, on the night of May 31, 1921, a violent attack by as many as 10,000 white Tulsans destroyed Greenwood, a uniquely prosperous Black community. The attack was so systematic and coordinated that it transcended mere mob violence. The review found that the trigger for the violence of the Tulsa Race Massacre was the kind of unfounded condemnation that, at the time, was commonly employed to justify unspeakable treatment of Black men; a white man alleged that a Black man, 19-year-old Dick Rowland, assaulted a white woman who operated an elevator he used. After Rowland’s arrest, a local newspaper then sensationalized the story and, soon, a mob of white Tulsans gathered outside the courthouse, demanding a lynching.

The local sheriff called on Black men from Greenwood, many recently returned from service during World War I, to come to the courthouse to prevent a lynching. The white mob saw this effort to protect Rowland as an unacceptable challenge to the social order. The mob grew. A confrontation broke out, and when someone fired a shot, horrific violence erupted. The Tulsa police deputized hundreds of white residents, many of whom — immediately before being awarded a badge — had been drinking and agitating for Rowland’s murder. Law enforcement officers helped organize these special deputies — as well as other white Tulsans — into the forces that would eventually ravage the Greenwood community.

Violence was initially unorganized and opportunistic. But at daybreak on June 1, a whistle blew, and the violence and arsons that had been chaotic became systematic. White Tulsans, many of whom had recently drilled together as the “Home Guard,” formed to replace members of the National Guard who had gone overseas during the Great War, became organized and efficient in their destruction. They looted, burned and destroyed 35 city blocks while Greenwood’s residents tried desperately to defend their homes. As the fires consumed Greenwood, many Black families fled for their lives, leaving behind their homes and valuable items. White residents chased them across and beyond the city, taking into custody men, women, children, the elderly and the infirm, and looting the homes they left behind. The destruction of the district was total. The survivors were left with little to nothing.

Law enforcement officers (both from the Tulsa Police and the National Guard) disarmed Black residents, confiscated their weapons and detained many in makeshift camps under armed guard. In addition, there are credible reports that at least some law enforcement officers did more than arrest and detain Black men; some participated in murder, arson and looting. After the devastation, city officials promised to help Greenwood rebuild, but the government of Tulsa not only failed to do so, it put up obstacles to residential reconstruction. White local leaders rejected outside aid, claiming they could handle the recovery, but then provided little to no financial support. Instead, claiming the area was best suited for industrial use, they imposed harsh new fire codes that priced residents out of the area.

Legal Findings

The department’s report concludes that, had today’s more robust civil rights laws been in effect in 1921, federal prosecutors could have pursued hate crime charges against the massacre’s perpetrators, including both public officials and private citizens. In addition, if modern interpretations of civil rights laws were in effect in 1921, police officers, public officials and any who acted in concert with such persons could have been prosecuted for willfully violating the civil rights of massacre victims. Many of these legal avenues, however, were not available in 1921. The few avenues for federal prosecution that were available in 1921 were not pursued.

Now, the statute of limitations has expired for all federal civil rights offenses. Moreover, the team could find no living perpetrators, and prosecution under any law (federal or state) would almost certainly be foreclosed by the Constitution’s Confrontation Clause, which requires the government to provide live witnesses who can be cross examined by the accused. Such witnesses would need to have sufficient knowledge to prove a particular defendant’s guilt beyond a reasonable doubt.

The report recognizes that some may find the department’s inability to prosecute a painful or dissatisfying outcome. However, the review recognizes and documents the horrible events that occurred as well as the trauma and loss suffered by the residents of Greenwood. While legal and practical limitations prevent the perpetrators of the crimes committed in 1921 from being held criminally accountable in a court of law, the historical reckoning continues. Legal limitations may have stymied the pursuit of justice, but work continues to ensure that future generations understand the scale and significance of this atrocity.

Following issuance of the report, Assistant Attorney General Clarke will convene with members of the Greenwood District, survivors and descendants of the Tulsa Race Massacre, the Tulsa civil rights community and other stakeholders.

For further information please contact the Office of Public Affairs. If you have information about a civil rights cold case, meaning a hate crime or other civil rights offense that resulted in death and that occurred on or before Dec. 31, 1980, please contact the Civil Rights Division’s Cold Case Unit at Coldcase.Civilrights@usdoj.gov.

The former president of a Michigan asphalt paving company pleaded guilty Wednesday for his role in a conspiracy to rig bids for asphalt paving services contracts in Michigan.

According to court documents filed in the U.S. District Court for the Eastern District of Michigan, Timothy Baugher, former president of Pontiac-based Asphalt Specialists LLC (ASI), conspired with F. Allied Construction Company Inc. (Allied), and employees from those companies to rig bids in each other’s favor. Baugher participated in the conspiracy from July 2017 through May 2021.

Wednesday’s guilty plea is the 10th in the Antitrust Division’s ongoing investigation into collusion in the Michigan asphalt paving industry. Baugher’s former employer, ASI, and another former ASI executive also pleaded guilty for their participation in the conspiracy with Allied in January 2024. Allied and two of its executives previously pleaded guilty in August 2023 for their participation in the conspiracy. On Aug. 15, 2024, ASI was sentenced to pay a fine of $6,500,000.

Under the terms of the conspiracy, the co-conspirators coordinated each other’s bid prices so that the agreed-upon losing company would submit intentionally non-competitive bids. These bids gave customers the false impression of competition when, in fact, the co-conspirators already had decided among themselves who would win the contracts.

“Americans deserve to pay a fair, competitive price to fix transportation infrastructure,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “The division and our law enforcement partners will continue to hold accountable executives who cheat consumers by undermining the competitive process.”

“Fair and open marketplace competition is essential in providing consumers and taxpayers the integrity expected in procuring contracts funded with public dollars” said Special Agent in Charge Anthony Licari of the Department of Transportation’s Office of Inspector General, Midwestern Region. “Corporate executives who collude to fixing prices and rigging bids will be held accountable.”

“Activities related to bid-rigging and collusion do not promote an environment conducive to open competition which harms the consumer,” said Executive Special Agent in Charge Kenneth Cleevely of the U.S. Postal Service Office of Inspector General. “The guilty plea in this case represents a win for all law enforcement agencies who investigate those who engage in this type of harmful conduct to ensure that justice is served."

Baugher pleaded guilty to one count of violating Section 1 of the Sherman Act. He faces a maximum penalty of 10 years in prison and a $1 million criminal fine for the charge. The maximum penalty for corporations is a $100 million criminal fine. The 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 amount is greater than the statutory maximum fine. A sentencing hearing will be scheduled at a later date. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Wednesday’s guilty plea resulted from an ongoing federal antitrust investigation into bid rigging and other anticompetitive conduct in the asphalt paving services industry being conducted by the Antitrust Division’s Chicago Office and the Offices of Inspectors General for the U.S. Department of Transportation and U.S. Postal Service.

Anyone with information in connection with this investigation should contact the Antitrust Division’s Complaint Center at 888-647-3258 or visit www.justice.gov/atr/report-violations.

As part of an ongoing investigation, four individuals and one company have pleaded guilty for their roles in bid-rigging conspiracies throughout central Florida.

Glenn Bailey and Douglas Sutter each pleaded guilty in the Middle District of Florida to participating in a conspiracy to suppress and eliminate competition by rigging bids on commercial roofing projects in violation of the Sherman Act on Jan. 8 and 9, respectively. Kenneth Cody and Christopher Rakos also pleaded guilty to the same crime on Oct. 3 and Dec. 6, 2024, respectively. Service Works of Fort Lauderdale LLC, also pleaded guilty to the same crime on Oct. 3, 2024, and was sentenced on Jan. 6.

According to the plea agreements, each of the defendants knowingly entered into a conspiracy to restrain trade by rigging bids for commercial roofing services in the Middle District of Florida. The commercial roofing services included the installation and repair of flat and sloped roofs on commercial and other facilities. The rigged bids impacted a variety of projects, including roofing services for schools, religious buildings, condominiums and retail stores.

“Safe, affordable roofing is critical to Florida communities that are prone to hurricanes and other harsh weather conditions,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “The guilty pleas secured today further demonstrate our commitment to protecting the competitive bidding process that is essential to constructing and maintaining America’s infrastructure.”

"Today's guilty plea reflects the FBI's unwavering commitment to holding those accountable who undermine fair competition through bid-rigging conspiracies," said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. "The actions of these individuals manipulated competitive processes, harmed taxpayers and the integrity of the marketplace. The FBI will continue to protect businesses and consumers from those who try to abuse the system for their own personal gain." 

“These individuals thought they could game the system and would not get caught. They were wrong,” said Acting Special Agent in Charge John Carlo of the Department of Education Office of Inspector General (OIG)’s Eastern Regional Office. “The OIG will continue to work with our law enforcement partners to aggressively pursue those who misappropriate education funds for their own selfish purposes. America’s taxpayers and students deserve nothing less.”

The FBI and Department of Education OIG are investigating the case.

Trial Attorneys Daniel A. Loveland Jr., Ronald P. Fiorillo II., Vijay N. Rao and Sumaiya F. Ismail of the Justice Department’s Antitrust Division are prosecuting the case.

Anyone with information on bid rigging, price fixing, market allocation or other anticompetitive conduct in the roofing should contact the Antitrust Division’s Complaint Center at 888-647-3258 or visit www.justice.gov/atr/report-violations.

An Oklahoma man pleaded guilty yesterday for his role in a cryptocurrency investment fraud conspiracy.

According to court documents, Travis Ford, 35, of Glenpool, was the CEO, co-founder, and head trader of Wolf Capital Crypto Trading LLC (Wolf Capital), a purported cryptocurrency investment firm. From January 2023 through August 2023, Ford solicited investments through Wolf Capital’s website and other social media and internet-based promotion activities. Ford held himself out as a sophisticated trader able to deliver high returns of 1-2% per day (approximately 547% per year). Ford admitted that he did not believe those promised investment returns were possible to achieve consistently. Ford made such false promises to induce members of the public to invest money in the company. Ford misappropriated and diverted investor funds to benefit himself and his co-conspirators, to the financial detriment of investors. In total, Wolf Capital raised $9.4 million from approximately 2,800 investors through fraudulent conduct.

Ford pleaded guilty to one count of conspiracy to commit wire fraud, for which he faces a maximum penalty of five years in prison. A sentencing date has not yet been set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Brent Wible, head of the Justice Department’s Criminal Division, and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigation Group made the announcement.

The USPIS is investigating the case.

Trial Attorneys John J. Liolos and Matt Kahn of the Criminal Division’s Fraud Section are prosecuting the case. 

A federal grand jury in Las Vegas returned an indictment earlier this week charging a former Nevada business owner for not paying employment taxes, not filing personal tax returns and obstructing justice.

According to the indictment, Deborah Meadows, formerly of Las Vegas, owned and operated A to Z Employment Services LLC, which provided carpet, upholstery and roadside cleaning services in Nevada. Meadows allegedly was responsible for all financial matters related to the company, including for filing the company’s quarterly employment tax returns and withholding Social Security, Medicare and income taxes from her employees’ wages and paying those funds over to the IRS, as well paying the Social Security and Medicare taxes the company owed.

From at least the fourth quarter of 2018 through the fourth quarter of 2020, Meadows allegedly withheld taxes from her employees’ wages, but did not pay over all those taxes to the IRS. In addition, from 2018 through 2021 Meadows also allegedly did not file his own personal tax returns as required by law.

After the grand jury began its investigation, Meadows allegedly responded to a grand jury subpoena by providing altered bank records and inaccurate tax records. The altered bank records allegedly showed that AZ-TEC Restoration LLC, another company Meadows owned and operated, had made tax payments to the IRS, when in fact the company had not done so. She also provided inaccurate individual and employment tax returns that allegedly showed taxes paid to the IRS, when in fact Meadows knew at the time that this did not happen.

If convicted, Meadows face a maximum penalty of five years in prison for each employment tax charge, a maximum penalty of one year in prison for each failure to file an individual tax charge and a maximum penalty of 20 years in prison for each obstruction charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Regina Jeon and Assistant Chief Eric Powers of the Tax Division are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

A Florida man pleaded guilty today to not paying employment taxes withheld from his employees’ pay and to filing a false tax return.

According to court documents and statements made in court, Matthew Brown, of Martin County, owned and operated businesses in and around Martin County. One of these businesses was Elite Payroll, a payroll services company. Elite Payroll provided such services to small businesses in and around St. Lucie, Martin and Palm Beach Counties. This included withholding Social Security, Medicare and federal income taxes from the wages of its clients’ employees, and then paying over those funds to the IRS.

Between 2014 and 2022, Brown did not pay over $20 million in taxes withheld from clients of Elite Payroll and from other businesses he controlled. Brown charged his clients the full amount of their tax liabilities, filed false tax returns with the IRS substantially underreporting those liabilities, and pocketed the difference.

Instead of paying over the funds he held in trust for Elite Payroll’s clients, Brown purchased commercial and residential real estate, including his multi-million-dollar home, and high-value luxury assets including a Valhalla 55 Sport Yacht, a Falcon 50 Aircraft and a collection of cars including Ferraris, Porsches and Rolls Royces.

In total, Brown caused a tax loss to the IRS of over $22 million.

Brown will be sentenced at a later date. He faces a maximum penalty of five years in prison, a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Markenzy Lapointe for the Southern District of Florida made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorneys Andrew Ascencio and Ashley Stein of the Tax Division and Assistant U.S. Attorney Michael Porter for the Southern District of Florida are prosecuting the case. Former Assistant U.S. Attorney Diana Acosta assisted in the investigation.

The Justice Department today released the ATF’s publication of Protecting America from Trafficked Firearms: NFCTA Updates, New Analysis, and Policy Recommendations , the fourth and final volume of the National Firearms Commerce and Trafficking Assessment (NFCTA). This landmark series represents the most thorough research, analysis, and examination ever of firearms commerce and how firearms enter illegal markets and fall into the wrong hands.

In April 2021, President Biden and Attorney General Merrick B. Garland directed the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to lead a research group in conducting a comprehensive study of criminal gun trafficking — defined as the intentional movement of firearms into the illegal market for a criminal purpose or possession. This directive acknowledged the urgent need for data-driven strategies to curb gun violence and illegal gun trafficking across the nation.

Volume IV, compiled after years of research by leading experts from both law enforcement and academia, delivers updated findings and trends that highlight how firearms reach criminal actors. It also underscores the critical role ATF and its partners play in disrupting these networks through its cutting-edge Crime Gun Intelligence — the free tools ATF provides to state, local, Tribal and federal law enforcement partners to help them prevent shootings, catch shooters, and break shooting cycles.

“This final volume of the NFCTA concludes the most comprehensive look at America’s crime gun data in over two decades and confirms that ATF’s advanced intelligence tools are vital to helping law enforcement nationwide solve gun crimes and take shooters off the streets,” said Attorney General Garland. “Expanded use of ATF’s crime gun tracing and National Integrated Ballistic Information Network has provided more investigative leads than ever on violent gun crimes, enhanced strategic intelligence on violent gangs, and improved the apprehension and prosecution of violent criminals. This report reminds us of the importance of our work, and I am grateful to the extraordinary professionals of the ATF who put their lives on the line to help keep our communities safe.”

“From conducting enhanced background checks to stopping firearms trafficking by cartels, the Department has prioritized addressing the most significant drivers of violent crime and identifying emerging threats to our communities,” said Deputy Attorney General Lisa Monaco. “This report is further evidence that to continue our historic progress against violent crime, we need to bring more crime gun intelligence to more law enforcement agencies, in more jurisdictions, more quickly than ever before.”

“At ATF, we know that we cannot successfully address the threat of gun violence in this nation without the best and most current information about the problem,” said ATF Director Steven Dettelbach. “For that reason, it is a privilege to announce Volume IV of the National Firearms Commerce and Trafficking Assessment (NFCTA): Protecting America from Trafficked Firearms: NFCTA Updates, New Analysis, and Policy Recommendations. This independent expert report is an unprecedented, data-driven analysis critical to fighting violent crime. At its core, Vol. IV helps anyone who looks at the facts to identify how criminals get their guns, what type of guns they seek, and where and how often they use them. While this report is a repository of invaluable information, the report’s most significant finding is that background checks are a crucial tool to help prevent felons, traffickers, and other dangerous people from arming themselves and hurting others. While the decision about whether to expand background checks is certainly up to policy makers, this report’s immense data and expert analysis shows conclusively that background checks save lives — period.”

Volume IV’s key highlights include:

• Surge in Privately Made Firearms (PMFs). Between 2017 and 2023, 92,702 suspected PMFs — untraceable “ghost guns” that are obtained without background checks and do not contain serial numbers — were recovered and reported. The number of PMFs recovered in crimes surged nearly 1,600% (from 1,629 to 27,490) with nearly 1,700 connected homicides and over 4,000 linked to other violent crimes. Miscellaneous firearms are predominantly firearm frames and receivers manufactured and sold before being assembled into an operational firearm. Between 2000 and 2022, annual miscellaneous firearms manufacturing increased nearly 6,600% with the bulk of this growth taking place in the last 10 years. Miscellaneous firearm manufacturing then decreased by 36% between 2022 and 2023.
• Rise Machinegun Conversion Devices. Recoveries of deadly machinegun conversion devices (MCDs), which are small, easily concealed devices that transform a semi-automatic firearm into an illegal machinegun in seconds, increased 784% between 2019 and 2023. In September 2024, the Deputy Attorney General launched a department-wide ANTI-MCD Task Force, which is chaired by ATF and a U.S. Attorney. The Task Force is a concerted effort to address this problem.
• ATF’s Crime Gun Intelligence Tools Help Police to Save Lives and their Use Should be Expanded and Fully Funded. ATF’s advanced intelligence tools — including ballistics evidence processing linking disparate shootings using the National Integrated Ballistic Information Network (NIBIN) and crime gun tracing (eTrace) — are pivotal in helping law enforcement nationwide solve gun crimes and take shooters off the streets before they kill again:
  • Crime Gun Tracing: From 2017 to 2023, crime gun trace requests have increased by 52%. Of the nearly 1.3 million trace requests between 2022 and 2023, nearly 56% had a different purchaser than the possessor and 46% required the use of “out-of-business” records. This emphasizes the need to prevent firearms trafficking networks, which often begin with purchases in the legal market.
  • Ballistics Evidence: As of December 2023, ATF’s NIBIN included 6.5 million entries of ballistic evidence, generating over 1,060,000 investigative leads provided to ATF’s federal, state, local, Tribal, territorial, and international law enforcement partners. In recent years, the number of leads provided has been over 200,000 annually.
  • Time to Crime (TTC) Decreased by 30%: The median TTC decreased almost 31% from 2017 (4.2 years) to 2023 (2.9 years). Crime guns associated with a short TTC are an indicator of firearm trafficking. Thus, the evidence supports that as lawful firearms sales have increased, so has illegal gun trafficking.
  • Multiple Shootings: Between 2019 and 2023, of the more than 828,000 pistols recovered and traced, NIBIN identified that 14% were used in more than one shooting, representing 191,313 different shooting events. Moreover, most of these crime guns had a first shooting within three years from their last known purchase, indicating that violent gun offenders were more quickly using firearms diverted from lawful commerce in shootings.
  • Stolen Firearms: Nearly 1.1 million firearms were reported stolen between 2019 and 2023, with thefts from private citizens accounting for 95% of these reports. Pistols reported stolen from a federal firearms licensee or an interstate shipment present a dangerous trend: they were used in a shooting more than one year faster than non-stolen pistols. The median time to first shooting for stolen pistols was 258 days.
  • Multiple Sales: From 2017 to 2023, there was a 102% increase in crime guns being traced to a multiple sale transaction, meaning, in just five years, it became twice as common for a multiple firearm sale to include a gun later recovered at a crime scene.
• Firearms Trafficking Across the Southern Border and Supporting ATF’s Efforts to Fight It. Volume IV also highlights firearms trafficking trends from the United States to Mexico, showing a 63% increase tracing of crime guns recovered in Mexico between 2017 and 2023.
  • Source States: Although crime guns recovered in Mexico increasingly originate from all states, in 2023, the majority of traced firearms recovered in Mexico came from Texas (43%), Arizona (22%), and California (9%).
  • Cartels are Arming Themselves Through U.S. Trafficking Channels: Five United States to Mexico pipelines accounted for 32% of all recovered crime guns traced to a purchaser. The Arizona to Sonora pipeline was the most dominant, followed by Texas to Tamaulipas, Texas to Nuevo León, Texas to Chihuahua, and Texas to Guanajuato. 82% of traced Mexico crime guns were recovered in a state with a dominant presence of both or either the Sinaloa or Jalisco New Generation Cartels.
  • Successful Interdictions can have an Impact, if Properly Funded: Between 2017 and 2021, ATF initiated 1,011 investigations of firearms trafficking from the United States to Mexico in which 1,082 crime guns were recovered and traced to a purchaser. Nearly 92% of these crime guns were recovered in the United State, prior to diversion to Mexico. In 2023, ATF Southbound interdictions rose 86% from the prior year. As this report makes clear, increased resources could help ATF expand its operational efforts along the border.
• Firearms Manufacturing and Sales. Volume IV highlights trends in manufacturing and sales of firearms, including:  
  • Firearm Production Far Outpaced Population Growth: Between 2000 and 2023, the number of firearms manufactured per 100,000 people increased by 113%, while the United States population grew by only 19%.
  • Growth in Silencers: The manufacturing of firearm suppressors rose by over 8,000% between 2000 and 2023. Silencers now account from 83% of all National Firearms Act-regulated manufacturing.
  • Over 100-Million Firearms Sold from FFL’s Alone: Based on the estimated minimum sales volume, between 2017 and 2023, federal licensees transferred at least 106,763,004 firearms to the public.
• Recommendations for Action. Volume IV underscores the urgent need for action to curb firearms trafficking trends, including by:
  • Expand Background Checks: Expanded background checks would save lives. Data clearly shows that such checks limit the opportunities dangerous, prohibited persons have to acquire firearms. There are several means by which this could be accomplished, including increasing ATF’s funding to investigate illegal trafficking accomplished by those not completing currently required background checks, prosecuting and securing appropriate sentences for unlicensed dealers who violate current laws, or examining federal and state-level background check laws to assess their effectiveness and the need for their expansion.
  • Enhanced Accountability in Law Enforcement Firearm Resales: Law enforcement agencies should evaluate their discretionary resale practices, which too often result in firearms being used in subsequent crimes — with over 25,000 firearms previously in the possession of law enforcement ending up at crime scenes between 2019 and 2023 alone. In considering whether to adopt a mandatory destruction policy, such as the one recommended by the International Association of Chiefs of Police, law enforcement agencies should consider distinguishing policies that allow law enforcement officers to purchase their issued service weapons versus policies governing the sale of weapons to the general public.
  • Strengthen and Expand ATF’s Crime Gun Intelligence: As of 2024, eTrace and NIBIN were used by approximately 55% and 67% of law enforcement agencies nationwide, respectively. Funding expanded and comprehensive the use of ATF’s eTrace and NIBIN tools by ATF and its partner law enforcement agencies will provide more investigative leads on violent gun crimes, enhanced strategic intelligence on violent gangs and other criminally active groups, and improve the apprehension and prosecution of violent gun criminals. Increased funding would improve these results by allowing ATF to provide law enforcement a single, automated platform with these tools.  

In April 2024, the Department issued Volume III of the NFCTA, Firearm Trafficking Investigations, which examines 9,708 closed ATF firearm trafficking investigations initiated between CY 2017 and 2021.

In February 2023, the Department issued Volume II of the NFCTA, Crime Gun Intelligence and Analysis, which presents and analyzes data on crime guns (firearms used in crime) recovered between 2017 and 2021. The analysis reinforces the critical importance of ATF’s unique crime gun tracing authority and highlights the value of data from ATF’s NIBIN program.

In May 2022, the Department issued Volume I of the NFCTA, Firearms in Commerce, which presents and analyzes data collected by ATF and other federal agencies related to the manufacture, exportation, and importation of firearms.

To produce the NFCTA, the ATF assembled and led a team of independent subject experts from current and former law enforcement, academia, and related fields. Although ATF issues a variety of public and law enforcement reports and bulletins regarding firearm commerce, trafficking, and related issues every year, it has not undertaken a joint academic study close to the scale of the NFCTA in more than 20 years.

A Virginia man and former business owner pleaded guilty yesterday to not accounting for and paying employment taxes to the IRS.

According to court documents and statements made in court, Richard E. Moore, of Augusta County, was the executive vice president and part owner of Nexus Services Inc., a Verona-based company that offered bond securitization and other services to immigrants detained by U.S. Immigration and Customs Enforcement. Moore, who exercised control over Nexus’s business and financial affairs, was responsible for withholding Social Security, Medicare and income taxes from Nexus’s employees’ wages and paying those funds over to the IRS. He was also responsible for filing quarterly employment tax returns. For many quarters between the first quarter of 2015 and first quarter of 2024, Moore withheld the funds but did not pay them over to the IRS and did not file the returns.

In total, he caused a tax loss to the IRS of approximately $3.1 million.

Moore’s sentencing will be scheduled for a later date. He faces a maximum penalty of five years in prison for each count of failing to pay employment taxes. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Zachary T. Lee for the Western District of Virginia made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorneys William Montague and Matthew Hicks of the Tax Division are prosecuting the case.

R&K Enterprises Inc. (R&K), headquartered in Newport News, Virginia, has agreed to pay over $2.6 million to resolve allegations under the False Claims Act and the common law that the company represented that it was a small business eligible for certain small business set-aside contracts when it did not meet the program rules to qualify as a small business.

The United States alleged that R&K represented and certified in its bid that it met the size standard for the General Services Administration’s One Acquisition Solution for Integrated Services Small Business Pool 1 Contract — measured in average revenue over the previous three years from the date of the bid — when it did not. To appear to meet the size standard, R&K allegedly novated a contract to another company, K&P Management Inc. (K&P), and represented the two companies were not affiliated. The United States alleged that, under the applicable rules, the two companies were affiliated based on several factors, including that the wife of R&K’s owner owned K&P, all of K&P’s purported revenue came from R&K, the two companies shared executives and R&K exercised control over K&P. As a result, the United States contended that R&K should have included K&Ps revenue in R&K’s calculation of its size.

“Small business set-aside contracts assist small businesses to compete,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When ineligible companies fraudulently obtain contracts reserved for small businesses, they prevent the small business community from receiving the contracting opportunities that Congress intended.”

“My office is committed to identifying, investigating and eradicating attempts to exploit programs intended to protect competition for contracts,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “The complex, multi-agency investigation that culminated in this settlement exemplifies the importance of strong partnerships that maximize our expertise and authority to effectively enforce the law.”

“We will work with law enforcement partners to investigate allegations of small business fraud, including companies that misrepresent their status to get federal contracts,” said Deputy Inspector General Robert C. Erickson of the General Services Administration (GSA).

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Virginia with assistance from the GSA Office of Inspector General, Small Business Administration and Department of Transportation Office of Inspector General.

Trial Attorney Danielle Rowan of the Justice Department’s Civil Division and Assistant U.S. Attorney Clare Wuerker for the Eastern District of Virginia investigated the matter.

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

Settlement

The Justice Department announced today that it entered into an agreement to share $50 million in forfeited assets with the Republic of Estonia (Estonia) in recognition of Estonia’s assistance in the successful prosecution of Danske Bank and related forfeiture.

“Coordinating with our foreign law enforcement counterparts is critical in the fight against complex financial crime — which now, more than ever before, is transnational in nature,” said Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division. “Today’s agreement to share $50 million in forfeited funds with Estonia recognizes Estonia’s valuable contribution to the successful U.S. prosecution of Danske Bank, which pleaded guilty for lying to U.S. banks about its inadequate anti-money laundering controls and high-risk, offshore customer base to gain access to the U.S. financial system. Estonia’s pledge to use the funds to combat financial crime, enhance asset recovery, and facilitate international cooperation reflects both countries’ commitment to invest in our vital law enforcement relationship to tackle complex cross-border crime.”

In December 2022, Danske Bank pleaded guilty to one count of conspiracy to commit bank fraud in a scheme to defraud U.S. banks regarding Danske Bank Estonia’s customers and anti-money laundering controls to facilitate access to the U.S. financial system. According to admissions and court documents, Danske Bank Estonia had a lucrative business line serving non-resident customers, whom it attracted by ensuring that those customers could transfer large amounts of money through Danske Bank Estonia with little, if any, oversight. Under the terms of the plea agreement, Danske Bank agreed to forfeit $2.059 billion. The Justice Department agreed to credit approximately $850 million in payments Danske Bank made in a coordinated criminal resolution with Danish authorities and a coordinated civil resolution with the U.S. Securities and Exchange Commission and forfeited approximately $1.2 billion. Estonia provided valuable law enforcement assistance in the Danske Bank investigation and ultimate resolution and forfeiture by providing evidence obtained in its investigation of individuals and in response to requests from U.S. authorities.

Under the agreement announced today, Estonia will use the funds to strengthen its capacity to fight financial crime. The shared funds must be used to 1) prevent, detect, investigate, and prosecute financial crime in all its forms, including money laundering, fraud, cybercrime, corruption, and terrorist financing; 2) provide cyber forensics, forensic accounting, counterintelligence, and other specialized education and training across the Baltic States and Nordic region, including as may be appropriate through a training center and collaboration with the United States; 3) enhance compliance with requirements and effective practices for combatting money laundering and the financing of terrorism, strengthen regulatory and administrative controls against money laundering and terrorist financing, and increase public awareness regarding financial crimes, white-collar crime, and financial fraud; and 4) enhance Estonian confiscation procedures and strengthen international cooperation in confiscation matters.

The agreement contains key measures to ensure transparency and accountability. Under the agreement, Estonia will establish an Implementing Commission composed of the heads of the Estonian Ministries of Justice and Digital Affairs, Internal Affairs, and Finance that will oversee the administration of funds and projects. In addition, expenditures will be subject to review by an independent external auditor. In recognition of the important bilaterial relationship of Estonia and the United States and their critical cooperation in law enforcement matters, the United States will serve as an advisor to the Implementing Commission.

Danske Bank was prosecuted by the Bank Integrity Unit of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the U.S. Attorney’s Office for the Southern District of New York. The FBI investigated the case. The Justice Department’s Office of International Affairs provided critical assistance.

The Criminal Division, through MLARS’ International Unit, administers the Justice Department’s international asset forfeiture sharing program. Pursuant to federal law, and in coordination with the Departments of the Treasury and State, the Attorney General may share proceeds of successful forfeiture of property with foreign countries that participate in the seizure or forfeiture of the property.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia against crude-oil producers XCL Resources Holdings LLC (XCL), Verdun Oil Company II LLC (Verdun) and EP Energy LLC (EP).

The lawsuit alleges that the three companies violated the pre-transaction notification and waiting period requirements of the Hart-Scott-Rodino Act of 1976 (HSR Act), following Verdun’s $1.4 billion purchase agreement for EP on July 26, 2021. At the time of transaction, Verdun was under common management with XCL.

According to the complaint, the three companies failed to observe a required waiting period following such a large transaction, in which federal agencies can investigate a potential merger before it closes. Instead, EP allowed Verdun and XCL to assume operational and decision-making control over significant aspects of its day-to-day business operations, including a stoppage to EP’s planned well-drilling and development at a time when the U.S. crude-oil market faced significant supply shortages and consumers faced soaring gasoline prices.

Simultaneous to filing its complaint, the department filed a proposed settlement, subject to approval by the court, under which the defendants have agreed to pay a $5.6 million civil penalty to resolve the lawsuit, a record civil penalty for illegal pre-merger coordination in violation of the HSR Act.

Further details about this matter are described in the FTC’s press release issued today, and in the complaint and competitive impact statement.

Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period via email to bccompliance@ftc.gov or by post to Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, CC-8416, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

Two laboratory marketers — Shahram Naghshbandi, of Fort Worth, Texas, and John Bello, of Chesterfield, Virginia; three physicians — Dr. Abbesalom Ghermay, of Plano, Texas; Dr. Daniel Theesfeld, of Longview, Texas; and Dr. James Cook, of Richmond, Virginia; and medical practice owner Troy Belton, of Columbia, South Carolina, and associated entities, have agreed to pay a total of $1,137,914 to resolve False Claims Act allegations they took part in laboratory kickback schemes in violation of the Anti-Kickback Statute. The parties have agreed to cooperate with the Justice Department's investigations of, and litigation against, other participants in the alleged schemes.

“Monetary inducements to healthcare providers undermine the integrity of taxpayer-funded healthcare programs and can improperly influence healthcare providers’ decision-making,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to hold accountable individuals, as well as companies, who disregard their legal obligations and participate in illegal kickback schemes.”

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 healthcare programs. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

The Anti-Kickback Statute ascribes liability to parties on both sides of an impermissible kickback arrangement. The settlements announced today resolve allegations that laboratory marketers and their companies paid or conspired to pay kickbacks to doctors, and that doctors and their companies received kickbacks in return for laboratory referrals. The alleged kickbacks resulted in the submission of false or fraudulent laboratory testing claims to Medicare in violation of the False Claims Act.

The Marketer Settlements

The settlements announced today resolve allegations that two marketers paid kickbacks in violation of the Anti-Kickback Statute to induce healthcare providers to make referrals to laboratories in New Jersey, Florida, Virginia and Texas.

Shahram Naghshbandi agreed to pay $400,000 to resolve allegations that he entered into illegal schemes to pay kickbacks to doctors for laboratory referrals. From August 2018 through July 2022, in return for Naghshbandi and his marketing company arranging for and/or recommending that several healthcare providers order laboratory testing from three clinical laboratories in Kenilworth, New Jersey; Dallas, Texas; and Orlando, Florida, these laboratories allegedly paid commissions to Naghshbandi’s marketing company based on reimbursements from the health care providers’ laboratory testing referrals. To induce these healthcare providers to order testing, Naghshbandi allegedly paid them thousands of dollars in kickbacks disguised as investment distributions from purported management service organizations (MSOs). In addition to the monetary settlement, Naghshbandi has been excluded from federal healthcare programs for 10 years.

John Bello and his marketing company, RiteRx4U LLC, agreed to pay $140,000 to resolve allegations that, from February 1, 2019, through February 28, 2021, they paid Dr. James Cook, of Richmond, Virginia, thousands of dollars in kickbacks to induce Dr. Cook to order testing from two clinical laboratories in Kenilworth, New Jersey, and Chester, Virginia. Bello and RiteRx4U allegedly sought to disguise these payments as purported investment returns when they were in fact based on the volume and value of Dr. Cook’s referrals to these laboratories.

The Healthcare Provider Settlements

The settlements announced today also resolve allegations that healthcare providers received kickbacks in violation of the Anti-Kickback Statute in return for making referrals to laboratories in New Jersey, Virginia and Texas.

Dr. Abbesalom Ghermay agreed to pay $228,482 to resolve allegations that, from January 2016 to November 2018, he received thousands of dollars in payments from a purported MSO in return for ordering testing from a laboratory in Houston, Texas.

Dr. James Cook and his medical practice, Family Medical Centers, P.C., agreed to pay $206,987 to resolve allegations that, from February 2019 to February 2021, they received thousands of dollars in payments from marketer RiteRx4U LLC in return for ordering testing from two clinical laboratories in Kenilworth, New Jersey, and Chester, Virginia. Cook and his practice allegedly received thousands of dollars in payments from the marketer that were disguised as purported investment returns but in fact were based on the volume and value of Cook’s testing referrals to the two laboratories.

Dr. Daniel Theesfeld and his medical practice, H8 Pain Management Center of Texas PLLC, agreed to pay $99,125 to resolve allegations that, from April 2017 to September 2018, they received thousands of dollars in payments from a purported MSO in return for ordering testing from a laboratory in Houston, Texas.

Advantage Medical Group, an outpatient clinic in Columbia, South Carolina, and its owner, Troy Belton, agreed to pay $63,320 to resolve allegations that from June 2017 to July 2022, they received thousands of dollars in payments from two purported MSOs in return for ordering testing from three laboratories in Kenilworth, New Jersey; Dallas, Texas; and Denton, Texas.

“Kickbacks can harm taxpayer-funded healthcare programs and improperly influence healthcare providers’ medical decisions,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Patients should always be able to rely on their medical professionals making decisions in the patients’ best interest, and not for any monetary reason. We will continue to pursue all those involved in illegal kickback schemes.”

“Individuals and entities that participate in the federal health care system are required to obey the laws meant to preserve the integrity of program funds and the provision of appropriate, quality services to patients,” said Special Agent in Charge Naomi Gruchacz of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue working with law enforcement to investigate parties alleged to have violated the Anti-Kickback Statute.”

The settlements were the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of New Jersey, with assistance from HHS-OIG.

Senior Trial Counsel Christopher Terranova of the Civil Division’s Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney Kruti Dharia for the District of New Jersey handled the settlements.

The United States has recovered over $53 million relating to conduct involving MSO kickbacks to health care providers, including False Claims Act settlements with 48 physicians. The government’s pursuit of these matters illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 1-800-HHS-TIPS (800-447-8477).

The claims resolved by the settlements are allegations only. There has been no determination of liability.

View the Naghshbandi Settlement here.

View the Bello Settlement here.

View the Cook Settlement here.

View the AMG Settlement here.

View the Theesfeld Settlement here.

View the Ghermay Settlement here.

Attorneys General of Illinois and Massachusetts Join Suit Against RealPage and Apartment Landlords, Bringing Total State and Commonwealth Co-Plaintiffs to 10

The Justice Department, together with its state co-plaintiffs, filed an amended complaint today in its antitrust lawsuit against RealPage, to sue six of the nation’s largest landlords for participating in algorithmic pricing schemes that harmed renters.

The amended complaint alleges the landlords — Greystar Real Estate Partners LLC (Greystar); Blackstone’s LivCor LLC (LivCor); Camden Property Trust (Camden); Cushman & Wakefield Inc and Pinnacle Property Management Services LLC (Cushman); Willow Bridge Property Company LLC (Willow Bridge) and Cortland Management LLC (Cortland) — participated in an unlawful scheme to decrease competition among landlords in apartment pricing, harming millions of American renters. Together, these landlords operate more than 1.3 million units in 43 states and the District of Columbia. The Attorneys General of Illinois and Massachusetts joined the amended complaint as co-plaintiffs, increasing the total number of State and Commonwealth co-plaintiffs to 10. At the same time, the Justice Department filed a proposed consent decree with landlord Cortland that requires it to cooperate with the government, stop using its competitors’ sensitive data to set rents and stop using the same algorithm as its competitors without a corporate monitor.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”

The amended complaint alleges that the six landlords actively participated in a scheme to set their rents using each other’s competitively sensitive information through common pricing algorithms.  Along with using RealPage’s anticompetitive pricing algorithms, these landlords coordinated through a variety of means, including:

• Directly communicating with competitors’ senior managers about rents, occupancy, and other competitively sensitive topics. In one example, Greystar supplied Camden with information not only about very recent renewal rates, but also its approach to pricing for the upcoming quarter, its acceptance of RealPage’s pricing recommendations, use of concessions and competitively sensitive information about occupancy. Likewise, executives at Camden and LivCor communicated over the course of months about their pricing strategies, including plans for certain price increases.
• Regularly conducting “call arounds.” During these discussions, euphemistically referred to as “market surveys,” property managers called or emailed competitors to share, and sometimes discuss, competitively sensitive information about rents, occupancy, pricing strategies and discounts.
• Participating in “user groups” hosted by RealPage. For instance, landlords discussed via user groups how to modify the software’s pricing methodology, as well as their own pricing strategies. In one example, LivCor and Willow Bridge executives participated in a user group discussion of plans for renewal increases, concessions and acceptance rates of RealPage rent recommendations.
• Sharing information with competitors about parameters in RealPage’s software. As an example, at the request of Willow Bridge’s director of revenue management, Greystar’s director of revenue management supplied its standard auto-accept parameters for RealPage’s software, including the daily and weekly limits and the days of the week for which Greystar used “auto-accept.”

The Justice Department also announced a proposed consent decree that, if approved by the court, would resolve its claims against Cortland, a landlord that manages over 80,000 rental units in 13 states. Under the proposed consent decree, Cortland would cooperate in the Justice Department’s investigation and litigation and be barred from, among other things:

• Using competitors’ competitively sensitive data to train or run any pricing model;
• Using third-party software or algorithms to price apartments without the supervision of a court-appointed monitor; and
• Soliciting, disclosing or using any competitively sensitive information with any other property manager as part of setting rental prices or generating rental pricing recommendations.

As required by the Tunney Act, the proposed consent decree, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed consent decree during a 60-day comment period to Chief, Technology and Digital Platforms Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 8600, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the Middle District of North Carolina may enter the final judgment upon finding it is in the public interest.

Co-plaintiffs in the case are the Attorneys General of California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington.

Greystar is headquartered in Charleston, South Carolina; LivCor and Cushman & Wakefield (whose residential property management business formerly operated independently as Pinnacle) are headquartered in Chicago; Willow Bridge (formerly known as Lincoln Residential) is headquartered in Dallas; Camden is headquartered in Houston; and Cortland is headquartered in Atlanta. All manage multifamily apartment buildings; several own some or all of the properties under their management.

The Justice Department today announced the completion of a major effort to modernize the process that federal agencies use to acquire real property. Over the past two years, the Justice Department’s Environment and Natural Resources Division (ENRD) has collaborated with attorneys throughout the federal government to identify outdated provisions in delegations of authority previously issued by the Justice Department between 1970 and 1991.

As a result of that effort, on Dec. 10, 2024 — pursuant to 40 U.S.C. § 3111(b) — Assistant Attorney General Todd Kim of ENRD issued 10 revised delegations of title review authority to land-acquiring federal agencies. These revised delegations should reduce the unnecessary duplication of effort by agency and Justice Department staff, promoting government efficiency and saving taxpayer funds.

Before the United States may acquire real property, 40 U.S.C. § 3111 requires that the Attorney General must first determine that the purchase will include sufficient title for the United States to use the property as intended. In 1970, because most land-acquiring agencies already employed legal staff qualified to review title evidence and make that determination, Congress authorized the Justice Department to delegate title review responsibility, allowing agency counsel to approve sufficiency of title on behalf of the Attorney General subject to Justice Department supervision and regulation. The Attorney General, through the Assistant Attorney General, subsequently delegated title review authority to 10 different land-acquiring agencies.

Many provisions of the original delegations are outdated, including references to since-replaced regulations and a now-unnecessary restriction on agency approval of title in certain acquisitions valued at more than $100,000. Additionally, since 1970, Congress has dissolved one affected agency, the Atomic Energy Commission, and administratively transferred another, the United States Coast Guard. The revised delegations address these issues, incorporating the Regulations of the Attorney General Governing the Review and Approval of Title for Federal Land Acquisitions (2016), eliminating the $100,000 limitation on certain acquisitions and identifying the modern version of each relevant agency.

“The revised delegations will enhance the productive working relationship that the Justice Department has always maintained with its agency partners, ensuring that each land acquisition complies with federal law while also promoting government efficiency and the conservation of taxpayer resources,” said Assistant Attorney General Kim. “This was a years-long project that will have a tangible effect on thousands of real property acquisitions by the federal government every year. I want to thank not only the Justice Department attorneys involved in this project, but also those throughout the entire federal government who contributed their ideas, experience, and expertise.”

The following agencies received revised delegations of authority: the Department of Agriculture, Department of the Army, Department of Energy, Department of Homeland Security, Department of the Interior, Department of the Navy, Department of Transportation, Department of Veterans Affairs, the General Services Administration and the U.S. Section of the International Boundary and Water Commission.

ENRD’s Land Acquisition Section — including Section Chief Andrew M. Goldfrank, Division Counsel for Title Matters Georgia Garthwaite and Trial Attorney Ben McMurtray — led the effort.

The Justice Department’s Office for Access to Justice today announced the launch of the Access to Justice Prize, a year-long prize competition that aims to foster innovative solutions to address critical gaps in access to justice across the United States. The inaugural competition will focus on access to justice gaps faced by rural communities across the country, aiming to advance general public awareness about rural access to justice gaps; prompt and support the development of new and innovative solutions; and promote the replication and expansion of strategies that work.

“Through our engagement with courts, justice practitioners, legal aid providers, academic institutions and other organizations across the country, we’ve heard loud and clear that solutions to close the rural justice gap must begin with rural communities themselves,” said Director Rachel Rossi of the Justice Department’s Office for Access to Justice. “Through the Access to Justice Prize competition, we further this approach, empowering those who best know the barriers their communities face to drive the effective solutions that will ensure access to justice for all, regardless of geography.”

Nationwide access to justice barriers are often exacerbated for rural Americans, especially when unique circumstances like long travel times, limited internet access or lack of attorneys are too often overlooked. A 2022 study by the Legal Services Corporation revealed that 77% of low-income rural households experienced at least one civil legal problem in the previous year, with 94% receiving inadequate or no legal help. Additionally, rural criminal justice systems are strained by part-time judges, contract defense counsel and lacking prosecutorial resources. Studies demonstrate that recruitment and retention challenges are increasing for criminal justice careers in rural areas, including for public defenders, prosecutors and law enforcement. And rural courts face rising caseloads, delay, uneven workloads among judges and lack of resources.

The 2025 Access to Justice Prize aims to inspire and support innovative ideas that address these challenges by engaging those closest to the issues — rural courts, practitioners and organizations. Eligible participants are encouraged to submit proposals for any solutions that expand access to justice, including, for example, solutions to:

• Increase access to legal representation, assistance or information;
• Simplify legal processes, systems, forms or language;
• Leverage technology to enhance legal system efficiency;
• Expand access for underserved rural populations, including Tribal communities and individuals with disabilities; and
• Build innovative partnerships to address local justice needs.

More information and additional examples can be found here. The competition will run on a one-year cycle, starting in January 2025, and will feature two judging phases:

1. Finalist Selection: Up to five finalists will receive $5,000 each and then refine their proposals over a six-month phase in preparation to compete for the grand prize.
2. Grand Prize Selection: Finalists will present their solutions at an Access to Justice Showcase, where judges will select the grand prize winner to receive $50,000.

Below is the timeline for the year-long Access to Justice Prize competition cycle:

• Jan. 7: Submissions open
• March 31: Submission deadline
• April 30: Finalists announced
• May 1 – Oct. 31: Refinement Phase
• Early December 2025: Grand Prize Showcase and winner announcement

Applicants are encouraged to visit the Access to Justice Prize website on Challenge.gov to review eligibility requirements, submission guidelines, and resources. The Office for Access to Justice will also present an informational webinar on Feb. 11 at 3:00 PM EST. Applications may be submitted beginning on Jan. 7 and must be received by 11:59 PM EST on March 31.

The Access to Justice Prize competition continues the ongoing work of the Office for Access to Justice to engage with and support rural communities in closing the justice gap. This includes the publication of resources to support rural access to justice; a focus on economic barriers faced by rural communities; and broad engagement with rural-focused court leaders, access to justice commissions, initiatives (including the Kansas Rural Justice Initiative Committee and the Alaska Legal Services Corporation’s Community Justice Workers project), criminal justice practitioners, civil legal aid providers, pro bono volunteers and more.

Entities and organizations are encouraged to also review their eligibility for Justice Department grant funding opportunities that may support rural justice initiatives and programs, including those specifically focused on rural jurisdictions, such as the Rural Program administered by the Office on Violence Against Women and the Rural Violent Crime Reduction Initiative administered by the Office of Justice Programs.

The Justice Department announced today that it has filed a lawsuit against the City of Hazleton, Pennsylvania, to challenge the city council’s at-large method of election.

The lawsuit alleges that the city’s current at-large method of electing city council members results in Hispanic citizens having less opportunity than other members of the electorate to participate in the political process and to elect candidates of choice, in violation of Section 2 of the Voting Rights Act. Hispanic voting-age citizens make up more than 40% of the city’s electorate. Hispanic-preferred candidates have run for the city council and routinely lose, despite the county’s sizeable Hispanic citizen population.

“The Voting Rights Act is an important tool to ensure that underrepresented citizens have an equal opportunity to choose their elected officials,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department is committed to ensuring that all citizens have an equal opportunity to participate in the democratic process and elect candidates of choice. We look forward to working with officials to achieve a more perfect union by bringing Hazleton, Pennsylvania, into compliance with the Voting Rights Act.”

“The Hispanic population is a growing and important population in the City of Hazelton, and those citizens should have the ability to choose candidates that represent their interests,” said U.S. Attorney Gerard M. Karam for the Middle District of Pennsylvania. “This complaint demonstrates my office’s commitment to partner with the Justice Department to enforce civil rights statutes like the Voting Rights Act.”

The complaint, filed in the U.S. District Court for the Middle District of Pennsylvania, alleges that changing the method of election can create opportunities for Hispanic voters to elect candidates of their choice to the Hazleton City Council. For example, by electing councilmembers from single-member districts, Hispanic voters would have an opportunity to elect at least two members of the five-member city council. The lawsuit seeks a federal court order implementing a new method of electing the Hazleton City Council.

The Justice Department looks forward to continued discussions with the City of Hazleton toward resolution of this matter.

The Civil Rights Division’s Voting Section, working with U.S. Attorneys’ Offices, enforces the civil provisions of federal statutes that protect the right to vote, including the Voting Rights Act, National Voter Registration Act, Help America Vote Act, Civil Rights Acts and the Uniformed and Overseas Citizens Absentee Voting Act.

More information about voting and elections is available at www.justice.gov/voting. Learn more about the Voting Rights Act and other federal voting laws at www.justice.gov/crt/voting-section. Complaints about possible violations of federal voting rights laws can be submitted through the Civil Rights Division’s website at civilrights.justice.gov or by telephone at 1-800-253-3931.

A Florida woman was sentenced today to 30 months in prison for her role in a money laundering conspiracy connected to romance scams that defrauded American victims.

Cristine Petitfrere, 30, of Miramar, Florida, was sentenced after admitting to personally laundering millions of dollars as part of her participation in the conspiracy. Petitfrere helped to funnel large sums of money from victims of romance scams into the hands of her overseas co-conspirators, retaining a portion as payment for her services and transferring the rest.

Romance scams target unsuspecting individuals, many of whom are seeking companionship online, and involve fraudsters who create fake personas to build relationships with victims. The fraudsters then convince victims to send money, often under false pretenses such as emergency situations or investments. These schemes not only cause significant financial losses, but also deeply impact the lives of victims.

Petitfrere pleaded guilty to conspiracy to commit money laundering in the Southern District of Florida in September 2024. According to her plea agreement, Petitfrere personally laundered over $2.7 million of criminal proceeds. As part of her sentence, Petitfrere was ordered to forfeit $203,815.59 in proceeds that she personally received from the offense.

“Romance scams are a growing threat to Americans, particularly to the elderly and vulnerable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to vigorously pursue those who help facilitate these criminal enterprises, whether they work on the frontlines of deception or behind the scenes.”

The FBI Miami Field Office investigated the case.

Trial Attorneys Matthew A. Robinson and Lauren M. Elfner of the Civil Division’s Consumer Protection Branch are prosecuting the case.

If you or someone you know is age 60 or older and has experienced financial fraud, experienced professionals are standing by at the National Elder Fraud Hotline at 1-833-FRAUD-11 (1-833-372-8311). This Justice Department hotline, managed by the Office for Victims of Crime, can provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is open Monday through Friday from 10:00 a.m. to 6:00 p.m. ET. English, Spanish and other languages are available.

More information about the department’s efforts to help American seniors is available at its Elder Justice Initiative webpage. For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. Elder fraud complaints may be filed with the Federal Trade Commission at www.reportfraud.ftc.gov/ or at 877-FTC-HELP. The Justice Department provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov.

El Departamento de Justicia anunció hoy que ha radicado una demanda contra la ciudad de Hazleton, Pennsylvania, para impugnar el sistema electoral por acumulación en el cual los votantes de toda la ciudad eligen a los miembros del Consejo Municipal.

La demanda alega que actualmente el sistema electoral por acumulación para la elección de los miembros del Consejo Municipal tiene como resultado el que los ciudadanos hispanos tengan una menor oportunidad de participar en el proceso electoral y de elegir a los candidatos de su elección, en violación a la sección 2 de la Ley de Derechos Electorales. Los ciudadanos hispanos con edad para votar constituyen más del 40% del electorado de la ciudad. Candidatos preferidos por los votantes hispanos se han postulado para escaños en el Consejo Municipal pero habitualmente pierden, a pesar de la considerable población de hispanos en la ciudad.

“La Ley de Derechos Electorales es una importante herramienta para asegurar que los ciudadanos insuficientemente representados tengan igualdad de oportunidades de escoger a sus funcionarios públicos,” afirmó Kristen Clarke, la Fiscal General Auxiliar de la División de Derechos Civiles del Departamento de Justicia. “El Departamento de Justicia está comprometido con asegurar que todos los ciudadanos tengan igualdad de oportunidades para participar en el proceso democrático y elegir a los candidatos de su elección. Esperamos con interés trabajar junto a los funcionarios para alcanzar una unión más perfecta y lograr que Hazleton cumpla con sus obligaciones bajo la Ley de Derechos Electorales.”

“La comunidad hispana es una creciente e importante población de la ciudad de Hazleton, y sus ciudadanos deben tener la habilidad de escoger candidatos que representen sus intereses,” declaró Gerard M. Karam, el Fiscal Federal para el Distrito Central de Pennsylvania. “Esta demanda demuestra el compromiso de mi oficina de colaborar con el Departamento de Justicia para hacer cumplir las leyes de derechos civiles, tal como la Ley de Derechos Electorales.” 

La demanda, radicada en el Tribunal Federal de Distrito para el Distrito Central de Pennsylvania, alega que cambiar el sistema electoral puede crear oportunidades para que los votantes hispanos elijan candidatos de su elección al Consejo Municipal de Hazleton. Por ejemplo, al elegir miembros del Consejo Municipal “por distrito” de un solo miembro cada uno, los votantes hispanos tendrían la oportunidad de elegir al menos dos de los cinco miembros del Consejo Municipal. La demanda solicita una orden judicial federal para implementar un nuevo sistema electoral para el Consejo Municipal de Hazleton.

La Sección de Votación de la División de Derechos Civiles, junto con las Oficinas de los Fiscales Federales, vela por el cumplimiento de las leyes federales civiles que protegen el derecho al voto, incluyendo la Ley de Derechos Electorales, la Ley Nacional de Inscripción de Votantes, la Ley Ayudemos a Estados Unidos a Votar, las Leyes de Derechos Civiles, y la Ley de Votación para los Uniformados y los Ciudadanos en el Extranjero.

Información adicional sobre la votación y las elecciones está disponible en www.justice.gov/crt/voting/ y Vote.gov en Español. Aprenda más sobre la Ley de Derechos Electorales y otras leyes federales electorales en www.justice.gov/crt/voting-section. Denuncias relacionadas a posibles vulneraciones de las leyes federales de derechos electorales pueden presentarse mediate el formulario en línea de la División de Derechos Civiles en https://civilrights.justice.gov/o por teléfono al (800) 253-3931.

A Florida man pleaded guilty today in the Southern District of Florida to charges of defrauding and conspiring to defraud investors in two public companies.

According to court documents, Theodore Farnsworth, 62, of Miami, engaged in schemes to defraud investors in Helios & Matheson Analytics Inc. (HMNY), a publicly traded Florida- and New York-based company that was the parent of MoviePass Inc. (MoviePass), and Vinco Ventures Inc. (Vinco), a publicly traded New York-based company. From August 2017 through March 2019, Farnsworth and his co-conspirators made materially false and misleading representations relating to HMNY’s and MoviePass’ business and operations to artificially inflate the price of HMNY stock and to attract new investors. At the time, Farnsworth was HMNY’s chairman and CEO. From November 2020 through September 2024, Farnsworth and his co-conspirators used the same strategy to defraud Vinco investors. Farnsworth also briefly served as Vinco’s CEO.

“Theodore Farnsworth — formerly the CEO of two publicly traded companies — repeatedly lied to the public to artificially inflate these companies’ stock prices, defraud investors, and enrich himself and his co-conspirators,” said Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division. “He concealed that MoviePass’ subscription model was a money-losing gimmick and falsely claimed that HMNY used artificial intelligence to monetize MoviePass’ subscriber data, among other misrepresentations. The Criminal Division is committed to protecting investors from criminals who engage in fraudulent schemes, including those that employ AI washing.”

“Theodore Farnsworth’s plans and promises for MoviePass seemed too good to be true — they were in fact part of a securities fraud scheme,” said Assistant Director in Charge James E. Dennehy of the FBI New York Field Office. “As he admitted today, Farnsworth’s ploys and boasts were actually lies and misrepresentations designed to boost stock prices. The FBI will continue to ensure anyone attempting to commit fraudulent schemes at the expense of investors is held accountable in the criminal justice system.”

MoviePass was a privately held company that offered subscribers a certain number of movie tickets per month at a flat monthly fee. HMNY acquired a majority ownership interest in MoviePass, after which MoviePass introduced a new “unlimited” plan that purported to allow new subscribers to see unlimited movies in theaters with no blackout dates for a flat monthly fee of $9.95 (the “unlimited” plan). Farnsworth and his co-conspirators falsely claimed that MoviePass’ “unlimited” plan was tested, sustainable, and would be profitable or break even on subscription fees alone. However, Farnsworth knew that the “unlimited” plan was a temporary marketing gimmick to attract new subscribers and, in turn, to artificially inflate HMNY’s stock price and attract new investors. In reality, MoviePass lost money from the “unlimited” plan.

In addition, Farnsworth falsely claimed that HMNY possessed and used technologies — such as “big data” and “artificial intelligence” capabilities — to generate revenue by analyzing and monetizing the data MoviePass collected from subscribers. But Farnsworth knew HMNY did not possess these capabilities to monetize MoviePass’ subscriber data and had incorporated any such technologies into the MoviePass application. The charges in this case, originally brought in 2022, represent one of the Criminal Division’s first “AI washing” cases.

Farnsworth also made false and misleading representations about the positive impact that multiple revenue streams (other than subscription fees) were having on MoviePass’ profitability and self-sufficiency. At the time, however, Farnsworth knew MoviePass did not have non-subscription revenue streams that would make MoviePass self-sufficient or otherwise offset the losses MoviePass experienced as a result of the unprofitable “unlimited” plan.

Additionally, Farnsworth falsely claimed that MoviePass’ cost of goods, as reflected in the number of tickets each subscriber purchased using their subscription, was naturally declining over time consistent with publicly stated expectations. In fact, Farnsworth and his co-conspirators directed MoviePass employees to implement numerous tactics to prevent certain subscribers from using the purportedly “unlimited” service to try to ease MoviePass’ cash shortfalls. These tactics included directing MoviePass employees to “throttle” subscribers who most frequently used the service to buy movie tickets, thereby inhibiting their ability to use the MoviePass service.

In addition to the fraud scheme related to HMNY and MoviePass, Farnsworth conspired with others to unjustly enrich themselves by falsely inflating the price of Vinco stock. Specifically, Farnsworth and his co-conspirators concealed from investors the true facts relating to the business and diverted the proceeds of the conspiracy for their personal use and benefit. Farnsworth and his co-conspirators took steps to conceal the conspiracy from regulators, law enforcement, investors, and the media.

Farnsworth pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. He faces a maximum penalty of 20 years in prison on the securities fraud count and five years in prison on the conspiracy to commit securities fraud count. A sentencing hearing will be scheduled at a later date. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI New York Field Office is investigating the case.

Trial Attorneys Lauren Archer, Kate McCarthy, and Matthew Reilly of the Criminal Division’s Fraud Section are prosecuting the case. Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section provided substantial assistance with the investigation and prosecution.

On Dec. 30, 2024, Special Master Mary Patrice Brown authorized payments from the U.S. Victims of State Sponsored Terrorism Fund (the Fund) totaling $1.035 billion to nearly 19,000 victims of state‑sponsored terrorism.

In the first week of January, the Fund issued over $766 million to approximately 14,700 claimants and will continue issuing payments on a rolling basis.

“This year, the U.S. Victims of State Sponsored Terrorism Fund has authorized a distribution of over $1 billion in compensation to support victims of state-sponsored terrorism — bringing the total authorized to date to over $7 billion,” said Principal Deputy Assistant Attorney General Brent S. Wible, head of the Justice Department’s Criminal Division. “The Criminal Division — through its Money Laundering and Asset Recovery Section, which administers the Fund — is tireless in its pursuit of justice for victims of state sponsored terrorism.”

“Although the amount distributed is significant, no amount of money can fully compensate those devastated by acts of international terrorism for their tremendous loss and trauma,” said Special Master Brown. “As many victims have shared, it is not about the monetary compensation, it is about justice. The dedicated team at the department has remained steadfast in the pursuit of justice for these victims.”

The Fund was established by Congress and is administered by the Criminal Division’s Money Laundering and Asset Recovery Section, under the leadership of the Special Master. The Fund has previously allocated more than $6 billion for thousands of victims of state-sponsored terrorism and their families in four rounds of distributions and one round of lump sum catch-up payments. The distribution announced today brings total authorized distributions to over $7 billion. Apart from an initial appropriation of approximately $1 billion from Congress and additional congressional appropriations for lump sum catch-up payments, funds available for distributions result from certain Justice Department prosecutions and cases and other U.S. government enforcement actions.

In 2024, the Fund accepted more than 4,500 newly eligible claimants, bringing the total number of eligible claimants to more than 20,000. Amounts outstanding and unpaid on these claims exceed $120 billion. Claims are anticipated to grow in the coming years as more victims of state-sponsored terrorism apply to the Fund. While the amount of funds available is not sufficient to compensate the victims’ claims in full, this compensation provides some measure of justice for victims of state‑sponsored terrorism.

More information about the Fund’s compensation to victims of state‑sponsored terrorism is available on the Fund website at www.usvsst.com, including application materials, frequently asked questions, and publications. 

The Justice Department issued the following statement from Attorney General Merrick B. Garland on the fourth anniversary of the attack on the U.S. Capitol that disrupted a joint session of the U.S. Congress in the process of affirming the presidential election results:

“On this day, four years ago, police officers were brutally assaulted while bravely defending the United States Capitol. They were punched, tackled, tased, and attacked with chemical agents that burned their eyes and skin. Today, I am thinking of the officers who still bear the scars of that day as well as the loved ones of the five officers who lost their lives in the line of duty as a result of what happened to them on January 6, 2021.

January 6 was a violent attack on the law enforcement officers defending the Capitol, and it was an unprecedented attack on a cornerstone of our system of government — the peaceful transfer of power from one administration to the next.

Over the past four years, our prosecutors, FBI agents, investigators, and analysts have conducted one of the most complex, and most resource-intensive investigations in the Justice Department’s history.

They have analyzed massive amounts of physical and digital data, identified and arrested hundreds of people who took part in unlawful conduct that day, and initiated prosecutions and secured convictions across a wide range of criminal conduct. We have now charged more than 1,500 individuals for crimes that occurred on January 6, as well as in the days and weeks leading up to the attack.

The public servants of the Justice Department have sought to hold accountable those criminally responsible for the January 6 attack on our democracy with unrelenting integrity. They have conducted themselves in a manner that adheres to the rule of law and honors our obligation to protect the civil rights and civil liberties of everyone in this country.

I am proud of them, and I am grateful to them for the work they have done and the sacrifices they have made over the last four years to seek accountability for the January 6 attack on the Capitol.”

Athira Pharma Inc., located in Bothwell, Washington, has agreed to pay $4,068,698 to resolve allegations that it violated the False Claims Act (FCA) by failing to report allegations of research misconduct to the National Institutes of Health (NIH) and Department of Health and Human Services (HHS) Office of Research Integrity in grant applications and grant award progress reports and assurances.

“The partnership between the scientific community and the federal government is built on trust and shared values of ethical scientific conduct,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement demonstrates that the Justice Department will pursue grantees that undermine the integrity of federal funding decisions.”

“The research into neurological disorders such as Alzheimer’s and Parkinson’s Disease is critical to growing numbers of patients in our community,” said U.S. Attorney Tessa M. Gorman for the Western District of Washington. “That research must not be tainted by the misconduct highlighted in this case. To its credit, Athira immediately notified NIH of the research misconduct after the full board of directors learned of it. The company’s transparency significantly helped Athira mitigate its damages and demonstrated its resolve towards coming into compliance with the relevant law and regulations.” 

“The failure of Athira to properly disclose allegations of falsified and manipulated scientific images by its former CEO to the NIH undermines public trust in taxpayer-funded research,” said Special Agent in Charge Steven J. Ryan of the HHS Office of Inspector General (OIG). “This settlement demonstrates HHS-OIG’s commitment to protecting the integrity of federally funded research.”

The settlement resolves allegations that, between Jan. 1, 2016, and June 20, 2021, Athira failed to report allegations that its former CEO, Leen Kawas, falsified and manipulated scientific images in her doctoral dissertation and in published research papers that were referenced in several grant applications submitted to NIH, including in a grant that NIH funded in 2019. Specifically, Athira violated its regulatory obligations to disclose the allegations to NIH in grant applications and Research Progress Performance Reports, and to disclose them to the HHS Office of Research Integrity in Small Business Organization Statements, Institutional Assurances or Annual Reports on Possible Research Misconduct.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the FCA by Andrew P. Mallon Ph.D.  Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Mallon will receive $203,434 under today’s settlement. 

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Western District of Washington, with assistance from HHS-OIG.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the FCA.  Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney Erin Colleran of the Justice Department’s Civil Division and Assistant U.S. Attorney Nicholas Bohl for the Western District of Washington handled the matter.

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

Settlement

The Justice Department announced today that it secured a settlement agreement with the State of Nevada to resolve the department’s findings that Nevada violates the Americans with Disabilities Act (ADA) and the Supreme Court’s decision in Olmstead v. L.C. by unnecessarily segregating children with behavioral health disabilities in institutional settings like hospitals and residential treatment facilities.

“Children with disabilities deserve to live with their families and in the communities they call home,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “These children should not be isolated in hospitals and residential treatment facilities, far from their homes. In this settlement, Nevada has committed that children with behavioral health disabilities will receive the services they need to remain in their communities. We look forward to partnering with Nevada as it implements this agreement and ushers in a new era of meaningful reform.”

Under the ADA and the Olmstead decision, states must administer their services to people with disabilities in the most integrated setting appropriate to their needs. This agreement, filed today in the U.S. District Court for the District of Nevada, will allow Nevada’s children with behavioral health disabilities to access the services they need without being forced to leave their homes, schools, and communities. To increase community integration for these children, Nevada has made significant commitments in this agreement, including:

• Children who may have a behavioral health disability will be screened and assessed, and provided with service coordination;
• Children with behavioral health disabilities will have access to expanded home- and community-based services. These services include wraparound facilitation, mobile crisis and stabilization services, respite care, individual and family therapy, behavioral support services, family peer support and youth peer support;
• Nevada will improve diversion and transition processes to ensure children with behavioral health disabilities are being diverted from, and transitioned as quickly as possible from, segregated placements; and
• Nevada will strengthen its quality assurance and performance improvement system.

Earlier today, the department filed a complaint. At the same time, the parties asked the court to dismiss the complaint but retain jurisdiction to enforce the agreement. An independent reviewer will evaluate the state’s compliance with the agreement.

Children with disabilities have been a significant focus of the Civil Rights Division’s Olmstead enforcement work. In November 2024, the division entered an agreement with Maine resolving a lawsuit that alleged that Maine failed to serve children with behavioral health disabilities in the most integrated setting appropriate; in July 2023, the division secured a court victory in a case challenging Florida’s unnecessary institutionalization of children with complex medical needs; and in December 2022, the division issued a report finding that Alaska violated Title II of the ADA by unnecessarily institutionalizing children with behavioral health disabilities. Additional information about the Civil Rights Division is available at www.justice.gov/crt.

Note: View Assistant Attorney General Kristen Clarke's remarks here.

The Justice Department announced today that it has reasonable cause to believe that the State of Oklahoma, Oklahoma City and Oklahoma City Police Department (OKCPD) discriminate against people with behavioral health disabilities. Specifically, the department finds that:

• Oklahoma unnecessarily institutionalizes, or puts at serious risk of unnecessary institutionalization, adults with behavioral health disabilities in the Oklahoma County area, in violation of Title II of the Americans with Disabilities Act (ADA);
• Oklahoma City and OKCPD engage in a pattern or practice of conduct that discriminates against people with behavioral health disabilities when providing emergency response services, in violation of Title II of the ADA and the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994.

“People with behavioral health disabilities in the Oklahoma County area are not receiving the support they need,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Instead of accessing treatment in the community, they are institutionalized repeatedly. Further, when they call 911 for a behavioral health emergency, they get a response by armed police, even when there is no public safety issue identified. As a result, urgent mental health needs often go unaddressed and crisis situations are needlessly escalated, sometimes leading to avoidable use of force. We recognize that the state and the city are taking preliminary steps to improve access for and treatment of people with behavioral health disabilities. The Justice Department is committed to working collaboratively with Oklahoma and Oklahoma City so that they implement the right services and supports their communities need and institute a lasting remedial plan.” 

The department’s investigation of the State of Oklahoma found that thousands of people with behavioral health disabilities are admitted to psychiatric hospitals in the Oklahoma County area each year, and many have long or repeated stays. Many also have long-term stays in nursing or residential care facilities. Most would prefer to live in their communities, surrounded by friends and family, and to have the freedom to make their own choices about their lives. These individuals could live successfully in their communities if they received critical community-based services that are proven to help people with behavioral health disabilities avoid unnecessary admissions or unnecessarily lengthy stays in segregated institutional settings. But Oklahoma does not provide sufficient services to prevent unnecessary institutionalization. As a result, many people with behavioral health disabilities never receive treatment until they are in crisis, when they instead end up needlessly hospitalized or in contact with law enforcement. For many in the Oklahoma County area, OKCPD is the law enforcement agency they encounter.

The investigation also concluded that when a person calls 911 seeking assistance with a behavioral health issue, the city sends police as the sole responders in most cases. In many cases these calls for assistance could be more effectively resolved by a response by behavioral health professionals who can provide appropriate treatment, but the city rarely involves such professionals. Instead, armed OKCPD officers respond to situations involving behavioral health needs, often failing to help, escalating crises or even unnecessarily using force.

During the department’s investigation, both the state and city initiated improvements to their systems. The state continued to expand its crisis system and released an updated Olmstead plan, and the city announced plans to develop and provide a behavioral health response to 911 calls, and began to make improvements within OKCPD that will help address these violations.

The department will be conducting outreach to members of the Oklahoma community for input on remedies to address the department’s findings. People may also submit recommendations by calling (888) 473-3460 or emailing MentalHealth.Oklahoma@usdoj.gov.

The department has opened 12 pattern and practice investigations into law enforcement agencies since 2021 pursuant to 34 U.S.C. 12601, and has been actively monitoring over a dozen agreements with law enforcement agencies that were secured prior to that period. Since 2021, the department has successfully concluded agreements and portions of consent decrees with the Yonkers, New York, Police Department; the Albuquerque, New Mexico, Police Department; the Suffolk County, New York, Police Department; the Portland, Oregon, Police Bureau; and the Seattle Police Department. The department has issued findings reports concerning several agencies including: Louisville, Kentucky, Metro Police Department; the Minneapolis Police Department; the Phoenix Police Department; the Lexington, Mississippi, Police Department; the Trenton, New Jersey, Police Department; the Memphis, Tennessee, Police Department; the Worcester, Massachusetts, Police Department; and the Mt. Vernon, New York, Police Department. Investigations are ongoing regarding the Louisiana State Police; the New York City Police Department’s Special Victims Division; and the Rankin County, Mississippi, Sheriff’s Department. The department also reached a court enforceable agreement with Louisville to resolve its findings.

Additional information about the Civil Rights Division is available at www.justice.gov/crt.

The Justice Department will hold a virtual community meeting on Jan. 7 at 6 p.m. CT. Members of the public are encouraged to attend to learn more about the findings. Please register to join the meeting at www.zoomgov.com/webinar/register/WN_lZgzBC4lRJiw7tk3pfEXrw#/registration.

The Justice Department issued the following statement from Attorney General Merrick B. Garland following the attack in New Orleans:

“The country woke up this morning to news of a terrible tragedy in New Orleans that killed at least 10 people and injured many more.

My heart is broken for those who began their year by learning people they love were killed in this horrific attack, and my prayers are with the dozens who were injured, including the New Orleans Police Department Officers who risked their lives to save others.

The FBI is investigating this matter as an act of terrorism. The FBI, the ATF, the Justice Department’s National Security Division, and the U.S. Attorney’s Office for the Eastern District of Louisiana will continue to work with our law enforcement partners and will deploy every available resource to conduct this investigation.”

The Justice Department, together with the Federal Trade Commission (FTC), today announced a civil enforcement action against Dave Inc. (Dave) and its co-founder, President, Chief Executive Officer and Chairman of the Board of Directors, Jason Wilk, for alleged violations of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).

Dave is a financial technology company that offers consumers short-term cash advances through its mobile app. The government’s lawsuit alleges that the defendants misled consumers by deceptively advertising Dave’s cash advances, charging hidden fees, misrepresenting how Dave uses customers’ tips and charging recurring monthly fees without providing a simple mechanism to cancel them.

According to a complaint filed in the U.S. District Court for the Central District of California, Dave and Wilk market their app as instantly providing consumers “up to $500” without any hidden fees. The complaint alleges that the defendants actually very rarely offer consumers anywhere near the advertised $500, often do not offer any cash advance at all, and charge an “express fee” to get cash advances instantly that they do not clearly disclose before consumers give the app access to their bank accounts. The lawsuit further alleges that the defendants induce app users to pay a sizeable “tip” on Dave’s cash advances by using a deceptive interface that does not offer a clear way to avoid tipping. According to the complaint, Dave’s app falsely represents to consumers that the company will purchase or pay for a certain number of meals for needy children based on the size of a customer’s tip, while in reality Dave keeps the vast majority of tips for itself and donates only a nominal sum to charity that is insufficient to purchase the stated number of meals. Finally, the complaint alleges that the defendants have violated ROSCA by enrolling their customers in automatically recurring monthly membership fees without clearly and conspicuously disclosing material transaction terms and without providing a simple mechanism for consumers to cancel those recurring fees.

This complaint, filed by the Justice Department, seeks unspecified amounts of consumer redress and monetary civil penalties from the defendants and a permanent injunction to prohibit them from engaging in future violations. It amends and replaces an earlier complaint that FTC filed, which named only Dave as a defendant and did not seek any civil penalties.

“The Justice Department is committed to stopping companies and their executives from preying on financially vulnerable consumers with deceptive advertisements, hidden fees and subscriptions that are difficult to cancel,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to enforce the FTC Act, ROSCA and other statutes that protect consumers from such misconduct.”

Senior Trial Attorney Sarah Williams, Trial Attorneys Sean Z. Saper and John F. Schifalacqua and Assistant Director Zachary A. Dietert of the Civil Division’s Consumer Protection Branch are handling the case, in coordination with staff at the FTC’s Bureau of Consumer Protection.

For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit www.FTC.gov.

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

Note: View the fact sheet here.

WASHINGTON – Today, the Justice Department issued a comprehensive final rule carrying out Executive Order (E.O.) 14117 “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” The E.O. charged the Justice Department with establishing and implementing a new regulatory program to address the urgent and extraordinary national security threat posed by the continuing efforts of countries of concern (and covered persons that they can leverage) to access and exploit Americans’ bulk sensitive personal data and certain U.S. Government-related data. The Final Rule will take effect 90 days from the date of the Final Rule’s publication, with certain affirmative due diligence, reporting, and auditing requirements taking effect 270 days after publication.

“This final rule is a crucial step forward in addressing the extraordinary national security threat posed of our adversaries exploiting Americans' most sensitive personal data,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “This powerful new national-security program is designed to ensure that Americans' personal data is no longer permitted to be sold to hostile foreign powers, whether through outright purchase or other means of commercial access.”

The Final Rule implements the E.O. by promulgating generally applicable rules for certain categories of data transactions that pose an unacceptable risk to the national security of the United States. As described in the E.O., countries of concern and covered persons can use their access to this data to engage in malicious cyber-enabled activities and malign foreign influence activities, bolster their military capabilities, and track and build profiles on U.S. persons (including members of the military and U.S. Intelligence Community, as well as other Federal employees and contractors) for illicit purposes such as blackmail, coercion, and espionage, and to bolster their military capabilities. Countries of concern and covered persons can also exploit this data to collect information on activists, academics, journalists, dissidents, political opponents, or members of nongovernmental organizations or marginalized communities to intimidate them; curb political opposition; limit freedoms of expression, peaceful assembly, or association; or enable other forms of suppression of civil liberties.

The Final Rule reflects the risk highlighted in the E.O. that the vulnerability of Americans’ bulk sensitive data is exacerbated because countries of concern are increasingly using bulk sensitive personal data to develop and enhance artificial intelligence (AI) capabilities and algorithms that, in turn, enable the use of large datasets in increasingly sophisticated and effective ways to the detriment of U.S. national security. Countries of concern can use AI in conjunction with multiple unrelated data sets, for example, to identify U.S. persons whose links to the federal government would be otherwise obscured in a single dataset and who can then be targeted for espionage or blackmail.

Among other things, the Final Rule identifies countries of concern and covered persons to whom the Final Rule applies, and designates classes of prohibited, restricted, and exempt transactions. The Final Rule establishes bulk thresholds for certain sensitive personal data, including human ‘omic data, biometric identifiers, precise geolocation data, personal health data, personal financial data, and certain covered personal identifiers. The Final Rule also prescribes processes to obtain licenses authorizing otherwise prohibited or restricted transactions; protocols for the designation of covered persons; and provides advisory opinions, and recordkeeping, reporting, and other due diligence obligations for covered transactions.

The Final Rule is consistent with the United States’ commitment to promoting an open, global, interoperable, reliable, and secure internet; protecting human rights online and offline; supporting a vibrant, global economy by promoting cross-border data flows that are required to enable international commerce and trade; and facilitating open investment. Notably, the Final Rule does not impose generalized data localization requirements regarding the physical or electronic storage of Americans’ bulk sensitive personal data or U.S. Government-related data, nor does it require locating computing facilities within the United States to process such data. The Final Rule does not prohibit U.S. persons from conducting medical, scientific, or other research in countries of concern, or from partnering or collaborating with covered persons to share data to conduct researching, if that activity does not involve the exchange of payment or other consideration as part of a covered data transaction. The Final Rule also does not broadly prohibit U.S. persons from engaging in commercial transactions, including exchanging financial and other data as part of the sale of commercial goods and services with countries of concern or covered persons, or impose measures aimed at a broader decoupling of the substantial consumer, economic, scientific, and trade relationships that the United States has with other countries.

The Final Rule further exempts several classes of data transactions from the scope of its prohibitions and restrictions, including personal communications and certain financial services transactions, corporate group transactions, transactions authorized by Federal law and international agreements, investment agreements subject to a Committee on Foreign Investment in the United States (CFIUS) action, telecommunication services, biological product and medical device authorizations, clinical investigations, and others.

The Final Rule’s prohibitions and restrictions are consistent with other access restrictions on sensitive personal data that have been imposed in other contexts, including transactions reviewed by the CFIUS and the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector (Team Telecom).

Lastly, under the Final Rule, parties engaging in vendor agreements, employment agreements, and investment agreements involving access by countries of concern or covered persons to bulk U.S. sensitive personal data or U.S. Government-related data would be restricted transactions that must comply with the separate security requirements that have been developed by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) in coordination with the Justice Department. These security requirements include organizational and system-level requirements (such as ensuring that basic organizational cybersecurity policies, practices, and controls are in place), and data-level requirements (such as data minimization and masking, encryption, and privacy-enhancing techniques). These critical requirements will be published separately by CISA through the Federal Register and on CISA’s website.

In connection with the Final Rule, the Justice Department will publish compliance, enforcement, and other guidance, which will be located at www.justice.gov/nsd/data-security. The Department will also continue to engage with industry and other stakeholders to determine whether any wind-down licenses are appropriate as this program goes into effect. The Department also anticipates publishing information regarding the application process to seek an advisory opinion or a license for an otherwise prohibited or restricted transaction, as described generally in the Final Rule at Subpart H.

A Utah man was sentenced on Monday to an aggregate of six years in prison for tax evasion and forcibly retaking a house and land that had been seized under court order to pay his outstanding tax debt.

According to court documents and evidence presented at trial, Paul Kenneth Cromar, formerly of Cedar Hills, Utah, owned a home in Cedar Hills and operated Blue Moon Productions LLC, a freelance film and media production company. From 1999 through 2005, Cromar did not file any federal income tax returns or pay any tax. In 2005, the IRS conducted an audit and assessed him with $703,266.96 in taxes, interest and penalties. For more than a decade thereafter, Cromar did not make any payments towards his outstanding debt and took steps to obstruct the IRS’s ability to collect his delinquent taxes.

In 2019, due to this course of conduct, a federal judge ordered that Cromar’s home be sold at auction to satisfy his tax obligations, which by then had ballooned to over $1 million. Cromar then attempted to stop the sale by filing false documents on the property’s title and with the IRS, including a false promissory note. He also attempted to intimidate potential purchasers of the home and harassed IRS personnel by filing frivolous lawsuits against them personally.   

Shortly before the sale closed, Cromar broke into the home and attempted to reclaim it. With the help of others, he occupied the home unlawfully for five months, fortifying it with firearms, sandbags and wooden boards tactically placed throughout the house.

In addition to his prison sentence, U.S. District Judge Howard C. Nielson Jr. for the District of Utah ordered Cromar to serve three years of supervised release and to pay approximately $723,028.65 in restitution to the United States as a condition of his supervised release.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Trina A. Higgins for the District of Utah and Special Agent in Charge Carissa Messick of IRS Criminal Investigation’s Phoenix Field Office made the announcement.

IRS Criminal Investigation’s Phoenix Field Office and the Treasury Inspector General for Tax Administration (TIGTA) jointly investigated the case. The FBI assisted in locating and apprehending Cromar, who had been a fugitive from justice in a related Utah state court criminal matter since August 2022.

Trial Attorneys Meredith Havekost and Patrick Burns of the Tax Division and Assistant U.S. Attorney Mark Woolf for the District of Utah prosecuted the case. Trial Attorney Peter Anthony of the Tax Division assisted with the investigation. 

A federal court in California entered an order on Monday authorizing the IRS to serve a John Doe summons on JustAnswer LLC, seeking information about U.S. taxpayers who were paid for answering questions as “experts” during the years 2017-2020. The IRS is seeking the records of individuals who were paid by JustAnswer, which operates a digital platform through which members of the public can pay to have questions answered by professionals such as doctors, lawyers, veterinarians, engineers and tax professionals. JustAnswer is headquartered in Covina, California.

The “gig economy” is where people earn income providing on-demand work, services or goods through a digital platform like a website or an app. Well-known examples of such platforms include Airbnb, Uber, Lyft, DoorDash, Etsy, Handy and TaskRabbit. The gig economy is a recent phenomenon associated with the increased prevalence of smart phones and their applications, facilitating the development of online marketplaces and platforms in which individuals can connect to obtain and offer goods and services. Digital platforms commonly serve as intermediaries, connecting sellers or service providers with customers while also processing payments. In the court’s order, U.S. District Judge Dolly M. Gee for the Central District of California found that there is a reasonable basis for believing that U.S. taxpayers who were paid by JustAnswer to answer questions as experts may have failed to comply with federal tax laws.

The court’s order grants the IRS permission to serve what is known as a John Doe summons on JustAnswer. There is no indication that JustAnswer has engaged in any wrongdoing in connection with its digital platform business. Rather, the IRS uses John Doe summonses to obtain information about individuals whose identities are unknown and who possibly violated internal revenue laws, such as by not reporting income they received. This John Doe summons directs JustAnswer to produce records identifying U.S. taxpayers who have used its platform to earn income, along with other documents relating to their work.

“The gig economy has grown in recent years and with it, the concern for tax compliance issues has increased,” said Deputy Assistant Attorney General David Hubbert of the Justice Department’s Tax Division. “This John Doe summons demonstrates that working with the IRS we will use all the tools available to us to ensure that no matter how U.S. taxpayers earn income, they are properly reporting it and paying their taxes. Those who choose to be on the forefront of the gig economy must be aware of, and abide by, all their tax obligations.”

“Like their fellow Americans who earn income through traditional means, U.S. taxpayers who earn income from digital and other platforms that comprise the gig economy need to pay their fair share of taxes,” said IRS Commissioner Danny Werfel. “The world is getting smaller for tax cheats, and we will work collaboratively with our partners to vigorously enforce the nation’s tax laws.”

The IRS Small Business Self-Employed Division and IRS Office of Fraud Enforcement assisted with the investigation that led to this case.

The Justice Department and the IRS are committed to ensuring that taxpayers abide by all federal tax laws. Federal law requires U.S. individual taxpayers to pay taxes on all income earned worldwide. Individuals must report all income earned from the gig economy on a tax return. This includes income from part-time, temporary or “side work”; income not reported on an information return form (like a Form W-2 or 1099) or other income statement; or income paid in cash, property, goods or digital assets.

The Tax Division reminds gig economy workers that the IRS has information and tips for how they can comply with their tax obligations. The IRS also has guidance for digital platform providers about their tax reporting and filing requirements.