District Not Recorded

The Department of Justice today announced the federal government’s first lawsuit filed against owners and servicers of student loans for violating the rights of servicemembers eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA).  The United States’ complaint alleges that three defendants, collectively known as Sallie Mae, engaged in a nationwide pattern or practice, dating as far back as 2005, of violating the SCRA by failing to provide members of the military the six percent interest rate cap to which they were entitled.  The three defendants are Sallie Mae Inc. (now known as Navient Solutions Inc.), SLM DE Corporation (now known as Navient DE Corporation), and Sallie Mae Bank.  The complaint further alleges that defendants Sallie Mae Inc. and SLM DE Corporation also violated the SCRA by improperly obtaining default judgments against servicemembers. 

In addition to the complaint, the department filed a proposed settlement of the lawsuit which will require Sallie Mae to pay $60 million to compensate servicemembers for the alleged SCRA violations.  The department estimates that about 60,000 servicemembers will receive compensation under the settlement.  The settlement and complaint have been filed in the U.S. District Court for the District of Delaware and the settlement is pending approval in that court.

 

The proposed settlement covers the entire portfolio of student loans serviced by, or on behalf of, Sallie Mae.  This includes private student loans, direct Department of Education loans and student loans that originated under the Federal Family Education Loan Program.  The proposed settlement is far-reaching, with certain sevicemembers to be compensated for violations of the SCRA that occurred almost a decade ago.

 

In addition to the $60 million in compensation, the proposed settlement contains several other key provisions to ensure that servicemembers are protected going forward.  Sallie Mae must request that all three major credit bureaus delete negative credit history entries caused by the interest rate overcharges and improper default judgments.  Going forward, Sallie Mae is required to streamline the process by which servicemembers may notify Sallie Mae of their eligibility for SCRA benefits.  The revised process will include an SCRA online intake form for servicemembers, and the availability of customer service representatives specially trained on the rights of those in military service.  It also requires Sallie Mae to pay the United States a civil penalty of $55,000. 

 

“Federal law protects our servicemembers from having to repay loans under terms that are unaffordable or unfair,” said Attorney General Eric Holder.  “That is the least we owe our brave servicemembers who make such great sacrifices for us.  But as alleged, the student lender Sallie Mae sidestepped this requirement by charging excessive rates to borrowers who filed documents proving they were members of the U.S. military.  By requiring Sallie Mae to compensate its victims, we are sending a clear message to all lenders and servicers who would deprive our servicemembers of the basic benefits and protections to which they are entitled: this type of conduct is more than just inappropriate; it is inexcusable.  And it will not be tolerated.”

 

“Our men and women in uniform who are called to active duty should not be subjected to additional red tape to receive the benefits they’re entitled to for serving their country,” said U.S. Education Secretary Arne Duncan.  “What's more, every student who has taken out a federal student loan should have the peace of mind that the department's servicers are following the law and treating all borrowers fairly.  Federal student loans are a critical part of helping every American find the clearest path to the middle class through a higher education, so we must do everything we can to ensure quality customer service for every borrower.”

 

“Our brave men and women in the military should not have to worry about receiving the benefits the SCRA provides,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “The Justice Department continues to enforce vigorously the laws that protect service members while they do their difficult and necessary work.”

 

“I applaud the work of the Department of Justice and all the agencies whose joint cooperation made this settlement possible,” said U.S. Attorney Charles M. Oberly III for the District of Delaware.  “The least we can do for our brave men and women who sacrifice so much to preserve our freedom is to see that they are afforded the benefits they are lawfully entitled to.”

 

 The department’s settlement is the result of a joint effort with the Department of Education, the Federal Deposit Insurance Corporation (FDIC), and the Consumer Financial Protection Bureau (CFPB).  The department’s investigation of Sallie Mae was the result of a referral of servicemember complaints from the CFPB’s Office of Servicemember Affairs, headed by Holly Petraeus.  The Department of Justice worked closely with the Department of Education during the investigation to ensure that aggrieved servicemembers with federally owned and federally guaranteed student loans would be fully compensated, and be able to receive the SCRA benefit of a reduced six percent interest rate through a streamlined process going forward.  In addition, the FDIC today announced its own important settlement with Sallie Mae in an effort to ensure protections for those who protect this country.

 

The settlement provides for an independent administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department identifies as victims.  The department will make a public announcement and post information on its website once more details about the compensation process become available.  Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department at this time. 

 

The department’s recent SCRA enforcement actions include negotiated agreements with the nation’s five largest home mortgage loan servicers as part of the National Mortgage Settlement, a historic agreement between the United States, 49 state attorneys general, the District of Columbia and the five servicers.  The department has also obtained major settlements against other lenders and servicers for conducting improper mortgage foreclosures and auto repossessions and for failing to grant the six percent interest rate benefit to SCRA-protected servicemembers.

 

The Civil Rights Division is the component within the Department of Justice authorized to enforce the SCRA.  This federal law provides protections for active duty servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments.  For more information about SCRA enforcement by the Justice Department, please visit www.servicemembers.gov or call 1-800-896-7743.

Late yesterday, a federal jury in the Northern District of Texas convicted a physician and a home health agency manager for their participation in a $3 million Medicare fraud conspiracy.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Sarah R. Saldaña of the Northern District of Texas, Special Agent in Charge Diego Rodriguez of the FBI Dallas Division and Special Agent in Charge Mike Fields of the Dallas office of the Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.

Joseph Megwa, M.D., and Ebolose Eghobor, R.N., were convicted of one count of conspiracy to commit health care fraud, and Megwa was convicted of three substantive counts of health care fraud. Eghobor was acquitted of the three substantive health care fraud counts brought against him. The home health care charges related to a scheme involving PTM Healthcare Services Inc. (PTM), which was owned and operated by Ferguson Ikhile, R.N. Ikhile pleaded guilty in 2013 to conspiracy to commit health care fraud.

According to evidence presented at trial, from approximately 2006 to 2011, PTM recruited Medicare beneficiaries so that PTM could bill Medicare for unnecessary home health services. Ikhile, Eghobor and others then prepared fraudulent medical records that made it appear that the beneficiaries needed home health services. In exchange for cash payments, Megwa, who owned and operated Raphem Medical Practice P.A., falsely certified that the beneficiaries needed home health services and that the services otherwise qualified for payment under Medicare.

Megwa was also convicted of four counts of making false statements related to a health care benefit program based on his submission of false claims to Medicare for home visits or house calls to patients that he never actually made.

The investigation was led by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Office of the Texas State Attorney General and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Northern District of Texas and the Criminal Division’s Fraud Section. The case was prosecuted by Deputy Chief Jeffrey A. Goldberg and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

 

Attorney General Eric Holder and Secretary of Education Arne Duncan will hold a press conference to announce a major law enforcement action to protect military servicemembers from unfair lending practices. TODAY, TUESDAY, MAY 13, 2014, at 1:15 P.M. EDT.

 

WHO:                Attorney General Eric Holder           

                                 Secretary of Education Arne Duncan

           

WHAT:               Press conference to announce law enforcement action to protect military servicemembers from unfair lending practices.

 

WHEN:                   TODAY, TUESDAY, MAY 13, 2014

                                                1:15 p.m. EDT

 

WHERE:             Department of Justice

                                    7th Floor Conference Room

                                    950 Pennsylvania Ave., N.W.

                                    Washington, D.C.

                                    OPEN PRESS

 

NOTE:  All media must present government-issued photo I.D. (such as driver’s license) as well as valid media credentials.  Media must enter the department at the visitor’s entrance on Constitution Avenue between 9th and 10th Streets by 12:55 p.m. EDT. Media may begin arriving at 12:15 p.m. EDT and cameras must be pre-set by 12:55 p.m. EDT. Press inquiries regarding logistics should be directed to the Office of Public Affairs at 202-514-2007 or email Stephen.Ratner@usdoj.gov.

Three individuals who pleaded guilty to conspiracy to commit mail fraud in connection with operating a series of fraudulent business opportunity companies were sentenced in the United States District Court for the Southern District of Florida.  Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo), of Coconut Creek, Fla., and Mitchell Berman (aka Brian Griffin), of Boca Raton, Fla., were sentenced on Friday to 120 months and 78 months imprisonment, respectively.  Steven Axelrod (aka Michael Hutton), of Wellington, Fla., was sentenced to 15 months imprisonment.  

 

“These sentences reflect the Department of Justice’s continued commitment to protecting consumers from fraud schemes,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “Those who violate court orders and who seek to deprive innocent, hardworking Americans of their hard-earned money will be held accountable.”

 

The defendants operated a series of fraudulent companies that sold coffee display rack business opportunities.  These business opportunities, as advertised by the defendants to potential purchasers, consisted of the following:  bags of coffee, display racks in which to place the coffee, profitable locations for the display racks, assistance in placing the display racks in profitable locations, and other customer services.

 

Berman and Gallo, with Axelrod as salesman, operated the first company in approximately 1999, leading to a December 2000 federal court order barring Berman, the company, and its successors from misrepresenting profits, locations, and other aspects of business opportunities.  Over the course of the next twelve years, beginning in August 2000 and continuing through October 2011, the defendants opened and closed five more iterations of the same company: Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee, and South Beach Coffee.  They sold business opportunities for a minimum of approximately $10,000.  In order to evade detection, all the defendants used aliases and gave out false addresses for the companies.  According to the indictment, Berman and Gallo also avoided listing their own names on corporate and promotional documents, and instead paid people who did not work at the companies to be titular presidents.  They operated each company for six months to a year, shutting down when purchasers began complaining, only to reopen again after a period of time.  

 

In selling these business opportunities, all three defendants made numerous false statements to potential purchasers of the business opportunities to induce them to buy.  Among the misrepresentations are that purchasers would likely earn substantial profits, that prior purchasers of the business opportunities were earning substantial profits, that purchasers would be given lucrative “commercial accounts,” and that the company would provide assistance in establishing and maintaining the business.  According to the indictment, purchasers made little to no money on their investments, were unable to find profitable locations or accounts, and were not provided the support promised by defendants.  In making misrepresentations to potential purchasers, Berman was also violating a 2000 federal court order.

 

The matter was handled by the Department of Justice’s Consumer Protection Branch with the investigative efforts of the Postal Inspection Service.  The case was prosecuted by Trial Attorneys Cindy Cho and Christopher Parisi of the Consumer Protection Branch of the Civil Division of the Department of Justice.  

WASHINGTON – Samuel K. Crocker, the U.S. Trustee for Kentucky and Tennessee (Region 8), has been designated by Attorney General Eric Holder also to serve as the U.S. Trustee for Kansas, Oklahoma and New Mexico (Region 20) for an interim period beginning today, the Executive Office for U.S. Trustees announced today. He replaces Richard A. Wieland, who has served as U.S. Trustee for Region 20 since January 2008.

Mr. Crocker was appointed as Region 8 U.S. Trustee in July 2011. Prior to that appointment, he was engaged in the private practice of law in Nashville, Tennessee, for more than 25 years. During that time he also served on the panel of chapter 7 trustees in the Middle District of Tennessee and as a trustee in numerous chapter 11 cases. Mr. Crocker has argued cases before the Fifth, Sixth and Eleventh Circuit Courts of Appeal. As an authority on consumer bankruptcy and trustee-related matters, he has written extensively and spoken frequently at bankruptcy seminars and training programs around the country and advises the U.S. Trustee Program (USTP) on national policy on those matters. Mr. Crocker received his law degree from the University of Mississippi School of Law in Oxford, Mississippi, and his Bachelor of Arts degree from Vanderbilt University in Nashville.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 93 field office locations. Region 20 is headquartered in Wichita, Kansas, with additional offices in Oklahoma City and Albuquerque, New Mexico.

Contact:

Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411

A former private security guard was sentenced in the District of Puerto Rico today for his role in providing armed security for a drug transaction.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement.

Ricardo Amaro-Santiago, 41, of Guaynabo, Puerto Rico, was sentenced to serve 15 years in prison by U.S. District Judge Gustavo A. Gelpi.

Amaro-Santiago was charged in an indictment unsealed on Oct. 6, 2010, along with 89 law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack.

According to the indictment and information presented in court, in May 2010, Amaro-Santiago provided security for what he believed was an illegal drug deal, but which in fact was part of the undercover FBI operation. Amaro-Santiago was employed as a private security guard but posed as a Puerto Rico police officer during the transaction. Amaro-Santiago was brought into the scheme by a co-defendant who was a police officer in Puerto Rico. In return for the security he provided, Amaro-Santiago received a cash payment of $1,000, which the court today ordered that he forfeit as part of his sentence.

The case was investigated by the FBI and was prosecuted by Trial Attorneys Marquest J. Meeks and Tracee Plowell of the Public Integrity Section in the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the District of Puerto Rico.

 

WASHINGTON – Patrick S. Layng, the U.S. Trustee for the Northern District of Illinois and the Eastern and Western Districts of Wisconsin (Region 11), has been designated by Attorney General Eric Holder also to serve as the U.S. Trustee for Colorado, Utah and Wyoming (Region 19) for an interim period beginning today, the Executive Office for U.S. Trustees announced today. He replaces Richard A. Wieland, who has served as interim U.S. Trustee in the region since July 2011.

Mr. Layng was appointed as Region 11 U.S. Trustee in December 2010. Prior to that appointment, he served as a Regional Criminal Coordinator for the U.S. Trustee Program (USTP) for six years, an Assistant U.S. Attorney in the Northern District of Illinois for more than 14 years, and a law clerk to the Honorable Stanley J. Roszkowski, U.S. District Court, Northern District of Illinois (retired). During his career, Mr. Layng has tried approximately 40 federal criminal trials and argued 14 cases before the U.S. Court of Appeals for the Seventh Circuit. While serving in the USTP, he has also led multi-regional trial teams in complex civil cases involving improper actions by major financial institutions and professional firms. Mr. Layng received his law degree cum laude from the University of Illinois Urbana-Champaign Law School and his undergraduate degree magna cum laude from the University of Illinois Urbana-Champaign College of Commerce.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 93 field office locations. Region 19 is headquartered in Denver with additional offices in Salt Lake City and Cheyenne, Wyoming.

Contact:

Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411

A Minnesota man who worked at Kadena Air Force Base in Okinawa, Japan, was indicted today in the District of Minnesota on charges of sexual abuse, production of child pornography and possession of child pornography.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Andrew M. Luger of the District of Minnesota, Executive Assistant Director John F. Wagner of the Naval Criminal Investigative Service’s (NCIS) Pacific Operations and Special Agent in Charge J. Chris Warrener of the FBI’s Minneapolis Field Office made the announcement.

According to the indictment, Ricky Isiah Sherwood, 18, of White Bear Lake, Minnesota, an employee on Kadena Air Force Base and a dependent of a military member, sexually assaulted a minor on the base on or about Feb. 11, 2014, and filmed parts of the assault using his cellular phone.

The Military Extraterritorial Jurisdiction Act gives U.S. federal courts jurisdiction over felonies committed abroad by certain persons employed by or accompanying the U.S. Military.

On May 7, 2014, Sherwood was arrested on a complaint at Kadena Air Force Base and made an initial appearance via telephone before Magistrate Judge Tony Leung in the District of Minnesota. The court ordered that Sherwood be detained and removed from Japan to the United States.

This case is being investigated by the NCIS and the FBI. This case is being prosecuted by Trial Attorney Ann Marie Ursini of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Katharine Buzicky of the District of Minnesota.

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

 

The Justice Department announced today that it will monitor elections on May 13, 2014, in Colfax and Douglas Counties, Nebraska, to ensure compliance with the Voting Rights Act and other federal voting rights statutes.  The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.

 

In Colfax County, the department will assign federal observers from the U.S. Office of Personnel Management (OPM) to monitor polling place activities based on a court order.  The observers will watch and record activities during voting hours at polling locations in this jurisdiction, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.

 

In addition, department personnel will monitor polling place activities in Douglas County.  A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.

 

Each year, the department deploys federal observers from OPM and departmental staff to monitor elections across the country.  To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931.

 

Visit this website for more information about the Voting Rights Act and other federal voting laws.

Sybil Marshall Coles, 45, of Pamplin, Virginia, was sentenced today to serve five years in prisonfor aggravated identity theft and preparing a false tax return, announced Assistant Attorney General Kathryn Keneally for the Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and Attorney General of Virginia Mark R. Herring.  On Jan. 28, 2014, Coles pleaded guilty to a two count criminal information.  Coles was also ordered to one year of supervised release and to pay $949,273 in restitution.

 

According to court documents and evidence from her sentencing, Coles was an employee at the Virginia Department of Social Services in Nottoway County.  From both her work and personal computers, Coles prepared and filed at least 222 false federal income tax returns claiming false refunds based on fictitious itemized deduction expenses and fictitious Schedule C businesses that reported losses, among other items, which resulted in a tax loss to the U.S. Treasury of at least $949,000.  Coles also prepared and filed false Commonwealth of Virginia tax returns. 

 

According to court documents, Coles used family members and friends to recruit individuals for whom she prepared tax returns.  She also prepared returns for herself, family members, friends and colleagues.  Coles used bank accounts in the name of another family member to conceal the activities and proceeds of the false return scheme.  As part of the scheme, Coles stole identities of taxpayers for whom she had prepared returns and used their information on other returns to claim fictitious childcare expenses.  In addition, after the criminal investigation began, Coles asked certain individuals to tell Internal Revenue Service (IRS) investigators that someone else prepared their tax returns.

 

The case was prosecuted by Tax Division Trial Attorney and Special Assistant U.S. Attorney Rebecca Perlmutter and Assistant Attorney General and Special Assistant U.S. Attorney Michael Jagels.  IRS-Criminal Investigation in Richmond, Virginia, investigated the case.      

A former New York-based tax liens company executive pleaded guilty today for his role in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

 
Vinaya K. Jessani, of New York City, entered a guilty plea in the U.S. District Court for the District of New Jersey in Newark to felony charges filed today. Under the plea agreement, Jessani has agreed to cooperate with the department’s ongoing investigation.

 
According to the charge, from at least as early as 1994 until as late as February 2009, Jessani, a former senior vice president who supervised the purchasing of municipal tax liens at auctions in New Jersey for the company he worked for, participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and instructing others to, allocate among certain bidders which liens each would bid on. The department said that Jessani and those under his supervision submitted bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

           
“Today’s guilty plea demonstrates the Antitrust Division’s continuing effort to prosecute those who manipulate the competitive process in order to harm home and property owners,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The division will continue to be vigilant in rooting out conspiracies that harm already distressed property owners.”

 
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. New Jersey state law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

 
According to court documents, the conspiracy permitted the conspirators to purchase tax liens with limited competition and each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

 
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the $1 million statutory maximum.

 

Today’s plea is the 15th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Including Jessani, 12 individuals and three companies have pleaded guilty. Additionally, four individuals and two entities have been indicted for their roles in the conspiracy to rig bids at tax lien auctions.

 

Today’s case was done in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

The Department of Justice Civil Rights Division today released its accomplishments report for 2013.  This report supplements the division’s first accomplishments report , issued last year, on the division’s work during the first four years of Attorney General Eric Holder’s leadership.  In the division’s 57th year, its substantial caseload reflects the persistence of civil rights challenges that create barriers to equality and freedom.  But in 2013, the division continued to set new records for numbers of cases and to reach first-of-their-kind agreements in a number of areas.  Through its enforcement efforts, the division works to fight discrimination and protect the civil and constitutional rights of people across the country.  

The division’s 2013 accomplishments report highlights its work to advance three core principles: expanding opportunity for all, safeguarding the fundamental infrastructure of democracy and protecting the most vulnerable among us.

 

“Last year, the Civil Rights Division worked to safeguard the most fundamental rights of American democracy, to extend the promise of equality and opportunity, and to advance the cause of justice that has defined this country since its earliest days,” said Attorney General Holder.  “I commend the dedicated men and women of the Civil Rights Division for their leadership on these critical efforts.  Their work is exemplary and in many cases groundbreaking.  It goes to the heart of who we are as a nation and as a people.  And that’s why it continues to be a top priority for this Department of Justice: because we are, and will always be, firmly committed to overcoming persistent threats as well as new challenges in order to ensure equal justice under law.”

 

“Over the course of 2013, the Civil Rights Division continued the impressive track record it initiated during the first four years of Attorney General Holder’s leadership,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “But for all that the division has accomplished, much work remains.  The division remains committed to meeting the next generation of civil rights challenges and to combating discrimination in all its forms.  We look forward to an even more productive 2014.”   

Expanding opportunity for all

 

The division’s efforts to ensure equal access to education, housing, consumer credit and employment continue to set new records and to pioneer new models for bringing equal opportunity to all.  For example, working with the Consumer Finance Protection Bureau, the division reached its largest ever auto lending settlement when Ally Bank and Financial Inc. agreed to pay $98 million for pricing discrimination in its automobile lending practices.  The settlement provided $80 million in direct relief to African-American, Hispanic and Asian/Pacific Islander borrowers who were charged higher interest rate markups on auto loans than white borrowers.  The division has obtained more than $800 million in monetary relief in fair lending settlements since the unit was founded in 2010.

 

Ahead of this year’s 60th anniversary of the landmark Supreme Court decision Brown v. Board of Education, in 2013, the division launched new tools and entered into agreements to address racial disparities in education systems across the country.  After an investigation into disciplinary practices in the Meridian, Mississippi, public school system, the division found that black students frequently received far harsher disciplinary consequences, including arrests and incarceration, than white students for comparable and often minor misbehavior.  The department entered into a landmark settlement with the Meridian school system that will create a discipline system that treats all students equally regardless of race.  Also, to help all school districts administer discipline fairly and consistently, the division, along with the Department of Education, issued a groundbreaking joint discipline guidance for schools to prevent and address racial discrimination in school discipline.  This guidance, along with its additional technical assistance material, provides important information on the means by which schools can act to dismantle the school-to-prison pipeline.

 

The division continues its efforts to eliminate unnecessary segregation of persons with disabilities and to ensure that individuals with intellectual and developmental disabilities are given the opportunity to participate fully in their communities, in accordance with the Supreme Court’s decision in Olmstead v. L.C.  In 2013, the division investigated Training Thru Placement (TTP), one of the largest facility-based employment service providers in Rhode Island, and a sheltered workshop in a Providence high school.  The division found that workers with intellectual and developmental disabilities typically remained at TTP for decades, earning sub-minimum wages, and that the high school workshop acted as a pipeline to TTP.  The department’s investigation found that the workers with disabilities at TTP were not in the most integrated setting appropriate for them; rather, they were capable of working in real jobs with supports and participating in activities in the community.  The division entered into an interim agreement with the state of Rhode Island and the Providence Public School District regarding TTP and the school-based workshop and expanded its investigation to all state-funded employment and day facilities to address the rights of people with disabilities to receive state employment and daytime services in the broader community, rather than in segregated sheltered workshops and facility-based day programs.  Since 2009, the division’s Olmstead enforcement work has helped protect the rights of more than 46,000 people with disabilities.

 

T he division also continues to aggressively enforce the Uniformed Services Employment and Reemployment Rights Act (USERRA), ensuring that servicemembers returning from active duty are not penalized by their civilian employers.  The division’s USERRA program is critically important because USERRA cases typically involve small amounts of back pay; without the division’s help, many servicemembers would not be able to find or afford private attorneys to take their cases.  In Forsyth County, North Carolina, for example, the division reached an agreement to vindicate the employment rights of an Army National Guard soldier who was discharged from his job as a sheriff without cause less than a year after completing a deployment to Iraq.

 

Finally, the division collected a record in civil penalties, nearly $900,000, through its enforcement of the Immigration and Nationality Act (INA), which prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee, document abuse and retaliation or intimidation.  The division also collected more in back pay than in any year in the past 10 years and settled major cases involving discriminatory documentary practices by Macy’s and Centerplate.  

Safeguarding the fundamental infrastructure of democracy  

In the wake of the Supreme Court’s decision in Shelby County v. Holder, the division continues to use all of the tools still available in the Voting Rights Act (VRA) to ensure that all Americans can cast a ballot free from racial discrimination.  In 2013, the department filed three complaints under the VRA to protect the rights of minority voters in Texas and North Carolina to challenge discriminatory voting laws; each of these challenges alleges that these state laws were enacted with discriminatory intent.

 

The division also expanded its record number of agreements with law enforcement agencies by entering into model agreements with the University of Montana Office of Public Safety and the Missoula Police Department to ensure that police services are delivered without discrimination, that sex crimes are fully and adequately investigated and that victims are treated fairly and with respect after an investigation found systemic failures to protect women victims of sexual assault. 

 

During Fiscal Year 2013, the division’s Courts Language Access Initiative worked with the court systems in 17 states to ensure that individuals are not denied access to important court proceedings because of their national origin and their limited English proficiency.  Access to state courts is critically important.  Whether cases involve child custody, domestic violence, foreclosure, wage claims or criminal prosecution, the stakes are too high in the courtroom context for parties or witnesses to be effectively excluded from participation.                                                   

Protecting the most vulnerable among us

 

The division prosecutes crimes to ensure protections for some of the most vulnerable populations in the country: those who are abused and trafficked for sex work or labor; those who are attacked out of hate due to the color of their skin, where they worship or who they love.  The division and its partners in the U.S. Attorneys’ Offices across the country filed 141 federal criminal civil rights cases, obtaining convictions of 166 defendants, in Fiscal Year 2013 –more than in any previous year in the division’s history.

 

For example, the division convicted 23 defendants on federal hate crimes charges – building on the division’s record in Fiscal Years 2009-2012, in which the division convicted 74 percent more individuals than in the preceding four years.  The division’s Appellate Section also defended the constitutionality of the Matthew Shepard and James Byrd Jr. Hate Crime Prevention Act in court.  Through its Human Trafficking Prosecution Unit, the division and its partners in the U.S. Attorneys’ Offices also brought 71 human trafficking cases, the most in the history of the division.  The division also brought 53 cases involving sex trafficking, a 55 percent increase over the previous year, and obtained convictions of 90 individuals for trafficking crimes.  

 

The division also works to develop policy and legislative proposals to close the gaps in our nation’s civil rights protections.  This year, the division provided technical assistance on numerous legislative initiatives, including the reauthorization of the Violence Against Women Act and the Employment Non-Discrimination Act.

 

For more information about the Civil Rights Division, visit the division website.

James M. Cole, the Deputy Attorney General of the Department of Justice, Kathryn Keneally, the Assistant Attorney General for the Tax Division of the Department of Justice, Preet Bharara, the United States Attorney for the Southern District of New York, and Richard Weber, the Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI), announced today that swisspartners Investment Network AG, a Swiss-based asset management firm, and three of its wholly-owned subsidiaries (collectively, the Swisspartners Group), entered into a non-prosecution agreement (NPA) with the U.S. Attorney’s Office for the Southern District of New York and agreed to pay $4.4 million to the United States. The NPA was entered into based on, among other things, the Swisspartners Group’s remedial measures, voluntary self-reporting and extraordinary cooperation, including its voluntary production of approximately 110 client files for non-compliant U.S.-taxpayer clients, and provides that the Swisspartners Group will not be criminally prosecuted for assisting U.S. taxpayer-clients in opening and maintaining undeclared foreign bank accounts from in or about 2001 through in or about 2011. The NPA requires the Swisspartners Group to forfeit $3.5 million to the United States, representing certain fees that it earned by assisting its U.S. taxpayer-clients in opening and maintaining these undeclared accounts, and to pay $900,000 in restitution to the IRS, representing the approximate amount of unpaid taxes arising from the tax evasion by the Swisspartners Group’s U.S. taxpayer-clients. The NPA applies only to the four specific entities that are party to it and does not apply to any other subsidiaries of swisspartners Investment Network AG or any individuals.

“The extraordinary cooperation of Swisspartners has enabled us to identify U.S. tax cheats who have hidden behind phony offshore trusts and foundations,” said Deputy Attorney General Cole . “In this and other cases around the world, we will continue to provide substantial credit for prompt and full cooperation.”

“As today’s announcement shows, we receive information about U.S. taxpayers with undisclosed accounts from many sources, some of which are not public,” said Assistant Attorney General Keneally. “For many accountholders, the time to come forward voluntarily to avoid criminal prosecution has run out.”

“This office will continue to work aggressively to hold accountable not only those U.S. taxpayers who evade their tax obligations by hiding money overseas, but also those abroad who make such tax evasion possible,” said U.S. Attorney Bharara. “For its wrongdoing in assisting U.S. taxpayers to open and maintain undeclared accounts overseas, the Swisspartners Group is being made to pay $4.4 million in forfeiture and restitution. Swisspartners avoided criminal charges as a direct result of its decision to self-report its misconduct at a time when it was not even under investigation and its extraordinary cooperation, including its decision to turn over voluntarily the files and identities of U.S. taxpayer clients it helped hide money from the IRS. The case serves as a clear example of the benefits that can be obtained from early and complete cooperation with federal law enforcement.”

“I am very pleased that we have successfully concluded negotiations with the Swisspartners Group,” said IRS-CI Chief Weber . “In making amends, the Swisspartners Group has turned over 110 account files relating to U.S. taxpayer-clients who maintained undeclared assets overseas. This agreement marks yet another significant step forward in combating offshore tax evasion. Anyone who is hiding money or assets offshore with the intent of committing tax evasion will be found and prosecuted. It's not a matter of ‘if,’ it's a matter of ‘when."

The NPA was entered into between the U.S. Attorney’s Office, on the one hand, and swisspartners Investment Network AG and the following three wholly-owned subsidiaries on the other: swisspartners Wealth Management AG, a Zurich-based company that establishes and manages entities such as foundations and trusts; swisspartners Insurance Company SPC Ltd., a Cayman Islands-based life insurance carrier that offers life insurance and annuity products; and swisspartners Versicherung AG, a Liechtenstein-based insurance carrier that offers a variety of insurance and annuity products.

The NPA recognizes that, beginning in 2008, the Swisspartners Group voluntarily implemented a series of remedial measures to stop assisting U.S. taxpayers in evading federal income taxes. The NPA further recognizes that in 2012, at a time when it was neither a subject nor target of any investigation by the U.S. Department of Justice, the Swisspartners Group self-reported its conduct concerning U.S. taxpayer-clients to the Department of Justice. Additionally, the NPA recognizes the extraordinary cooperation of the Swisspartners Group, including its voluntary production of client files for 110 non-compliant U.S. taxpayers that included the identities of those U.S. taxpayers.

As part of the NPA, the Swisspartners Group admitted various facts concerning its wrongful conduct and the remedial measures that it took to cease that conduct. Specifically, the Swisspartners Group admitted that it knew certain U.S. taxpayers were maintaining undeclared foreign bank accounts with the assistance of the Swisspartners Group in order to evade their U.S. tax obligations, in violation of U.S. law. The Swisspartners Group acknowledged that it helped certain U.S. taxpayer-clients conceal from the IRS their beneficial ownership of undeclared assets maintained in foreign bank accounts by, among other things, creating sham foundations and other sham entities that served as the nominal account holders; placing accounts or insurance policies in the names of non-U.S. nationals; facilitating the transportation of large amounts of cash into the United States on behalf of U.S. taxpayer-clients; and arranging for the bulk deposit of cash at Swiss depository financial institutions on behalf of U.S. taxpayer-clients.

As part of the NPA, the Swisspartners Group has agreed to forfeit $3.5 million to the United States, representing certain fees it obtained in exchange for services that it provided to U.S. taxpayers with undeclared foreign bank accounts from in or about 2001 through in or about 2011. In connection with this forfeiture, the Swisspartners Group has agreed not to contest a civil forfeiture action filed by the United States. That action was filed on May 9, 2014, in the U.S. District Court for the Southern District of New York and assigned to U.S. District Judge Gregory H. Woods.

The department entered into the NPA based on factors including:

 
·          the Swisspartners Group’s voluntary implementation of various remedial measures beginning in or about May 2008; ·          the Swisspartners Group’s voluntary self-reporting of its criminal conduct at a time when it was neither a subject nor target of any investigation by the U.S. Department of Justice; ·          the Swisspartners Group’s voluntary and extraordinary cooperation, including its voluntary production of account files that include the identities of U.S. taxpayer-clients; ·          the Swisspartners Group’s willingness to continue to cooperate to the extent permitted by applicable law; and

·          the Swisspartners Group’s representation, based on an investigation by outside counsel, the results of which have been shared with the U.S. Attorney’s Office and the Tax Division, that the misconduct under investigation did not, and does not, extend beyond that described in the Statement of Facts.

The NPA requires the Swisspartners Group to continue to cooperate with the United States for at least three years from the date of the agreement. In the event that the Swisspartners Group violates the NPA, the U.S. Attorney’s Office may prosecute the Swisspartners Group.

 

Josh Hummer, formerly a sergeant at Roxbury Correctional Institution (RCI) in Hagerstown, Maryland, was sentenced today to serve 12 months and a day in prison for obstruction of justice. Previously, on Jan. 31, 2014, a federal jury found Hummer guilty of providing false and misleading information to state investigators tasked with conducting an inquiry into a series of staff assaults against an inmate, Kenneth Davis, at RCI.

 

Evidence presented at trial showed that Hummer, 41, of Chambersburg, Pennsylvania, was on duty as a sergeant at RCI on the morning of March 9, 2008, when officers assaulted Davis inside a cell. On April 3, 2008, Hummer lied to a Maryland State Police detective about that assault.

 

Sixteen former RCI officers have been convicted in connection with the series of assaults against Davis. Through those guilty pleas, the defendants have admitted that officers from three different shifts, including Hummer’s, assaulted Davis in retaliation for a prior incident in which Davis had hit an officer. As a result of these beatings, Davis suffered broken bones in his face, ribs and back.

 

“The vast majority of correctional supervisors serve their communities with honor and integrity,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “When a supervisor at a correctional facility tries to cover up a staff assault of an inmate, however, the Department of Justice will do its utmost to hold him accountable.”

 

This case was investigated by the Frederick Resident Agency of the FBI, and prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorneys Sanjay Patel and Christine Siscaretti, with the support of Assistant U.S. Attorney Michael Cunningham of U.S. Attorney’s Office for the District of Maryland.

 

The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – was indicted today for his role in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA) and to defraud PetroTiger.

Acting Principal Deputy Assistant Attorney General Marshall Miller of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.

Joseph Sigelman, 43, of Miami and the Philippines, was indicted today by a federal grand jury in the District of New Jersey and charged with conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering violations. Gregory Weisman, 42, of Moorestown, New Jersey, the former general counsel of PetroTiger, pleaded guilty on Nov. 8, 2013, to conspiracy to violate the FCPA and to commit wire fraud. Sigelman’s co-CEO, Knut Hammarskjold, 42, of Greenville, South Carolina, pleaded guilty to the same charge on Feb. 18, 2014.

According to court records, Sigelman and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million. To conceal the bribes, they first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. Sigelman and Hammarskjold provided Weisman invoices, including her bank account information. The conspirators made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed. Sigelman and his conspirators then took steps to conceal the bribe payments from PetroTiger’s board members.

In addition, court documents allege that Sigelman and others attempted to secure kickback payments while negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition. In exchange for negotiating more favorable terms for the owners of the target company, two of the owners agreed to kick back to the conspirators a portion of the increased purchase price. To conceal the kickback payments, Sigelman and others had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments and used the code name “Manila Split” to refer to the payments amongst themselves.

Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013. Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport. Sigelman was arrested on Jan. 3, 2014, in the Philippines. The charges against Sigelman, Hammarskjold and Weisman were unsealed on Jan. 6, 2014.

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

The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which cooperated with the department’s investigation. The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Zach Intrater of the District of New Jersey.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .

 

Dr. Patricia Lynn Hough, of Englewood, Florida, was sentenced today to serve two years in prison and three years supervised release by U.S. District Court Judge John Steele in Fort Myers, Florida, for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks, and for filing false individual income tax returns which failed to report the existence of those foreign accounts or the income earned in those accounts, the Justice Department and the IRS announced. Hough was also ordered to pay $15,518,382 in restitution and $42,732.27 for the costs of prosecution . Hough was convicted by a jury on Oct. 24, 2013.

 
According to court documents and court proceedings, Hough owned two Caribbean-based medical schools, Saba University School of Medicine located in Saba, Netherlands Antilles, and Medical University of the Americas located in Nevis, West Indies. Hough conspired to defraud the IRS with her husband, Dr. David Fredrick, who is awaiting trial. They carried out the conspiracy by creating and using nominee entities, including a foundation, and by using undeclared accounts in their names and the names of nominee entities at UBS and other foreign banks to conceal assets and income from the IRS. Both schools and the associated real estate were sold on April 3, 2007, for more than $35 million, all of which was deposited into undeclared accounts in the names of the nominee entities. The majority of the proceeds from the sale were not reported to the IRS on their tax returns and no tax was paid. In total, between 2003 and 2008, Hough and Fredrick failed to pay more than $15 million in taxes.

 
The evidence at trial further proved that Hough and Fredrick used emails, telephone calls and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS. The evidence also established that Hough and Fredrick caused funds from the undeclared accounts in the names of the medical schools to be transferred to undeclared accounts in their individual names or in the names of nominee entities. Hough and her husband then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Florida.

 
Hough was also convicted of three counts of filing false tax returns for 2005, 2007 and 2008. The evidence at trial showed that Hough filed false tax returns that substantially understated her total income because she failed to report substantial interest and investment income and because she failed to report her half of the proceeds from the sale of the medical schools in 2007. In addition, Hough failed to report that she had an interest in, or signature or other authority over, bank, securities or other financial accounts located in foreign countries.

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

 
“The Justice Department is committed to investigating and prosecuting those who continue to evade taxes by hiding income and assets in undisclosed offshore bank accounts,” said Assistant Attorney General Kathryn Keneally for the Tax Division. “As this sentence shows, those who fail to come into compliance risk high penalties and jail.”

 
“Those who use nominee entities to conceal their assets and income in offshore accounts should realize by now that no bank offering such services will be a safe haven from the IRS,” said Chief of IRS-Criminal Investigation Richard Weber. “Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report. It is more important that the American people feel confident that everyone is playing by the same rules and paying their taxes. Today, Dr. Hough has been held accountable for using an intricate network of financial transactions to evade her tax obligation.”

 

This case was prosecuted by Trial Attorneys Caryn Finley and Leigh Kessler of the Tax Division and was investigated by IRS – Criminal Investigation. Assistant Attorney General Keneally thanks them for their work, and also thanks the U.S. Attorney’s Office for the Middle District of Florida, Fort Myers Division, for their assistance and support in the prosecution.

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

The United States has filed a complaint under the False Claims Act against Stevens-Henager College, Inc. and its owner, The Center for Excellence in Higher Education, for illegally compensating recruiters, the Department of Justice announced today.  Stevens-Henager operates a chain of for-profit colleges in Idaho and Utah. 

 

“Congress has made clear that colleges should not pay improper incentives to admissions recruiters,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The Department of Justice and the Department of Education are working together to combat unlawful recruitment practices that can harm students and result in the waste of taxpayer funds.” 

 

In its complaint, the government alleged that the college falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters based on the number of students they recruit.  Congress enacted the prohibition on such incentive compensation to curtail the enrollment of unqualified students, high student loan default rates, and the waste of student loans and grant funds.

 

The claims alleged by the United States were initiated by a whistleblower lawsuit filed by two former Stevens-Henager employees under the False Claims Act, which allows private citizens to file suit over false claims on behalf of the government.  The act provides for the recovery of triple damages and penalties, and allows the government to intervene and take over the allegations, as it has done in this case.  The whistleblower is entitled to a share of any recovery obtained in the lawsuit. 

 

“Fighting fraud and protecting federal tax dollars from abuse is a priority for this office,” said U.S. Attorney Wendy Olson for the District of Idaho. “The False Claims Act is an important tool for doing just that. Whistleblowers are necessary to our ongoing efforts to combat fraud, waste and abuse.”

 
This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Idaho, and the Department of Education, Office of Inspector General.  The case is captioned United States ex rel. Brooks v. Stevens-Henager College, Inc., et al., Case No. 1:13-CV-00009-BLW (D. Id.).  The claims asserted are allegations only, and there has been no determination of liability.

A commercial real estate developer pleaded guilty for his role in a $50 million securities fraud scheme, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California.

Bradley Holcom, 55, entered his plea before United States District Judge Cathy Ann Bencivengo in San Diego, admitting that he committed wire fraud in connection with the sale of approximately $50 million worth of promissory notes which he sold to investors located throughout the United States.

According to court documents, Holcom solicited investors to provide funds for commercial and residential development through an investment program he operated called the Trust Deed Investment Program. Holcom falsely told investors who purchased notes through the Trust Deed Investment Program that they would receive a lien on a specific piece of property he was developing and that the lien would enable them to take priority over any other potential liens or interests in the property.

However, Holcom admitted that he never provided investors with a lien in the property he was purportedly developing and instead conveyed to investors a lesser interest that did not allow them to foreclose on the property to protect their investment. In addition, while he promised investors that their purported lien would be in first position, he subsequently solicited investments for properties that he knew were already encumbered by first position liens. Holcom also sold properties that were supposedly serving as security for investors without informing investors that the property they had financed for development was sold. In 2008 and 2009, he continued to solicit investors for new funds by making misrepresentations about his true financial condition and the manner in which he was using investor money.

As part of his plea, Holcom admitted that his conduct caused approximately $50 million in losses to over 50 victims. Sentencing is scheduled for July 25, 2014.

This case was investigated by the FBI’s Phoenix Division – Yuma Resident Agency. The case is being prosecuted by Trial Attorney Henry P. Van Dyck and Deputy Chief Daniel Braun of the Criminal Division’s Fraud Section and by Assistant United States Attorney Mark Pletcher of the United States Attorney’s Office for the Southern District of California. The Department appreciates the substantial assistance of the U.S. Securities and Exchange Commission.

The former e xecutive director of the Legislature of the Virgin Islands was indicted today by a federal grand jury in the Virgin Islands for accepting bribes and engaging in extortion in the award of contracts with the Legislature, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Ronald W. Sharpe for the District of the Virgin Islands.

The indictment charges Louis “Lolo” Willis, 56, of St. Thomas, Virgin Islands, with three counts of federal programs bribery and three counts of extortion under color of official right.

According to the indictment, Willis was the executive director of the Legislature between 2009 and 2012. One of his responsibilities included oversight of the renovation of the Legislature building, which included awarding and entering into contracts on behalf of the Legislature. These contracts included contracts for general construction, air-conditioning services and carpentry, which were not publicly bid. Willis was also responsible for paying the contractors for their work. As alleged in the indictment, Willis accepted payments, including, among other things, thousands of dollars in cash, from three contractors in exchange for using his official position to secure contracting work for the contractors and to ensure they received payment upon completion.

An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.

This case was investigated by the FBI’s San Juan Division, the Office of the Virgin Islands Inspector General and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Trial Attorneys Peter Mason and Jennifer Blackwell of the Criminal Division’s Public Integrity Section and First Assistant U.S. Attorney Thomas Anderson of the District of the Virgin Islands.

 

WASHINGTON - El Secretario de Justicia de los Estados Unidos Eric Holder y el Secretario Arne Duncan anunciaron hoy la emisión de una orientación actualizada para ayudar a las escuelas públicas primarias y secundarias a garantizar que los procesos de matriculación sean compatibles con la ley y cumplir con su obligación de brindar acceso igualitario a la educación a todos los niños, independientemente de su procedencia.

En 2011, los Departamentos de Justicia y Educación emitieron una orientación para ayudar a las escuelas a comprender sus responsabilidades bajo el fallo de la Corte Suprema en Plyler contra Doe y las leyes federales de derechos civiles de brindar acceso igualitario a la educación a todos los niños, independientemente de su situación inmigratoria o la de sus padres. Hoy, los departamentos están emitiendo importantes actualizaciones a dicha orientación, la que incluye ejemplos de prácticas de matriculación permitidas, así como ejemplos de los tipos de información que no pueden usarse como base para denegar el ingreso de un estudiante a la escuela.

Los documentos de orientación actualizados—los que incluyen una carta orientativa a los estados y los distritos escolares y una hoja informativa y un documento de preguntas y respuestas—destacan la necesidad de flexibilidad al aceptar documentos de los padres para probar la edad de un menor y probar que el menor vive en el área de servicio de una escuela. También brindan ejemplos específicos de los tipos de documentos que muchas escuelas han aceptado. Los documentos orientativos recuerdan a las escuelas que no pueden exigir ciertos documentos—tales como una licencia de conducir de un padre o una madre, emitida por el estado—cuando dicha exigencia impediría la matriculación de un estudiante debido a la situación inmigratoria de su padre o madre.

"Los distritos de escuelas públicas tienen la obligación de matricular a los alumnos independientemente de su situación inmigratoria y sin discriminar debido a raza, color u origen nacional", señaló el Secretario de Justicia de los Estados Unidos Eric Holder. "El Departamento de Justicia hará todo lo posible para garantizar que las escuelas cumplan con esta obligación. Haremos valer la ley para asegurar que la puerta de la escuela permanezca abierta para todos".

"Queremos garantizar que cada líder escolar comprenda las exigencias legales según la Constitución y las leyes federales, y esperamos que esta actualización corrija algunos conceptos erróneos", indicó el Secretario Arne Duncan. "El mensaje es claro: permitan que todos los niños que viven en su distrito se inscriban en sus escuelas públicas".

En los tres años desde la emisión original de la orientación en 2011, los departamentos vienen trabajando en conjunto con los estados y los distritos escolares en todo el país para lograr el cumplimiento de acuerdo con Plyler y las leyes federales de derechos civiles que prohíben la discriminación debido a raza, color y origen nacional.

Los cambios importantes anunciados hoy brindarán a los distritos herramientas adicionales y la orientación práctica necesarias para asegurar que la puerta de la escuela esté abierta para todos los estudiantes, y que menores indocumentados y menores pertenecientes a familias inmigrantes ya no enfrenten barreras para la matriculación en la escuela y para su camino hacia un futuro mejor.

WASHINGTON—Attorney General Eric Holder and Secretary Arne Duncan today announced updated guidance to assist public elementary and secondary schools to ensure enrollment processes are consistent with the law and fulfill their obligation to provide all children –  no matter their background –  equal access to an education. 

In 2011, the Departments of Justice and Education issued guidance to help schools understand their responsibilities under the Supreme Court’s decision in Plyler v. Doe and federal civil rights laws to provide all children with equal access to an education regardless of their or their parents’ immigration status. Today, the departments are issuing important updates to that guidance, including examples of permissible enrollment practices, as well as examples of the types of information that may not be used as a basis for denying a student entrance to school.   

The updated guidance documents— including a guidance letter to states and school districts and a fact sheet and Q and A document—emphasize the need for flexibility in accepting documents from parents to prove a child’s age and to show that a child resides within a school’s attendance area.  They also provide specific examples of the types of documents that many schools have accepted.  And the guidance documents remind schools that they may not require certain documents – such as a parent’s state-issued driver’s license – where such a requirement would prevent a student from enrolling because of his or her parent’s immigration status.

“Public school districts have an obligation to enroll students regardless of immigration status and without discrimination on the basis of race, color, or national origin,” said Attorney General Eric Holder.  “The Justice Department will do everything it can to make sure schools meet this obligation.  We will vigilantly enforce the law to ensure the schoolhouse door remains open to all.”

“We want to be sure every school leader understands the legal requirements under the Constitution and federal laws, and it is our hope that this update will address some of the misperceptions out there,” said Secretary Arne Duncan.  “The message here is clear: let all children who live in your district enroll in your public schools.”

In the three years since the guidance was initially issued in 2011, the departments have worked collaboratively with states and school districts across the country to meet their obligations under Plyler and federal civil rights laws that prohibit discrimination on the basis of race, color and national origin. 

The important changes announced today will provide districts with the additional tools and practical guidance needed to make sure the schoolhouse door is open to all students and that undocumented children and children from immigrant families no longer face barriers to enrollment in school and starting down the path to a better future.

All updated guidance material from today’s call will be available in both Spanish and English at http://www.justice.gov/crt/about/edu/documents/plyler.php

Robert C. Sathre was sentenced today to serve 36 months in federal prison for tax evasion by U.S. District Judge Alan B. Johnson in Cheyenne, Wyoming, the Justice Department and Internal Revenue Service (IRS) announced.  Sathre was also ordered to pay $3,113,882 in restitution to the IRS and to serve three years of supervised release.  Sathre pleaded guilty on Feb. 26, 2014, to willfully evading the payment of his 1995 and 1996 tax liability.

 

According to court documents and proceedings, Sathre sold a Minnesota business and received installment payments in 1995 and 1996 of more than $3 million.  Sathre concealed his income by filing a 1995 tax return in which he reported only $64,928 in total income.  Sathre then purchased land and set up another business, a gas station and convenience store in Sheridan, Wyoming, known as the Rock Stop.

 

According to court documents and proceedings, Sathre concealed assets by opening a foreign bank account in the Caribbean island of Nevis and by using purported trusts.  In a 10 month period spanning from 2005 through 2006, Sathre sent over $500,000 to the account in Nevis to keep the funds out of reach from the IRS.  When Sathre sold the Rock Stop in 2007, he wired over $1,250,000 from the sale proceeds to the trust account of a Wyoming law firm.  He later directed the law firm to wire $900,000 from the trust account to his account at the Bank of Nevis.  Sathre also provided a false declaration and false promissory note to the Bank of Nevis to conceal the source of this transfer and obtained a debit card linked to the foreign account to access funds locally.  In addition, Sathre provided the Bank of Sheridan with an IRS form on which he falsely claimed that he was neither a citizen nor a resident of the United States.

 

This case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorneys Ellen Quattrucci and Ignacio Perez de la Cruz of the Justice Department’s Tax Division prosecuted the case.

Zdenko Jakiša, 45, of Forest Lake, Minnesota, was arrested today on immigration fraud charges for failing to disclose multiple crimes committed in Bosnia-Herzegovina and his military service during the armed conflict there in the 1990s.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, United States Attorney Andrew M. Luger of the District of Minnesota, Special Agent in Charge J. Michael Netherland of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) St. Paul and Acting Special Agent in Charge Jane Rhodes-Wolfe of the FBI’s Minneapolis Field Office made the announcement.

Jakiša made an initial appearance today in the District of Minnesota and is scheduled for a detention hearing on May 12, 2014.

According to the indictment unsealed today, Jakiša, a former member of the armed forces of the Croatian Defense Council in Bosnia-Herzegovina, committed immigration fraud by providing false and fraudulent information about his military service during the Bosnian conflict, his criminal record in Bosnia-Herzegovina and his commission of crimes of moral turpitude.

Records from Bosnia and Bosnian witnesses indicate that Jakisa committed numerous crimes in Bosnia-Herzegovina, which he did not disclose during his refugee or green card applications. Such crimes include the murder of an elderly Bosnian Serb woman and the kidnapping, robbery and assault of a Bosnian Muslim man in September 1993.

The case is being investigated jointly by HSI St. Paul and the FBI’s Minneapolis Field Office. ICE’s Human Rights Violators and War Crimes Center provided the lead in this investigation. The Criminal Division’s Office of International Affairs and their counterparts at the Prosecutor’s Office of Bosnia and Herzegovina provided valuable assistance.

The case is being prosecuted by Senior Trial Attorney Matthew C. Singer from the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Nate Petterson of the District of Minnesota.

Members of the public who have information about former human rights violators in the United States are urged to contact U.S. law enforcement through the Human Rights and Special Prosecutions Section at hrsptips@usdoj.gov , toll-free at 1-800-813-5863, the HSI tip line at 1-866-DHS-2-ICE, or to complete its online tip form at www.ice.gov/exec/forms/hsi-tips/tips.asp . To learn more about the assistance available to victims in these cases, the public should contact HSI’s confidential victim-witness toll-free number at 1-866-872-4973. Tips may be provided anonymously.

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

 

The Justice Department reached an agreement today with Master Klean Janitorial, a company based in Denver, resolving claims that the company engaged in a pattern or practice of discriminatory documentary requests based on citizenship status in violation of the Immigration and Nationality Act (INA).

 

The department’s investigation was initiated based on a referral from U.S. Citizenship and Immigration Services.  The investigation found that Master Klean Janitorial subjected work-authorized non-U.S. citizen new hires to unlawful demands for specific documentation issued by the U.S. Department of Homeland Security in order to verify their employment eligibility, while U.S. citizens were permitted to present their choice of documentation.  The INA’s anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the hiring and employment eligibility verification process based on their citizenship status or national origin.  This practice is commonly known as document abuse. 

 

Under the settlement agreement, Master Klean Janitorial will pay $75,000 in civil penalties to the United States, undergo training on the anti-discrimination provision of the INA, revise its employment eligibility verification policies and be subject to monitoring of its employment eligibility verification practices for one year.

 

“The Department of Justice is committed to eliminating discriminatory hurdles for work-authorized non-U.S. citizens in the employment eligibility verification process,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “I am pleased that Master Klean Janitorial has worked cooperatively with the department to reach an amicable resolution.”  

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

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

 

Applicants or employees who believe they were subjected to different documentary requirements or discrimination based on their citizenship status, immigration status or national origin in hiring, firing or recruitment or referral should contact the worker hotline above for assistance.

WASHINGTON - El Departamento de Justicia llegó a un acuerdo hoy con Master Klean Janitorial, una empresa con sede en Denver, en el cual se resuelven los reclamos de que la empresa cometió un patrón o práctica de peticiones discriminatorias para documentos basado en el estado de ciudadanía en violación de la Ley de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del departamento se inició basada en una referencia del Servicio de Ciudadanía e Inmigración de los Estados Unidos. La investigación concluyó que Master Klean Janitorial sometió a los nuevos empleados que no eran ciudadanos estadounidenses, pero que contaban con autorización de trabajo, a exigencias ilegales de presentar documentos específicos emitidos por el Departamento de Seguridad Nacional para verificar su elegibilidad de empleo, mientras que a los ciudadanos estadounidenses se les permitía presentar los documentos de su elección. La provisión anti-discriminación de la INA prohíbe que los empleadores impongan cargas documentales adicionales a los empleados con autorización de trabajo durante el proceso de contratación y verificación de elegibilidad de empleo con base a su estado de ciudadanía u origen nacional. Esta práctica es comúnmente conocida como abuso de documento.

Conforme al acuerdo de resolución, Master Klean Janitorial pagará $75,000 en sanciones civiles a los Estados Unidos, participará en adiestramiento sobre la provision anti-discriminación de la INA, revisará sus políticas de verificación de elegibilidad de empleo, y estará sujeto a un período de monitoreo de sus prácticas de verificación de elegibilidad de empleo por un año.

"El Departamento de Justicia se compromete a eliminar obstáculos discriminatorios para aquellas personas con autorización de trabajo que no tienen ciudadanía estadounidense durante el proceso de verificación de elegibilidad de empleo," expresó la Sub-Procuradora General Interina para la División de Derechos Civiles, Jocelyn Samuels. "Estoy satisfecha que Master Klean Janitorial haya trabajado cooperativamente con el departamento para llegar a una solución amigable."

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas con Inmigración (OSC por sus siglas en inglés) es responsable de exigir el cumplimiento de la provisión anti-discriminación de la INA. La ley prohíbe, entre otras cosas, la discriminación con base al estado de ciudadanía y origen nacional en la contratación, despido o reclutamiento o referencia por comisión; abuso de documento; y represalias o intimidación. Para más información sobre las protecciones contra la discriminación en el empleo conforme a las leyes de inmigración o para registrarse para un seminario de internet gratis, llame a la línea directa para trabajadores de la OSC al 1-800-255-7688 (1-800-237-2515, TTY para las personas con dificultades auditivas, llame a la línea directa para empleadores de la OSC al 1-800-255-8155 (1-800-237-2515, TTY) para las personas con dificultades auditivas, o visite el sitio web a www.justice.gov/crt/about/osc.

Los solicitantes o trabajadores que creen que han sido sometidos a requisitos documentales distintos o discriminación basada en su estado de cuidadanía, estado migratorio u origen nacional, en la contratación, despido, o reclutamiento o referencia, deben comunicarse con la línea directa para trabajadores indicada previamente para recibir ayuda.

The Department of Justice announced today that Abdelkader and Hnia Amal pleaded guilty to one count of alien harboring in the U.S. District Court for the Eastern District of Virginia.  The guilty plea stemmed from evidence that Abdelkader and Hnia Amal unlawfully brought a woman into the United States from Morocco and then kept the woman in their home as a domestic servant for three years.   

 

According to court records, the defendants, who are husband and wife, concealed, harbored and shielded from detection a Moroccan national, identified in court records as F.H., in their home in Alexandria, Virginia, from December 2007 until December 2010.  F.H. served as a domestic servant within the home of the defendants.  Hnia Amal also had F.H. work for her commercial cleaning company, cleaning various residential and commercial properties. 

 

The Amals unlawfully brought F.H. into the United States on a visa they procured based on false representations that F.H. would be employed as a domestic servant for a different employer.  After the defendants unlawfully smuggled F.H. into the United States in December 2007, they did not pay her a salary.  Instead, the defendants made two down payments towards an apartment in Morocco on F.H.’s behalf.  The two payments, made in October 2010 and January 2011, were roughly equivalent to $8,500, and represented only about a quarter of the total apartment cost.  Moreover, while Hnia Amal’s cleaning company received money for the work that F.H. performed, F.H. did not receive any pay for her work on behalf of Hnia Amal’s cleaning company.  

 

According to the statement of facts entered with Abdelkader Amal’s plea agreement, Amal previously held an A-1 diplomatic visa as a military official in the Moroccan embassy in Washington, D.C.  After Amal retired in 2003 as the defense supply attaché, he was no longer eligible to sponsor individuals for domestic employment under an A-3 visa.

           

The defendants face a statutory maximum sentence of five years in prison and a fine of up to $250,000 when they are sentenced on July 11, 2014.  As part of the plea agreement, the defendants also agreed to pay at least $52,700 in restitution to F.H.  In determining the actual sentence, the court will consider the U.S. Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

                                                                                             

The case was jointly investigated by the FBI and the U.S. Department of State’s Diplomatic Security Service.  The case was jointly prosecuted by Special Assistant U.S. Attorney C. Alexandria Bogle of the Eastern District of Virginia and Trial Attorney Matthew T. Grady of the Civil Rights Division’s Human Trafficking Prosecution Unit.

The owners of Alpha Ambulance Inc. (Alpha), a now-defunct Los Angeles-area ambulance transportation company, have been sentenced in connection with a Medicare fraud scheme.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office made the announcement.

Aleksey Muratov, aka Russ Muratov, 32, and Alex Kapri, aka Alex Kapriyelov or Alexander Kapriyelov, 56, were sentenced by U.S. District Court Judge Audrey B. Collins in the Central District of California to serve 108 months and 75 months in prison, respectively. Both Kapri and Muratov pleaded guilty on Oct. 28, 2013, to conspiracy to commit health care fraud.

Muratov and Kapri were owners and operators of Alpha, which specialized in the provision of non-emergency ambulance transportation services to Medicare-eligible beneficiaries, primarily dialysis patients.

According to court documents, Muratov and Kapri knowingly provided non-emergency ambulance transportation to Medicare beneficiaries whose medical condition at that time did not require ambulance transportation. With Kapri’s knowledge, Muratov and others at Alpha instructed certain Alpha employees to conceal the Medicare beneficiaries’ medical conditions by altering required documents for Medicare reimbursement and creating fraudulent justifications for the transportation. The defendants caused Alpha to submit claims to Medicare that were fraudulent because the transportation was not medically necessary.

Additionally, as the defendants were submitting these false claims, Medicare notified Alpha that the company would be subject to a Medicare audit. In response, Muratov instructed Alpha employees – with Kapri’s knowledge – to alter specific documents that would be submitted to Medicare in response to the audit and create false justifications for transportation of the beneficiaries identified.

From at least June 2008 through at least July 2012, Alpha submitted more than $49 million in claims for ambulance transportation. As a result, Medicare paid Alpha more than $13 million for these claims, many of which were fraudulent.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. This case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter and Assistant Chief O. Benton Curtis III of the Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

 

Baptist Health System Inc. (Baptist Health), the parent company for a network of affiliated hospitals and medical providers in the Jacksonville, Florida, area, has agreed to pay $2.5 million to settle allegations that its subsidiaries violated the False Claims Act by submitting claims to federal health care programs for medically unnecessary services and drugs, the Department of Justice announced today.  The alleged misconduct involved Medicare, Medicaid, TRICARE and the Federal Employee Health Benefits Program. 

 

“Providers that bill for unnecessary services and drugs contribute to the soaring cost of health care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Providers must deal fairly and honestly with federal health care programs, and the Justice Department will investigate aggressively and hold accountable those who do not.” 

 

This settlement resolves allegations that, from September 2009 to October 2011, two neurologists in the Baptist Health network misdiagnosed patients with various neurological disorders, such as multiple sclerosis, which caused Baptist Health to bill for medically unnecessary services.  Although Baptist Health placed one of the physicians at issue on administrative leave in October 2011, it did not disclose any misdiagnoses to the government until September 2012.

 

“This settlement sends a clear message that health care fraud will not be tolerated in our district, particularly when there is the potential for harm to patients,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.

 

The improper conduct at issue in this case included Medicaid patients.  Medicaid is funded jointly by the states and the federal government.  The state of Florida, which paid for some of the Medicaid claims at issue, will receive $19,024 of the settlement amount.

 

“ Health care providers will not be permitted to provide patients unnecessary medical services and drugs and then pocket the improper payments they receive as a result,” said Acting Special Agent in Charge Brian Martens, U.S. Department of Health and Human Services Office of Inspector General.  “Our agency is dedicated to investigating health care fraud schemes that divert scarce taxpayer funds meant to provide for legitimate patient care.”

 

The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by Verchetta Wells, a former Baptist Health employee.  The act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery.  Wells will receive $424,155.

 

“These health care providers did not only violate the laws of the United States - they violated the trust placed in them by their patients,” said Inspector General of the U.S. Office of Personnel Management Patrick E. McFarland.  “Federal employees deserve health care providers, including hospitals, that meet the highest standards of ethical and professional behavior.  Today's settlement reminds all providers that they must observe those standards and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that may put the health and well-being of their patients at risk.”

 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19.1 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs.

 

This settlement is the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, the U.S. Department of Health and Human Services Office of Inspector General, the Defense Health Agency Program Integrity Office and the Office of Personnel Management Office of Inspector General.

 

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against Baptist Health was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Wells v. Baptist Health System Inc. et al.

Today, the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Middle District of Georgia announced that Jason Stacks, a former Lowndes County Sheriff’s Office (LCSO) Deputy, pleaded guilty to conspiring to use his law enforcement authority to unlawfully detain and take money from motorists.   

      

In connection with his plea, Stacks admitted that he conspired with two civilians to subject Hispanic motorists to unlawful traffic stops so that the conspirators could demand the motorists pay money in order to avoid arrest and/or deportation.  On Aug. 16, 2013, Stacks, while acting as a LCSO Deputy, unlawfully detained at least four motorists.  One of the motorists, identified in the plea documents by the initials T.C., was unlawfully detained by Stacks and then approached by Stacks’s two Spanish-speaking co-conspirators, who explained to T.C. that he would be sent to jail or deported if he did not pay $500.  When T.C. responded that he did not have $500 in his car, the co-conspirators drove T.C. to his residence and took $300 in cash from him.  Stacks and the two co-conspirators divided the $300 among them.

 

“Mr. Stacks admitted that he conspired to use his badge to unlawfully detain and take money from motorists,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue to vigorously prosecute officers who seek to profit from the violation of civil rights.”

 

“Today’s guilty plea is another example of the zero tolerance the Department of Justice has for law enforcement officers who violate individuals’ civil rights,” said U.S. Attorney Michael J. Moore for the Middle District of Georgia. 

 

This case has been investigated by the FBI, with assistance from the Lowndes County Sheriff’s Office.  The matter is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Risa Berkower of the Civil Rights Division, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia. 

The Department of Justice and the Federal Trade Commission (FTC) will hold a joint public workshop on June 23, 2014, to explore the economic and legal analysis of conditional pricing practices among firms in a supply chain.  The workshop will focus on conditional pricing arrangements – practices in which prices are explicitly or effectively contingent on commitments to purchase or sell a specified share or volume of a single product or a mix of multiple products – such as loyalty or bundled pricing.

A principal goal of the workshop will be to advance the economic understanding of the potential harms and benefits of conditional pricing practices and to reexamine their treatment under the antitrust laws.

Conditional pricing practices, similar to other distribution strategies, may have anticompetitive effects and efficiency benefits.  For example, if a loyalty or share discount induces buyers to make most or all of their purchases from the seller, under some circumstances it might deprive the seller’s rivals of sufficient access to efficient distribution or production and facilitate the seller’s exercise of market power. Similarly, bundled pricing can deny rivals that do not produce all of the products in the bundle efficiencies of scale or scope.  Supporters of such arrangements contend, however, that as long as these practices involve prices that are above some measure of cost, they are likely to reflect beneficial price competition, and that restraining their use will inhibit robust competition.

The legal treatment of conditional pricing practices has traditionally fallen into two categories.  The first focuses on pricing and applies various forms of a price-cost test.  The second examines whether a particular pricing practice reduces competition by raising the costs of rival firms or otherwise impeding their ability or incentives to expand or achieve efficiencies.  These effects on competition could be comparable to those resulting from other distribution practices, such as exclusive dealing or tying.

Economic Learning.  Workshop participants will examine both theoretical and empirical economic learning regarding these arrangements and consider many questions, including:

• What are the economic theories of harm and benefit?
• What do the economic and business-strategy literatures tell us about how and with what frequency firms employ conditional pricing practices?
• Under what circumstances are the various conditional pricing strategies likely to lead to competitive harm?
• In what settings might conditional pricing practices allow firms to realize efficiencies?
• To what degree might less-restrictive alternatives enable firms to achieve those same efficiencies?

Law and Policy Issues. Participants also will consider how to integrate the economic learning with the relevant legal standards. To that end, the workshop will explore the current legal standards in the United States and abroad and will consider a number of questions, including:

• How has the treatment of various conditional pricing practices evolved in the courts?
• To what extent do the standards articulated in judicial decisions align—or fail to align—with the relevant theories of competitive harm and benefit?
• What are the practical challenges of proof that the courts and litigants have confronted when attempting to apply the different legal standards?
• Do price-cost tests provide certainty and predictability to firms?
• How do price-cost tests compare to other alternative tests?
• Under the various standards, how might misalignment with theory and challenges of proof threaten to under-deter harmful practices or over-deter beneficial conduct?
• How do the various legal standards, if at all, affect primary conduct?
• What legal standards should the courts and antitrust agencies apply to the various conditional pricing strategies and theories of competitive harm?

The Department of Justice and the FTC are interested in receiving comments on conditional pricing practices and will accept written submissions from now through Aug. 22, 2014, 60 days after the event. Interested parties may submit public comments to https://ftcpublic.commentworks.com/ftc/conditionalpricingworkshop.  Submitted comments will be made publicly available on the Department of Justice and FTC websites.

The all-day workshop is free and open to the public. Individuals are encouraged, but not required, to register in advance for the workshop by sending an email to CPPworkshop@ftc.gov. Please include “RSVP” in the subject line. Seating will be on a first-come, first-serve basis.

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted by e-mail to lkittelson@ftc.gov or by calling Lara Kittelson at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed and provide contact information.

The workshop will take place at the FTC’s new satellite conference center, Constitution Center, 400 Seventh Street, S.W., Washington, D.C. 20024.  A workshop agenda and list of speakers will be published in advance of the workshop.  

Press contacts:

Department of Justice

Office of Public Affairs

Gina Talamona

202-514-2007

 

Federal Trade Commission

Office of Public Affairs

Mitch Katz

202-326-2161

 

Staff contacts:

Department of Justice

Antitrust Division, Office of Legal Policy

Robert Potter

202-514-2512

 

Federal Trade Commission

Douglas Hilleboe, Office of Planning Policy

202-326-2155

 

Andrea Zach, Bureau of Competition

202-326-2184

FRESNO, California. — Se reveló hoy una segunda acusación sustitutiva añadiendo 19 cargos incluyendo conspiración de delincuencia organizada e intento de asesinato contra tres demandados por su supuesta participación en la violenta pandilla Nuestra Familia, anunciaron David A. O’Neil, ayudante interino del procurador general de la División Criminal del Departamento de Justicia y Benjamin B. Wagner, procurador federal.

“Este caso tan complejo identificó la red que se extiende màs allà de los canales de distribución de drogas de la pandilla y reveló una estructura de mando que dirige actos de violencia para conseguir y mantener el control de sus miembros, independientemente de si los miembros pasean por las calles de Modesto o estàn encarcelados”, dijo Todd Irinaga, el agente especial supervisor de la oficina del FBI en Modesto. “Los cargos de hoy demuestran la eficacia del enfoque de una Fuerza de Tarea de Combate contra el Tràfico de Drogas y el Crimen Organizado (OCDETF), integrada por agencias y jurisdicciones múltiples para desmantelar organizaciones de tràfico de drogas que amenazan la seguridad y calidad de vida en nuestras comunidades”.

Gary Anthony Romero, 48, de Stockton, y Joe Anthony Félix, 34, de Modesto, fueron acusados inicialmente de conspiración para distribuir y poseer metanfetaminas con intenciones de distribuir ante un gran jurado federal en Fresno. La acusación sustitutiva, devuelta bajo sello el 30 de abril de 2014, incluye todos los presuntos cargos en la acusación original, así como nuevos cargos contra ellos. También fue acusado Jesús Gómez Félix, 30, de Modesto.

Jesús Félix fue arrestado hoy e hizo su primera comparecencia ante el tribunal federal en Fresno. Romero y Joe Félix fueron procesados hoy por los cargos en Fresno. Han estado bajo custodia federal desde marzo de 2013.

De acuerdo con la acusación sustitutiva, Nuestra Familia es una pandilla en prisión que se formó originalmente en el sistema estatal de prisiones de California en la década de 1960. Los líderes de Nuestra Familia controlan y dirigen las actividades criminales de la pandilla, tanto dentro como fuera del sistema de prisiones.

De acuerdo con la acusación sustitutiva, Romero ha sido miembro de Nuestra Familia durante unos 20 años y ha alcanzado uno de los niveles màs altos de autoridad en Nuestra Familia. Presuntamente ordenó que se cometieran varios delitos para el beneficio de la pandilla en el Condado Stanislaus, incluyendo intentos de asesinato, asaltos, robos y tràfico de drogas. Romero està acusado de conspiración de delincuencia organizada; seis cargos de intento de asesinato y seis cargos de asalto con un arma peligrosa, todos en apoyo de la delincuencia organizada; un cargo de usar y descargar un arma de fuego durante un delito de violencia y un cargo de conspiración para distribuir metanfetaminas.

Joe Félix llegó a ser un líder de Nuestra Familia en el Condado Stanislaus en 2012 y presuntamente ordenó a miembros de la pandilla que cometieran asesinatos y traficaran en drogas en Modesto. Joe Félix es acusado de conspiración de delincuencia organizada; un cargo de intento de asesinato, un cargo de conspiración para cometer un asesinato, y un cargo de asalto con un arma peligrosa, todos en apoyo de la delincuencia organizada; un cargo de usar y descargar un arma de fuego durante un delito de violencia; y un cargo de conspiración para distribuir metanfetaminas.

Jesús Félix està acusado con un cargo de asalto con un arma peligrosa resultando en lesión corporal grave en apoyo de la delincuencia organizada y un cargo de usar y descargar un arma de fuego durante un delito de violencia.

Este caso fue investigado por el Fuerza de Tarea contra el efecto de las pandillas en Central Valley, bajo la Iniciativa de Calles Seguras del FBI, con la asistencia de la Oficina del Fiscal del Condado de Stanislaus, la Oficina del Alguacil del Condado de Stanislaus, el Departamento de Policía de Modesto, Departamento de Policía de Ceres, la Patrulla de Carreteras de California, el Departamento de Correcciones y Rehabilitación de California, la Oficina de Prisiones y el Departamento de Libertad Condicional del Condado de Stanislaus.

El caso està siendo procesado por el abogado criminalista Louis A. Crisóstomo de la Sección de Delincuencia Organizada y Pandillas de la División Criminal y por Kimberly A. Sànchez y Laurel J. Montoya, ayudantes del procurador federal para el Distrito Oriental de California.

Los cargos contenidos en la acusación son meramente acusaciones, y se presume que los demandados son inocentes a menos y hasta que se pruebe que son culpables. Si se les condena, cada demandado contempla una condena estatutaria màxima de cadena perpetua y una multa de $250,000. Cualquier sentencia, sin embargo, serà determinada a discreción del tribunal después de considerar cualquier factor estatutario aplicable y las Directrices Federales de Sentencias, que toman en consideración un número de variables.

The United States has asked the U.S. District Court for the Southern District of Florida in Miami to stop Lazaro Jesus Toyos, Shirley Ester Almazan, Dilma Toyos Garcia and Daniel Almazan, and their companies L. Toyos Tax Service Inc., Toyos Garcia Tax Service Inc., Toyos Tax Service Inc. and Total Income Tax Services from preparing federal income tax returns for others, the Justice Department announced today.

 

Lazaro Toyos became a paid tax return preparer in 1979 as an adjunct to his insurance business.  In the years that followed, he was joined in the business by his daughters, Dilma Garcia and Shirley Almazan, and Almazan’s husband, Daniel Almazan.  Since 2008, these defendants have prepared over 17,000 tax returns for customers.  The complaint alleges that the defendants prepare returns that unlawfully understate income tax liabilities and overstate refunds by fabricating and/or exaggerating deductions and tax credits that their clients are not eligible to take.  These alleged practices include fabricating business losses for non-existent businesses, falsely claiming the First Time Homebuyer Credit for taxpayers who did not actually purchase a home and falsely claiming American Opportunity Credits for taxpayers who did not incur education expenses or go to college.  Altogether, the complaint alleges that loss to the U.S. Treasury from the defendants’ activities may be in the millions of dollars.

 

In the past decade, the Justice Department’s Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return preparers.  Information about these cases is available on the Justice Department website .  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

The U.S. Justice Department’s Civil Rights Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia announced today that they had reached an agreement with Penske Truck Leasing Co. resolving claims that Penske violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to properly reemploy and then terminating U.S. Air Force Reserve Member William Mann following his return from required military training with his reserve unit.

 

According to the complaint, filed in the U.S. District Court for the Eastern District of Virginia, Mann was honorably discharged as a Staff Sergeant in 2011 from the U.S. Air Force after serving with the 512 Mortuary Affairs Squadron at Dover Air Force Base.  During his service, Mann suffered a service-related injury.  Immediately upon his discharge, Mann notified Penske of his ability to return to work with some medical limitations.  The complaint alleged that Penske refused to reemploy Mann, instead placing him on short term leave.  In October 2011, while Mann was on short-term leave, he informed Penske that he would need more time to fully recover from his injuries.  Two months later, Penske terminated Mann’s employment.

 

USERRA protects the rights of members of the uniformed services to retain their civilian employment following absences due to military service obligations, and expressly requires employers to accommodate injured servicemembers when they return from military service.

 

“Congress enacted USERRA to protect our men and women in uniform from experiencing the kind of injustice experienced by Mr. Mann,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our servicemembers.”

 

Under the terms of the settlement, which was filed as a consent decree simultaneously with the complaint, Penske has agreed to pay $85,000 in lost wages to Mann. 

 

“Members of the Air Force Reserve sacrifice time away from their jobs to serve their country,” said U.S. Attorney Boente.  “When servicemembers are injured in relation to their service, USERRA ensures that they are not discriminated against and that their employment rights are protected.”

 

This case stems from a referral by the U.S. Department of Labor (DOL) following an investigation by the DOL’s Veterans’ Employment and Training Service.  The case is being handled by the Employment Litigation Section of the Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Virginia, who work collaboratively with the DOL to protect the jobs and benefits of National Guard and Reserve servicemembers upon their return to civilian life.

 

Additional information about USERRA can be found on the Justice Department website and the division website, as well as on the DOL’s website.

Related Materials:

Signed Consent Decree

The Justice Department announced today the filing of a lawsuit against the state of Hawaii and the state of Hawaii Department of Transportation Airports Division (HDOT-Airports) alleging that the defendants discriminated against former employee Sherry Valmoja by subjecting her to sexual harassment in violation of Title VII of the Civil Rights Act of 1964.  According to the complaint, Valmoja complained to the defendants about the harassment and was then subjected to retaliation, also in violation of Title VII.  Title VII is a federal statute that prohibits discrimination on the basis of race, color, national origin, sex and religion, and prohibits retaliation against an employee who opposes an unlawful employment practice or against an employee who has made a charge or participated in an investigation, proceeding or hearing under the act.

 

The complaint, filed in the U.S. District Court for the District of Hawaii, alleges that during Valmoja’s employment as a law enforcement canine handler, she was subjected to sexual harassment in the form of lewd and unwelcome comments.  Valmoja also suffered intimidation by a co-worker.  The complaint also alleges that the unwelcome conduct and intimidation began as early as 2009, when both Valmoja and her co-worker were employed by a private company contracted to the defendants; after both Valmoja and the co-worker became employed by the state of Hawaii, the harassment and intimidation continued until Valmoja’s ultimate termination in 2012. 

 

The suit further alleges that the co-worker confronted Valmoja about her prior sexual harassment complaints and intimidated her after canine handler services were transferred to Hawaii.  Despite timely complaints by Valmoja about her co-worker’s conduct, the defendants failed to take reasonable steps to remedy the harassment.  Instead, the defendants implemented an employment schedule that brought Valmoja and her harasser into close contact.  When Valmoja objected to the continued harassment and retaliation by other HDOT-Airports employees, including managers, her employment was terminated.

 

Through this lawsuit, the United States seeks declaratory and injunctive relief requiring the defendants to develop and implement policies preventing their employees from being subjected to sexual harassment sex and retaliation.  In addition, the United States seeks monetary damages for Valmoja as compensation for the employers’ discriminatory actions. 

 

“ The Justice Department is committed to the vigorous enforcement of all federal civil rights laws under its jurisdiction, including Title VII’s prohibition against sexual harassment and retaliation in the workplace ,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “This lawsuit should send a clear message that the department will take necessary action to eliminate and remedy the effects of unlawful sexual harassment in our public sector workplaces .”

 

Valmoja originally filed her sexual harassment and retaliation charges against HDOT-Airports with the Honolulu Field Office of the Equal Employment Opportunity Commission (EEOC), which investigated the matters, determined that there was reasonable cause to believe that discrimination had occurred based upon sex and retaliation and referred the matters to the Department of Justice.  This lawsuit is brought by the department as a result of a project designed to ensure vigorous enforcement of Title VII against state and local governmental employers by enhancing cooperation between the EEOC and the Civil Rights Division.

 

“ Sex discrimination and retaliation in the workplace continue to be problematic -- they're a factor in 32 and 43 percent, respectively, of all EEOC charges filed in Hawaii,” said Director Timothy Riera for the EEOC’s Honolulu Local Office.  “The EEOC is pleased to partner with the Department of Justice to ensure that employers appropriately address sex discrimination and promote work environments where employees are free to complain without fear of retribution.”

          

More information about Title VII and other federal employment laws is available at the division’s Employment Litigation Section website .  The continued enforcement of Title VII is a priority of the Civil Rights Division.  Additional information about the Civil Rights Division of the Department of Justice is available on the division website

 

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website

A second superseding indictment was unsealed today adding 19 counts including racketeering conspiracy and attempted murder against three defendants for their alleged participation in the violent Nuestra Familia gang, Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Benjamin B. Wagner announced.

Gary Anthony Romero, 48, of Stockton, Calif., and Joe Anthony Felix, 34, of Modesto, Calif., were first charged with conspiracy to distribute and possess with intent to distribute methamphetamine by a federal grand jury in Fresno, Calif. The superseding indictment, returned under seal on April 30, 2014, includes all of the charges alleged in the original indictment, as well as new charges against them. A new defendant, Jesus Gomez Felix, 30, of Modesto, was also charged.

Jesus Felix was arrested today. Romero and Joe Felix have been in federal custody since March 2013. Jesus Felix will make his initial appearance in federal court in Fresno today, and Romero and Joe Felix were arraigned on the charges today in Fresno.

According to the superseding indictment, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s. Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.

According to the superseding indictment, Romero has been a member of Nuestra Familia for about 20 years and has reached one of the highest levels of authority in Nuestra Familia. He allegedly ordered various crimes to be committed for the benefit of the gang in Stanislaus County, including attempted murders, assaults, robberies and drug dealing. Romero is charged with racketeering conspiracy; six counts of attempted murder and six counts of assault with a dangerous weapon, all in aid of racketeering; one count of using and brandishing a firearm during a crime of violence; one count of conspiracy to commit robbery; and one count of conspiracy to distribute methamphetamine.

Joe Felix became a Nuestra Familia leader in Stanislaus County in 2012 and allegedly ordered members of the gang to commit murder and deal drugs in Modesto. Joe Felix is charged with racketeering conspiracy; one count of attempted murder, one count of conspiracy to commit murder, and one count of assault with a dangerous weapon, all in aid of racketeering; one count of using and discharging a firearm during a crime of violence; and one count of conspiracy to distribute methamphetamine.

Jesus Felix is charged with one count of assault with a dangerous weapon resulting in serious bodily injury in aid of racketeering and one count of using and discharging a firearm during a crime of violence.

This case was investigated by the Central Valley Gang Impact Task Force under the FBI’s Safe Streets Initiative, with the assistance of the Stanislaus County District Attorney’s Office, Stanislaus County Sheriff’s Office, Modesto Police Department, Ceres Police Department, the California Highway Patrol, the California Department of Corrections and Rehabilitation, the Bureau of Prisons and the Stanislaus County Probation Department.

The case is being prosecuted by Trial Attorney Louis A. Crisostomo of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorneys Kimberly A. Sanchez and Laurel J. Montoya of the Eastern District of California.

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

 

A federal court in Chicago permanently barred Barbara L. Garrett from preparing tax returns for others or working for any business that prepares tax returns for others, the Justice Department announced today.  The court’s injunction, filed in the U.S. District Court for the Northern District of Illinois, also requires Garrett to contact and provide a copy of the injunction order to every customer for whom she prepared a tax return since 2011.  Garrett agreed to the permanent injunction, which was entered against her by the court on April 30, 2014.

The complaint alleged that Garrett, while working at multiple Chicago-area tax preparation businesses, including Instant Tax Service, Preferred Financial and Income Tax Solutions, claimed fraudulent deductions and credits on her customers’ federal tax returns.  Examples cited in the complaint include returns prepared by Garrett for customers that falsely claimed thousands of dollars in bogus deductions from entirely fake businesses.

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

Related Materials:

United States v. Barbara L. Garrett
Complaint for Permanent Injunction and Other Relief
Order
Amended Final Judgment of Permanent Injunction

A campaign worker pleaded guilty today for paying voters to vote in the November 2012 school board election in Donna, Texas, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Diana Balderas Castaneda, 48, of Donna, pleaded guilty to one count of vote-buying before U.S. District Judge Ricardo Hinojosa in the Southern District of Texas. Sentencing has been scheduled for July 25, 2014.

According to a factual statement read during the plea hearing, a general election was held on Nov. 6, 2012, in Donna for the presidential election, as well as various state, county and local offices, including the Donna School Board. Balderas assisted in the campaign to elect four candidates to the Donna School Board. In the course of that work, Balderas knowingly and willfully paid and offered to pay voters for voting in this election. In addition, at least two campaign managers paid voters in her presence.

Another campaign worker, Rebecca Gonzalez, 44, also of Donna, pleaded guilty to the same charge before U.S. District Judge Randy Crane in the Southern District of Texas on Feb. 14, 2014. She is scheduled for sentencing on Sept. 16, 2014.

This case was investigated by the FBI. Trial Attorneys Monique Abrishami and Jennifer Blackwell of the Public Integrity Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Leo J. Leo of the Southern District of Texas are prosecuting the case.

 

 

Two alleged members of the Almighty Imperial Gangsters Nation have been indicted for their alleged roles in a 2007 murder in the Southern District of Florida.

 
Acting Assistant Attorney David A. O’Neil of the Criminal Division and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.

 
The indictment returned by a federal grand jury on May 1, 2014, and unsealed today in the Southern District of Florida charges Jose Herrera, aka “Spyro,” 27, and Leonel Carrera, aka “Leo,” 25, both of Miami, with murder in aid of racketeering activity.  Herrera and Carrera were both arrested this morning.

 
The indictment alleges that Herrera and Carrera participated in the murder of Hockynson Sanchez, aka “Jaxx,” on Nov. 20, 2007, for the purpose of maintaining and increasing their position in the Almighty Imperial Gangsters Nation.

 
According to the indictment, the Almighty Imperial Gangsters Nation is a nationally known organized street gang that originated in the northwest side of Chicago and spread to other regions of the United States, including South Florida. Members and associates of the Almighty Imperial Gangers Nation allegedly engaged in acts of violence, including murder, attempted murder, aggravated battery and aggravated assault, as well as narcotics distribution and other criminal activities.

 
This case is being investigated by the FBI field offices in Miami, Chicago and Merrillville, Ind., along with the Miami-Dade Police Department, the City of Miami Police Department, the Chicago Police Department, the Franklin Park, Illinois, Police Department and the East Chicago Police Department.  The United States Attorney’s Office for the Northern District of Indiana, the State Attorney’s Offices of Miami-Dade and Broward Counties, the Florida Department of Correction and the Broward County Sheriff’s Office assisted with this case.

 
The case is being prosecuted by Joseph A. Cooley and Rebecca A. Staton of the Criminal Division’s Organized Crime and Gang Section, as well as the Forfeiture Section of the United States Attorney’s Office for the Southern District of Florida.

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

Two Aryan Brotherhood of Texas (ABT) gang members pleaded guilty this week to racketeering charges related to their membership in the ABT’s criminal enterprise, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

 
Kelley Ray Elley, of Austin, Texas, pleaded guilty today before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity.  Jamie Grant Loveall, aka “Dutch,” of Houston, pleaded guilty to the same charge on May 1, 2014.

 
According to court documents, Elley, Loveall and other ABT gang members and associates agreed to commit multiple acts of murder, robbery, arson, kidnapping and narcotics trafficking on behalf of the ABT gang.  Elley, Loveall and numerous ABT gang members met on a regular basis at various locations throughout Texas to report on gang-related business, collect dues, commit disciplinary assaults against fellow gang members and discuss acts of violence against rival gang members, among other things.  

 

By pleading guilty to racketeering charges, Elley and Loveall admitted to being members of the ABT criminal enterprise.

 

According to the superseding indictment, the ABT was established in the early 1980s within the Texas prison system.  The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s.  According to the superseding indictment, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism.   Over time, the ABT expanded its criminal enterprise to include illegal activities for profit.

Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, arson, assault, robbery and threats against those who violated the rules or posed a threat to the enterprise.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”

According to the superseding indictment, in order to be considered for ABT membership, a person must be sponsored by another gang member.  Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.

 
Loveall and Elley are both scheduled to be sentenced on Oct. 7, 2014.  Each faces a maximum penalty of life in prison.

 
Loveall and Elley are two of 36 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges.  To date, 26 defendants have pleaded guilty.  

                                                 
This Organized Crime Drug Enforcement Task Force (OCDETF) case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite, Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.

The case is being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Southern District of Texas.

 

The Department of Justice announced today that it has reached a settlement with eBay Inc. that prevents the company from entering into or maintaining agreements with other companies restraining employee recruitment and hiring.

The department’s Antitrust Division filed the proposed settlement in the U.S. District Court for the Northern District of California in San Jose. If approved by the court, the settlement would resolve the department’s competitive concerns and the original lawsuit filed on Nov. 16, 2012.

 
In its lawsuit, the department alleged that senior executives and directors of eBay and Intuit entered into an agreement, beginning no later than 2006, that prevented each firm from recruiting employees from the other and that prohibited eBay from hiring Intuit employees that approached eBay.

 

In the high technology sector, employees with advanced or specialized skills are highly valued and sought after. Companies often heavily recruit and hire experienced and capable employees of other technology firms, offering significantly better job opportunities or pay. The agreement between eBay and Intuit diminished important competition between the firms to attract highly skilled technical and other employees to the detriment of affected employees who had less access to better job opportunities and higher pay.

 
“eBay’s agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed settlement resolves the department’s antitrust concerns and ensures that eBay will not engage in similar conduct in the future.”

 

Previously, in denying eBay’s motion to dismiss the case, the district court found that the agreement alleged by the department, if proven, would constitute a naked horizontal market allocation agreement that was manifestly anticompetitive and lacking in any redeeming virtue, and thus could be found per se unlawful.

 

The proposed settlement would prohibit eBay from entering or maintaining anticompetitive agreements relating to employee hiring and retention for five years. It would broadly prohibit eBay from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, hiring or otherwise competing for employees. eBay will also implement compliance measures tailored to these practices. Intuit is already subject to a similar consent decree, and for that reason was not a defendant in this case.

 
Today, the California Attorney General’s Office also filed a settlement in its related case, The People of the State of California v. eBay Inc., based on the same facts alleged in the department’s complaint.

  
This case and the proposed settlement arose out of a series of Antitrust Division investigations into employee recruitment practices at a number of high tech companies. In September 2010, the Antitrust Division filed a civil antitrust lawsuit against six high tech firms– Adobe Systems Inc., Apple Inc., Google Inc., Intel Corporation, Intuit Inc. and Pixar–for antitrust violations arising from “no cold call” agreements. In December 2010, the Antitrust Division filed a civil antitrust lawsuit against Lucasfilm Ltd. alleging antitrust violations involving similar activities restraining competition for employees. In both cases, settlements were filed at the same time the lawsuits were filed resolving the department’s competitive concerns. Today’s proposed settlement with eBay is substantially the same as the court-approved settlements in the two prior cases.

 

eBay Inc. is a Delaware corporation with its principal place of business in San Jose, Calif.

 

The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 7100, Washington D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

 

A federal judge in California has permanently barred Michael I. Turner, of San Diego, from preparing federal tax returns for others, the Justice Department announced today.

In the complaint, filed in August 2013, the government alleged that Turner has prepared returns since at least 2004 but failed to sign or affix a Preparer Tax Identification Number to many of the returns that he has prepared.  The complaint also alleged that Turner entered bogus deductions on his customers’ returns, primarily on the Schedule A, Itemized Deductions, in order to claim larger refunds for those customers.  Further, the government alleged that when the Internal Revenue Service (IRS) audited Turner’s customers, he provided the customers with false documents in an attempt to assist them in falsely substantiating charitable contributions and employee expenses that they did not incur.  Turner pleaded guilty to filing a false tax return in 2013.    

In addition to barring Turner from preparing returns, the court’s civil injunction order bars Turner from serving as a representative on behalf of any person or entity before the IRS, and from owning, managing, controlling, working for or volunteering for a tax return preparation business.  In consenting to the injunction, Turner did not admit to the government’s allegations.

In the past decade, the Justice Department's Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return preparers.  Information about these cases is available on the Justice Department   website .  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on   this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the   Tax Division with details.

Related Materials:

United States v. Michael I. Turner
Complaint for Permanent Injunction and Other Relief
Order of Permanent Injunction

Jeremy Heath Higgins was indicted for threatening an African-American man at a Quinton, Alabama, restaurant, and for threatening another person who ordered Higgins to leave the restaurant due to his behavior, Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division and U.S. Attorney Joyce Vance for the Northern District of Alabama announced today.  

Higgins, 28, was charged in a three count indictment returned yesterday by a federal grand jury in the U.S. District Court for the Northern District of Alabama.  The indictment charges him with one felony count and two misdemeanor counts of interference with a federally-protected activity.  The indictment alleges that on June 14, 2013, Higgins approached and threatened an African-American man at the Alabama Rose Steakhouse because the man was present at the restaurant with a white woman.  According to the indictment, another person ordered Higgins to leave the premises of the restaurant because of Higgins’ behavior toward the African-American man, after which Higgins allegedly shouted a threat to burn down the restaurant.  The indictment further alleges that Higgins threatened the person who had ordered him to leave the restaurant by painting graffiti on the restaurant’s exterior and fence.    

If convicted of the felony count of the indictment, Higgins could face a maximum sentence of 10 years in prison and a $250,000 fine.  For each of the misdemeanor charges, Higgins could face a maximum sentence of one year in prison and a $200,000 fine.  

This case is being investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Robin B. Mark of the Northern District of Alabama and Trial Attorney David Reese of the Justice Department’s Civil Rights Division.

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.  

Josef Dörig, 72, of Switzerland, pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS) in connection with his work as the owner of a trust company in Switzerland.  Deputy Attorney General James Cole, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and IRS-Criminal Investigation Chief Richard Weber made the announcement after the plea was accepted by U.S. District Judge Gerald Bruce Lee.  Dörig was charged in a one count superseding indictment on July 21, 2011.  Sentencing is set for Aug. 8, 2014, and Dörig faces a statutory maximum sentence of five years in prison.

“Today’s plea further pulls back the curtain on efforts by Swiss banks to help U.S. taxpayers evade taxes through the use of sham trusts and foundations,” said Deputy Attorney General Cole.  “Rest assured, the days of bank secrecy for U.S. tax cheats in Switzerland – and around the world – are numbered.”

“This plea sends a strong message to those who use or help others use offshore bank accounts to evade U.S. taxes,” said Assistant Attorney General Keneally.  “We are receiving information from a variety of sources and are committed to investigating and prosecuting this wrongdoing.”

“We will continue to investigate and prosecute banks and individuals who assist U.S. citizens in the evasion of income taxes with overseas accounts,” said U.S. Attorney Boente.  “The doors are quickly closing on this illegal activity.”

“Assisting American taxpayers to evade their tax obligations with the use of secret bank accounts held in sham entities violates the law, and we will find those who are doing it,” said Chief of IRS-Criminal Investigation Richard Weber.  “IRS-CI will pursue those who use anonymous offshore accounts to avoid paying their fair share.  IRS Criminal Investigation is proud to have shared our hallmark expertise in following the money trail in this and other increasingly sophisticated criminal schemes.”

In a statement of facts filed with the plea agreement, Dörig admitted that between 1997 and 2011, while owning and operating a trust company, he engaged in a wide-ranging conspiracy to aid and assist U.S. customers in evading their income taxes by concealing assets and income in secret bank accounts held in the names of sham entities at a financial institution referred to in the superseding indictment as International Bank (IB), one of the biggest banks in Switzerland and one of the largest wealth managers in the world.

According to the statement of facts, from 1972 to 1996, Dörig worked for a subsidiary of IB.  The subsidiary formed, managed and maintained nominee tax haven entities.  Individuals concealed their assets by holding their accounts at IB in the names of these tax haven entities.  During this time, the subsidiary managed and maintained over 100 sham entities for U.S. taxpayers committing tax evasion.

Also included in the statement of facts, in 1997, executives at the subsidiary devised a plan to spin off all of these sham entities into a new trust company, Dörig Partner AG, to be owned and operated by Dörig, who was then an employee of the subsidiary.  Dörig was required to make his best efforts to keep the existing accounts at IB open and to ensure that any clients referred to him by IB would open new accounts at that institution.

According to the statement of facts, IB promoted Dörig Partner as a provider of various entity structures.  The phone list used in IB’s New York representative office identified Dörig Partner as an external trust expert.  Dörig Partner also sublet space from IB in an office tower where a private bank owned by IB was the major tenant.

As part of the conspiracy, Dörig traveled to the United States to introduce himself to new clients he had obtained as part of the spin-off.  In the following years, he traveled to the United States with bankers from IB, including his co-defendants Markus Walder, Marco Parenti-Adami and Michele Bergantino, to meet with existing and prospective clients who already had undeclared accounts at IB but had been identified by the IB’s bankers as potential candidates for the use of a structure.

According to the statement of facts, although Dörig ostensibly controlled both the structure and the account at IB, in practice, many of the U.S. taxpayers with undeclared accounts controlled the assets in those accounts by dealing directly with IB bankers, often without either the knowledge or consent of Dörig.

According to the statement of facts, in 2008, IB ordered Dörig Partner to close accounts for the structures they managed.  Dörig turned to an asset manager at a financial services firm in Zurich for assistance.  The financial services firm maintained a master account in its own name at a private bank in Gibraltar, and then opened sub-accounts for Dörig’s clients at that bank to which Dörig transferred the funds from the clients’ undeclared accounts at IB.  The financial services firm provided the Gibraltar bank only with the number associated with each sub-account and did not inform the bank of any information regarding the owners of the assets in the sub-accounts. 

This case is being investigated by IRS-Criminal Investigation.  Assistant U.S. Attorney Mark D. Lytle and Trial Attorneys Mark F. Daly and Nanette L. Davis of the Tax Division are prosecuting the case.

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

Related Materials:

United States v. Josef Dörig
Statement of Facts

Assistant Attorney General for the Tax Division Kathryn Keneally, U.S. Attorney Sanford C. Coats for the Western District of Oklahoma, and the Internal Revenue Service (IRS) announced today that Larry Douglas Friesen pleaded guilty to three counts of willfully failing to pay employment taxes.

 

On March 21, 2014, a criminal information was filed in federal district court that alleged Friesen willfully failed to pay over to the IRS the federal income taxes and the Federal Insurance Contributions Act (FICA) taxes due and owing during three tax quarters in the 2007 calendar year.  According to the criminal information, Friesen, who was the owner of the Law Office of Doug Friesen, deducted and collected federal income taxes and FICA taxes from his employees’ paychecks but failed to pay these taxes to the IRS.

 

Under the terms of the plea agreement, Friesen agreed to pay restitution in the amount of $320,000 to the IRS.  Friesen faces a statutory maximum penalty of one year in prison per count, one year of supervised release per count and a maximum fine of $100,000 per count.  A sentencing hearing will be set by the court in approximately 90 days.

                                               

The case was investigated by Special Agents from IRS-Criminal Investigation and prosecuted by Trial Attorneys Christopher Maietta and Sonia Owens of the Tax Division, with valuable support from the U.S. Attorney’s Office for the Western District of Oklahoma.

A federal jury in Detroit today convicted a physical therapist, physical therapy assistant and unlicensed doctor for their participation in a nearly $15 million Medicare fraud scheme.

 

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

 

Shahzad Mirza, 43, a physical therapist; Jigar Patel, 30, a physical therapy assistant; and Srinivas Reddy, 38, a foreign medical school graduate without a license to practice medicine were each found guilty of one count of conspiracy to commit health care fraud in connection with a scheme perpetrated from approximately July 2008 through September 2011 at Detroit area companies Physicians Choice Home Health Care LLC (Physicians Choice), Quantum Home Care Inc. (Quantum), First Care Home Health Care LLC (First Care), Moonlite Home Care Inc. (Moonlite) and Phoenix Visiting Physicians.  In addition, Mirza and Patel were each found guilty of two counts of health care fraud in connection with the submission of false claims to Medicare for home health services, and Reddy was found guilty of three counts of health care fraud in connection with the submission of false claims to Medicare for home health services and physician home visits.  Patel was found guilty of one count of money laundering in connection with his laundering of the proceeds of the fraud through his company MI Healthcare Staffing.

 

The defendants were charged in a superseding indictment returned Feb. 6, 2012.  Three other individuals charged in the indictment remain fugitives.

 

According to evidence presented at trial, Physicians Choice, Quantum, First Care and Moonlite operated a fraudulent scheme to bill Medicare for home health care services that were never provided.  The home health care companies paid kickbacks to recruiters who in turn paid Medicare beneficiaries cash and promised them access to narcotic prescriptions.  The conspirators created the company Phoenix Visiting Physicians, which employed unlicensed individuals, including Reddy, to visit patients and provide them with narcotic prescriptions as well as obtain the information necessary to fill out paperwork to refer them for medically unnecessary home health care services. 

 

Evidence presented at trial showed that beneficiaries pre-signed medical paperwork that was provided to Patel and other physical therapist assistants to fill in with false information purporting to show that the care was provided, when it was not.  Patel, registered physical therapist Mirza and others would sign this paperwork as though they had provided services.  In the course of the conspiracy, Patel incorporated his own staffing company, MI Healthcare Staffing, through which he laundered proceeds of the fraud from home health care companies and a shell company owned and operated by his co-conspirators.

 

Physicians Choice and the related companies were paid nearly $15 million in the course of the conspiracy.

 

Sentencing for all three defendants has not yet been scheduled. 

 

The investigation was led by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen and Rohan A. Virginkar of the Fraud Section.

 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

 

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

Shokrollah Baravarian, of Beverly Hills, California, was charged today in the U.S. District Court for the Central District of California with conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.

 

According to the indictment, Baravarian, a former senior vice president at the Los Angeles branch of a bank headquartered in Tel Aviv, Israel, conspired to conceal the existence of undeclared accounts owned and controlled by U.S. customers in Israel.  The indictment alleges that these accounts were concealed from the IRS by opening them under pseudonyms, code names and the names of nominee entities set up in the British Virgin Islands and the island of Nevis.

 

“This charge results from an ongoing and extensive investigation into the use of undeclared bank accounts in Israel, and demonstrates the department’s determination to find and prosecute those who help U.S. taxpayers evade taxes through offshore accounts located anywhere in the world,” said Deputy Attorney General James M. Cole.

 

“IRS-Criminal Investigation and Tax Division prosecutors have been investigating the use of undeclared bank accounts globally, and charges have been brought against not only the U.S. taxpayers with undeclared Israeli bank accounts but also those who facilitate the hiding of assets and income abroad,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “Whether it be Israel, Switzerland, the Caribbean or elsewhere, the Justice Department is finding the hiding places and is committed to prosecuting tax cheats.”

 

“The defendant assisted others to hide the true ownership of offshore bank accounts through the use of code names and nominee entities,” said Chief of IRS-Criminal Investigation Richard Weber.  “Our special agents unraveled the complex financial transactions used to disguise the funds in the undeclared accounts.  Those who help others commit tax evasion risk prosecution and substantial monetary penalties.”

 

The indictment further alleges that Baravarian assisted U.S. customers in secretly accessing the funds in their undeclared accounts by obtaining back-to-back loans from the Los Angeles branch of the bank.  According to the indictment, a back-to-back loan was a loan that was secured by funds in an undeclared account in Israel and issued by the Los Angeles branch to a U.S. customer.  Baravarian is alleged to have helped conceal the fact that U.S. customers were using their own funds as collateral by purposely not keeping copies of loan-related documents in the files at the Los Angeles branch.  These documents included Israeli account information and pledge agreements used to secure the loans.  As detailed in the indictment, some U.S. customers obtained back-to-back loans from the Los Angeles branch by transferring funds to Israel from other foreign countries, including Switzerland and China.

 

The indictment further alleges that a banker in Israel would periodically travel to Los Angeles and meet with U.S. customers to discuss their account statements.  Prior to making these trips, the banker would redact the names of the U.S. customers reflected on the account statements.

 

Baravarian is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.

 

U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns and on a Report of Foreign Bank and Financial Reports filed with the U.S. Treasury.

 

If convicted, Baravarian faces a potential maximum prison term of five years and a maximum fine of $250,000.  The charge contained in the indictment is only an allegation. The defendant is presumed innocent and it is the government’s burden to prove guilt beyond a reasonable doubt.

 

The case was investigated by special agents of IRS-Criminal Investigation.  Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Sandra R. Brown, Chief of the Tax Division of the U.S. Attorney’s Office for the Central District of California.

 

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

Li Fangwei, who is more commonly known by his alias “Karl Lee,” is charged with violating the International Emergency Economic Powers Act (IEEPA) by using United States-based financial institutions to engage in millions of dollars of U.S. dollar transactions in violation of economic sanctions that prohibited such financial transactions. In addition, Li Fangwei is also charged with conspiring to commit wire fraud and bank fraud, a money laundering conspiracy, two separate violations of IEEPA and two separate substantive counts of wire fraud, in connection with such illicit transactions. Li Fangwei, a national of the People’s Republic of China, is a fugitive.

The announcement was made today by Assistant Attorney General John P. Carlin of the Justice Department’s National Security Division, Preet Bharara, U.S. Attorney for the Southern District of New York, George C. Venizelos, Assistant Director in Charge for the FBI’s New York Field Office.

“ These charges are an important part of the ‘ all tools’ approach our government is taking against Li Fangwei to shut down and deny him the profit from his proliferation activities,” said Assistant Attorney General Carlin. “This case is an outstanding example of multiple agencies working together to focus various enforcement efforts on the significant threat to our national security posed by such proliferation networks.”

“As alleged, Li Fangwei has used subterfuge and deceit to continue to evade U.S. sanctions that had been imposed because of his illicit trade in prohibited materials with Iran,” said U.S. Attorney Bharara. “Previously having been exposed as a violator of those sanctions, Li spun a web of front companies to carry out prohibited transactions essentially in disguise. He now stands charged with serious crimes, and millions of his dollars have been seized. It is the hope of this Office not only that Li’s banned commerce cease once and for all, but that he be apprehended and brought before the bar of American justice.”

“Whether motivated by greed or otherwise, Li Fangwei allegedly ignored sanctions imposed by the United States Government and hid behind front companies he developed to engage in a series of illegal transactions, including attempts to acquire ‘dual use’ items on behalf of Iran-based entities,” said Director in Charge Venizelos. “IEEPA makes it a crime to willfully violate U.S. sanctions on designated countries such as Iran. Individuals and companies who evade U.S. sanctions and misuse our banking system to further their illegal activity not only undermine the integrity of our financial markets but also threaten U.S. National Security interests. The FBI is committed to ensuring that strategically important goods and technology, particularly those that could be used in the production or delivery of weapons of mass destruction, do not end up in the wrong hands.”

According to the superseding indictment previously filed in Manhattan federal court and other court documents: Li Fangwei controls a large network of industrial companies based in eastern China, one of which is LIMMT Economic and Trade Company Ltd. (LIMMT). Over the years, Li Fangwei’s companies have done millions of dollars of business with Iran. This business has included selling to Iranian entities various metallurgical goods and related components that are banned for transfer to Iran by, among others, the United Nations, because the items are controlled by the Nuclear Supplier’s Group (a multinational group that maintains “control lists,” which identify nuclear-related dual-use equipment, material and technology). Li Fangwei has been, among other things, a long-time supplier to Iran’s Defense Industries Organization and Iran’s Aerospace Industries Organization. In addition, Li Fangwei has been a principal contributor to Iran’s ballistic missile program, through China-based entities that have been sanctioned by the United States.

In light of his supply of restricted items to Iran, the United States has imposed targeted sanctions on both Li Fangwei and LIMMT. Specifically, the United States Department of the Treasury’s Office of Foreign Asset Controls (OFAC) publicly added LIMMT (in 2006) and Li Fangwei (in 2009) to its List of Specially Designated Nationals and Blocked Persons (SDN List). By virtue of their inclusion on the SDN List, Li Fangwei and LIMMT were effectively precluded from conducting any business within the United States without first obtaining a license or authorization from OFAC. Neither Li Fangwei nor LIMMT has sought such a license or authorization.

The above-referenced restrictions have forced Li Fangwei to operate much of his business covertly. In response to United States sanctions, Li Fangwei has built an outsized network of China-based front companies to conceal his continuing participation, and LIMMT’s continuing participation, in sanctioned activities. The front companies are listed in Exhibit A to the superseding indictment. As shown in Exhibit A, many of those front companies have used the same address as LIMMT, or a close variant thereof.

During the period from 2006 through to the present, Li Fangwei has used front companies to engage in more than 165 separate U.S. dollar transactions, with a total value in excess of approximately $8.5 million dollars. Included in those illicit transactions have been transactions involving sales to U.S. companies and sales of merchandise by Li Fangwei to Iran-based companies utilizing the U.S. financial system. Li Fangwei also attempted to acquire on behalf of Iran-based entities so-called “dual use” items from the United States, China and other countries that could be used in the production of weapons of mass destruction and/or devices used to deliver weapons of mass destruction.

Additionally, the U.S. Attorney’s Office and the FBI announced the seizure of over $6,895,000 in funds attributable to the Li Fangwei front companies, and the filing of a civil complaint seeking the forfeiture of those funds to the United States. The seized funds are substitutes for money held by Li Fangwei’s front companies at banks in China, and were seized from accounts at U.S. banks held in the name of foreign banks used by these front companies to conduct U.S. currency transactions (the correspondent accounts). The funds were seized pursuant to seizure warrants issued on Dec. 18, 2013, and April 25, 2014. The $6,895,000 represents funds used by the Li Fangwei front companies to engage in transactions that violate the U.S. sanctions laws and thus are subject to forfeiture. There are no allegations of wrongdoing by the U.S. or foreign banks that maintain these accounts. Because the funds used in those transactions are held in banks overseas, the United States is unable to seize the funds directly. However, pursuant to U.S. law, the United States can seize funds located in a bank’s correspondent accounts in the United States if there is probable cause to believe that funds subject to forfeiture are on deposit with that bank overseas. Based on this provision and others, the seizure warrants were executed. These funds were transferred to a seized asset account maintained by the United States Marshals Service pending resolution of the forfeiture action.

Based on information developed in the course of the FBI’s investigation into Li Fangwei that forms the basis of the superseding indictment, OFAC today is adding eight additional front companies used by Li Fangwei to its List of Specially Designated Nationals and Blocked Persons.

Finally, the United States Department of Commerce announced today the addition of nine China-based suppliers of Li Fangwei to its Entity List.

The Superseding Indictment charges Li Fangwei with seven separate offenses:

·          Count One: Conspiracy to violate the International Emergency Economic Powers Act;

 

·          Counts Two and Three: Substantive violations of the International Emergency Economic Powers Act;

 

·          Count Four: Money laundering conspiracy;

 

·          Count Five: Conspiracy to commit wire fraud and bank fraud; and

 

·          Counts Six and Seven: Wire fraud.

If convicted, Li Fangwei faces a maximum sentence of 20 years in prison on each of Counts One through Four and Counts Six and Seven, and 30 years in prison on Count Five. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Additional efforts directed at Li Fangwei and his network were announced today by the U.S. Department of State’s Transnational Organized Crime Rewards Program, Department of Treasury and the Department of Commerce.

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

 

Oneike Mickhale Barnett, a Jamaican citizen, was sentenced today in Ft. Lauderdale, Fla., in connection with his role in a fraudulent lottery scheme based in Jamaica that targeted victims in the United States, the Justice Department announced.  Barnett was sentenced by U.S. District Court Judge William J. Zloch to serve 60 months in prison and 5 years supervised release.  Barnett also was ordered to pay $94,456 in restitution.

 

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

 

“This sentence sends a strong message that the American justice system will not stand by while criminals defraud unsuspecting Americans of their savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Department of Justice will use all available means to hold these international criminals accountable.” 

 

Barnett was arrested in Orlando, Fla., in August 2013, following his indictment by a federal grand jury in Ft. Lauderdale on Aug. 9, 2012.  Barnett pleaded guilty on Feb. 28, 2014, to conspiracy to commit wire fraud.  As part of his guilty plea, Barnett acknowledged that had the case gone to trial, the United States government would have proved beyond a reasonable doubt that, from 2008 through 2012, he was a member of a conspiracy in which elderly victims were informed that they had won a large amount of money in a lottery and were induced to pay bogus fees in advance of receiving their purported lottery winnings.  In an effort to convince the victims that the lottery winnings were real, the conspirators sent them written and electronic communications discussing their purported lottery winnings which claimed to be from a genuine sweepstakes company, and from federal agencies, including the Internal Revenue Service and the Federal Reserve.

 
“As international fraudsters focus their criminal schemes on Americans, we will do all we can to prosecute and deter such criminal activity,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida.  “ We will continue to bring international fraudsters to justice in the United States.” 

 
Also as part of his guilty plea, Barnett acknowledged that the government would have proved beyond a reasonable doubt that he knew the claims of lottery winnings were completely fabricated and he, along with his co-conspirators, kept the victims’ money for their own benefit without paying any lottery winnings.

                 
Assistant Attorney General Delery and U.S. Attorney Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, and the U.S. Marshals Service.  The case was prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning.

 

Dr. Dayo Obebe of Muscogee County, Georgia, was sentenced today to serve 12 months and one day in prison for tax evasion and ordered to pay $189,661 in restitution, announced Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.  Obebe pleaded guilty to one count of tax evasion on Feb. 6, 2014.

 

According to court documents, Obebe is a dentist licensed in Georgia and Alabama, where he operated the Moon Road Cosmetic & Family Dentistry in Columbus, Georgia, and the Brent Dental Dentistry in Brent, Alabama.  In 2004, Obebe began intentionally concealing money he earned from patients who paid with credit cards from his accountants and the Internal Revenue Service (IRS) by placing credit card payments into a separate bank account from cash and check receipts.  Consequently, Obebe intentionally underreported his total income from the dental practices on his 2004, 2005 and 2006 federal income tax returns by more than $500,000 and falsely claimed a tax refund.

 

According to court documents, during an IRS audit of Obebe’s tax return, he lied to the IRS revenue agent conducting the audit when he stated that the dental practices did not accept credit cards as a form of payment for dental services when, in fact, the dental practice did accept credit cards.  In total, Obebe evaded paying over $185,000 in taxes to the IRS on his 2004, 2005 and 2006 federal income tax returns.

 

The case was investigated by special agents of IRS - Criminal Investigation and Trial Attorney Charles Edgar for the Tax Division prosecuted the case.

 

More information about the Tax Division and its enforcement efforts can be found at the division website.

Charmaine Anne King was sentenced today in connection with her role in a fraudulent international lottery scheme that targeted U.S. citizens, the Justice Department announced.  King was sentenced by U.S. District Court Judge K. Michael Moore in Miami to serve 57 months in prison and 5 years supervised release.  A hearing on restitution has been scheduled for June 5, 2014.  King was convicted by a federal jury in Miami on Feb. 5, 2014, of one count of conspiracy, three counts of mail fraud, and two counts of wire fraud. 

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

 
“The Justice Department will continue to hold criminals accountable for fraudulent lottery schemes,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “This illegal conduct creates significant financial harm to people throughout the country, and we will continue to investigate and prosecute such crime, and bring those responsible to justice.” 

 
A federal grand jury in Miami returned an indictment against King and co-conspirator Althea Angela Peart on Oct. 31, 2013.  Judge Moore adopted a report and recommendation accepting Peart’s guilty plea on Feb. 4, 2014, and on March 20, 2014, he sentenced Peart to 33 months’ incarceration.  As part of her plea agreement, Peart acknowledged that a co-conspirator, believed to be located in Canada, mailed letters to elderly victims in the United States falsely informing the victims that they had won more than a million dollars in a lottery.  These letters purported to be from an actual sweepstakes company in the United States.

 
“International lottery fraudsters have cheated Americans out of tens of millions of dollars,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida.  “In this particular scheme, the fraudsters convinced the victims to deposit counterfeit checks into their bank accounts in order to pay fees to collect their purported lottery winnings.  After the victims sent the money to King, the counterfeit cashier’s checks bounced and they lost their money.  Such fraud will not be tolerated.  Together with federal and local law enforcement, we are working to put an end to this type of scheme.” 

 
The evidence at King’s trial showed that a co-conspirator sent fraudulent lottery letters to the victims and included counterfeit cashier’s checks made out to the victims for thousands of dollars.  These letters instructed victims to call “claims agents” who were actually co-conspirators, and when the victims called the purported claims agents, the agents informed the victims that they had to pay several thousand dollars in fees in order to collect their purported lottery winnings.  The claims agents told the victims to deposit the cashier’s checks in the victims’ bank accounts in order to purportedly cover the money they had to pay.  The co-conspirators instructed the victims on how to send and wire this money to King and others.  The cashier’s checks that victims received from the fraudulent lottery had no value.  The evidence demonstrated that after the victims sent money to King, the counterfeit cashier’s checks bounced.  Victims never received any lottery winnings.

 
Evidence presented at trial showed that King kept a percentage of the money she received from victims and sent the rest of the money to a co-conspirator.  King continued to participate in this scheme even after the U.S. Postal Inspection Service verbally informed her that she was participating in unlawful activity, and after she later signed a Cease and Desist Order requiring that she stop receiving money from victims of fraud.  The order that King signed described the lottery related activity that the U.S. Postal Inspection Service explained was unlawful.

 

Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, and the U.S. Marshals Service.  The case is being prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning with the Department of Justice’s Civil Division, Consumer Protection Branch.