District Not Recorded

The United States filed a complaint today seeking to bar Joyce Bougere-Keyes, and her business, Joyce Tax & Financial Service LLC, from preparing federal tax returns for others, the Justice Department announced.

The civil injunction complaint, filed in the U.S. District Court for the Western District of Louisiana, alleges that Bougere-Keyes, of New Iberia, prepares federal income tax returns for customers that report fabricated and/or inflated business income and expenses to maximize the amount of the Earned Income Tax Credit her customers claim.  Bougere-Keyes has also improperly claimed education credits for ineligible taxpayers.  Since 2009, Bougere-Keyes has prepared over 7,500 individual income tax returns and the loss to the U.S. Treasury caused by her conduct could exceed $1 million.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 .  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website .   An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Related Materials:

United States v. Joyce Bougere-Keyes, etc.
Complaint for Permanent Injunction

As the April 15 tax filing deadline approaches, Attorney General Eric Holder warned U.S. tax filers to beware a “rising threat” of scammers seeking fraudulent refunds based on stolen identities, and vowed aggressive enforcement against the practice.  Speaking in a recorded video message released on the Justice Department’s website, Attorney General Holder explained that a growing pool of criminals are engaged in the activity, including gangs and drug sellers seeking quick access to cash.

The Justice Department’s Tax Division, in conjunction with the Internal Revenue Service and U.S. Attorneys’ Offices nationwide, have prioritized the investigation and prosecution of individuals who engage in stolen identity refund fraud.  In the last year alone, the Department charged more than 880 defendants involved in stolen identity refund fraud, and the IRS reports that it resolved or closed approximately 963,000 cases involving identity theft victims.

“This is an increasingly urgent problem,” said Attorney General Holder.  “Its impact can be devastating to families that are counting on legitimate tax refunds that are diverted by identity theft.  And especially in recent years, the Justice Department has seen the scale, scope, and execution of these fraud schemes grow significantly.”

The Attorney General urged Americans to protect themselves by reporting suspicious activity and learning more at the IRS website, the Justice Department’s Tax Division website, and STOPFRAUD.GOV.  Noting that anyone can be a target of these scams, Attorney General Holder shared his own recent experience with tax refund fraud after two individuals in Georgia attempted to obtain a fraudulent refund using his personal information.

            The complete text of the Attorney General’s video message is below:   “With the time to file taxes just around the corner, we at the Justice Department want to warn you about a rising threat facing law-abiding taxpayers.

“Over the last several years, stolen identity refund fraud has affected hundreds of thousands of Americans, victimizing honest citizens and draining billions of taxpayer dollars from the U.S. Treasury.  In fact, the IRS reported that last year they resolved and closed approximately 963,000 cases involving identity theft victims.  Criminals who perpetrate these schemes use stolen personal identifying information – such as Social Security numbers – to file false tax returns with the IRS in order to steal fraudulent tax refunds.

“These scams are no longer just about white-collar criminals.  They are carried out by a variety of actors – from greedy tax return preparers to identity brokers who profit from the sale of personal information – to gangs and drug rings looking for easy access to cash.  And these criminal enterprises disproportionately target the most vulnerable members of society – including low-income families, the elderly, Medicaid recipients, and those who have lost loved ones – including children.

“This is an increasingly urgent problem.  Its impact can be devastating to families that are counting on legitimate tax refunds that are diverted by identity theft.  And especially in recent years, the Justice Department has seen the scale, scope, and execution of these fraud schemes grow significantly.

“Fortunately, our knowledge of these crimes – and our ability to stop them – has grown as well.  Last year alone, the Justice Department charged more than 880 defendants for their involvement in stolen identity refund fraud.  Over the last few years – in some instances – those convicted of these crimes have faced sentences totaling upwards of ten years in prison.  These sentences match the seriousness of these crimes.  And they demonstrate our steadfast commitment to investigating and prosecuting tax refund fraud that involves identity theft.

“Particularly as we approach April 15th – as millions of Americans prepare and file this year’s tax returns – the Justice Department and its partners are stepping up our enforcement efforts.  And we’re taking aggressive action to stop stolen identity refund fraud in its tracks whenever and wherever it occurs.

“The Justice Department will use every tool at its disposal to go after these scammers.  And we’ll keep working with the IRS, the FBI, the Secret Service, the Postal Inspection Service, and other federal law enforcement agencies – as well as state and local law authorities – to combat these crimes.  But we need members of the public to do their part by staying vigilant.  After all, identity thieves can target anyone – something I saw firsthand last year, when two people attempted to get a fraudulent tax refund using my personal information.

“So I urge all of you to help my colleagues and I raise awareness about this growing threat.  Protect yourself by reporting suspicious activity and filing your taxes as early as possible.  And keep yourself from becoming a target by learning more about fraud and identity theft on the IRS website – or by visiting STOPFRAUD.GOV.”

The full video is available at http://www.justice.gov/agwa.php.

Tommy Edward Clack was sentenced today to serve 66 months in federal prison for tax and fraud crimes by U.S. District Judge Thomas D. Schroeder in Winston-Salem, N.C., the Justice Department and Internal Revenue Service (IRS) announced.  Clack was also ordered to pay $1,350,597 in restitution to the IRS and $20,945 in restitution to a bank he defrauded, and to serve five years of supervised release.  Clack previously pleaded guilty to one count of willfully filing a false federal income tax return for 2007 and one count of knowingly making a false statement to a federally insured bank in order to obtain a mortgage loan.

According to court documents, for approximately the past 10 years, Clack has been a traveling, self-employed paving contractor doing business in North Carolina, South Carolina, Maryland and Florida.  Clack operated under several different business names and changed the names frequently in order to avoid scrutiny by state and federal law enforcement agencies.  Over the years, Clack was charged with and convicted of multiple state criminal violations in Maryland, North Carolina, South Carolina and Florida as a result of his business practices.  Since June 2010, Clack has been under an injunction banning him from operating as a driveway paving contractor in North Carolina.  He is also subject to a cease-and-desist order in Maryland that bans him from various fraudulent practices.

According to court documents, Clack significantly underreported the income from his paving business on his tax returns.  From 2004 to 2007, Clack earned gross income of over $5.7 million, but reported only a fraction of it to the IRS.  In 2004, Clack underreported his income by approximately $294,829.  In 2005, he underreported his income by approximately $1,178,822.  In 2006, Clack underreported his income by approximately $1,868,556.  And in 2007, Clack underreported his income by $2,428,710.  Clack’s returns were prepared by a professional accountant, but Clack knowingly provided her with false information on which to base his returns, and he signed his returns knowing that they significantly understated his income.  Altogether, as a result of these false returns Clack underpaid his taxes by $1,350,597 for the 2004 through 2007 tax years.

According to court documents, Clack employed a number of strategies to conceal his tax fraud.  In addition to constantly changing the name of his paving company, Clack did not maintain books and records.  He also dealt extensively in cash, paid his employees in cash, and structured currency transactions with his bank in amounts designed to evade the bank’s requirement to file Currency Transaction Reports with the U.S. Treasury.

Court documents also state that in December 2003, Clack submitted a mortgage loan application in the name of his then-wife to a bank in Greensboro, N.C.  The application sought a $640,000 loan as financing for the purchase of a $1.2 million home.  As part of the loan application, Clack provided the bank with a tax return in his wife’s name for the year 2002 that claimed married filing separate status, reported adjusted gross income of $372,748 and claimed total tax liability of $127,745.  Clack claimed that this tax return had been filed with the IRS, when in fact Clack and his then-wife had filed a joint federal income tax return for 2002 that claimed that the couple had adjusted gross income of $17,656 and a total tax liability of $2,685.  The bank would not have approved the loan if they knew about the discrepancy.  Clack ultimately defaulted on the loan and the bank suffered a loss after foreclosing on the collateral.

The case was investigated by the IRS-Criminal Investigation, with assistance from the North Carolina State Bureau of Investigation.  It was prosecuted by Trial Attorney Jonathan Marx of the Tax Division with assistance from the U.S. Attorney’s Office for the Middle District of North Carolina.

A former vice president of a Chesapeake, Va., government contracting company pleaded guilty today to conspiracy to pay bribes to public officials in exchange for favorable treatment in connection with U.S. government contract work.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after the plea was accepted by U.S. Magistrate Judge Douglas E. Miller in the Eastern District of Virginia.

Adam C. White, 40, was charged by criminal information on March 28, 2014, with one count of conspiracy to bribe public officials. White faces a maximum penalty of five years when he is sentenced on July 11, 2014.

According to a statement of facts filed with the plea agreement, White worked for a government contracting company that was created to support the U.S. Navy’s Military Sealift Command (MSC) on various telecommunication projects. For several years, White and his business partners paid bribes to MSC public officials in exchange for favorable treatment in awarding MSC-related government contract work.

White admitted that he contributed a portion of his paycheck to the bribe payments by regularly withdrawing approximately $1,000 in cash from his personal bank account after receiving his bi-weekly paycheck and providing it to his business partners. Together, White and his business partners paid approximately $3,000 to $4,000 a month in cash bribes to two MSC public officials. In his statement of facts, White also admits that he was aware his business partners provided other things of value, including flat-screen televisions, to influence the official actions of a MSC public official.

As a condition of the plea agreement, White has agreed to forfeit $57,000 as the proceeds of the offense.

In December 2013, White resigned from his position as vice president of the government contracting company.

Prior to entry of this guilty plea, four other individuals pleaded guilty in connection with the same bribery scheme. On Feb. 12, 2014, Kenny E. Toy, the former afloat programs manager for the MSC N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to bribery and admitted receiving more than $100,000 in cash bribes. On Feb. 18, 2014, Dwayne A. Hardman, one of White’s business partners, pleaded guilty to bribery and admitted to providing more than $140,000 in cash bribes to Toy and another MSC public official. On Feb. 19, 2014, Michael P. McPhail pleaded guilty to conspiracy to commit bribery and agreed to forfeit $57,000. On March 5, 2014, Roderic J. Smith, another of White’s business partners, pleaded guilty to conspiracy and agreed to forfeit $175,000.

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

Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today.  This marks the first successfully litigated extradition on an antitrust charge.

 
Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013.  He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division.  “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities.  During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida,  Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies.  As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy.  That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007.  Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

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

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation.  The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter.  The Criminal Division’s Office of International Affairs provided assistance.

Anyone with information concerning bid rigging or other anticompetitive conduct in the marine products industry is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694.

A co-owner of a Middlesex, N.J., industrial pipes, valves and fittings supply company pleaded guilty today to one count of making a false statement, the Department of Justice announced.

Victor Boski pleaded guilty in the U.S. District Court of New Jersey to willfully making a materially false and fictitious statement to the U.S. Environmental Protection Agency (EPA) at a debarment proceeding.  Previously, Boski and his company, National Industrial Supply LLC (NIS), had pleaded guilty on March 4, 2009, to participating in a kickback and fraud conspiracy to defraud the EPA at the Federal Creosote Superfund site located in Manville, N.J., and to defraud Tierra Solutions Inc., a general contractor based in The Woodlands, Texas, at the Diamond Alkali Superfund site in Newark, N.J., from approximately December 2000 to approximately September 2004.  As outlined in the 2009 plea agreement, Boski provided $55,000 in kickbacks to two employees of the prime contractor responsible for awarding contracts at the two Superfund sites in exchange for the award of sub-contracts to NIS.  These kickbacks included luxury vacations and payments to shell companies held by the two employees.  Today’s guilty plea arises from false statements Boski made to the EPA in regard to his and NIS’s debarment hearing that resulted from the 2009 guilty pleas.

According to court documents, Boski appeared before the EPA on or about Nov. 30, 2011, on behalf of NIS to review his and NIS’s future eligibility to contract with the United States.  During the course of the hearing, Boski falsely stated that he and NIS had paid kickbacks in the form of sporting event tickets and that the $55,000 in kickbacks he and NIS pleaded guilty to paying was an artificial number.

“When individuals plead guilty to participating in fraud and kickback schemes, it is crucial that that they do not then lie to government procurement officials about their conduct,” said Bill Baer, Assistant Attorney General in charge of the Justice Department’s Antitrust Division.  “The division will vigorously prosecute individuals who make false statements regarding the crimes they have committed.”

Including Boski, nine individuals and three companies have pleaded guilty or been convicted of charges arising out of this investigation.  More than $6 million in criminal fines and restitution have been imposed and six of the individuals have been sentenced to serve prison sentences ranging from five months to 14 years.  One individual was sentenced to six months home confinement and the remaining two were sentenced to pay criminal fines and restitution.  An additional individual, John A. Bennett, a Canadian citizen, was also charged on Aug. 31, 2009, and is facing extradition to the United States.  Boski is scheduled to be sentenced on July 7, 2014, before Judge Susan D. Wigenton.

Boski faces a maximum penalty of five years in prison and a $250,000 fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the statutory maximum fine.

The ongoing investigation is being conducted by the Antitrust Division’s New York Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation.  Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at the Federal Creosote and/or the Diamond Alkali sites should contact the Antitrust Division’s New York Office at 212-335-8000 or visit www.justice.gov/atr/contact/newcase.htm.

J. Keith McCray, a criminal investigator with the Macon County, Ala., Sheriff’s Office, pleaded guilty in federal court today to assaulting a handcuffed man at the county jail, resulting in bodily injury to the victim.

An indictment against McCray, 41, charged that on July 4, 2013, he violated the civil rights of a door-to-door salesman who was selling alarm systems in McCray’s Tuskegee, Ala., neighborhood.  At the plea hearing, McCray admitted that he arrested the salesman and transported him to the Macon County Jail.  There, McCray struck the victim four times in the face and head while the victim was handcuffed and posed no threat.

McCray pleaded guilty to one felony count of deprivation of rights under color of law.  At sentencing, McCray faces a maximum sentence of 10 years in prison and a $250,000 fine. 

“The defendant attacked an innocent citizen who was simply trying to earn a living on the day of the incident,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “When he assaulted the defenseless victim, he violated the trust put in him by the community as well as the law.  The Department will continue to hold accountable those who abuse their authority.”

“While we look to law enforcement to maintain the safety and security of our citizens, their position of authority does not give them the right to act outside the bounds of the law,” said U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.  “We trust them to protect and serve our communities.  While most members of law enforcement serve honorably,  McCray breached this trust and must be held accountable.  Failure to do so would discredit the noble service of every other officer, and weaken the public’s trust in those who are sworn to protect them.” 

This case was investigated by the FBI and the Alabama Bureau of Investigation.  The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.

WASHINGTON – The United States has entered into a settlement agreement with the Kerr-McGee Corporation and certain of its affiliates (“New Kerr-McGee”), and their parent Anadarko Petroleum Corporation, in a fraudulent conveyance case brought by the United States and co-plaintiff Anadarko Litigation Trust  (the “Trust”) in the bankruptcy of Tronox Inc. and its subsidiaries (Tronox), announced Deputy Attorney General James Cole, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resource Division Robert G. Dreher, U.S. Attorney for the Southern District of New York Preet Bharara, and U.S. Environmental Protection Agency Assistant Administrator Cynthia Giles.

The bankruptcy court had previously found, in December 2013, that the historic Kerr-McGee Corporation (“Old Kerr-McGee”) fraudulently conveyed assets to New Kerr-McGee to evade its debts, including its liability for environmental clean-up at contaminated sites around the country.  Pursuant to the settlement agreement, the defendants agree to pay $5.15 billion to settle the case, of which approximately $4.4 billion will be paid to fund environmental clean-up and for environmental claims.  This is the largest environmental enforcement recovery ever by the Department of Justice.

 “Kerr-McGee's businesses all over this country left significant, lasting environmental damage in their wake,” said Deputy Attorney General Cole.  “It tried to shed its responsibility for this environmental damage and stick the United States taxpayers with the huge cleanup bill.  Through a lot of hard work, we uncovered this fraud and recovered over $5 billion dollars for the American people.  This settlement demonstrates the Justice Department’s firm commitment to preventing and combating all forms of fraud and to securing environmental justice.”
 
 “If you are responsible for 85 years of poisoning the earth, then you are responsible for cleaning it up,” said U.S. Attorney Bharara.  “That’s why this case was brought.  And that’s why the defendants are paying a record $5.15 billion -- to fund that colossal cleanup and to make things right.  The company tried to keep its rewards and shed its responsibilities by playing a corporate shell game, putting its profitable oil-and-gas business in a new entity and leaving behind a bankrupt shell holding the environmental liabilities of the defunct, polluting lines of business.  The company tried to cleanse its valuable business from its toxic legacy liabilities. Now the defendants will pay to cleanse the land and water.”

“Today's settlement is a just resolution of an historic injustice to the American people and our environment,” said Acting Assistant Attorney General Dreher.  “The money recovered will result in clean-ups of a toxic history the Old Kerr-McGee unsuccessfully tried to walk away from.”

 “EPA’s vigorous pursuit of this case will have a big return for communities across the country,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Companies that pollute can’t escape their responsibility to pay for the cleanup.  EPA will continue to fight for those affected by pollution.”

The Fraudulent Conveyance

 According to the complaints of the government and the litigation trust created to pursue Tronox’s fraudulent conveyance claims on behalf its environmental and torts creditors and the Dec. 12, 2013, written opinion of U.S. Bankruptcy Judge Allan L. Gropper:

  Old Kerr-McGee operated numerous businesses, which included uranium mining, the processing of radioactive thorium, creosote wood treating, and manufacture of perchlorate, a component of rocket fuel.  These operations left contamination across the nation, including radioactive uranium waste across the Navajo Nation; radioactive thorium in Chicago and West Chicago, Illinois; creosote waste in the Northeast, the Midwest, and the South; and perchlorate waste in Nevada.

 In the years prior to 2005, Old Kerr-McGee concluded that the liabilities associated with this environmental contamination were a drag on its business, the exploration and production of oil and gas.  With the intent of evading these and other liabilities, Old Kerr-McGee created a new corporate entity – defendant New Kerr-McGee – and, through a scheme executed in 2002 and 2005, transferred its valuable oil and gas exploration assets to the new company.  The legacy environmental liabilities were left behind in the old company, which was re-named Tronox, and spun off as a separate company in 2006.  As a result of these transactions, Tronox was rendered insolvent and unable to pay its environmental and other liabilities.  In 2009, Tronox went into bankruptcy.

 The United States and the bankruptcy estate (now represented by the Trust) brought this lawsuit to hold the defendants accountable and require them to repay the value of the assets fraudulently conveyed from Old Kerr-McGee. 

In its decision, the court found that Old Kerr-McGee transferred assets with the intent to hinder or delay creditors, in particular environmental creditors, and also transferred those assets for less than their fair value, which left Tronox insolvent, unable to pay its debts when they came due, and undercapitalized.  Among other things, the court concluded that: “[T]here can be no dispute that Kerr-McGee acted to free substantially all its assets – certainly its most valuable assets – from 85 years of environmental and tort liabilities.”

The Settlement

 Under today’s settlement agreement, the defendants will pay $5.15 billion to the trust to settle the fraudulent conveyance case.  Pursuant to a 2011 agreement between the United States, certain state, local, and tribal governments, and the bankruptcy estate, approximately 88 percent of the net proceeds of this litigation will be distributed by the trust to the United States, certain state governments, the Navajo Nation, and environmental trusts created to clean up the contaminated sites.  The 2011 settlement agreement provides specific percentages of this funding that will be made available to each site.

 As a result of these agreements, some of the key recoveries for environmental claims and for clean-up of environmental sites are estimated to be the following:

• $1.1 billion will be paid to a trust charged with cleaning up two dozen contaminated sites around the country, including the Kerr-McGee Superfund Site in Columbus, Miss.

• $1.1 billion will be paid to a trust responsible for cleaning up a former chemical manufacturing site in Nevada that has led to contamination in Lake Mead.  Lake Mead feeds into the Colorado River, a major source of drinking water in the Southwest.

• Approximately $985 million will be paid to U.S. EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations. Additionally, the Navajo Nation will receive more than $43 million to address radioactive waste left at the former Kerr-McGee uranium mill in Shiprock, N.M.

• Approximately $224 million will be paid to U.S. EPA for clean-up of thorium contamination at the Welsbach Superfund Site in Gloucester, N.J.

• Approximately $217 million will be paid to the federal Superfund in repayment of costs previously incurred by EPA’s clean-up of the Federal Creosote Superfund Site in Manville, N.J.

Additional amounts will be paid to the United States, states, Navajo Nation, and environmental trusts for other environmental claims and contaminated sites.

The settlement agreement will be lodged with the U.S. Bankruptcy Court for the Southern District of New York for a period of at least 30 days before it is submitted for the court’s approval, in order to provide public notice and to afford members of the public the opportunity to comment on the settlement agreement.

*           *           *

The litigation of this case was assisted by EPA personnel from around the country; the U.S. Fish & Wildlife Service and Bureau of Land Management of the U.S. Department of the Interior; the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce; the U.S. Nuclear Regulatory Commission; the U.S. Forest Service of the U.S. Department of Agriculture; the U.S. Department of Defense as well as numerous state governments and the Navajo Nation.
 
 This case was handled by Assistant U.S. Attorneys Robert William Yalen and Joseph Pantoja of the Southern District of New York, and by Alan S. Tenenbaum, Katherine Kane, Frederick S. Phillips, Marcello Mollo, and Erica Pencak of the Justice Department’s Environment and Natural Resource Division. 

The consent decrees are available at the following link: http://www.justice.gov/enrd/Consent_Decrees.html. 

Related Materials:

Fact Sheet
Settlement Proceeds Chart
Map

Hagatna, GU - ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that a federal grand jury returned a multi-count indictment charging three (3) individuals with conspiracy to distribute more than 50 grams of methamphetamine, two counts of attempted possession of methamphetamine with intent to distribute, and giving notice of a search warrant: JAYVIN WYLL UEDA REMOKET, 30, FREDERICK A. OBAK, 47, and AMOS SHIOICHI UEDA, 46, were arrested today by law enforcement agents.   A conviction for conspiracy to distribute more than 50 grams of methamphetamine carries a mandatory minimum sentence of ten (10) years imprisonment and a maximum of life imprisonment.

Initial appearances for defendants were held on April 3, 2014, at 4:00 p.m.

This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, (OCDETF) a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

This OCDETF investigation involved federal agents and local law enforcement officers of the Drug Enforcement Administration (DEA), Federal Bureau of Investigations (FBI), U.S. Postal Inspection Service (USPIS), and Guam Customs and Quarantine Agency (GCQA); with assistance from the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), Guam Police Department (GPD), Guam Probation Division and Homeland Security Investigations.  The case is being prosecuted by Assistant U.S. Attorney Rosetta San Nicolas.

The public is reminded that an indictment contains only allegations and is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

On April 3, 2014, a U.S. District Court for the Eastern District of Michigan in Detroit issued a judgment against the law firm Hatchett, DeWalt & Hatchett PLLC in the amount of $122,994.12 for unpaid federal employment and unemployment taxes and penalties for late filing partnership income tax returns for various tax periods from 2003 to 2012.

The Honorable Robert H. Cleland also entered a stipulated order of permanent injunction requiring Hatchett, DeWalt & Hatchett PLLC to file all employment, unemployment and partnership tax returns on a timely basis, to deposit all due taxes in an appropriate federal depository bank and to pay all required liabilities due on each return on a timely basis.  The order enjoins the law firm from assigning property or making any payments until the employment tax and withholding liabilities are first paid to the Internal Revenue Service (IRS).  It also requires the law firm to provide monthly affidavits to the IRS verifying that the requisite tax deposits have been made in a timely manner.

The permanent injunction order was issued in response to the Feb. 4, 2014, suit filed by the Department of Justice, alleging that Hatchett, DeWalt & Hatchett PLLC had been engaged in a practice known as “pyramiding,” whereby a business withholds taxes from its employees but intentionally fails to remit them to the IRS as mandated by law.

Related Materials:

United States v. Hatchett, DeWalt & Hatchett PLLC.
Complaint
Judgment
Stipulated Order of Permanent Injunction

Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery and U.S. Attorney for the Eastern District of Wisconsin James L. Santelle announced today that a federal grand jury indicted two men for odometer tampering and related crimes.  Erick Sanchez-Pulido, 30, and his brother, Israel Sanchez-Pulido, 31, were charged with one count of conspiracy, 15 counts of odometer tampering, four counts of making false odometer statements and other charges.  Both men are Mexican citizens who were allegedly in the U.S. illegally and, prior to their arrests, had been living in the Chicago area. 

The indictment charges that the Sanchez brothers purchased high-mileage used motor vehicles at Wisconsin auto auctions, rolled back the vehicles’ odometers, altered the mileage readings on the vehicles’ titles and sold the vehicles to unsuspecting consumers.  The indictment alleges that from late 2009 through February 2014, the defendants rolled back the odometers on at least 146 vehicles.

“Odometer fraud harms consumers making one of the biggest purchases in their lives:  an automobile,” said Assistant Attorney General Delery.  “Not only do purchasers end up paying more for used cars, but the rolling back of mileage on odometers could ultimately affect a car’s safety and the costs of future repairs to consumers."

“Today’s charges reflect the abiding focus of the Justice Department on identifying, investigating and prosecuting perpetrators of consumer fraud who victimize trusting, unsuspecting car buyers,” said U.S. Attorney Santelle.  “I acknowledge and commend the excellent work of agents of the National Highway Traffic Safety Administration and the Wisconsin Department of Transportation that resulted in this important indictment—premised on conspiratorial conduct in altering mileage readings and rolling back odometers.”

“Tampering with odometers is a crime that puts consumers’ lives and wallets at risk,” said NHTSA Acting Administrator David Friedman.  “Safety is the Department of Transportation's top priority, and we will continue to work with our Department of Justice and state DOT partners to deter odometer fraud and inform consumers of the potential signs of and dangers associated with this crime.”

The case was investigated by the National Highway Traffic Safety Administration’s Office of Odometer Fraud Investigation and the Wisconsin Department of Transportation.  Trial Attorney Patrick Jasperse, with the Consumer Protection Branch at the U.S. Department of Justice, and Assistant U.S. Attorney Jonathan H. Koenig are prosecuting the case.  The Wisconsin Department of Justice’s Division of Criminal Investigation and the Kenosha County Sheriff’s Department assisted in making the arrests.

More information on odometer fraud is available at www.nhtsa.gov/Odometer-Fraud.   Tips on detecting and avoiding odometer fraud are available at www.nhtsa.gov/staticfiles/nvs/pdf/811284.pdf .

An indictment is only a charge and is not evidence of guilt.  The defendants are presumed innocent until such time, if ever, that the government proves their guilt beyond a reasonable doubt.

Edward N. Levine, 63, of Mill Valley, Calif., and Lumsden W. Quan, 46, of San Francisco, were indicted by a federal grand jury in Las Vegas today for the illegal sale of two horns from an endangered black rhinoceros, announced Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Daniel G. Bogden, U.S. Attorney for the District of Nevada. The indictment is a result of “Operation Crash,” a nationwide effort led by the U.S. Fish & Wildlife Service (FWS) and the Justice Department to investigate and prosecute those involved in the black market trade of endangered rhinoceros horns.

The indictment charges Levine and Quan each with one count of conspiracy to violate the Lacey Act and the Endangered Species Act and one count of violating the Lacey Act. The Lacey Act prohibits the sale of wildlife that was transported in violation of law. The Endangered Species Act prohibits the interstate transportation of endangered species for a commercial purpose and the interstate sale of an endangered species.

According to the indictment, over the course of approximately two months, Quan and Levine negotiated the sale of two black rhinoceros horns by e-mail and telephone, ultimately communicating with a law enforcement officer acting in an undercover capacity. The indictment further alleges that Quan and Levine offered to sell the two black rhinoceros horns for $55,000 and agreed to meet the buyer in Las Vegas. On March 19, 2014, after directing another person to drive with the horns from California to Las Vegas, Quan and Levine flew from California to Las Vegas, to make the sale. Quan met the law enforcement officer acting in an undercover capacity in a Las Vegas hotel room, where Quan sold two black rhinoceros horns for $55,000. Both men were arrested later that day.

Rhinoceros are herbivores of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law and the black rhinoceros is endangered. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by 180 countries around the world to protect fish, wildlife and plants that are or may become imperiled. Nevertheless, trafficking in rhinoceros horn has skyrocketed in recent years due to the demand for horn for ornamental carvings, good luck charms or alleged medicinal purposes. As a result of this demand, rhino populations have declined by more than 90 percent since 1970. South Africa, for example, has witnessed a rapid escalation in poaching of live rhinos, rising from 13 in 2007 to more than 1,000 in 2013.

The investigation is being conducted by the U.S. Fish and Wildlife Service’s Office of Law Enforcement. Officers from the National Park Service, U.S. Forest Service, and Nevada Division of Wildlife assisted with the arrests on March 19.  The case is being prosecuted by Trial Attorney Todd S. Mikolop of the U.S. Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Kate Newman of the U.S. Attorney’s Office for the District of Nevada.

A federal indictment returned under seal in June 2013 and unsealed today charges six foreign nationals, including a Ukrainian businessman and a government official in India, with participating in an alleged international racketeering conspiracy involving bribes of state and central government officials in India to allow the mining of titanium minerals. Five of the six defendants are also charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA), among other offenses.

Acting Assistant Attorney General David A. O’Neil of the Department of Justice’s Criminal Division, U.S. Attorney Zachary T. Fardon for the Northern District of Illinois and Special Agent in Charge Robert J. Holley of the FBI’s Chicago Field Office made the announcement.

“Fighting global corruption is part of the fabric of the Department of Justice,” said Acting Assistant Attorney General O’Neil.  “The charges against six foreign nationals announced today send the unmistakable message that we will root out and attack foreign bribery and bring to justice those who improperly influence foreign officials, wherever we find them.”

“Criminal conspiracies that extend beyond our borders are not beyond our reach,” said U.S. Attorney Fardon. “We will use all of the tools and resources available to us to ensure the integrity of global business transactions that involve U.S. commerce.”

“This case is another example of the FBI’s willingness to aggressively investigate corrupt conduct around the globe” said Special Agent in Charge Holley.  “With the assistance of our law enforcement partners, both foreign and domestic, we will continue to pursue those who allegedly bribe foreign officials in return for lucrative business contracts.”

Beginning in 2006, the defendants allegedly conspired to pay at least $18.5 million in bribes to secure licenses to mine minerals in the eastern coastal Indian state of Andhra Pradesh. The mining project was expected to generate more than $500 million annually from the sale of titanium products, including sales to unnamed “Company A,” headquartered in Chicago.

One defendant, Dmitry Firtash, aka “Dmytro Firtash” and “DF,” 48, a Ukrainian national, was arrested March 12, 2014, in Vienna, Austria. Firtash was released from custody on March 21, 2014, after posting 125 million euros (approximately $174 million) bail, and he pledged to remain in Austria until the end of extradition proceedings.

Five other defendants remain at large: Andras Knopp, 75, a Hungarian businessman; Suren Gevorgyan, 40, of Ukraine; Gajendra Lal, 50, an Indian national and permanent resident of the United States who formerly resided in Winston-Salem, N.C.; Periyasamy Sunderalingam, aka “Sunder,” 60, of Sri Lanka; and K.V.P. Ramachandra Rao, aka “KVP” and “Dr. KVP,” 65, a Member of Parliament in India who was an official of the state government of Andhra Pradesh and a close advisor to the now-deceased chief minister of the State of Andhra Pradesh, Y.S. Rajasekhara Reddy.

The five-count indictment was returned under seal by a federal grand jury in Chicago on June 20, 2013. All six defendants were charged with one count each of racketeering conspiracy and money laundering conspiracy, and two counts of interstate travel in aid of racketeering. Five defendants, excluding Rao, were charged with one count of conspiracy to violate the FCPA.

As alleged in court documents, Firtash controls Group DF, an international conglomerate of companies that was directly and indirectly owned by Group DF Limited, a British Virgin Islands company. Group DF companies include: Ostchem Holding AG, an Austrian company in the business of mining and processing minerals, including titanium; Global Energy Mining and Minerals Limited, a Hungarian company, and Bothli Trade AG, a Swiss company, for which Global Energy Mining and Minerals was the majority shareholder. In April 2006, Bothli Trade and the state government of Andhra Pradesh agreed to set up a joint venture to mine various minerals, including ilmenite, a mineral which may be processed into various titanium-based products such as titanium sponge, a porous form of the mineral that occurs in the processing of titanium ore.

In February 2007, Company A entered into an agreement with Ostchem Holding, through Bothli Trade, to work toward a further agreement that would allow Bothli Trade the ability to supply 5 million to 12 million pounds of titanium sponge from the Indian project to Company A on an annual basis. The mining project required licenses and approval of both the Andhra Pradesh state government and the central government of India before the licenses could be issued.

As alleged in the indictment, the defendants used U.S. financial institutions to engage in the international transmission of millions of dollars for the purpose of bribing Indian public officials to obtain approval of the necessary licenses for the project. They allegedly financed the project and transferred and concealed bribe payments through Group DF, and used threats and intimidation to advance the interests of the enterprise’s illegal activities.

According to the indictment, Firtash was the leader of the enterprise and caused the participation of certain Group DF companies in the project. Firtash allegedly met with Indian government officials, including Chief Minister Reddy, to discuss the project and its progress, and authorized payment of at least $18.5 million in bribes to both state and central government officials in India to secure the approval of licenses for the project. Firtash also allegedly directed his subordinates to create documents to make it falsely appear that money transferred for the purpose of paying these bribes was transferred for legitimate commercial purposes, and he appointed various subordinates to oversee efforts to obtain the licenses through bribery.

As alleged in the indictment, Knopp supervised the enterprise and, together with Firtash, met with Indian government officials. Knopp also met with Company A representatives to discuss supplying titanium products from the project. Gevorgyan allegedly traveled to Seattle and met with Company A representatives. Gevorgyan also engaged in other activities, including allegedly signing false documents, monitoring bribe payments and coordinating transfers of money to be used for bribes. Lal, also known as “Gaj,” allegedly engaged in similar activities, reported to Firtash and Knopp on the status of obtaining licenses, and recommended whether, and in what manner, to pay certain bribes to government officials.

The indictment further alleges that Sunderalingam met with Rao to determine the total amount of bribes and advised others on the results of the meeting, and he identified various foreign bank accounts held in the names of nominees outside India that could be used to funnel bribes to Rao. Rao allegedly solicited bribes for himself and others in return for approving licenses for the project, and he warned other defendants concerning the threat of a possible law enforcement investigation of the project.

The indictment lists 57 transfers of funds between various entities, some controlled by Group DF, in various amounts totaling more than $10.59 million beginning April 28, 2006, through July 13, 2010.

The indictment seeks forfeiture from Firtash of his interests in Group DF Limited and its assets, including 14 companies registered in Austria and 18 companies registered in the British Virgin Islands, as well as 127 other companies registered in Cyprus, Germany, Hungary, the Netherlands, Seychelles, Switzerland, the United Kingdom and one unknown jurisdiction and all funds in 41 bank accounts in several of those same countries. Furthermore, the indictment seeks forfeiture from all six defendants of more than $10.59 million.

This case is being investigated by the FBI’s Chicago Field Office. The case is being prosecuted by Assistant U.S. Attorneys Amarjeet Bhachu and Michael Donovan of the Northern District of Illinois and Trial Attorney Ryan Rohlfsen of the Criminal Division’s Fraud Section.

The Justice Department has worked closely with and has received significant assistance from its law enforcement counterparts in Austria, as well as the Hungarian National Police, and greatly appreciates their assistance in this matter.  Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proof beyond a reasonable doubt.

The Department of Justice announced the filing of a lawsuit today against Clark County, Nev., alleging that the county discriminated against Therese Scupi, an African-American woman, on the basis of race and sex and retaliated in violation of Title VII of the Civil Rights Act of 1964, as amended.  Title VII is a federal statute that prohibits employment discrimination on the basis of race, color, national origin, sex and religion.  

The complaint, filed in the U.S. District Court for the District of Nevada, alleges that the county discriminated against Scupi by subjecting her to compensation discrimination and retaliation from 2007 to the present.  According to the complaint, Scupi, Director of Diversity for the county, was paid significantly less than four white county employees who had duties substantially similar to Scupi’s.  The complaint also alleges that the county subjected Scupi to retaliation when she complained of disparities in her pay that she believed were based on her race and sex.   

Through this lawsuit, the United States is seeking declaratory and injunctive relief requiring the county to develop and implement appropriate and effective measures to prevent and correct race and sex discrimination and retaliation, as well as monetary damages for Scupi as compensation for the county’s actions.    

“Pay discrimination based on gender and race is a priority enforcement initiative for the Department of Justice,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “Nationwide, women earn only about 77 cents for every dollar earned by a man, and women of color earn even less.” 

Scupi originally filed a charge of race and sex discrimination and retaliation with the Equal Employment Opportunity Commission (EEOC), a federal agency that enforces laws against discrimination in employment.  The EEOC’s Las Vegas Local Office investigated the matter, determined that there was reasonable cause to believe that discrimination and retaliation had occurred and referred the matter to the Department.

“Women and men deserve equal pay for equal work, and federal law holds employers to that responsibility,” said Director Amy Burkholder for the EEOC’s Las Vegas Local Office.  “We were pleased to work with the Department of Justice on this case and are hopeful that employers take note of the need to address such discrimination in the workplace.”  

The continued enforcement of Title VII is a priority of the department’s Civil Rights Division.  Additional information about the Civil Rights Division of the Department of Justice is available on the division website.

Saipan, MP – United States Attorney for the Districts of Guam and the Northern Mariana Islands Alicia A.G. Limtiaco, announced that JUAN MANGLONA AYUYU, former Senator for the island of Rota in the Northern Marianas Commonwealth Legislature, was sentenced on March 31, 2014, by Judge Ramona Manglona in the District Court for the Northern Mariana Islands.  Ayuyu was sentenced to 41 months in federal prison followed by three years of supervised release for his convictions of Conspiring to Obstruct a Grand Jury Investigation and Conspiring to Violate the Endangered Species Act.  Ayuyu was also ordered to perform 100 hours of community service.

Ayuyu and his legislative assistant, Ryan James Inos Manglona, attempted to transport eight federally protected Mariana fruit bats, or Fanihi, on board a Freedom Air flight from Rota to Saipan.  The bats, however, were discovered by the Transportation Security Administration (TSA), and Ayuyu instructed Manglona to lie to a Federal grand jury investigating their involvement.

The investigation was led by Erwin T. Flores, Conservation Inspector with the CNMI Division of Fish & Wildlife, an agency under the CNMI Department of Lands and Natural Resources, together with agents of the U.S. Fish and Wildlife Service.  The case was prosecuted by Assistant U.S. Attorney Garth R. Backe.

Attorney General Eric Holder released the following statement today after the confirmation of John P. Carlin to serve as Assistant Attorney General for National Security:   “John Carlin is an outstanding leader and an exceptional public servant who has spent his entire legal career at the Department of Justice and its components,” said Attorney General Eric Holder. “Throughout his tenure, he has repeatedly demonstrated the skill, foresight, and vision that this position demands. I am confident that under his leadership, the National Security Division will continue to strengthen and advance its critical mission to safeguard the American people and protect this nation.”  

A Detroit-area physician pleaded guilty today for her role in a $7 million health care 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 U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Adelina Herrero, 72, of Ann Arbor, Mich., pleaded guilty before U.S. District Judge Paul D. Borman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. Sentencing will be scheduled at a later date.

According to court documents, beginning in approximately April 2010 and continuing through approximately April 2013, Herrero and others agreed that she would refer Medicare beneficiaries whom she had never seen or treated to Advance Home Health Care Services Inc. (Advance) and Perfect Home Health Care Services LLP (Perfect), which were both owned by co-conspirators. Herrero signed medical documents, such as home health care certifications and plans of care for these beneficiaries, falsely certifying that they were under her care and that they required home health care. Advance, Perfect and other home health agencies then used Herrero’s false documents to support their claims to Medicare for home health services — including physical therapy services — that were never rendered and/or not medically necessary. Herrero knew the medical documents she signed for her co-conspirators would be used to support false claims to Medicare. Herrero admitted that in exchange for signing the home health care documents, she accepted kickback payments from a co-conspirator.

The false and fraudulent claims to Medicare arising from Herrero’s conduct total approximately $1,382,208 in billings for home health services and physician services, of which Medicare paid $1,321,372.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Special Trial Attorney Katie R. Fink and Trial Attorney Patrick J. Hurford 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 .

Today, a federal jury in the U.S. District Court for the District of North Dakota sitting in Bismarck, N.D., convicted Lindrith Tsoodle, 58, of one felony count and one misdemeanor count of using excessive force on persons in his custody in November and December of 2010.  Tsoodle was also convicted of making false statements to a federal law enforcement officer, and was acquitted of tampering with a witness.

Tsoodle, a former police officer with the Three Affiliated Tribes Police Department in New Town, N.D., on the Fort Berthold Reservation, was found guilty of violating the rights of two people in his custody by using excessive force.  Specifically, he was convicted of twisting the neck of a handcuffed suspect, throwing him to the ground and kneeing him in the abdomen.  He was also convicted of, on a separate occasion, excessively tightening the handcuffs of an arrestee, slamming him against the wall, using pepper spray on the arrestee and striking him with his hands and a baton.  Both assaults occurred while the suspects were restrained and were not posing a physical threat to the defendant.

Additionally, Tsoodle was found guilty of making various false statements to a U.S. Bureau of Indian Affairs Special Agent, who interviewed the defendant following one of the assaults.

“Our constitutional system of government requires police officers to abide by the laws they enforce, and to protect the constitutional rights of all persons in their custody,” said Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division.  “The Department of Justice and the Civil Rights Division will vigorously prosecute law enforcement officers who use excessive force.”

Tsoodle faces a statutory maximum penalty of 10 years for the federal excessive force count, a statutory maximum sentence of one year for the misdemeanor and faces a statutory maximum penalty of five years for the false statements count.  

This case was investigated by the Minot Resident Agency of the Minneapolis Division of the FBI and was prosecuted by Special Litigation Counsel Gerard Hogan and Trial Attorney Nicholas Durham of the Civil Rights Division.

Deundra Milhouse, an Alabama resident, pleaded guilty today to several charges involving stolen identity refund fraud (SIRF) and firearms offenses, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.  Milhouse pleaded guilty to one count of access device fraud, one count of aggravated identity theft and one count of being a felon in possession of a firearm.  He was indicted in December 2013 and has been detained since his arrest in late January 2014. 

According to the plea agreement, Milhouse was involved in SIRF crimes—the use of stolen identities to steal money from the Internal Revenue Service (IRS) by filing fraudulent tax returns claiming refunds in the victims’ names—from spring 2011 through late 2013.  In 2011 and 2012, he received over $80,000 in fraudulently obtained tax refunds in a bank account he controlled.  By 2013, he switched to using prepaid debit cards to receive the refunds. 

Milhouse also admitted in his plea agreement that his car was stopped while he was driving on Oct. 8, 2013, in Elmore County, Ala.  He managed to flee on foot and threw away a handgun that he had been carrying, which he was prohibited from owning as a convicted felon.  Numerous prepaid debit cards and documents with personal identifying information were found in the car.  Milhouse also admitted that a later search of his house uncovered more documents with personal identifying information of victims, as well as over 200 prepaid debit cards, a computer used to file tax returns and a magazine and ammunition for the discarded handgun.  As part of his plea, Milhouse detailed that his conduct involved an attempted fraud loss of over $400,000 and more than 250 victims, and that he had at least one felony conviction for a crime of violence prior to owning the handgun.   

At sentencing, Milhouse faces a maximum sentence of 10 years in prison on the access device fraud count and a maximum sentence of 10 years on the felon in possession of a firearm count, plus a mandatory two-year consecutive sentence for aggravated identity theft. 

This case was investigated by special agents of the IRS - Criminal Investigation and by the Elmore County Sheriff’s Office.  Trial Attorneys Jason Poole and Michael Boteler of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown and the U.S. Attorney’s Office for the Middle District of Alabama. 

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

Seven individuals have been indicted in the Southern District of Florida for their alleged participation in a mortgage fraud scheme in the Miami area.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Inspector General David A. Montoya of the Department of Housing and Urban Development and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency’s Office of the Inspector General.

A 19-count indictment, returned on March 13, 2014, by a federal grand jury and unsealed today, charges Miami-Dade County residents Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo with one count of conspiracy to commit wire and bank fraud. Some of those defendants have also been charged with bank fraud and wire fraud. Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez were taken into custody today and made their initial appearances before United States Magistrate Judge Jonathan Goodman in Miami, while the other three defendants remain at large.

As alleged in the indictment, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez owned or controlled various real estate properties in the Miami area. They enlisted mortgage brokers and other individuals, including Perez and Angulo, to recruit straw buyers to act as qualifying mortgage applicants to fraudulently purchase condominiums in the properties. The defendants prepared and caused to be prepared loan documents containing false statements and representations relating to the buyers’ income, assets and other information necessary to enable lenders to assess the buyers’ qualifications to borrow money, which induced the lenders to make loans to finance the condominiums. Luis Michael Mendez and Marie Mendez are alleged to have submitted their own fraudulent loan applications for two condominiums, and they, as well as Luis Mendez and Stavroula Mendez, advanced the buyers cash to close the transactions.

After the loans were funded, the defendants allegedly caused fraudulent payments to be made from the loan proceeds to pay kickbacks through shell companies to the brokers, recruiters and straw buyers, as well as to pay the mortgages to conceal the conspiracy. Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to losses by the lenders.

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

The case is being investigated by HUD-OIG and FHFA-OIG. The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.

A Los Angeles physician assistant pleaded guilty today to defrauding Medicare by signing fraudulent prescriptions for durable medical equipment while working at two separate medical clinics in California.

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), Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Erasmus Kotey, 77, of Montebello, Calif., pleaded guilty before U.S. District Judge Margaret M. Morrow in the Central District of California to one count of health care fraud and one count of conspiracy to commit health care fraud. Sentencing is scheduled for Sept. 8, 2014.

According to court documents, Kotey was a physician assistant who worked at medical clinics in and around Los Angeles County. From approximately November 2007 through February 2008, Kotey engaged in a scheme to commit health care fraud through his work at a clinic located at 866 North Vermont Avenue in Los Angeles. In addition, from approximately April 2008 through December 2008, Kotey engaged in a conspiracy to commit health care fraud through his work at a clinic located at 943 South Atlantic Boulevard, Suite 218, in Monterey Park, Calif.

At both clinics, Kotey signed prescriptions and other medical documents for medically unnecessary power wheelchairs and other durable medical equipment (DME). Kotey and his co-conspirators then sold the prescriptions to DME supply companies, knowing that the prescriptions were fraudulent. Based on these fraudulent prescriptions, the DME supply companies then submitted false and fraudulent claims to Medicare.

Combined, the two indictments allege that fraudulent prescriptions from Kotey were responsible for approximately $7 million in false and fraudulent claims to Medicare, and Medicare paid approximately $3 million on those claims.

The cases were investigated by the FBI, HHS-OIG and the IRS and 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. The cases are being prosecuted by Trial Attorney Fred Medick of the Fraud Section and Assistant U.S. Attorneys Kristen Williams and Cathy Ostiller of the Central District of California.

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 .

The Department of Justice filed a civil lawsuit today in the U.S. District Court for the District of Nevada to stop Bill Sunga Modina, who allegedly does business as 5M Financial and 6M Financial, from preparing federal tax returns.  According to the complaint, Modina has prepared over 2,200 tax returns since 1992.

The complaint alleges that Modina understates his customers' federal tax liabilities by reporting false or inflated employee business expenses and inflated or fabricated charitable contributions.  In addition, the complaint alleges that Modina has failed to provide his preparer identifying number on tax returns he prepared, thereby obscuring his identity as the tax return preparer.  According to the complaint, Modina’s activities have resulted in an estimated average tax loss of over $4,400 per return, and the total tax loss could allegedly be as high as $9,680,000 due to Modina’s false and fraudulent return preparation.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 .  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website .   An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Related Materials:

United States v. Bill Sunga Modina, etc.
Complaint for Permanent Injunction and Other Equitable Relief

An Iowa man pleaded guilty today in the District of Massachusetts to federal child exploitation charges moments before his jury trial was scheduled to begin this morning.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Acting Inspector in Charge Shelly Binkowski of the U.S. Postal Inspection Service (USPIS) made the announcement.

Joshua Dunfee , 32, of Oxford Junction, Iowa, pleaded guilty before U.S. District Court Chief Judge Patti B. Saris to the coercion and enticement of a child to engage in illicit sexual activity and the sexual exploitation of a child to produce child pornography. Sentencing is scheduled for June 27, 2014.

Dunfee posed as “John” from “Hunt Photography” on Facebook and communicated with a Massachusetts mother who was seeking employment as a model and believed Hunt Photography to be a legitimate business. In October 2011, Dunfee contacted the mother and told her that Hunt Photography had a client willing to pay $20,000 for a mother-daughter bikini modeling contract. Dunfee told the mother that in order to apply she would need to audition her daughter for him immediately and persuaded the mother to take her minor daughter out of school.

At Dunfee’s further direction, the mother placed her daughter on webcam for him to view for a 48-minute video call. During this time, Dunfee was able to see and hear the mother and her minor daughter, but they were unable to see or hear him. During the “audition,” Dunfee directed via instant messenger that the minor be posed for him—first in a bra and underwear and then completely naked. Dunfee knew that the girl was a minor.

On Nov. 3, 2011, federal agents executed a search warrant at Dunfee’s residence, where law enforcement had traced the illicit conduct via IP address records. A forensic examination of Dunfee’s computers (obtained during the execution of the search warrant) revealed various activities consistent with the use of certain platforms to communicate while posing as Hunt Photography, including Facebook, Skype and Windows Live Messenger Chat.

The case was investigated by law enforcement in Massachusetts, the USPIS, the Jones County, Iowa, Sheriff’s Office, the Massachusetts State Police, the Attleboro Police Department and the Department of Justice High Technology Investigative Unit. Substantial assistance was provided by the U.S. Attorney’s Office for the District of Iowa.

The case is being prosecuted by Trial Attorney Herbrina Sanders of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Stacy Dawson Belf of the District of Massachusetts’s Major Crimes Unit.

This case is brought as part of Project Safe Childhood, which is a nationwide initiative created by the Department of Justice in 2006 that is designed to protect children from online exploitation and abuse. Led by the U.S. Attorney’s Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.    

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A federal grand jury in Mobile, Ala., returned a one-count indictment against a former real estate investor, charging him with conspiracy to commit mail fraud as part of a scheme related to  public real estate foreclosure auctions held in southern Alabama, the Department of Justice announced today.

 
The indictment, returned on March 27, 2014, and entered today in the U.S. District Court for the Southern District of Alabama, charges former real estate investor Chad E. Foster, of Theodore, Ala., with conspiracy to commit mail fraud affecting a financial institution.  The department alleged that the scheme defrauded financial institutions, homeowners and others with a legal interest in selected foreclosure properties, for the unlawful purpose of obtaining money and property through fraudulent pretenses, representations or promises.

 
The indictment charges Foster with conspiring with others to, among other things, conduct secret, second auctions open only to members of the conspiracy, to make payoffs to and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in selected properties.  Several financial institutions suffered actual monetary losses as a result of the conspiracy.  According to the charge, Foster participated in the mail fraud conspiracy beginning at least as early as February 2005 and continuing until at least January 2007.

 
“Conspiring to defraud financial institutions and distressed homeowners is a crime the Antitrust Division takes seriously,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will vigorously prosecute those who subvert the competitive process for their own gains.”

 
“The public demands that the integrity of our nation’s financial institutions and processes be free from fraud and deceit,” said Stephen E. Richardson, FBI Special Agent in Charge of the Mobile Field Office.  “These indictments in this investigation reflect the FBI’s unwavering commitment to protecting the citizen’s reliance on those processes.”

 
To date, nine individuals and two companies have pleaded guilty in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes in the Alabama real estate foreclosure auction industry.

 
The charge of conspiracy to commit mail fraud affecting a financial institution carries a maximum penalty of 30 years in prison, five years of supervised release, and a $1 million fine.   

Today’s charge stems from an ongoing investigation being conducted by the Antitrust Division’s new Washington Criminal II Section and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Alabama should call the Antitrust Division at 404-331-7116, or visit www.justice.gov/atr/contact/newcase.htm.

 
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 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.

Attorney General Eric Holder issued the following statement today on the status of same-sex marriages performed in the state of Michigan:

“I have determined that the same-sex marriages performed last Saturday in Michigan will be recognized by the federal government.  These families will be eligible for all relevant federal benefits on the same terms as other same-sex marriages. The Governor of Michigan has made clear that the marriages that took place on Saturday were lawful and valid when entered into, although Michigan will not extend state rights and benefits tied to these marriages pending further legal proceedings.  For purposes of federal law, as I announced in January with respect to similarly situated same-sex couples in Utah, these Michigan couples will not be asked to wait for further resolution in the courts before they may seek federal benefits to which they are entitled.  

“Last June’s decision by the Supreme Court in United States v. Windsor was a victory for equal protection under the law and a historic step toward equality for all American families.  The Department of Justice continues to work with its federal partners to implement this decision across the government.  And we will remain steadfast in our commitment to realizing our country’s founding ideals of equality, opportunity, and justice for all.”

Attorney General Eric Holder and Director of National Intelligence James Clapper released the following joint statement Friday:

 
“Earlier this year in a speech at the Department of Justice, President Obama announced a transition that would end the Section 215 bulk telephony metadata program as it existed, and that the government would establish a mechanism that preserves the capabilities we need without the government holding this bulk data. As a first step in that transition, the President directed the Attorney General to work with the Foreign Intelligence Surveillance Court (FISC) to ensure that, absent a true emergency, the telephony metadata can only be queried after a judicial finding that there is a reasonable, articulable suspicion that the selection term is associated with an approved international terrorist organization. The President also directed that the query results must be limited to metadata within two hops of the selection term instead of three.  These two changes were put into effect on Feb. 5, 2014, when the FISC granted the government’s motion to amend its Jan. 3, 2014, primary order approving the production of telephony metadata collection under Section 215. Following a review for declassification the Jan. 3 primary order, the government’s motion to amend that order, and the order granting the motion were posted to the FISC’s website, as well as the Office of the Director of National Intelligence website and icontherecord.tumblr.com.

 
“In addition to directing those immediate changes to the program, the President also directed the Intelligence Community and the Attorney General to develop options for a new approach to match the capabilities and fill gaps that the Section 215 program was designed to address without the government holding this metadata.  He instructed us to report back to him with options for alternative approaches before the program came up for reauthorization on March 28. Consistent with the President’s direction, we provided him with alternative approaches for consideration.

 
“After carefully considering the available options, the President announced yesterday that the best path forward is that the government should not collect or hold this data in bulk, and that it should remain at the telephone companies with a legal mechanism in place that would allow the government to obtain data pursuant to individual orders from the FISC approving the use of specific numbers for such queries. The President also noted that legislation would be required to implement this option. 

 
“Given that this legislation is not yet in place, and given the importance of maintaining this capability, the President directed the Department of Justice to seek a 90-day reauthorization of the existing program, which includes the modifications that he directed in January. Consistent with both the President’s direction, and with prior declassification decisions, in light of the significant and continuing public interest in the telephony metadata collection program, DNI Clapper declassified the fact that the United States filed an application with the FISC to reauthorize the existing program as previously modified for 90 days, and that today the FISC issued an order approving the government’s application. The order issued today expires on June 20, 2014. The Administration is undertaking a declassification review of this most recent court order. When the review is complete the ODNI will post the documents to its website and icontherecord.tumblr.com.”

WASHINGTON – Attorney General Eric Holder today announced the retirement of H. Marshall Jarrett, Director for the Executive Office for U.S. Attorneys (EOUSA) as well as the appointment of Monty Wilkinson as the new Director for EOUSA. 
 
Prior to his appointment as Director for EOUSA in 2009, Jarrett served as Counsel for the Office of Professional Responsibility, as an Associate Deputy Attorney General, and as Deputy Chief of the Public Integrity Section of the Department of Justice. In addition, he served as Chief of the Criminal Division in the U.S. Attorney’s Office for the District of Columbia and as Criminal Chief and First Assistant U.S. Attorney in the U.S. Attorney’s Office for the Southern District of West Virginia.

“For 39 years, Marshall has distinguished himself in the Department as an exceptional public servant and a principled leader. To me, personally, he has been a trusted mentor and a good friend,” said Attorney General Holder. “In the face of daunting staff and resource constraints, Marshall’s calm and steady leadership was exactly what EOUSA and the U.S. Attorney community needed over these past several years.  His extraordinary contributions have left an indelible mark on the Department and the country will be forever grateful for his service.”

Wilkinson, whose appointment as Director for EOUSA will become effective on March 31, has held many significant executive-level positions in the Department. He most recently served as the Principal Deputy Director and Chief of Staff for EOUSA.  Before arriving at EOUSA, he served as Counselor and Deputy Chief of Staff to the Attorney General and as an Associate Deputy Attorney General.

“Monty is a tremendous asset to the Department, and I am grateful he has agreed to take on this enormous responsibility,” said Attorney General Holder. “I look forward to continuing to work closely with him and the U.S. Attorneys as we continue our critical mission to provide justice for the American people.”

The Department of Justice’s Antitrust Division today announced a new streamlined procedure that will lower the costs and expedite the review process for parties seeking to modify or terminate old antitrust settlements and litigated judgments.

 
The new voluntary procedure, which is effective immediately, updates a 1999 protocol.  The expedited process can be used by parties seeking to modify or terminate perpetual decrees–settlements and litigated judgments–entered prior to 1980.

In 1979, the department determined that entering into perpetual decrees was not in the public interest. Since that time, decrees have included “sunset” provisions that will automatically terminate them after a term of years, not to exceed 10 years.  Most decrees entered into before 1980 do not contain this provision.

“The new streamlined procedure will expedite the review process for legacy decrees and will benefit both the defendants and the department by eliminating costly and time intensive investigations,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will continue to look for ways to incorporate procedural efficiencies whenever possible as it is an important part of effective antitrust enforcement.”

 
Pre-1980 perpetual decrees cannot be terminated or modified except by court order.  Since 1980, there have been significant changes in markets and technology and substantial changes in antitrust law.  Going forward, the department will advise courts that pre-1980 “legacy” decrees, except in limited circumstances, are presumptively no longer in the public interest.  Those limited circumstances may include when there is a long-standing reliance by industry participants on the decree.

The updated procedure differs from the present procedure in two important ways.  First, the party seeking termination or modification will no longer be subject to the extensive discovery that was required by the 1999 protocol.  This should result in a substantial reduction in the cost of seeking decree termination.  Second, when responding to a request to terminate or modify qualifying legacy decrees, the department will no longer conduct an in-depth investigation into the relevant markets due to the significant changes that have taken place. The updated procedure can be found in the Division Manual on the Antitrust Division’s website.

Under the protocol, the requesting party will publish, at its own expense, notice of its intent to seek termination or modification and invite interested parties to provide the Antitrust Division with relevant information.  The division will work with the requesting party to determine what form of cost-effective notice is appropriate.  Because the process is expedited, the division believes that a pre-filing public comment period best serves the public interest by allowing interested parties to come forward early in the process so that their concerns may be considered and addressed prior to the filing of a motion to modify or terminate.  The division will take into account issues that are brought to its attention and address them as appropriate.  Other parts of the 1999 protocol will remain in effect. 

Thank you for that kind introduction – and for inviting me here today.  It’s a pleasure to be back at AU, and a privilege to join so many experts, essential partners, and good friends in advancing one of the most important conversations currently facing government and private sector leaders across the country. 

At the Justice Department’s National Security Division, there is little we do that is more important than working on how the government can partner with private companies to protect our nation and its people better – from terrorism, from cyber attacks, and from a range of other malicious activities.

This past December, I attended a ceremony marking the twenty-fifth anniversary of the bombing of Pan Am Flight 103 over Lockerbie, Scotland, which claimed the lives of 259 people on the plane and 11 on the ground. 189 were Americans.  It was the deadliest act of terror against the United States prior to September 11th.

The families and friends of those who were lost came together that winter day at Arlington National Cemetery to recall the event that changed their lives forever.  They spoke movingly of loved ones who had been on board that plane, many of whom were American college students flying home for the holidays.

On December 21, 1988, instead of reuniting with their companions and loved ones, they heard news reports of a catastrophic explosion and wreckage strewn over miles of the Scottish countryside.  Shortly thereafter, they learned, as did the rest of the world, that terrorists were to blame.

There was a call for justice – to find the perpetrators and hold them responsible.  And there was also a call for new security measures designed to stop another attack from happening. 

At the ceremony last winter, former Secretary of Labor Ann McLaughlin Korologos spoke of her experience leading the seven-member Presidential Commission on Aviation Security and Terrorism that was formed a few months after the attack to investigate what went wrong.  Eighteen months after Lockerbie, that Commission issued a report calling for national attention to our aviation security system, and identifying a host of specific proposals intended to harden our nation’s airline security and keep all Americans safe – both at airports and in the skies.

Many of these measures did not become reality.  Interest faded, attention waned – and so did political and social will.  Twelve years later, the horror of 9/11 changed that.  It reinvigorated the focus on aviation security – and the 9/11 Commission called for many of the same security measures called for in the wake of Lockerbie.  This time, almost all of them were implemented.

Today, national leaders in both government and private industry must apply the lessons we learned from unspeakable tragedies like these, and from decades of effective counterterrorism policy, to business action in cyberspace.   It is imperative that we take action promptly, without waiting for a galvanizing tragedy.  We can work together to change norms now -- not in the wake of an immensely damaging terrorist cyber attack.  In doing so, we will have a much better chance of preventing such an attack from ever taking place. 

I grew up in New York City, a place where you can experience the anonymity now enjoyed by so many on the Internet.  And when I was a kid, the NYPD sent an officer to our school who told us how to conduct ourselves on the streets of New York. 

Our version of Officer Friendly told us to look both ways when we crossed the street.  Of course, he told us not to make eye contact with people on the street -- which was pretty standard advice back then. 

As a kid, that seemed to make total sense.  Decades later, New York City is now one of the safest major cities on the planet.  And when we look back at that advice, it seems crazy that there was a consensus of blaming the victim for making eye contact.  These days, on the internet, we tell our kids to beware of chatting with individuals they don’t know, to avoid certain websites or apps. 

When a person’s credit card gets stolen, or their credentials for accessing a social media site or their bank are hacked, we tell them, “You should have known better than to go to that website,” or, “You shouldn’t have used the same 18-character password more than once.” Together, hopefully, we can look back in a few short years and think that that those warnings and the victim-blaming is also strange and that we’ve come a long way with regards to cyber security.

 One of the things that’s changed in New York over the years is its social norms – like making eye contact.  We need to shape social norms in the cyber area, too.  Just as it was in a chaotic urban environment, it’s tricky to cultivate trust in cyberspace.  There were streets in New York where the bad guys and the good guys passed each other shoulder to shoulder.  The same thing is true in cyberspace.  Legitimate businesses and innocent customers use the same Internet that hackers and terrorists use.

As my former boss at the FBI, Bob Mueller, explained, bad actors – specifically terrorists – are using cyberspace for at least three discrete aspects of terrorist activity: (1) to propagandize and recruit; (2) to plot and plan attacks in the physical world; and (3) to launch attacks in the virtual world itself.  It’s hard to cultivate trust online amidst such company and to restore a sense of security. 
But like change in New York, change in cyberspace will be a community effort.  When our Officer Friendly came to visit, he told us about Safe Havens – businesses that opened themselves up just a little bit, to be better members of the community, and to provide a place for people to go if they felt threatened.  Back then, there were little yellow Safe Haven signs on the doors of stores in New York, and he told us, “If you’re feeling uncomfortable or scared, or are being targeted, don’t be afraid to go into one of these stores and seek help.  Your safety should be your first priority.” 

Just as those Safe Havens existed as trusted businesses when I was kid, the government and the corporate community can come together to create safe havens in cyberspace. 

We need to work together to prevent terrorists from using networks – using the very websites and apps we use every day – to plot attacks in the physical world.  And we need to shore up our security so that devastating attacks cannot be launched in the virtual world.  These tasks are not easy, and they are ones we need to undertake with care, to strike a proper balance between security and liberty.

Some businesses, especially those in the communications sectors, may be hesitant to build new partnerships with government – or are drawing back from their current partnerships – because of the national discussion that has taken place over the last year. 
The President has committed to providing greater transparency about the government’s lawful use of data collection authorities.  However, as the President has noted, the nature of some unauthorized disclosures have shed more heat than light.  And that heat has come onto companies as well, often unfairly.  We take their concerns seriously, and we are dedicated to increasing transparency as well as protecting civil liberties.  That is why many layers of checks and balances are built into the systems – without question some of the best protections provided by any country in the world.  Our authorities are rigorously overseen by Congress, and often scrutinized by the courts and independent government watchdogs.  And they are aimed at ensuring the safety of the nation and our allies. 

Of course, the private sector should not be punished for complying with the law.  We are concerned about this issue, and we are dedicated to working with companies to address misconceptions, correct misinformation, and help to rebuild the public’s confidence that our partnerships are conducted under the law.  We are working with industry to help them be more transparent about what kinds of information they are required to share with the government, and how very few of their customers are ever impacted by government actions. 

Yesterday’s announcement by the President of a way forward on the handling of telephony metadata indicates just how committed the Government is to ensuring that the public’s concerns are addressed, without the Government sacrificing certain operational needs.  As you might have heard, the President announced a proposal that will, with the passage of appropriate legislation, allow the government to end bulk collection of telephony metadata records under Section 215, while ensuring that the government has access to the information it needs to meet its national security requirements.

Getting our legal policies right is one thing.  But make no mistake: It will lead to tragedy if the ultimate result of these disclosures is to cause businesses to shy away from working with the government to prevent terrorism.   The undeniable truth is that our collaboration, and the protections we have put in place together, make us safer from those who would attempt to do us harm – from terrorists to hostile nation-states seeking to capitalize on our vulnerabilities. 

One example that comes to mind is the case of Khalid Aldawsari, a college student from Saudi Arabia who took chemistry classes at Texas Tech in Lubbock, Texas.  When he began placing large and unusual orders for chemicals online, the chemical company reported the order to the FBI, as did the shipping company.  Ultimately, he was convicted in federal court and sentenced to life in prison for trying to use those chemicals to make a bomb, potentially to attack a former President.  And heading off that threat all began with two companies taking the right step of alerting the FBI to suspicious activity.

Whenever the public faces a threat, whether from terrorists, computer hackers, or pick-pockets on the Metro, people expect the government to protect them.  But the government can’t do it alone.  And that is particularly true in the context of cyber threats, given just how much of our nation’s most essential information is found online and, in particular, in the hands of private companies.

You know the threats we face.  You’ve seen them firsthand.  Although we often think of the government and our brave men and women serving abroad as a primary focus of terrorist attacks, we must keep in mind that the 9/11 attacks targeted this nation as a whole, and its impact was felt by all of us. 

Since then, terrorism is now increasingly diverse and decentralized, from al Qaeda affiliates overseas to homegrown terrorists – such as the Boston Marathon bombers – who may live in the communities they intend to strike.  But the cyber threat is growing rapidly, and down the road, may rival or even surpass the threat we face today. 

Malicious cyber actors are an increasing risk to our security and prosperity.  Last year, BP’s CEO stated that his company sees approximately 50,000 attempted cyber intrusions each day.   And he is not alone. 

As you know, hackers – in many cases working for foreign states or organized criminal syndicates – break into private businesses’ servers and steal the key intellectual property that gives us a competitive edge in the global marketplace. And malicious cyber actors sometimes target companies’ infrastructure.  In 2012, Saudi Arabia’s state oil company, Aramco, suffered an attack that destroyed 30,000 of its computers – nearly 75% of its workstations, a devastating loss for any company. 

Many of these same hackers exploit vulnerabilities in software, turning home computers or servers into launch pads for malicious denial-of-service attacks against banks, companies, and government agencies – shutting them down and disrupting their ability to do business.  It does not take much imagination to see how these same tools could be used by terrorists, resulting in what has been referred to as a potential “cyber 9/11.”

When these attacks happen, people ask the same two basic questions many asked after the Lockerbie bombing: “What more could have been done to protect me?”  And, “are they going to get these guys?”  To answer these questions, we need the private sector and the government to work together.

Intrusions by nation-states have gone on longer than acknowledged.  Why are so many companies waiting to come to the government for help?  This situation is not unlike the way that organized crime was able to intimidate small businesses into paying for so-called “insurance” .  For each mom and pop store, individually, it made more sense to pay the insurance rather than face retaliation for speaking up or going to the cops.  And as a result, the criminal organizations made big profits.  They only took a small amount from each business, but the money added up over the dozens or hundreds of businesses they intimidated.  It wasn’t until the cost of doing business with the mafia got too high – or someone was brave enough to stand up to the mob – that law enforcement was able to break up these organized crime rings.

The calculus that many businesses make today is similar to the decisions that the mom and pop stores had to make several decades ago: Does the cost of paying out – that is, failing to tell the authorities about cyber attacks – outweigh the costs of potential retaliation?  When faced with the prospect of taking on a nation-state with all of its powers – not to mention the fear of not being able to do business in that’s nation’s marketplace – many companies have made the calculation of remaining silent.
But the cost of that silence is increasing.  As valuable assets, proprietary information, and research and development investments are repeatedly compromised by increasingly relentless attacks, businesses can no longer afford to stay silent victims.  The calculus has changed.  Companies are taking action.

Over the last year, we have seen a tipping point.  As more and more companies come forward, more and more will feel emboldened.  Eventually, these nation-state hackers – just like the mafia – will lose the ability to intimidate victims.
Public-private partnerships are particularly important because of the key role that businesses play in our society.  Unlike some countries, where government maintains control over the telecommunications and energy industries, nearly all critical infrastructure in the United States is owned and managed by private companies.  The fiber-optic cables that our communications transit; the servers that direct our Internet traffic;  the software that allows us to communicate; and the energy we use to power our daily lives – all of these things, and so many more, are created and operated by private companies.

We thrive as a nation because of private innovation, and the creativity that comes with the freedom to innovate.  This has been true throughout our history.  But these unique strengths also create opportunities for attacks.  When attacked, companies are often in the best position to protect themselves and their customers from cyber aggressors.  But they may not always be in the best position to know the precise threats they face, which is where we can help. 

Take, for example, the Department’s work on cyber threats.  On a daily basis, the FBI is working with companies that have been the victims of hacks – many of whom may not even know they have been victimized, or how to protect themselves.  The Washington Post reported earlier this week that federal agents notified more than 2,000 U.S. companies last year that their computer systems were hacked – and, as the article explained, even that considerable figure represents only a fraction of the actual number of cyber intrusions into the private sector.

There are many efforts underway across the government to work with private corporations on strengthening public-private cyber cooperation.   The Department of Homeland Security, the Department of Energy, and other departments and agencies routinely work closely with companies to protect critical infrastructure.

 In driving this work forward, the FBI has long relied on its InfraGard program, which brings together individuals in law enforcement, government, the private sector, and academia to talk about how to protect our critical infrastructure.  InfraGard has more than 85 chapters across the country, with more than 47,000 members. 

These are all positive and important efforts, but we have to do more.

As we speak, the Department of Justice is working hard to be a more accessible partner to companies.  Over the past two years, the National Security Division established a national program to focus on cyber threats to the national security – those posed by terrorist and nation state actors – and we are continuing to grow.  We are still a very new Division, but we are evolving quickly to meet new and emerging threats. 

The story of NSD’s creation is an interesting one.  Although not formally created until 2006, NSD’s story begins, like so many others, with calls for reforms that were first spotted years ago.  We trace our origin all the way back to 1978, with the passage of the Foreign Intelligence Surveillance Act.  FISA was, in part, a response to public and congressional dissatisfaction with a series of intentional abuses of wiretaps and surveillance for political purposes.  The Church Committee’s report set out those problems and made a case for reform.  The report emphasized that the Attorney General, as the nation’s chief legal officer, plays an essential role in maintaining the lawfulness of actions by our country’s intelligence agencies.  NSD was created, and is proud, to execute that mission decades later on his behalf. 

So as we tackle the cyber threat, we build upon our roots.  We were created so that prosecutors and law enforcement officials could work smoothly and effectively with intelligence attorneys and the Intelligence Community, to ensure that we most effectively defend our nation’s security while at the same time protecting our vital civil liberties.  And I would be remiss in describing the vital work of our Division if I neglected to acknowledge this week’s conviction of Sulaiman Abu Ghayth in New York.  Abu Ghayth, described as a senior spokesman for Osama bin Laden and al Qaeda, was convicted by a federal jury on all counts, including conspiring to kill Americans and other terrorism charges.

So, even as we defend our national security through successful counterterrorism prosecutions in federal court, we also defend our security while protecting our civil liberties in cyberspace.  In 2012, we established the National Security Cyber Specialists’ Network, with members from across all of our areas of expertise, federal prosecutors from each and every U.S. Attorney’s Office, and partners from the Department’s Computer Crime and Intellectual Property Section, who have had longstanding and continuing success against organized cyber criminals, hacktivists, criminal fraudsters and other bad actors. 

Since then, we have hosted extensive training for these network members and for every member of the National Security Division, to ensure we have the skills we need to tackle the threat.   Federal prosecutors across the country are reaching out to companies in their districts to let them know about the network and how we can help.

Here in our nation’s capital, we work closely with the FBI’s National Cyber Investigative Joint Task Force to assess cyber issues in real time as they arise.  We’ve launched a 24/7 cyber response capacity.  We are now a one-stop shop and resource for national security cyber matters across the country.

There are criminal cases to be brought against these actors, but that is just one tool.   We are committed to using every tool at our disposal, law enforcement and others, to disrupt adversaries’ activities and prevent damage to U.S. national interests – just as we do in other arenas of counterterrorism, counterespionage, and export control.

We are drawing from our expertise in those areas, and building new capabilities to ensure that we can use all available tools to meet a range of constantly-evolving threats.

 Employing this comprehensive, “all-tools” approach means we need to be prepared not only to prosecute cyber intrusions, economic espionage, and export control violations, but also to work with our partners to enforce other civil and regulatory laws.

We cannot do this alone.  This “all-tools” approach requires trusted collaboration, including with operational and legal experts in the private sector.

It’s often said, there are only two types of companies: those that have been hacked and those that will be.  Now, that’s no longer the case.  Today, there is only one category:  those that have been hacked, and that will be hacked again.

Going forward, we want to work even more closely with our private sector partners to be ready for whatever may happen in the near future.  Of course, private companies will remain our first line of defense, and their legal teams must be prepared to face difficult questions and complex matters, including how to respond to cyber breaches; how to interpret and comply with the cyber Executive Order and the cybersecurity framework recently released by the Administration; and, how to stay on top of the evolving “standard of care” for cyber security.

All of us – including lawyers and operators in the public and private sectors – will need to cooperate closely to address these and associated threats.  We all must act on the premise that success requires reporting from, and close relationships with, victims and potential victims who seek indicators of malicious activity. 

My colleagues and I have already met with a number of private entities and received a positive response, and we will continue these meetings to keep the dialogue going. 

And as we look toward the future, we must continue establishing channels that regularly communicate cyber threat information between the public and private sectors.  Information must move in both directions.  It is an approach that works in other contexts, and it will succeed here as well.

We have come a long way in our collective approach to counterterrorism.  Together, we have improved airline safety, hardened critical infrastructure, developed new technology that can help first responders, and designed a wide range of protective measures.  These measures, of course, don’t eliminate the threat of to our national security, which remains very real and very dangerous.  But we are safer than we used to be, and better prepared to cope with any potential attack.

We need to achieve this same success in the cyber realm. So the critical question is: What will it take? 

We’ve certainly had plenty of attacks that caused real pain, exposed real weaknesses, and suggested real problems for the future.  Yet, despite all of these warnings, we don’t seem to have fully turned the corner in addressing this threat.  And the reasons for that are understandable. 

Confronting cyber threats incurs real economic cost.  We appreciate that.  But doing nothing will cost us all more in the long run, and may, for some businesses, prove devastating.

The writing is on the wall – our adversaries are getting bolder, more aggressive, and more skilled.  They flex their muscle to show us what they can do, but it is only the tip of the iceberg.  Without a concerted, collective effort to make the changes needed to protect ourselves in cyberspace, it is only a matter of time before we are really hit – hard.  Far better to form partnerships and make the required investments before a large-scale attack takes place.

Indeed, perhaps even more than in the terrorism context, the private sector is critical to our success in the cyber context because of just how much vital information is now held “in corporate trust,” so to speak. 

While government holds and protects some of what cyber terrorists want to access, the private sector has much, much more.  So, whether it’s about ensuring that our electric grid is safe from attacks – whether physical or cyber – or making sure you can access your bank account information on your smartphone without getting hacked, we urgently need to form the type of public-private partnerships to keep those vital resources safe.  These are the type of partnerships we’ve created for counterterrorism.  We must build on those partnerships to combat cyber threats – not pull away from each other.

This is the challenge now before us – and this is the cause that everyone in this room, and many beyond it, must come together to confront.  Each of us has a unique role to play, and distinct responsibilities to fulfill. 

Leaders in government can articulate precisely what we have to offer the private sector.  Leaders in the private sector can demonstrate what these partnerships have to offer to their customers.  And leaders in academia can survey the legal authorities we have – and take stock of what legal authorities we don’t have but need – to facilitate cooperative, productive cyber partnerships. We can build these partnerships while respecting civil liberties and do it in a transparent and productive way.

We are committed to meeting regularly with critical partners to get your feedback on how we are doing; to solicit suggestions on how we can do better; and to gain the benefit of your views on how the overall landscape is looking. Please reach out to us so that we can talk more about what NSD does, and how we can work together to keep you safer and our nation safer.

I want to close today by calling upon everyone here to continue the important open dialogue we’re holding here at AU today.  I urge you to serve as connectors – as bridges – to make private-public partnerships a reality. 

We had warnings before 9/11.  But we didn’t act – at least not enough.  The state of security of the Internet today is a rumbling storm in the distance.  We need to be smart and work together, now, before a cyber 9/11 – before there’s an attack or intrusion or exfiltration so big – and so devastating – we are forever changed.  Thank you for participating in this important conversation, and thank you for having me here today.

The Justice Department filed a lawsuit today against Sairam Enterprises Inc. LLC alleging that it discriminated against Jeffrey Crockett and his family on the basis of disability in violation of Title III of the Americans with Disabilities Act (ADA).  Sairam Enterprises owns and operates the Days Inn and Conference Center Tulsa, a hotel in Tulsa, Okla.

The complaint, filed in the U.S. District Court for the Northern District of Oklahoma, alleges that Days Inn Tulsa maintained a “no pet” policy that was enforced against Crockett to prohibit him, his service animal and his family from staying at the hotel on Aug. 31, 2010, while they were traveling through Oklahoma.  Crockett is a veteran of the U.S. Air Force and U.S. Marine Corps who has a degenerative disc disease, a demyelinating disease, post-traumatic stress disorder, depression and panic disorder.  Crockett’s service animal is a German shepherd named Phineas that is trained to perform tasks directly related to his disabilities, and Days Inn Tulsa allegedly made no effort to modify its policy even after Crockett notified the hotel that Phineas is a service animal. 

“The men and women who have given so much to our country through their military service cannot be denied accommodations because they need a service animal,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue to enforce the ADA so that they, and others with disabilities, do not need to face such discrimination.”

“It is vital for the Justice Department to protect every citizen’s right to equal treatment and opportunity, especially for our Nation’s veterans,” said U.S. Attorney Danny C. Williams Sr. for the Northern District of Oklahoma.  “Under the American with Disabilities Act, no citizen with the need for a service animal should be discriminated against and denied accommodation.”

In the lawsuit, the United States is seeking a court order declaring that Days Inn Tulsa violated the ADA, prohibiting future discrimination by the hotel, and requiring the hotel to adopt a nondiscrimination policy and to train its staff on nondiscrimination.  The lawsuit also seeks an award of monetary damages to the Crocketts who were allegedly harmed by the discrimination and a civil penalty.

To read the complaint and for more information on the ADA, visit the ADA website.  Those interested in finding out more about this lawsuit or the obligations of private entities to accommodate people with service animals under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access the ADA website.  ADA complaints may be filed by email.

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

The Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Texas announced today that a federal grand jury in Houston returned a six count indictment charging Dante Phearse, 33, with calling in bomb threats to two Houston synagogues, a municipal courthouse and a private business.    

Phearse, of Houston, has been charged with two civil rights violations for threat of force with an explosive device against two synagogues, which allegedly obstructed members of the synagogues from enjoying the free exercise of their religious beliefs.  Phearse is also charged with four counts of using an instrument of interstate commerce to communicate a threat to kill and injure people and destroy a building by means of an explosive device.    

The indictment alleges that on April 30, 2013, Phearse telephoned two different synagogues in Houston, Congregation Beth Israel and Congregation Or Ami, and left voicemails threatening to bomb the buildings and cause other harms to the members.  According to the indictment, on the same day, Phearse also called in and threatened to bomb the City of Houston Municipal Courts building and a private business.       

If convicted, Phearse faces a statutory maximum penalty of 20 years in prison for each civil rights violation, and a statutory maximum penalty of 10 years in prison for each count of making bomb threats over the phone.  Phearse has been in custody since his arrest.  He is expected to make an initial appearance on the indictment in the near future, at which time the U.S. expects to request his continued detention pending trial.   

This case is being investigated by the Houston Division of the FBI in cooperation with the Houston Police Department.  It is being prosecuted by Trial Attorneys Nicholas Murphy and Saeed Mody of the Civil Rights Division and Assistant U.S. Attorneys Ruben Perez and Joe Magliolo of the Southern District of Texas, in cooperation with the Harris County District Attorney’s Office.  

An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty through due process of law.

Five men have been charged in the Eastern District of New York with conspiring to defraud the Newspaper and Mail Deliverers’ Union (NMDU) and Hudson News newsstands to obtain a union card and employment at Hudson News newsstands for the son of the alleged underboss of the Colombo family of La Cosa Nostra.

A criminal complaint was unsealed today charging Benjamin Castellazzo Jr., Rocco Giangregorio, Glenn LaChance, Rocco Miraglia, aka “Irving,” and Anthony Turzio, aka “the Irish Guy,” with mail fraud conspiracy. The five men were arrested earlier today, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn.

In addition, a three-count indictment was unsealed today charging Thomas Leonessa, aka “Tommy Stacks,” with wire fraud, wire fraud conspiracy and theft and embezzlement from employee benefit plans in an unrelated scheme. The indictment was returned by a federal grand jury sitting in Brooklyn, N.Y., on March 6, 2014, and relates to Leonessa’s alleged “no show” job as a delivery driver for the New York Post.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, United States Attorney Loretta E. Lynch of the Eastern District of New York Acting Special Agent in Charge Cheryl Garcia of the New York region of the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office.

As alleged in the complaint, the NMDU is an independent union that represents approximately 1,500 employees involved in the newspaper industry in New York, New Jersey and Connecticut. NMDU members deliver newspapers for The New York Times, The Wall Street Journal, the New York Daily News, the New York Post and El Diario. Hudson News, which also employs members of the NMDU, is a retail chain of newsstands mainly located in major transportation hubs, including airports and train stations.

Between June 2009 and October 2009, Miraglia, who was a foreman at the New York Daily News – as well as an associate of the Colombo organized crime family and the son of a deceased soldier in the Colombo family – conspired with officials of the NMDU and with Turzio, an employee of El Diario, to get an NMDU union card for Castellazzo Jr. and place him in a job at Hudson News. Castellazzo Jr. is the son of Benjamin Castellazzo, the alleged underboss of the Colombo family. Giangregorio and LaChance, who are business agents for the NMDU, also participated on this scheme.

As alleged in the indictment, Leonessa was employed by the New York Post to deliver newspapers by truck from a New York Post warehouse in the Bronx, N.Y., to New Jersey. He was also a member of the NMDU, which maintained offices, including offices for its welfare and pension funds, in Queens, N.Y. From about December 2010 to about September 2011, Leonessa had a “no show job” – a job for which he was paid wages and benefits for services he did not perform – at the New York Post. When Leonessa did not complete his required deliveries, he was nevertheless, based on his fraudulent representations, paid wages by the New York Post and accorded benefits from employee pension and welfare funds managed by the NMDU.

Leonessa is scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levyat the federal courthouse in Brooklyn, N.Y.

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

The case was investigated by the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and the FBI, with assistance from the New York City Police Department, the New York County District Attorney’s Office and Waterfront Commission of New York Harbor.

The government’s case is being prosecuted by Trial Attorney Joseph Wheatley of the Department of Justice’s Organized Crime and Gangs Section and Assistant U.S. Attorneys Elizabeth A. Geddes and Allon Lifshitz.

WASHINGTON— On Wednesday, a federal jury in Manhattan found Sulaiman Abu Ghayth, the son-in-law of Usama bin Laden and a senior member of al Qaeda, guilty on three counts, including conspiracy to kill Americans.

U.S. Attorney General Eric Holder released the following statement: “This verdict is a major milestone in the government’s unrelenting efforts to pursue justice against those involved with the September 11 attacks. I can imagine no more fitting outcome, and no stronger message to those who would harm our nation and its people: that no amount of distance or time can weaken America’s resolve to pursue, capture, and hold them accountable to the fullest extent of the law.

“I want to especially note that this verdict has proven that proceedings such as these can safely occur in the city I am proud to call home, as in other locations across our great nation. It was appropriate that this defendant, who publicly rejoiced over the attacks on the World Trade Center, faced trial in the shadow of where those buildings once stood.

“We never doubted the ability of our Article III court system to administer justice swiftly in this case, as it has in hundreds of other cases involving terrorism defendants. It would be a good thing for the country if this case has the result of putting that political debate to rest. This outcome vindicates the government’s approach to securing convictions against not only this particular defendant, but also other senior leaders of al Qaeda.

“I want to personally congratulate U.S. Attorney Bharara, his team in the Southern District of New York, and those who assisted in our National Security Division, for successfully prosecuting this case with the utmost integrity and professionalism. I also wish to thank the Federal Bureau of Investigation, U.S. Marshals Service, and Mayor de Blasio and the city of New York. This was truly a team effort.”

Acting Assistant Attorney General for National Security John Carlin released the following statement: “This case highlights our resolve to find and bring to justice those who plot to attack our citizens and our interests around the world.  As the face and voice of al Qaeda in the days and weeks after the 9/11 attacks, Abu Ghayth conspired with Usama Bin Laden and al Qaeda and announced to the world al Qaeda’s deadly intentions to continue to attack America.  Today, he stands convicted and he will face justice for his role in al Qaeda’s lethal plot to kill Americans.  I want to thank all of the agents, analysts, and prosecutors who are responsible for this result.”

Tieu Tran, 59, of Mankato, Minn., pleaded guilty late yesterday to one count of forced labor trafficking in the U.S. District Court for the District of Minnesota, the Justice Department announced today.  Tran is the former owner and manager of Nails By Jordan, a nail salon located in Mankato.

According to evidence presented in court proceedings and documents, in 2008, Tran recruited a woman from Vietnam to travel to the United States using false promises of legal immigration status and a high-paying job.  In reality, Tran smuggled the victim and two other Vietnamese nationals across the southern U.S.-Mexico border, imposed a significant debt upon the victim and forced the victim to pay down the smuggling debt by working at Tran’s son’s Vietnamese restaurant, Pho Saigon, in Mankato. 

During the plea proceedings, Tran admitted to compelling the victim to work long hours without paying her as promised, using a scheme, plan and pattern of non-violent coercion.  This included manipulation of debts, isolation and verbal intimidation to hold the victim in fear, knowing that the victim was without legal status and money, did not have the ability to speak English, feared losing her family home in Vietnam to creditors and had nowhere else to turn for subsistence.

“This defendant preyed on vulnerable victims and exploited them for her profit,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “Traffickers routinely use schemes of non-violent coercion to exploit victims by manipulating the victims’ debts, fears of immigration consequences, linguistic isolation and other vulnerabilities.  The Civil Rights Division is committed to seeking justice on behalf of victims of human trafficking and to holding human traffickers accountable”

“Human trafficking degrades the dignity of humanity and strikes at the heart of individual equality and freedom,” said U.S. Attorney Andy Luger for the District of Minnesota.  “The U.S. Attorney’s Office for the District of Minnesota will aggressively prosecute those who seek to capitalize on human frailty through such conduct.”

“ The FBI, in conjunction with its law enforcement partners, remains steadfast in its commitment to eradicate human trafficking,” said Special Agent in Charge J. Chris Warrener of the FBI’s Minneapolis Field Office.  “Human trafficking is an insidious crime which impacts not only its victims, but society as a whole.  Detecting and bringing to justice those who perpetrate these schemes will always be a top priority for law enforcement. ”  

Tran faces a statutory maximum sentence of 20 years in prison and a $250,000 fine.  As part of her plea agreement, Tran agreed to nullify all debts imposed upon the victim, as well as similar debts imposed upon seven other individuals believed to be under similar circumstances.

This case was investigated by the FBI and is being prosecuted by Trial Attorney William Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant U.S. Attorney David Steinkamp of the U.S. Attorney’s Office for the District of Minnesota.

(HAGATNA, GU) ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that a federal grand jury returned an indictment charging twelve (12) individuals as follows:

• FRANCISCO C. ARIAS, 38,  EDER J. CORTEZ-ZELAYA, 31, DAVID G. QUINATA, 52, BRIAN G. QUINATA, 37, JOSEPH S.N. MANSAPIT, 43, JOHNNY J.S. QUENGA, 36, KEN J. NANGAUTA, 49, CORINNA M. CONCEPCION, 42, LAWRENCE P. CONCEPCION, 49, FLORENTINA P. DEPAMAYLO, 60, JOSHUA E. MOYE, 26, and RICHARD J. BORJA, 42,  were charged with conspiracy to distribute more than 50 grams of methamphetamine.  A conviction for conspiracy to distribute more than 50 grams of methamphetamine carries a mandatory minimum sentence of ten (10) years imprisonment and a maximum sentence of life imprisonment.

• ARIAS, CORTEZ-ZELAYA, QUENGA, CORINNA M. CONCEPCION,  NANGAUTA, DAVID G. QUINATA, BRIAN G. QUINATA, MANSAPIT, and  MOYE were also charged with conspiracy to commit money laundering which carries a maximum sentence of twenty (20) years imprisonment. 

• ARIAS and CORTEZ-ZELAYA were charged with separate counts of unlawful use of the mail to facilitate the conspiracy to distribute methamphetamine which carries a maximum sentence of five (5) years imprisonment. 

Defendants ARIAS and CORTEZ-ZELAYA were arrested in Las Vegas, Nevada.  Other defendants were arrested in Guam.  Initial appearances for the defendants have been held.   

This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS).  The case is being prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.

The public is reminded that an indictment contains only allegations and is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

(HAGATNA, GU) - ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on March 24, 2014, in the U.S. District Court of Guam, Chief Judge Frances M. Tydingco-Gatewood sentenced RODNEY D. TAITANO, age 45, to 10 years in prison followed by five years of supervised release based upon his conviction for conspiracy to distribute over 50 grams of methamphetamine.  Chief Judge Tydingco-Gatewood also ordered TAITANO to perform 50 hours of community service.

            The defendant was receiving methamphetamine from California.  The drugs were inside air impact wrenches whose motors had been removed.  On May 4, 2013 Guam Customs Officers intercepted a suspicious package at the Guam Customs Air Cargo Facility and discovered methamphetamine concealed inside of two air impact wrenches which belonged to the defendant.   

            U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, Alicia A.G. Limtiaco, stated, “Our community is not immune from the poison of methamphetamine.  This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”

            The case was investigated by the Drug Enforcement Administration, Guam Customs & Quarantine Agency, Guam Police Department, Superior Court of Guam Probation Office, and United States Postal Inspectors.  The United States was represented by Assistant U.S. Attorneys Karon V. Johnson and Clyde Lemons, Jr.

The Department of Justice’s Antitrust Division today issued the 2014 edition of its annual newsletter on its website.  The newsletter highlights the Antitrust Division’s civil and criminal enforcement actions, international cooperation efforts and competition advocacy over the last year.

The newsletter includes a message from Assistant Attorney General Bill Baer, which focuses on the strong return on investment that antitrust enforcement provides, the division’s continued focus on litigation effectiveness and the division’s commitment to enforcing the antitrust laws and promoting competition in all sectors of the American economy. “We remain steadfast in our efforts to ensure that markets are free of anticompetitive restraints and consumers benefit from robust competition,” Assistant Attorney General Baer stated in his message.

This year’s update highlights the division’s criminal enforcement matters, including criminal fines, which totaled more than $1 billion for the third time since 2009, and incarceration for culpable executives.  The division won trial victories in its ongoing real estate foreclosure auction investigation and its investigation into anticompetitive behavior at Environmental Protection Agency Superfund sites, and secured multiple guilty pleas in its automotive parts, tax liens and ocean shipping investigations.

Other newsletter articles describe the division’s civil enforcement program–including its trial victories against both Apple Inc. and BazaarVoice Inc. in the e-book and online ratings and review software industries, respectively. The division also reached civil settlements to protect consumers and preserve competition in the airline, broadcasting and deepwater oil well chemical industries.

The newsletter also features articles about the division’s use of new document production techniques and mergers that increase bargaining leverage. 

The Department of Justice, the Federal Trade Commission (FTC), and the Competition Bureau Canada today issued a set of “best practices” to make more transparent how they coordinate merger reviews that affect the United States and Canada.

Assistant Attorney General for the Department of Justice’s Antitrust Division Bill Baer, FTC Chairwoman Edith Ramirez and Canadian Commissioner of Competition John Pecman praised the long record of successful cooperation between the two jurisdictions, and noted that cross-border coordination and cooperation in merger matters have steadily increased over the last decades.

The best practices set forth how effective day-to-day cooperation works between the two U.S. agencies and the Competition Bureau, including how the agencies communicate with each other, benefit from the similarity of their respective merger review timetables, cooperate in the analysis of evidence, use waivers of confidentiality provided by the parties and address remedies and settlements. The best practices also seek to promote cooperation and coordination between the U.S. and Canadian agencies in order to enhance the likelihood of consistent outcomes when the same merger is reviewed in both countries. In addition, the best practices acknowledge the contribution that merging parties can make in facilitating cooperation, and provide guidance to firms about how to work with the agencies to coordinate and facilitate the reviews of their proposed transactions.

 
“The strong relationship between the U.S. and Canadian competition agencies has allowed us to cooperate closely and effectively on many merger investigations,” said Assistant Attorney General Baer. “The best practices we are issuing today are a testimony to our agencies’ long-standing and productive working relationship and the importance all of our agencies place on transparency.”

“We have developed a very close working relationship with our Canadian colleagues based on our shared approach to the implementation of our competition laws and policies,” said FTC Chairwoman Ramirez. “These best practices exemplify our commitment to cooperation and convergence, benefiting our agencies, merging parties, and ultimately consumers.”

 
The best practices, which do not modify existing law, build upon the framework of the 1995 antitrust cooperation agreement between the United States and Canada and the experience gained under that framework.

Related Materials:

U.S. and Canada Antitrust Agencies Best Practices

Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division today met with 35 international antitrust enforcement agencies and dozens of private antitrust practitioners in Washington, D.C., to emphasize the need for procedural fairness and transparency for parties in antitrust investigations.

 
At the International Competition Network (ICN) roundtable on investigative process, Baer applauded the progress that already has been made in the international competition community toward shared values of due process and transparency in antitrust investigations and stressed the importance of continuing that effort.

Baer said that process and transparency matter. They help ensure that enforcers’ views are exposed to informed reaction and that parties understand the processes used to reach a particular outcome. Baer also said that when fair and transparent decision-making processes are in place, the legitimacy of the agency’s outcome is enhanced.

Baer encouraged newer antitrust enforcement agencies to adopt practices that would provide greater transparency and procedural fairness to parties in antitrust investigations. Some of the practices recommended include providing parties under investigation with information about the timing of antitrust agency’s decision-making, allowing parties to submit white papers and meet with investigating staff and decision-makers to present their views, and providing parties in investigations with regularly updated information about the agency’s concerns.

The ICN roundtable was co-hosted by the Department of Justice and the Federal Trade Commission. FTC Chairwoman Edith Ramirez also presented remarks.

Williesteina Jacobs was indicted in the Eastern District of New York on March 21, 2014, and charged with 27 counts of aiding in the preparation of false returns, the Justice Department and Internal Revenue Service (IRS) announced today following her arrest.

According to the indictment, Jacobs owned and operated a tax preparation business called International Professional Business Services, which was located in South Richmond Hill, N.Y., and Jamaica, N.Y.  The indictment charges that Jacobs prepared false personal income tax returns for clients for tax years 2007 through 2009.  Jacobs allegedly attached false schedules that reported business losses the taxpayers did not incur and attached schedules that reported inflated or fictitious deductions.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Jacobs faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 on each count.

The case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorneys Jennifer Laraia and Stephen Descano of the Justice Department’s Tax Division are prosecuting the case . 

A Long Island, N.Y., doctor was arrested today on charges that he submitted millions of dollars in false billings to Medicare.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Special Agent in Charge Thomas O’Donnell of the Department of Health and Human Services Office of Inspector General (HHS-OIG).

Dr. Syed Imran Ahmed, 49, was charged with one count of health care fraud by a criminal complaint unsealed this morning in federal court in Brooklyn, N.Y. A seizure warrant seeking millions of dollars of Ahmed’s alleged ill-gotten gains, including the contents of seven bank accounts, was also unsealed. In addition, a civil forfeiture complaint was also filed today against Ahmed’s residence located in Muttontown, N.Y., valued at approximately $4 million. Further, search warrants were executed earlier today at six locations in New York, Michigan and Nevada. Ahmed’s initial appearance is scheduled this afternoon before U.S. Magistrate Judge Marilyn Go.

“The Medicare system entrusts doctors to provide patients with the care and services they need,” said Acting Assistant Attorney General O’Neil.  “The charges unsealed today allege that Dr. Ahmed billed millions of dollars to Medicare for surgical procedures that he did not actually perform.  These charges are yet another example of the Department of Justice’s determination to hold accountable those who abuse the trust placed in them and steal from the system for personal gain.”

“As alleged, Ahmed created phantom medical procedures to steal very real taxpayer money. The defendant sought to enrich himself and fund his lifestyle through billing Medicare for services he never performed,” stated United States Attorney Lynch.  “We are committed to protecting these taxpayer-funded programs and prosecuting those who steal from them.”

“Fraudulently billing the government defrauds every American taxpayer,” said FBI Assistant Director in Charge Venizelos. “We will investigate cases of graft and greed to protect important programs for those who need them.”

“For a single physician, the alleged conduct in this case is among the most serious I've seen in my law enforcement career," said HHS-OIG SAC O’Donnell.  “Being a Medicare provider is a privilege, not a right.  When Dr. Ahmed allegedly billed Medicare for procedures he never performed, he violated the basic trust that taxpayers extend to healthcare providers.”

As alleged in the complaint, Ahmed engaged in a scheme to submit claims to Medicare for surgical procedures that were not in fact performed. The complaint alleges multiple instances in which either patients told law enforcement officers that they never had the procedures that were billed, or hospital medical records did not contain any evidence that the procedures were actually performed. From January 2011 through mid-December 2013, Medicare was billed at least $85 million for surgical procedures purportedly performed by Ahmed.

The investigation has been conducted by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Trial Attorney Turner Buford of the Fraud Section and Assistant U.S. Attorneys William Campos and Erin Argo of the U.S. Attorney’s Office for the Eastern District of New York.

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

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 .

Detrick and Natashia Tucker, a husband and wife who owned and operated a tax preparation business named T&T Express Tax located in Pine Mountain, Ga., were sentenced to serve 12 months and one day and 46 months in prison, respectively, for crimes relating to the preparation of false tax returns, 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.  Detrick Tucker previously pleaded guilty to aiding and assisting in the preparation of false tax returns and Natashia Tucker pleaded guilty to conspiring to defraud the United States by filing false tax returns.  Natashia Tucker was ordered to pay $1,483,025 in restitution and Detrick Tucker was ordered to pay restitution in the amount of $66,235.

According to court documents, the Tuckers conspired to fraudulently inflate refunds on their clients’ tax returns in order to increase the popularity of T&T Express Tax and secure more business.  Detrick Tucker contributed to the conspiracy by registering T&T Express Tax with the Internal Revenue Service (IRS) so that the false returns could be electronically filed and by performing managerial duties.  He also knowingly allowed Natashia Tucker to use his IRS registration numbers to file her own false tax returns.  As the main tax return preparer at T&T Express Tax, Natashia Tucker prepared the majority of the false returns at the business.  She primarily obtained the artificially high refunds by abusing the Earned Income Tax Credit and by creating false business information for her clients.  During its three years of operation, T&T Express Tax filed at least 268 fraudulent federal tax returns that claimed over $1,000,000 in false refunds. 

The case was investigated by special agents of the IRS-Criminal Investigation and the Georgia Department of Revenue.  Trial Attorneys Alexander Effendi and Charles Edgar Jr. of the Tax Division prosecuted the case.

A former soldier of the U.S. Army National Guard has pleaded guilty for his role in a bribery and fraud scheme that caused approximately $70,000 in losses to the U.S. Army National Guard Bureau, 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.

Former Sergeant First Class Michael Rambaran, 51, of Pearland, Texas, pleaded guilty today to one count of conspiracy, one count of bribery and one count of aggravated identity theft. Sentencing is scheduled for June 24, 2014 before U.S. District Judge Lee H. Rosenthal in Houston.

The case arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against 25 individuals, 22 of whom have pleaded guilty.

According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program that offered monetary incentives to Army National Guard soldiers who referred others to join the Army National Guard. Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.

Rambaran admitted that between approximately February 2008 and August 2011, while he was a recruiter for the National Guard, he obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants so that they could use the information to obtain fraudulent recruiting referral bonuses by falsely claiming that they were responsible for referring those potential soldiers to join the Army National Guard, when in fact they were not. In exchange for the information, Rambaran admitted that he personally received a total of approximately $29,000 in payments from the recruiting assistants.

Co-conspirators Edia Antoine, Ernest A. Millien III and Melanie Moraida pleaded guilty to conspiracy and bribery in connection to this scheme. Antoine and Millien are each scheduled to be sentenced on Aug. 24, 2014. Moraida is scheduled to be sentenced on Aug. 26, 2014. All of these sentencing hearings are set before U.S. District Judge Rosenthal in Houston.

Another alleged co-conspirator, Christopher Renfro, who was indicted on Aug. 7, 2013, remains charged with two counts of wire fraud and two counts of aggravated identity theft. Trial is currently scheduled for June 16, 2014, before U.S. District Judge Rosenthal in Houston. An indictment is only an accusation, and a defendant is presumed innocent unless and until proven guilty.

The cases are being investigated by special agents from the San Antonio Fraud Resident Agency of Army CID’s Major Procurement Fraud Unit. This case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.

Billy James Hammett, 30, of Marysville, Calif., was sentenced today by U.S. District Judge John A. Mendez to serve 87 months in prison for violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act in a 2011 racially motivated attack against a white man and an African-American woman in Marysville.  The court also ordered Hammett to pay restitution in the amount of $175 and to serve three years of supervised release following his prison sentence.  Hammett pleaded guilty on Dec. 17, 2013, and his co-defendants, Perry Sylvester Jackson, 28, and Anthony Merrell Tyler, 33, have also pleaded guilty and are awaiting sentencing.

According to documents filed with the court, around 10:45 p.m. on April 18, 2011, a white man and an African-American woman parked their car at a convenience store in Marysville.  Shortly afterward, the three defendants, each of whom has white supremacist tattoos, attacked the man and woman based on race.  After calling the male victim a “[racial slur]-lover,” Jackson punched him twice in the head through the open passenger window.  At the same time, Hammett kicked the woman in the chest.  A few seconds later, Tyler smashed the car’s windshield with a crowbar.   As the attack continued, the woman managed to take refuge inside the convenience store.  All three assailants then descended upon the male victim and began attacking him in the parking lot.  He sustained abrasions on his right forearm and knees, while the woman suffered bruising to her chest.  At the end of the incident, Tyler used a racial slur to refer to an African-American witness.

In sentencing the defendant, Judge Mendez said he found surveillance video footage of the assault “disturbing.”  He noted that Hammett’s attack on the victims was “unprovoked and unwarranted,” and that the victims continue to suffer.

During the sentencing hearing, Judge Mendez also specifically considered Hammett’s background and criminal history, which includes a conviction in 2006 for assaulting a 72-year-old black man, also in Marysville.  According to court records, Hammett made racial comments immediately before the unprovoked attack.  In addition, Hammett has been affiliated with a number of white supremacist gangs, including Supreme White Power.  He has tattoos of the words “white power” across his abdomen, a large swastika on the right side of his torso and the word “skinhead” written across the top of his back.  Judge Mendez stated during the sentencing hearing that Hammett poses “a serious threat to the public.”

“The defendant and his associates accosted the victims in public and assaulted them because of their race,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The department is committed to stamping out racial violence and will continue to prosecute hate crimes vigorously.”

“Racially-motivated violence has no place in civilized society,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “This office has a history of prosecuting those who perpetrate crimes of hate, and as long as these crimes continue, we will be there to enforce the law and uphold this nation’s constitutional values.”

Jackson is scheduled to be sentenced on April 22, 2014, and Tyler is scheduled to be sentenced on July 8, 2014.  Each defendant faces a statutory maximum sentence of 10 years in prison and a fine of $250,000. 

This case was investigated by the FBI with the assistance of the Yuba County Sheriff's Office and the Yuba County District Attorney's Office. The case is being prosecuted by U.S. Attorney Wagner and Trial Attorney Chiraag Bains of the Justice Department's Civil Rights Division.

Joshua Vandyk, a U.S. citizen, and Eric St-Cyr and Patrick Poulin, Canadian citizens, were indicted for conspiracy to launder monetary instruments, the Department of Justice and Internal Revenue Service (IRS) announced today.  The indictment alleges that Vandyk, St-Cyr and Poulin conspired to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of bank fraud.  The Caribbean-based defendants allegedly assisted undercover law enforcement agents, posing as U.S. clients, in laundering purported criminal proceeds through an offshore structure designed to conceal the true identity of the proceeds’ owners.  Vandyk and St-Cyr invested the laundered funds on the clients’ behalf and represented the funds would not be reported to the U.S. government. 

The indictment was returned in the Eastern District of Virginia on March 6, 2014, and unsealed on March 12, 2014, when all three defendants were arrested in Miami, Fla.  In addition to the conspiracy charge, Vandyk, St-Cyr and Poulin were each charged with two counts of money laundering. 

“These charges result from an extensive investigation and are the latest demonstration of the Department’s resolve to find and prosecute those who aid money laundering and tax fraud globally," said Deputy Attorney General James M. Cole. 

According to the indictment, Vandyk and St-Cyr lived in the Cayman Islands and worked for an investment firm based in the Cayman Islands.  St-Cyr was the founder and head of the investment firm, whose clientele included numerous U.S. citizens.  Poulin, an attorney at a law firm based in Turks and Caicos, worked and resided in Canada and in the Turks and Caicos.  His clientele also included numerous U.S. citizens.  

According to the indictment, Vandyk, St-Cyr and Poulin solicited U.S. citizens to use their services to hide assets from the U.S. government.  Vandyk and St-Cyr directed the undercover agents posing as U.S. clients to create offshore foundations with the assistance of Poulin and others because they and the investment firm did not want to appear to deal with U.S. clients.  Vandyk and St-Cyr used the offshore entities to move money into the Cayman Islands and used foreign attorneys as intermediaries for such transactions. 

According to the indictment, Poulin established an offshore foundation for the undercover agents posing as U.S. clients and served as a nominal board member in lieu of the clients.  Poulin transferred wire payments from the offshore foundations to the Cayman Islands, where Vandyk and St-Cyr invested those funds outside the United States in the name of the offshore foundation.  The investment firm represented that it would neither disclose the investments or any investment gains to the U.S. government, nor would it provide monthly statements or other investment statements to the clients.  Clients were able to monitor their investments online through the use of anonymous, numeric passcodes.  Upon request from the U.S. client, Vandyk and St-Cyr would liquidate investments and transfer money, through Poulin, back to the United States.  According to Vandyk and St-Cyr, the investment firm would charge clients higher fees to launder criminal proceeds than to assist them in tax evasion. 

“I commend IRS Criminal Investigation and the Division’s prosecutors for the extraordinary work that they have done over many months in this investigation,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “In particular, it is important to note that the IRS’s voluntary disclosure policy excludes disclosures after the government has received information about taxpayers’ identities.  If the investigation team now has the names of account holders who have not yet come forward, time has run out for them.”

“As alleged in the indictment, these defendants were in the business of creating layers of transactions so their US clients could launder criminal proceeds,” said Chief of IRS-Criminal Investigation Richard Weber.  “IRS Criminal Investigation is committed to unraveling complex financial and money laundering schemes and holding those accountable for creating mechanisms to hide assets offshore and dodge the tax system.”

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant faces a maximum potential sentence of 20 years in prison for each count. 

The case was investigated by special agents of the IRS-Criminal Investigation.  Trial Attorneys Todd Ellinwood and Caryn Finley of the Department’s Tax Division and Assistant U.S. Attorney Kosta Stojilkovic of the U.S. Attorney’s Office for the Eastern District of Virginia are prosecuting the case. 

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

Related Materials:

United States v. Joshua Vandyk, etc.
Indictment

A Southern California man who ran a durable medical equipment (DME) supply company has been found guilty by a federal jury in Los Angeles for his role in a $1.5 million 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, Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office and 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) made the announcement.

Vahe Tahmasian, 36, of Glendale, Calif., was found guilty on March 21, 2014, in U.S. District Court in the Central District of California of one count of conspiracy to commit health care fraud, six counts of health care fraud and six counts of aggravated identity theft. Sentencing is set for June 9, 2014.

The evidence introduced at trial showed that between April 2009 and February 2011, Tahmasian operated a Medicare fraud scheme at Orthomed Appliance Inc. (Orthomed), a DME supply company in West Hollywood, Calif. Tahmasian and his co-conspirator, Eric Mkhitarian, purchased Orthomed from the previous owners and put the company in the name of a straw owner. The defendant and his co-conspirator then stole the personal identifying information of Medicare beneficiaries and doctors in the company’s patient files and used that information to submit a large volume of fraudulent claims to Medicare. The evidence showed that during a three-month period in late 2010, Tahmasian submitted more than $1.2 million in fraudulent claims to Medicare for services that were never prescribed by a physician and never provided to the Medicare beneficiaries. Tahmasian and his co-conspirator then took out more than $622,000 in cash from the company over a six-week period in early 2011. The evidence at trial showed that Tahmasian used a fake California driver’s license during the course of the fraudulent scheme. Tahmasian submitted a total of $1,584,640 in claims to Medicare and received approximately $994,036 on those claims.

Mkhitarian, Tahmasian’s alleged co-conspirator, remains a fugitive.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG and 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. The case is being prosecuted by Assistant Chief Benton Curtis and Trial Attorney Alexander Porter 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 & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The leader of a piracy group engaged in the illegal distribution of copies of copyrighted Android mobile device applications and a co-conspirator have pleaded guilty for their roles in the scheme that distributed more than one million copies of copyrighted apps with a total retail value of more than $700,000.

Acting Assistant Attorney General David A. O’Neil of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.

“These mark the first convictions secured by the Justice Department against those who illegally distribute counterfeit mobile apps,” said Acting Assistant Attorney General O’Neil.  “These men trampled on the intellectual property rights of others when they and other members of the Appbucket group distributed more than one million copies of pirated apps.  The Criminal Division has made fighting intellectual property crime a top priority, and these convictions demonstrate our determination to prosecute those who undermine the innovations of others in new technologies.”

“Copyright infringement discourages smart, innovative people from using their talents to create things that the rest of society can use and enjoy,” said U.S. Attorney Yates. “Theft is theft – whether the property taken is intellectual or tangible – and we will continue to prosecute those who steal copyrighted material.”

“The wholesale theft of intellectual property as seen in this case cannot and will not go unaddressed,” said FBI SAC Johnson.  “The FBI will continue to work with its various law enforcement partners in identifying, investigating and presenting for prosecution those individuals and groups engaged in such criminal activities that involve the attempt to profit from the hard work and the developed creative ideas of others.”

Nicholas Anthony Narbone, 26, of Orlando, Fla., pleaded guilty today to one count of conspiracy to commit criminal copyright infringement, and Thomas Allen Dye, 21, of Jacksonville, Fla., pleaded guilty to the same change on March 10, 2014. Sentencing is scheduled for July 8, 2014, and June 12, 2014, respectively.

An information filed on Jan. 24, 2014, charged Narbone, Dye and others with one count of conspiracy to commit criminal copyright infringement.  According to the information, Narbone, Dye and their fellow conspirators identified themselves as the Appbucket group, with Narbone as the leader, and, from August 2010 to August 2012, they conspired with other members of the Appbucket group to reproduce and distribute more than one million copies of copyrighted Android mobile device apps through the Appbucket alternative online market without permission from the copyright owners of the apps.

The investigation was conducted by the FBI.  The prosecution is being handled by Assistant U.S. Attorney Christopher Bly of the Northern District of Georgia and Assistant Deputy Chief for Litigation John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). Significant assistance was provided by the CCIPS Cybercrime Lab, and the Office of International Affairs also provided assistance in this matter.

The Department of Justice filed a lawsuit today against Con-Way Freight Inc. alleging that the company violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to promptly reassign Naval Reservist Dale Brown to his former position as a driver with appropriate seniority once he notified the company that he had fully recovered from a temporary service-related medical disability.                                          

According to the complaint, filed in the U.S. District Court for the Northern District of Illinois, Brown began working for Con-Way on Nov. 9, 1987, as a driver sales representative (DSR).  In 2006, Brown was working at Con-Way’s Rock Island, Ill., facility when he deployed for active duty.  While in Iraq, Brown suffered a serious shoulder injury in a truck accident during a night mission and returned to Con-Way in 2009 following an honorable discharge.  Con-Way placed him in a lower-paying position due to medical restrictions that prevented him from returning to the DSR position.  By 2012, Brown had made a full recovery and notified the company that he was able to resume work as a DSR without medical restrictions.  Con-Way refused to return Brown to the DSR position and instead made him apply for open positions as they became available.  Months later, Brown was eventually hired as a DSR, but, Con-Way treated him as a new employee with no seniority to bid on assignments.  As a result, Brown effectively received a 40 percent reduction in pay compared to what he was earning as a DSR prior to his military leave.  He also no longer has a regular work schedule because his seniority was not restored upon resinstatement and he must call in each day to see if and for how long he will work on a given day.

USERRA obligates employers to promptly reemploy returning servicemembers and place them as near as possible in the position that they would have been in absent military service, or a position of similar seniority, status and pay.  For servicemembers like Brown who return with a service-connected disability, the reemployment obligation extends to providing accommodations to the servicemember, which can include a temporary position until the servicemember has recovered and is able to return to his or her proper reemployment position.  Contrary to these requirements, Con-Way violated USERRA by treating Brown as a newly hired DSR, with no accrued seniority, rather than placing him in the position that he would have held had he not served his country and suffered a serious and debilitating injury that required temporary accomodation. 

The lawsuit seeks an adjustment to Brown’s seniority date as a DSR to his pre-deployment date with back wages for Con-Way’s six month delay in reemploying Brown once he asked for reinstatement as a DSR following his medical clearance, and his inability to bid on desirable shifts and routes due to his lack of seniority.

“Employers have a legal obligation under USERRA to accommodate servicemembers who suffer a disability while serving their country,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Civil Rights Division is committed to protecting the rights of those who have served their country through military service.” 

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.

Additional information about USERRA can be found on the Justice Department website’s Servicemember page and Employment Litigation Section page, as well as on the DOL website.

WASHINGTON—In a new step to further the Justice Department’s efforts towards enhancing reentry among formerly incarcerated individuals, Attorney General Eric Holder announced Monday that the Bureau of Prisons (BOP) will impose new requirements on federal halfway houses that help inmates transition back into society. Under the proposed new requirements, these halfway houses will have to provide a specialized form of treatment to prisoners, including those with mental health and substance abuse issues. For the first time, halfway houses will also have to provide greater assistance to inmates who are pursuing job opportunities, such as permitting cell phones to be used by inmates and providing funds for transportation. The new requirements also expand access to electronic monitoring equipment, such as GPS-equipped ankle bracelets, to allow more inmates to utilize home confinement as a reentry method. 
 
Holder announced the changes in a video message posted on the Department’s website.
 
The BOP’s new policies have the potential to be far-reaching. To ease their transition, those exiting prison typically spend the last few months of their sentence in either a federal halfway house—known as a residential reentry center (RRC)—or under home confinement, or a combination of the two.  These community-based programs provide much needed assistance to returning citizens in finding employment and housing, facilitating connections with service providers, reestablishing ties to family and friends, and more.
 
Last year alone, more than 30,000 federal inmates passed through a halfway house.
 
Among the most significant changes Holder announced is the requirement for standardized Cognitive Behavioral Programming (CBP) to be offered at all federal halfway houses. This treatment will address behavior that places formerly incarcerated individuals at higher risk of recidivism. As part of this treatment requirement, BOP is setting guidelines for instructor qualifications, class size and length, and training for all staff at the halfway houses.
 
Several other modifications are being made to the standard contracts that apply to federal halfway houses in order to provide greater support to returning citizens. Examples include requiring halfway houses to provide public transportation vouchers or transportation assistance to help residents secure employment, requiring all federal halfway houses to allow residents to have cell phones to facilitate communication with potential employers and family, and improving and expanding home confinement by increasing the use of GPS monitoring.
 
The proposed new requirements will be posted today on the Federal Business Opportunities website (www.fbo.gov).  Interested parties will have a 30-day period to comment on the proposal. The BOP anticipates implementing the new requirements beginning with contracts expiring in 2014. 

The complete text of the Attorney General’s video message is below:   “Today, America’s federal prison population is experiencing a period of significant negative growth, with nearly 4,000 fewer inmates behind bars than at the end of the last fiscal year.  This is the first major reduction in the federal prison population in three decades.

“Thanks to a variety of effective, evidence-based reentry programs and services, we’re doing more than ever to ensure that the tens of thousands of federal inmates who return to their communities each year have access to the substance abuse treatment, job training, affordable housing, parenting education, and other resources that so many need to break the cycle of poverty, criminality, and incarceration.

“Through innovative strategies like the Justice Department’s ‘Smart on Crime’ initiative, we’re working hard to tear down unnecessary barriers to opportunity and independence – while building up programs that enable former prisoners to reintegrate into their communities.  And nowhere is this work stronger than at the Federal Bureau of Prisons – where groundbreaking efforts are underway to make our criminal justice expenditures both smarter and more productive.

“Today, I’m pleased to announce that the Justice Department – through the Bureau of Prisons – is taking a critical step forward that will enable us to build on this important work – and improve the way reentry programming is implemented from coast to coast.

“For the first time, we will require all 200-plus halfway houses in the federal system to offer standardized treatment to prisoners with mental health and substance abuse issues. This treatment will be intensive, and must follow rigorous standards set forth by the Bureau of Prisons.  Once fully implemented, these services will be available to every single one of the approximately 30,000 inmates who are released through halfway houses each year.  This will ensure consistency and continuity of care between federal prisons and community-based facilities.  And it will enhance the programs that help prisoners overcome their past struggles, get on the right path, and stay out of our criminal justice system.

“These important changes and others are codified in BOP’s published requirements for halfway houses – which will be posted online this week.  Over the next 30 days, those who operate halfway houses will have the opportunity to provide feedback on these newly proposed requirements.  And I encourage members of the public to visit this site, learn about these tools, and make your voices heard as well – so we can all take an active part in constructing the more effective, more efficient, and more just system that everyone in this country deserves.”
 
The full video is available at http://www.justice.gov/agwa.php.

Okland Construction Co. Inc. has agreed to pay the government $928,000 to resolve allegations that it made false statements and submitted false claims under the Small Business Administration’s (SBA) Section 8(a) Program for Small and Disadvantaged Businesses, the Justice Department announced today.

“The purpose of the 8(a) Program is to assist small and disadvantaged businesses to compete in the American economy,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Justice Department is committed to making sure that those who participate in 8(a) contracts do so honestly and fairly.”

Okland Construction, a large construction company, entered into a mentor-protégé agreement with Saiz Construction Co., a participant in the 8(a) Program. The mentor-protégé program allows a large business mentor to form an SBA-approved joint venture with a small business protégé to jointly bid on and perform 8(a) contracts, which are contracts awarded by federal agencies that are set aside solely for small businesses. Without a qualifying joint venture, the mentor and protégé cannot jointly bid on 8(a) contracts, and the mentor cannot perform the primary functions of the contract.

The government alleged that Okland Construction did not form a qualifying joint venture with Saiz Construction and thus was not eligible to jointly bid on or perform the primary functions of eight 8(a) contracts with Saiz Construction. Nevertheless, Okland Construction allegedly prepared the bids for the 8(a) contracts and its employees served as project managers, submitted invoices and performed payroll and other accounting functions. Furthermore, Okland Construction allegedly concealed its extensive involvement in performing the 8(a) contracts by misrepresenting to the government that its employees were employees of Saiz Construction.

The government also alleged that Okland Construction’s relationship with Saiz Construction violated the terms of an SBA set-aside contract awarded to Saiz Construction that required Saiz Construction to perform at least 15 percent of the labor on the contract minus the cost of materials.

“Large businesses must not be allowed to fraudulently obtain access to contracts set aside for small businesses,” said SBA Inspector General Peggy E. Gustafson. “The SBA mentor-protégé program enhances the capability of 8(a) participants to compete more successfully for federal contracts through a relationship with another successful business; however, this program must not be used as a vehicle to improperly benefit large, non-disadvantaged companies.”

“SBA’s contracting programs, including the 8(a) Business Development Program, provide small businesses with the opportunity to grow and create jobs,” said SBA General Counsel Sara D. Lipscomb. “But SBA has no tolerance for waste, fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow to the intended recipients.”

The civil settlement resolves a lawsuit filed by Saiz Construction and its owner Abel Saiz under the whistleblower provision of the False Claims Act, which permits private parties, known as relators, to file suit on behalf of the government for false claims and to share in any recovery. The relators filed the lawsuit after Saiz Construction terminated its mentor-protégé agreement with Okland Construction. Saiz Construction and Saiz will receive a total of $148,480.

This settlement with Okland Construction was the result of a coordinated effort among the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of Utah, the SBA Office of Inspector General, the SBA Office of General Counsel, the Department of the Air Force and the Army Corps of Engineers.

The civil lawsuit was filed in the District of Utah and is captioned United States ex rel. Saiz Construction Co. Inc. and Abel Saiz v. Okland Construction Co. Inc., No. 2:11-cv-00362 (D. Utah). The claims resolved by this settlement are allegations only, and there has been no determination of liability.