District Not Recorded

Anthony Williams, of Baton Rouge, La., was sentenced to serve 24 months in prison followed by two years of supervised release, the Justice Department, the Internal Revenue Service (IRS) and the Treasury Inspector General for Tax Administration (TIGTA) announced today.  Williams previously pleaded guilty to threatening to retaliate against a witness by causing bodily injury.      

According to court documents, Williams is the son of Angela Myers, who was tried in federal court in Baton Rouge in March 2013 for filing fraudulent tax returns with stolen identities.  One of the witnesses at Myers’ trial was an individual who testified on March 6, 2013, and the next day Williams used Instagram, a popular social media platform, to make a threat against this witness.  Williams described the witness as a “rat” and threatened bodily injury against him in retaliation for his testimony.  As explained in court documents and court proceedings, federal law enforcement took steps to ensure the safety of the witness and to prevent the threat from being carried out.  On March 7, 2013, a jury found Myers guilty on 21 felony counts and she was later sentenced to serve 11 years in prison .  Williams was indicted in July 2013 and pleaded guilty to making the threat in October 2013. 

“Our legal system depends on witnesses testifying without the fear of retribution,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “This prosecution shows that the Justice Department will take action when someone threatens a witness.”

“Threatening or intimidating a witness in a federal criminal matter is a quick way to find yourself in federal prison,” said U.S. Attorney J. Walter Green for the Middle District of Louisiana.  “Our office will continue to have zero tolerance for such conduct and will continue to devote the necessary resources to aggressively pursue those who engage in such conduct.  No one should fear speaking the truth about possible federal criminal activity.”

“It is extremely important for witnesses who provide testimony in criminal matters to know that our justice system protects them from retaliation,” said Special Agent in Charge of IRS-Criminal Investigation Gabriel L. Grehan.  “It is also appropriate for Anthony Williams to suffer the consequences of his actions to threaten a witness in a criminal proceeding.  IRS-CI would like to thank the Department of Justice and our federal law enforcement partners for pursuing this case to its foreseeable end.”

Assistant Attorney General Keneally and U.S. Attorney Green commended the efforts of special agents of IRS - Criminal Investigation and TIGTA, who investigated the case, and of Tax Division Trial Attorney Jason Poole and Assistant U.S. Attorney Alan Stevens, who prosecuted the case.

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

Victor Lipukhin, formerly a resident of St. Charles, Ill., was indicted yesterday by a federal grand jury in Kansas City, Mo., for attempting to interfere with the administration of the internal revenue laws and filing false tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.  The charges relate to Lipukhin hiding millions of dollars in several Swiss bank accounts held at UBS AG.   

According to the indictment, Lipukhin formerly served as president of Severstal Inc. (USA), a subsidiary of AO Severstal, the largest steel producer in Russia.  He lived in St. Charles from at least 2001 through mid-2007.

Lipukhin, a Russian citizen and former lawful permanent U.S. resident, kept between approximately $4,000,000 and $7,500,000 in assets in two bank accounts with UBS in Switzerland from at least 2002 through 2007.  In 2002, he and another individual opened a UBS bank account in the name of Old Orchard, a sham Bahamian entity.  The account was initially funded with over $47,000,000 transferred into the account from a previously maintained UBS account in the Bahamas.  In 2003, the other individual left the account, leaving Lipukhin as the sole owner and signatory.  Lipukhin also maintained another account at UBS in Switzerland in the name of Lone Star, another sham Bahamian entity.  He directed virtually all transactions in the accounts, typically through a Bahamian national who served as the nominee director of the Old Orchard and Lone Star entities to help conceal Lipukhin’s ownership and control.  However, he failed to report his ownership of these accounts and failed to report any income earned in these accounts on his tax returns.

According to the indictment, in order to further conceal his ownership of the undisclosed UBS accounts, Lipukhin utilized fictitious mortgages through an entity called Dapaul Management, controlled by a Canadian attorney, to conceal his purchase of real estate in the United States with funds from the UBS accounts.  This includes his purchase of a historic building at 18 N. Fourth St, in St. Charles, Ill., for $900,000 in the name of Charlestal LLC, a domestic entity controlled by Lipukhin.  He also transferred funds from his UBS accounts to the Canadian attorney for ultimate transfer to a domestic Charlestal bank account in order to conceal the source of the funds, then used the funds in the Charlestal account to pay for various personal expenses and to withdraw cash for personal use.  Finally, Lipukhin impeded the administration of Internal Revenue laws by attempting to prevent an automobile dealer from filing a Form 8300 – which is required for certain cash transactions over $10,000 – with the IRS in order to report Lipukhin’s cash payment to purchase an automobile.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Lipukhin faces a potential maximum sentence of three years imprisonment on each count.  

U.S. citizens and permanent residents are required to report income from any source on their tax returns, regardless of whether the source of the income is inside or outside the United States.  Further, U.S. taxpayers who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are also required to disclose the existence of the account on Schedule B, Part III of an individual income tax return.  They must also disclose the existence of the account by filing a Report of Foreign Bank and Financial Accounts with the U.S. Treasury.

Assistant Attorney General Kathleen Keneally of the Tax Division commended the agents from IRS –Criminal Investigation who investigated the case and Trial Attorney Timothy J. Stockwell of the Tax Division, who is prosecuting the case.

A federal court in Fort Lauderdale, Fla., permanently barred Keisha Stewart, a tax preparer in Plantation, Fla., from preparing federal tax returns for others, the Justice Department announced today.  Stewart agreed to the civil injunction order, and a stipulated final judgment of permanent injunction was entered against her by the court on March 20, 2014.

The complaint alleged that Stewart prepared federal income tax returns for customers that inflated income or included fictitious income to qualify her customers to receive or to maximize the earned income tax credit; claimed false tax credits that are refundable or decrease the amount of tax on her customers' returns, including phony education credits (American Opportunity Credit) and residential energy credits; falsely claimed head of household status on behalf of customers who did not qualify in order to improperly decrease their reported tax liabilities; and claimed false dependents on behalf of customers and also claimed the child and additional child tax credits on their behalf.    

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. Keisha Stewart, et al.
Stipulated Final Judgment of Permanent Injunction
 

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Flint Hills Resources of Port Arthur has agreed to implement innovative technologies to control harmful air pollution from industrial flares and leaking equipment at the company’s chemical plant in Port Arthur, Texas. This settlement is part of EPA’s national effort to advance environmental justice by protecting communities such as Port Arthur that have been disproportionately impacted by pollution. The company is also required to pay a $350,000 penalty for Clean Air Act violations.

Once fully implemented, EPA estimates that the settlement will reduce emissions of volatile organic compounds (VOCs), including benzene and other hazardous air pollutants (HAPs), by an estimated 1,880 tons per year, and will reduce emissions of greenhouse gases by approximately 69,000 tons per year.

“This agreement reflects the Justice Department’s and the EPA’s commitment to alleviate the environmental and human health challenges faced by vulnerable communities,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division. “This settlement will mean cleaner, healthier air for residents of the Port Arthur area who continue to bear a disproportionate burden from the impacts of industrial pollution.”

“Communities like Port Arthur are a focus of our enforcement efforts as they have been hit hard by air pollution,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “ By working with EPA, Flint Hills has advanced new air pollution controls that will help EPA bring similar air quality improvements to other American communities. EPA will continue to focus on tough pollution controls and cutting edge technologies in order to reduce the burden of air pollution on Americans who need it most.”

The settlement requires Flint Hills to operate state‑of‑the‑art equipment to recover and recycle waste gases and to ensure that gases sent to flares are burned with 98 percent efficiency. The company has spent approximately $16 million to implement these required controls on industrial flares.

When the agreement is fully implemented, the company estimates it will spend $28 million to reduce “fugitive” pollutant emissions that may leak from valves, pumps, and other equipment. The company must monitor leaks more frequently, implement more aggressive repair practices, adopt innovative new practices designed to prevent leaks and replace valves with new “low emissions” valves or use packing material to reduce leaks.

To further mitigate pollution impacting the community, the company will spend $2 million on a diesel retrofit or replacement project that is estimated to reduce nitrogen oxides and particulate matter by a combined 85 tons, in addition to 39 tons of carbon monoxide, over the next 15 years. The company will also spend $350,000 to purchase and install technologies to reduce energy demand in low income homes.

For the past several years, Flint Hills has operated a system to monitor the ambient levels of the hazardous air pollutants benzene and 1,3-butadiene at the boundaries of the facility, also known as the “fence line.” The company has used the information collected to identify and reduce potential pollutant sources for communities living near the facility. In this settlement, Flint Hills has agreed to make its fence line monitoring data available online to the public.

The complaint, filed by DOJ on behalf of EPA at the same time as the settlement, alleges that the company improperly operated its steam-assisted flaring devices in a way that emitted excess amounts of VOCs, including benzene and other hazardous air pollutants.  It also alleges violations of EPA regulations designed to limit emissions from leaking equipment.

The measures required by the settlement will cut emissions of pollutants that can cause significant harm to public health. VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis. Chronic exposure to benzene, which EPA classifies as a carcinogen, can cause numerous health impacts, including leukemia and adverse reproductive effects in women.

Today’s settlement is part of EPA’s national effort to reduce emissions of toxic air pollutants, with a particular focus on industrial flares and leaks from equipment. Improper operation of an industrial flare can emit hundreds of tons of hazardous pollutants into the air. EPA encourages companies to flare less, and when they do flare, to fully burn the harmful chemicals found in the waste gas.

Flint Hills’ plant in Port Arthur manufactures chemicals that are used in a variety of products, including medical devices, automotive parts and appliance components. The Port Arthur facility has the capacity to produce nearly 1.4 billion pounds of ethylene and 700 million pounds of propylene annually.

The consent decree, lodged in U.S. District Court for the Eastern District of Texas, is subject to a 30-day public comment period and court approval. The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html .

More information about the settlement: www2.epa.gov/enforcement/flint-hills-resources-port-arthur-clean-air-act-settlement

For more on recent settlements related to flaring: http://www2.epa.gov/enforcement/national-enforcement-initiatives

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A Massapequa, N.Y., man pleaded guilty today in U.S. District Court in Allentown, Pa., to conspiracy to commit odometer tampering, the Department of Justice announced.  The defendant, Edward Capicchioni, 53, pleaded guilty to one count of conspiracy to tamper with odometers and make false odometer certifications.  Capicchioni rolled back odometers on used cars and trucks to make the vehicles appear more valuable.  Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.

“Tampering with a car’s odometer in order to trick a would-be buyer is not only pernicious, it is a federal crime,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “A car is an expensive purchase – indeed, for many of us, the most expensive purchase of our lives – and we have a right to know that the car we are buying is what it appears to be.  The Department of Justice will continue to take action against those who seek to defraud consumers.”

Capicchioni admitted to purchasing high-mileage cars, sport-utility vehicles and trucks from individual sellers in New York, Pennsylvania, Rhode Island and Maryland.  Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania.  Capicchioni also took steps to hide his odometer fraud scheme.  He checked the Carfax public database to see if it included a mileage entry that was higher than the false, lower mileage to which he reset the odometer.  When Carfax included a higher mileage, Capicchioni submitted to Carfax fraudulent documentation in the name of the vehicle’s prior owner, in order to have the higher mileage reading removed. 

After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the Office of Odometer Fraud Investigation at the National Highway Traffic Safety Administration (NHTSA).  NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities, and Carfax continued to provide information and assistance throughout NHTSA’s investigation.

This case is being prosecuted by Trial Attorney John W. Burke with the Consumer Protection Branch of the U.S. Department of Justice.

 
NHTSA has established a special hotline to handle odometer fraud complaints.   Individuals with information relating to odometer tampering should call (800) 424-9393 or

(202) 366-4761.  Tips on detecting and avoiding odometer fraud are available at   www.nhtsa.gov/staticfiles/nvs/pdf/811284.pdf . More information on odometer fraud is available at http://www.nhtsa.gov/Odometer-Fraud .

A federal jury convicted Jean Claude Roy, aka Dredd the Don and Dreddy, age 31, of Germantown, Md., late yesterday of conspiracy to commit sex trafficking by force, fraud or coercion, three counts of interstate transportation for prostitution and witness and evidence tampering.    

The verdict was announced by Acting Assistant Attorney General Jocelyn Samuels for the Department of Justice Civil Rights Division, U.S. Attorney Rod J. Rosenstein for the District of Maryland, Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Chief J. Thomas Manger of the Montgomery County Police Department.  

“This defendant preyed on vulnerable young women and exploited them for prostitution,” said Acting Assistant Attorney General Samuels.  “The Civil Rights Division is committed to seeking justice on behalf of victims of human trafficking.”  

“Protecting our communities from those who engage in human trafficking is a top priority for HSI,” said Special Agent in Charge Winter.  “As a member of the Maryland Human Trafficking Task Force, HSI is committed to working with our law enforcement partners to investigate human trafficking, as well as working with our local non-governmental, community-based and faith-based organizations to identify, rescue and assist victims of trafficking.”  

According to evidence presented during the two week trial, between August and September 2012, Roy transported a victim across state lines to engage in prostitution and forced the victim to engage in prostitution by taking the victim’s identity documents, keeping all of the victim’s money and bragging about beating murder charges.    

In November 2012, Roy recruited co-defendant Brittney Creason to engage in prostitution at his direction.  Thereafter, Creason helped Roy recruit and transport girls from Illinois and North Carolina to engage in prostitution.  He continued to force women to engage in prostitution by bragging about beating murder charges, taking their identity documents and taking their money.   

Trial evidence also showed that from Jan. 1 through Jan. 10, 2013, while Roy was in jail on related state charges, he called an individual several times and had that person access online accounts and storage services belonging to Roy and Creason in order to erase evidence related to these charges.  

Roy faces a statutory maximum sentenced of life in prison for conspiracy to commit sex trafficking by force, fraud or coercion; a statutory maximum of 10 years in prison for each of three counts of interstate transportation for prostitution; and a statutory maximum of 20 years in prison for witness and evidence tampering.  U.S. District Judge Paul W. Grimm scheduled sentencing for July 16, 2014.

The jury found Roy not guilty of sex trafficking and attempted sex trafficking by force, fraud and coercion; and possessing and brandishing a firearm during a crime of violence.  

Creason, aka Kitty Amor, age 19, of Decatur, Ill., previously pleaded guilty to using a facility in interstate commerce for an illegal activity and awaits sentencing.    

This case was investigated by the Maryland Human Trafficking Task Force, which was formed in 2007 to discover and rescue victims of human trafficking while identifying and prosecuting offenders.  Members include federal, state and local law enforcement, as well as victim service providers and local community members.  For more information about the Maryland Human Trafficking Task Force, please visit this website.   

Report suspected instances of human trafficking to HSI's tip line at 866-DHS-2ICE (1-866-347-2423) or by completing its online tip form.  Both are staffed around the clock by investigators.  

Acting Assistant Attorney General Samuels and U.S. Attorney Rosenstein commended HSI Baltimore and the Montgomery County Police Department for their work in the investigation.  They also thanked Assistant U.S. Attorney Kristi N. O’Malley and Trial Attorney William E. Nolan of the Civil Rights Division's Human Trafficking Prosecution Unit, who are prosecuting the case.

Angela Althea Peart was sentenced in connection with her role in a fraudulent international lottery scheme that targeted U.S. citizens, the Justice Department announced today.  Peart was sentenced by U.S. District Court Judge K. Michael Moore for the Southern District of Florida in Miami to serve 33 months in prison and 5 years supervised release.  A hearing on restitution has been scheduled for June 5, 2014. 

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

 
“International lottery fraud aimed at stealing from elderly victims cannot, and will not, be tolerated by the Department of Justice,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will seek to hold accountable those who participate in illegal lottery schemes, including those in the U.S. who facilitate schemes directed from abroad.”

 
“As international fraudsters focus their criminal schemes on Americans, we will do all we can to prosecute and deter such criminal activity,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer.  “N ow more than ever, the public needs to be mindful of these schemes to avoid falling prey to them.  So long as criminals continue to line their pockets with the money of our nation’s seniors, we will be there to prosecute them and bring them to justice.” 

 
A federal grand jury in Miami returned an indictment against Peart and co-conspirator Charmaine Anne King on Oct. 31, 2013.  Judge Moore adopted a report and recommendation accepting Peart’s guilty plea on Feb. 4, 2014.  Co-defendant King was convicted by a federal jury in Miami on Feb. 5, 2014, of one count of conspiracy, three counts of mail fraud and two counts of wire fraud.  King’s sentencing is scheduled for April 17, 2014.

 
As part of her guilty plea, Peart admitted that beginning in or around March 2012 and continuing through, in or around November 2013, she was a member of a conspiracy to fraudulently enrich herself by keeping victims’ money for her own benefit without paying any lottery winnings.  Peart acknowledged that a co-conspirator, believed to be located in Canada, mailed letters to elderly victims in the United States falsely informing the victims that they had won more than a million dollars in a lottery.  These letters purported to be from an actual sweepstakes company in the United States. 

 
Peart also admitted that as part of the conspiracy, victims were told that they must make a payment of several thousand dollars in order to collect their purported lottery winnings.  The victims were told to send their payments to Peart and others.  Peart acknowledged that she received victims’ funds, kept 10 percent of the money received from victims and then sent the rest to another member of the conspiracy.  Victims never received any lottery winnings.

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

Kristopher Michael Montemayor, a county commissioner for Precinct 1 of the Webb County Commissioners Court in Texas, was arrested today on charges of bribery, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

A federal grand jury in the Southern District of Texas returned an indictment on March 18, 2014, that charges Montemayor, 36, of Laredo, Texas, with two counts of federal programs bribery. The indictment was unsealed following today’s arrest.

According to allegations in the indictment, while serving as a county commissioner, Montemayor solicited and accepted bribes in exchange for promising to perform various official acts. Montemayor allegedly accepted the use of a 2012 Ford truck, which cost approximately $37,015, in exchange for promising to provide government jobs to both the vehicle’s owner and his spouse.

The indictment further alleges that Montemayor, while serving as a county commissioner, solicited and accepted approximately $11,000 in cash as well as electronics equipment worth approximately $2,700 from a businessman who, unbeknownst to Montemayor, was an undercover law enforcement agent. The indictment alleges that Montemayor promised to take official action to promote the business interests of the undercover agent in exchange for cash and electronics.

If convicted, Montemayor faces a maximum potential penalty of 10 years in prison for each bribery charge. Each charge also carries a maximum $250,000 fine.

The case is being investigated by the FBI’s Laredo Resident Agency. The case is being prosecuted by Trial Attorneys Emily Rae Woods and Mark Cipolletti of the Criminal Division’s Public Integrity Section.

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

Tonawanda Coke Corporation was sentenced in federal court in Buffalo, N.Y., Wednesday to pay a $12.5 million penalty and $12.2 million in community service payments for criminal violations of the Clean Air Act (CAA) and the Resource Conservation and Recovery Act (RCRA), the Justice Department and the U.S. Environmental Protection Agency announced. Tonawanda was convicted by a federal jury in March 2013 on 11 counts of violating the CAA and three counts of violating the RCRA.

The fine is one of the largest fines ever levied in an air pollution case involving a federal criminal trial. The community service payment will go to fund an epidemiological study and an air and soil study to help determine the extent of health and environmental impacts of the coke facility on the Tonawanda community.

In addition, Tonawanda Coke Environmental Control Manager, Mark L. Kamholz, 66, of West Seneca, N.Y., who was convicted of 11 counts of violating the CAA, one count of obstruction of justice and three counts of violating the RCRA, was sentenced to one year in prison, 100 hours of community service, and a $20,000 fine.

“This sentence holds Tonawanda Coke Corporation and its environmental manager accountable for attempting to deceive federal and state environmental regulators while exposing the local community to toxic emissions,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The environmental regulations designed to protect our citizens also place trust in industry not to choose pollution over profit. Tonawanda Coke Corporation betrayed that trust. We hope the federal and state investigation, prosecution and sentencing of Tonawanda begins to bring justice to a community that has born too high a burden for having simply been the neighbor of Tonawanda Coke. They deserved a better neighbor.”

“Today’s sentencing holds Tonawanda Coke and its Environmental Control Manager accountable for one of the most egregious environmental pollution crimes in this area’s history,” said William J. Hochul Jr., U.S. Attorney for the Western District of New York. “As found by the jury, these defendants released hundreds of tons of poisonous, benzene-laden gas containing into the atmosphere, while also dumping additional hazardous waste out in the open. Such conduct is the equivalent to releasing known killers into the community. As expressed in citizen letters, this criminal conduct at a minimum caused substantial emotional and psychological harm, to say nothing of possible physical harm. The fact that remedial measures would have cost a small fraction of the company's multimillion dollar profits only adds to the seriousness of these crimes.”

“Today’s sentence is some measure of justice for the communities of Tonawanda that for too long have been overburdened by toxic air pollution,” said Cynthia Giles, Assistant Administrator of U.S. EPA’s Office of Enforcement and Compliance Assurance. “Environmental crimes have real victims, as the residents of these communities know well. When local companies break the law, EPA and its partners will step in to reduce dangerous air toxics and fight for those vulnerable to pollution.”

“The NYS Department of Environmental Conservation (DEC) has worked closely with the Department of Justice and Environmental Protection Agency to address serious environmental violations at Tonawanda Coke,” said DEC Commissioner Joe Martens. “This sentencing is an important step in redressing the environmental insults borne by the Tonawanda community based on Tonawanda Coke Corporation's gross disregard for federal and state environmental laws. DEC will continue to work on the civil enforcement action with our federal partners to further protect public health and the environment.”

According to evidence presented at trial, Tonawanda Coke released coke oven gas containing benzene into the air through an unreported pressure relief valve. In addition, a coke-quenching tower was operated without baffles, a pollution control device required by TCC’s Title V Clean Air Act permit designed to reduce the particulate matter that is released into the air during coke quenches.

In addition, prior to an inspection conducted by the U.S. Environmental Protection Agency in April of 2009, defendant Kamholz told another TCC employee to conceal the fact that the unreported pressure relief valve, during normal operations, emitted coke oven gas directly into the air, in violation of the TCC’s operating permit.

The defendants also stored, treated and disposed of hazardous waste without a permit to do so, in violation of the Resource Conservation and Recovery Act. These offenses related to TCC’s practice of mixing its coal tar sludge, a listed hazardous waste that is toxic for benzene, on the ground in violation of hazardous waste regulations.

The sentences are the culmination of an investigation on the part of the U.S. Environmental Protection Agency, Criminal Investigation Division, under the direction of Director Doug Parker, and Assistant Special Agent-In-Charge, Vernesa Jones-Allen and investigators of the New York State Department of Environmental Conservation Police, Bureau of Environmental Crimes Investigation, under the direction of Captain Frank Lauricella.

Assistant U.S. Attorney Aaron J. Mango of the Western District of New York and Senior Trial Attorney Rocky Piaggione of the Environmental Crimes Section in the Justice Department’s Environment and Natural Resources Division handled the prosecution.  

LSB Industries Inc. (LSB), the largest merchant manufacturer of concentrated nitric acid in North America, and four of its subsidiaries have agreed to reduce harmful emissions of nitrogen oxides (NOx) by meeting emission limits that are among the lowest for the industry in the nation at plants in Alabama, Arkansas, Oklahoma and Texas, the U.S. Environmental Protection Agency (EPA) and Department of Justice announced today.

EPA estimates that the measures required by today’s settlement will reduce NOx emissions by more than 800 tons per year, directly benefitting surrounding communities, which include low-income and minority populations living near the Arkansas and Texas plants. The companies estimate that it will cost between $6.3 and $11.7 million to implement the measures required by the settlement.

“With today’s settlement, LSB and its subsidiaries are further improving the nitric acid manufacturing process and reducing harmful air pollution across four states,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “In response to the Clean Air Act and state law claims, the companies have taken a constructive and cooperative approach by agreeing to implement global operational changes and mitigate past emissions. These actions raise the bar for compliance in this industry sector.”

“This case is about cleaner air for people living in communities near manufacturing plants,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “LSB Industries has committed to dramatic cuts in air pollution and ensuring they are in compliance with the law. We expect others in the industry to recognize the imperative to adopt reforms and reduce pollution in communities where they operate.”

LSB and its four nitric acid producing subsidiaries will also pay a total penalty of $725,000 to resolve alleged violations of the Clean Air Act and applicable Oklahoma state law. In addition to paying the penalty, the companies must continuously monitor emissions and make any necessary operational improvements such as installing new pollution controls or upgrading current controls to meet the new NOx limits.

The settlement applies to the 10 nitric acid manufacturing plants owned or operated by the following Oklahoma City-based LSB subsidiaries: El Dorado Chemical Co., in El Dorado, Ark. (four plants); Cherokee Nitrogen Co. in Cherokee, Ala. (two plants); El Dorado Nitrogen Co. in Pryor, Okla. (three plants); and El Dorado Nitrogen Co. in Baytown, Texas (one plant).  The complaint, filed concurrently with the settlement, alleges that the Cherokee, El Dorado and Pryor subsidiaries constructed or made modifications to their plants that resulted in increased emissions of NOx without first obtaining pre-construction permits and installing pollution controls. The complaint does not allege any violations regarding the Texas facility.

Today’s action is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions, including acid manufacturing facilities. High concentrations of NOx in the air can irritate the lungs and lower resistance to respiratory infections such as influenza. Continued or frequent exposure may cause increased incidence of acute respiratory illness in children. Further, airborne NOx can significantly contribute to acid rain and lead to the formation of smog.

The companies have also agreed to spend $150,000 to remediate and reforest ten acres of land with acidified soils located near El Dorado, Ark. NOx emissions, such as those from nitric acid plants, can contribute to soil acidification. The project will help to minimize erosion, reduce stormwater runoff, improve habitat for wildlife and capture carbon dioxide, a greenhouse gas.

The states of Oklahoma and Alabama are co-plaintiffs in today’s settlement and will receive a portion of the total penalty as follows: $206,250 will be paid to the Oklahoma Department of Environmental Quality and $156,250 will be paid to the Alabama Department of Environmental Management.

LSB, headquartered in Oklahoma City, Okla., is a major producer of nitrogen-based fertilizers, including anhydrous ammonia, urea and ammonium nitrate. The company owns and operates the largest fleet of concentrated nitric acid rail cars in the United States. LSB and its subsidiaries produce nitric acid for use in products that include herbicides, metal treatment, explosives and pharmaceuticals.

The consent decree, lodged in U.D. District Court for the Western District of Oklahoma, is subject to a 30-day public comment period and court approval. The consent decree is available for viewing at www.justice.gov/enrd/Consent_Decrees.html .
 

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Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, entered a plea of guilty today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“Marubeni pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman.  “The company refused to play by the rules, then refused to cooperate with the government’s investigation.  Now Marubeni faces the consequences for its crooked business practices in Indonesia .”

“For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia,” said Acting U.S. Attorney Michael J. Gustafson.  “Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”

“Companies that wish to do business in the United States or with U.S. companies must adhere to U.S. law, and that means bribery is unacceptable,” said Assistant Director in Charge Parlave.  “The FBI continues to work with our international law enforcement partners as demonstrated in this case to ensure that companies are held accountable for their criminal conduct.  I want to thank the agents, analysts and prosecutors who brought this case to today’s conclusion.”

Marubeni entered a plea of guilty to an eight-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. Marubeni admitted its criminal conduct and has agreed to pay a criminal fine of $88 million, subject to the district court’s approval. Sentencing has been scheduled for May 15, 2014.

As part of the plea agreement, Marubeni has agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation. The plea agreement cites Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

Frederic Pierucci, who was the vice president of global boiler sales at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA. David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012, to one count of conspiracy to violate the FCPA. Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013. The charges against Hoskins and Pomponi are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

According to court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Marubeni and its consortium partner to provide power-related services for the citizens of Indonesia. To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

As admitted in court documents, Marubeni and its co-conspirators retained the first consultant in the fall of 2002. However, in the fall of 2003, before the Tarahan contract had been awarded, Marubeni and its co-conspirators determined that the first consultant was not bribing key officials at PLN effectively. One e-mail between employees of the power company’s subsidiary in Indonesia described a meeting between Marubeni employees, employees of its consortium partner, and PLN officials during which the PLN officials expressed “concern” that if Marubeni and its consortium partner win the project, whether the agent would give the officials “rewards” that they would consider “satisfactory,” or “only give them pocket money and disappear. Nothing has been shown by the agent that the agent is willing to spend money.” Shortly thereafter, a Marubeni employee sent an e-mail to other employees at Marubeni and its consortium partner stating that “unfortunately our agent almost did not execute his function at all, so far. In case we don’t take immediate action now now [sic], we don’t have any chance to get this project forever.”

As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN. In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the first consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.”

Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials. Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.

This case is being investigated by FBI agents from the Washington Field Office, with assistance from the Resident Agency of the FBI in Meriden, Conn. Significant assistance was provided by the Criminal Division’s Office of International Affairs. In addition, the department greatly appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.

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

U.S. Attorney General Eric Holder, U.S. Secretary of Transportation Anthony Foxx, U.S. Attorney for the Southern District of New York Preet Bharara, Inspector General of the U.S. Department of Transportation (DOT) Calvin L. Scovel III, National Highway Traffic Safety Administration (NHTSA) Acting Administrator David Friedman and Federal Bureau of Investigation (FBI) Deputy Assistant Director Joe Campbell announced a criminal wire fraud charge against Toyota Motor Corporation (“TOYOTA” or “the company”), an automotive company headquartered in Toyota City, Japan, that designs, manufactures, assembles, and sells Toyota and Lexus brand vehicles.  The charge is that TOYOTA defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.   

Also today, the Department of Justice announced a deferred prosecution agreement with TOYOTA (“the agreement”) under which the company admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration.  The admissions are contained in a detailed statement of facts attached to the agreement.  The agreement, which is subject to judicial review, requires TOYOTA to pay a $1.2 billion financial penalty – the largest penalty of its kind ever imposed on an automotive company, and imposes on TOYOTA an independent monitor to review and assess policies, practices and procedures relating to TOYOTA’s safety-related public statements and reporting obligations.  TOYOTA agrees to pay the penalty under a Final Order of Forfeiture in a parallel civil action also filed today in the Southern District of New York.             

The criminal charge is contained in an Information (“the information”) alleging one count of wire fraud.  If TOYOTA abides by all of the terms of the agreement, the Government will defer prosecution on the information for three years and then seek to dismiss the charge.

“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” said Attorney General Eric Holder.  “When car owners get behind the wheel, they have a right to expect that their vehicle is safe.  If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact.  Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

“Safety is our top priority,” said Transportation Secretary Anthony Foxx.  “Throughout this recall process, NHTSA investigators worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges.  Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million – together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences.”

“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” said U.S. Attorney Preet Bharara for the Southern District of New York.  “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress.  The tens of millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives.  Companies that make inherently dangerous products must be maximally transparent, not two-faced.  That is why we have undertaken this landmark enforcement action.  And the entire auto industry should take notice.”

“To the families and friends of those who died or were injured as a result of these incidents, I offer my deepest sympathies for your loss and my highest admiration for the strength you demonstrate every day,” said DOT Inspector General Calvin L. Scovel III.  “As is true for Secretary Foxx and DOT, safety is and will remain the highest priority of my office.  The OIG is committed to working with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of the Department of Transportation’s or related laws. The efforts of this dedicated multi-agency team and the agreement reached with Toyota must serve as a clarion call to all auto manufacturers of the need to always be as vigilant and forthcoming as possible to keep the public safe.” 

According to the allegations in the information, as well as other documents filed today in Manhattan federal court, including the Statement of Facts:

In the fall of 2009, TOYOTA deceived consumers and its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), by claiming that it had “addressed” the “root cause” of unintended acceleration in its vehicles through a limited safety recall of eight models for floor-mat entrapment, a dangerous condition in which an improperly secured or incompatible all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed.  Such public assurances deceived customers and NHTSA in two ways:  First, at the time the statements were made, TOYOTA knew that it had not recalled some cars with design features that made them just as susceptible to floor-mat entrapment as some of the recalled cars.  Second, only weeks before these statements were made, TOYOTA had taken steps to hide from NHTSA another type of unintended acceleration in its vehicles, separate and apart from floor-mat entrapment: a problem with accelerators getting stuck at partially depressed levels, known as “sticky pedal.” 

Floor-Mat Entrapment: A Fatal Problem

TOYOTA issued its misleading statements, and undertook its acts of concealment, against the backdrop of intense public concern and scrutiny over the safety of its vehicles following a widely publicized Aug. 28, 2009 accident in San Diego, Calif., that killed a family of four.  A Lexus dealer had improperly installed an incompatible all-weather floor mat into the Lexus ES350 in which the family was traveling, and that mat entrapped the accelerator at full throttle.  A 911 emergency call made from the out-of-control vehicle, which was speeding at over 100 miles per hour, reported, “We’re in a Lexus . . . and we’re going north on 125 and our accelerator is stuck . . . there’s no brakes . . . we’re approaching the intersection . . . Hold on . . . hold on and pray . . . pray.”  The call ended with the sound of the crash that killed everyone in the vehicle.

The San Diego accident was not the first time that TOYOTA had faced a problem with floor-mat entrapment.  In 2007, following a series of reports alleging unintended acceleration in Toyota and Lexus vehicles, NHTSA opened a defect investigation into the Lexus ES350 model (the vehicle involved in the 2009 San Diego accident), and identified several other Toyota and Lexus models it believed might likewise be defective.  TOYOTA, while denying to NHTSA the need to recall any of its vehicles, conducted an internal investigation in 2007 which revealed that certain Toyota and Lexus models, including most of the ones that NHTSA had identified as potentially problematic, had design features rendering entrapment of the gas pedal by an all-weather floor mat more likely.  TOYOTA did not share these results with NHTSA.  In the end, the Company negotiated a limited recall of 55,000 mats (no vehicles) – a result that TOYOTA employees touted internally as a major victory:  “had the agency . . . pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”

Shortly after TOYOTA announced its 2007 mat recall, company engineers revised internal design guidelines to provide for, among other things, a minimum clearance of 10 millimeters between a fully depressed gas pedal and the floor.  But TOYOTA decided those revised guidelines would only apply where a model was receiving a “full model redesign” –  something each Toyota and Lexus model underwent only about once every three to five years.  As a result, even after the revised guidelines had been adopted internally, many new vehicles produced and sold by TOYOTA – including the Lexus ES350 involved in the 2009 San Diego accident – did not comply with TOYOTA’s 2007 guidelines.

After the fatal and highly publicized San Diego accident, TOYOTA agreed to recall eight of its models, including the ES350, for floor-mat entrapment susceptibility.  Thereafter, as part of an effort to defend its brand image, TOYOTA began issuing public statements assuring customers that this limited recall had “addressed the root cause of unintended acceleration” in its U.S.-sold vehicles. 

As TOYOTA knew from internal testing it had completed by the time these statements were made, the eight-model recall had not in fact “addressed the root cause” of even the floor-mat entrapment problem.  Models not recalled – and therefore still on the road – bore design features rendering them just as susceptible to floor-mat entrapment as those within the recall population.  One engineer working at a TOYOTA facility in California had concluded that the Corolla, a top-selling car that had not been recalled, was among the three “worse” vehicles for floor-mat entrapment.  In October 2009, TOYOTA engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis.  None of these findings or this data were shared with NHTSA at the time.

The Sticky Pedal Problem

What is more misleading, at the same time it was assuring the public that the “root cause” of unintended acceleration had been “addressed” by the 2009 eight-model floor-mat entrapment recall, TOYOTA was hiding from NHTSA a second cause of unintended acceleration in its vehicles: the sticky pedal.  Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A-Pedal Company”) and installed in many Toyota brand vehicles in North America as well as Europe, resulted from the use of a plastic material inside the pedals that could cause the accelerator pedal to become mechanically stuck in a partially depressed position.  The pedals incorporating this plastic were installed in, among other models, the Camry, the Matrix, the Corolla, and the Avalon sold in the United States. 

The sticky pedal problem surfaced in Europe in 2008.  There, reports reflected instances of “uncontrolled acceleration” and unintended acceleration to “maximum RPM,” and customer concern that the condition was “extremely dangerous.” 

In early 2009, TOYOTA circulated to European Toyota distributors information about the sticky pedal problem and instructions for addressing the problem if it presented itself in a customer’s vehicle.  These instructions identified the issue as “Sudden RPM increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer complain of pedal sticking, the pedal should be replaced with pedals manufactured by a company other than A-Pedal Company.  Contemporaneous internal TOYOTA documents described the sticky pedal problem as a “defect” that was “[i]mportant in terms of safety because of the possibility of accidents.” 

TOYOTA did not then inform its U.S. regulators of the sticky pedal problem or conduct a recall.  Instead, beginning in the spring of 2009, TOYOTA quietly directed A-Pedal Company to change the pedals in new productions of affected models in Europe, and to plan for the same design changes to be rolled out in the United States (where the same problematic pedals were being used) beginning in the fall of 2009.  The design change was to substitute the plastic used in the affected pedal models with another material and to change the length of the friction lever in the pedal.

Meanwhile, the sticky pedal problem was manifesting itself in U.S. vehicles.  On or about the same day the San Diego floor-mat entrapment accident occurred, staff at a U.S. TOYOTA subsidiary in California sent a memorandum to staff at TOYOTA in Japan identifying as “critical” an “unintended acceleration” issue separate and apart from floor-mat entrapment that had been identified in an accelerator pedal of a Toyota Matrix vehicle in Arizona.  The problem identified, and then reproduced during testing of the pedal on Sept. 17, 2009, was the sticky pedal problem.  Also in August, the sticky pedal problem cropped up in a U.S. Camry.

On Sept. 9, 2009, an employee of a U.S. TOYOTA subsidiary who was concerned about the sticky pedal problem in the United States and believed that TOYOTA should address the problem prepared a “Market Impact Summary” listing (in addition to the August 2009 Matrix and Camry) 39 warranty cases that he believed involved potential manifestations of the sticky pedal problem.  This document, which was circulated to TOYOTA engineers and, later, to staff in charge of recall decisions in Japan, designated the sticky pedal problem as priority level “A,” the highest level. 

By no later than September 2009, TOYOTA recognized internally that the sticky pedal problem posed a risk of a type of unintended acceleration – or “overrun,” as Toyota sometimes called it – in many of its U.S. vehicles.  A September 2009 presentation made by a manager at a U.S. TOYOTA subsidiary to TOYOTA executives gave a “current summary of O/R [overrun] types in NA [North American] market” that listed the three confirmed types as: “mat interference” (i.e., floor-mat entrapment), “material issue” (described as “pedal stuck and . . . pedal slow return/deformed”) and “simultaneous pedal press” by the consumer.  The presentation further listed the models affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”

Hiding Sticky Pedal from NHTSA and the Public

 As noted, TOYOTA had by this time developed internal plans to implement design changes for all A-Pedal-Company-manufactured pedals in U.S. Toyota models to address, on a going-forward basis, the still-undisclosed sticky pedal problem that had already been resolved for new vehicles in Europe.  On Oct. 5, 2009, TOYOTA engineers issued to A-Pedal Company the first of the design change instructions intended to prevent sticky pedal in the U.S. market.  This was described internally as an “urgent” measure to be implemented on an “express” basis, as a “major” change – meaning that the part number of the subject pedal was to change, and that all inventory units with the old pedal number should be scrapped.

On Oct. 21, 2009, however, in the wake of the San Diego floor-mat entrapment accident, and in the midst of TOYOTA’s discussions with NHTSA about its eight-model entrapment recall, engineers at TOYOTA and the leadership of TOYOTA’s recall decision group decided to cancel the design change instruction that had already been issued and to suspend all remaining design changes planned for A-Pedal Company pedals in U.S. models.  U.S. TOYOTA subsidiary employees who had been preparing for implementation of the changes were instructed, orally, to alert the manufacturing plants of the cancellation.  They were also instructed not to put anything about the cancellation in writing.  A-Pedal Company itself would receive no written cancellation at this time; instead, contrary to TOYOTA’s own standard procedures, the cancellation was to be effected without a paper trail.

TOYOTA decided to suspend the pedal design changes in the United States, and to avoid memorializing that suspension, in order to prevent NHTSA from learning about the sticky pedal problem.

In early November 2009, TOYOTA and the leadership of a U.S. TOYOTA subsidiary became aware of three instances of sticky pedal in U.S. Corollas.  Shortly thereafter, the leadership of the recall decision group within TOYOTA discussed a plan to finally disclose the sticky pedal problem to NHTSA.  The recall decision group was aware at this time not only of the problems in the three Corollas in the United States but also of the problems that had surfaced in a Matrix and a Camry in August 2009 and been reproduced through testing in September 2009.  The group was also familiar with the sticky pedal problem in Europe, the design changes that had been implemented there, and the cancellation and suspension of similar planned design changes in the United States.  Knowing all of this, the group’s leadership decided that (a) it would not disclose the September 2009 Market Impact Summary to NHTSA; (b) if any disclosure were to be made to NHTSA, it would be limited to a disclosure that there were some reports of unintended acceleration apparently unrelated to floor-mat entrapment; and (c) NHTSA should be told that TOYOTA had made no findings with respect to the sticky pedal problem reflected in the reports concerning the three U.S. Corollas, and that the investigation of the problem had just begun.

On Nov. 17, 2009, before TOYOTA had negotiated with NHTSA a final set of remedies for the eight models encompassed by the floor-mat entrapment recall, TOYOTA informed NHTSA of the three Corolla reports and several other reports of unintended acceleration in Toyota model vehicles equipped with pedals manufactured by A‑Pedal Company.  In TOYOTA’s disclosure to NHTSA, TOYOTA did not reveal its understanding of the sticky pedal problem as a type of unintended acceleration, nor did it reveal the problem’s manifestation and the subsequent design changes in Europe, the planned, cancelled, and suspended design changes in the United States, the August 2009 Camry and Matrix vehicles that had suffered sticky pedal, or the September 2009 Market Impact Summary. 

TOYOTA’s Misleading Statements

After the August 2009 fatal floor-mat entrapment accident in San Diego, several articles critical of TOYOTA appeared in U.S. newspapers.  The articles reported instances of TOYOTA customers allegedly experiencing unintended acceleration and the authors accused TOYOTA of, among other things, hiding defects related to unintended acceleration.

On Nov. 25, 2009, TOYOTA, through a U.S. subsidiary, announced its floor- mat entrapment resolution with NHTSA.  In a press release that had been approved by TOYOTA, the U.S. subsidiary assured customers: “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.”  A spokesperson for the subsidiary stated during a press conference the same day, “We’re very, very confident that we have addressed this issue.” 

In truth, the issue of unintended acceleration had not been “addressed” by the remedies announced.  A-Pedal Company pedals which could experience stickiness were still on the road and still, in fact, being installed in newly-produced vehicles.  And the best-selling Corolla, the Highlander, and the Venza – which had design features similar to models that had been included in the earlier floor-mat entrapment recall – were not being “addressed” at all.

Again, on Dec. 23, 2009, TOYOTA responded to media accusations that it was continuing to hide defects in its vehicles by authorizing a U.S. TOYOTA subsidiary to publish the following misleading statements on the subsidiary’s website: “Toyota has absolutely not minimized public awareness of any defect or issue with respect to its vehicles.  Any suggestion to the contrary is wrong and borders on irresponsibility.  We are confident that the measures we are taking address the root cause and will reduce the risk of pedal entrapment.”   In fact, TOYOTA had “minimized public awareness of” both sticky pedal and floor-mat entrapment.  Further, the measures TOYOTA had taken did not “address the root cause” of unintended acceleration, because TOYOTA had not yet issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for floor-mat entrapment.

TOYOTA’s False Timeline

When, in early 2010, TOYOTA finally conducted safety recalls to address the unintended acceleration issues it had concealed throughout the fall of 2009, TOYOTA provided to the American public, NHTSA and the United States Congress an inaccurate timeline of events that made it appear as if TOYOTA had learned of the sticky pedal in the United States in “October 2009,” and then acted promptly to remedy the problem within 90 days of discovering it.  In fact, TOYOTA had begun its investigation of sticky pedal in the United States no later than August 2009, had already reproduced the problem in a U.S. pedal by no later than September 2009, and had taken active steps in the months following that testing to hide the problem from NHTSA and the public.

*                *                *

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Bonnie Jonas, Deputy Chief of the Criminal Division and Assistant U.S. Attorney Sarah E. McCallum are in charge of the prosecution, and Assistant U.S. Attorney Sharon Cohen Levin, Chief of the Money Laundering and Asset Forfeiture Unit is responsible for the forfeiture aspects of the case. 

Related Materials:

Deferred Prosecution Agreement
Toyota Information
Toyota Statement of Facts

USDOJ: INTERPOL Washington: Updates

Department of Justice

Joint Law Enforcement Operation Leads to Return of Accused Argentine War Criminal Hiding in United States

WASHINGTON - An exhaustive investigation spearheaded by INTERPOL Washington and the U.S. Marshals Service International Investigations Branch ended with one of Argentina's most sought-after war criminals being located in Miami.

In December 2013, INTERPOL Buenos Aires requested assistance from U.S. law enforcement officials in establishing the whereabouts of Rodolfo Adolfo Gimenez. A former Argentine military officer, Gimenez, is accused of committing atrocities against civilians during Argentina's “dirty war” in the 1970s.

Knowing that an international arrest warrant would be forthcoming, Gimenez fled Argentina in October 2013, traveling through Chile and ultimately seeking safe haven in Florida. INTERPOL Washington and investigators from the U.S. Marshals Service subsequently determined Gimenez had taken refuge in a safe house situated well within the Spanish speaking community in Miami, where he believed that he could easily acclimatize and blend in.

On Friday, at the request of INTERPOL Washington, U.S. Marshals Service personnel from the Southern District of Florida and agents from the Miami office of U.S. Immigration and Customs Enforcement - Homeland Security Investigations positively located and identified Gimenez and facilitated his removal from the United States back to Argentina. There, he was taken into custody by Argentine National Police representatives from INTERPOL Buenos Aires.

“This is an excellent example of U.S. law enforcement and the Argentina government working together to apprehend a wanted fugitive,” said Amos Rojas, U.S. Marshal for the Southern District of Florida. “The Marshals Service is dedicated to pursuing all those who choose to flee rather than face justice.”

According to the INTERPOL Red Notice and warrants of arrest issued by Federal Courts in Argentina, Gimenez is specifically implicated “in the unlawful imprisonment of 22 year old Juan Marcos Herman, a political activist in student circles and a member of the anti-military Peronist Youth Movement. In July 1977, Herman was kidnapped at gunpoint by a group of military personnel.” He was subsequently taken to a clandestine detention center in Buenos Aires where he was “subjected to repeated mental and physical torture, and relentless interrogation.” Herman was never again seen alive, and his remains have never been recovered. If convicted as charged, Gimenez faces life in prison.

“I commend the work of all the law enforcement authorities involved in this investigation,” said INTERPOL Washington Director Shawn Bray. “This is a great example of U.S. law enforcement agencies and their international partners sharing information to locate and bring criminals to justice. No matter how far and hard this fugitive ran he could not escape the coordinated international effort to locate him.”

INTERPOL Washington credits the combined efforts of INTERPOL, INTERPOL Buenos Aires, the U.S. Marshals Service, U.S. Immigration and Customs Enforcement – Homeland Security Investigations and Enforcement Removal Operations, U.S. Customs and Border Protection, U.S. Citizenship and Immigration Services, the Transportations Security Administration, the U.S. Department of State Bureau of Diplomatic Security, and the U.S. Department of Justice Office of International Affairs.

A Florida man who had been the straw owner of a physical therapy rehabilitation facility has been sentenced to serve 30 months in prison for his role in a $28.3 million Medicare fraud scheme.

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

Roberto Fernandez Gonzalez, 63, formerly of southwest Florida, was sentenced by U.S. District Judge Susan C. Bucklew in the Middle District of Florida and was ordered to forfeit $446,738 and pay the same amount in restitution. Fernandez pleaded guilty on June 24, 2013, to conspiracy to commit health care fraud.

According to court documents, Fernandez and his co-conspirators used various physical therapy clinics and other business entities throughout Florida – including Rehab Dynamics Inc. in Venice, Fla. – to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14.4 million on those claims.

Fernandez’s co-conspirators obtained and controlled Rehab Dynamics. They engaged in a sham sale of Rehab Dynamics to Fernandez, a Cuban immigrant with no background in the health care industry. Fernandez did not have the money to buy Rehab Dynamics. Instead, the co-conspirators paid Fernandez approximately $20,000 to serve as the straw owner of Rehab Dynamics from January 2008 through March 2008. During that time, Rehab Dynamics submitted approximately $1.6 million in fraudulent claims to Medicare seeking reimbursement for rehabilitation therapy services that were not provided. Medicare paid approximately $446,738 on those false claims.

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 Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.

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

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

Alexander Beltran Herrera, 37, a commander of the FARC terrorist organization, pleaded guilty today in the U.S. District Court for the District of Columbia to hostage-taking charges stemming from the 2003 kidnappings of three U.S. citizens in Colombia.

The guilty plea was announced by John P. Carlin, Acting Assistant Attorney General for the Justice Department’s National Security Division; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and George L. Piro, Special Agent in Charge of the FBI’s Miami Division.

Beltran Herrera pleaded guilty to three counts of hostage-taking. He is to be sentenced July 25, 2014, by the Honorable Royce C. Lamberth. The offense of hostage taking carries a maximum sentence of life in prison, although as part of the extradition process from Colombia, the United States agreed not to seek a sentence exceeding 60 years.

According to a statement of facts submitted as part of the plea hearing, t he FARC is an armed, violent organization in Colombia, which since its inception in 1964, has engaged in an armed conflict to overthrow the Republic of Colombia, South America’s longest-standing democracy. The FARC has consistently used hostage taking as a primary technique in extorting demands from the Republic of Colombia, and hostage taking has been endorsed and commanded by FARC senior leadership. The FARC has characterized American citizens as “military targets” and has engaged in violent acts against Americans in Colombia, including murders and hostage taking. The FARC was designated as a foreign terrorist organization by the U.S. Secretary of State in 1997 and remains so designated.

Beltran Herrera, a commander in the FARC, was involved in the hostage taking of three United States citizens: Marc D. Gonsalves, Thomas R. Howes, and Keith Stansell.  These three, along with Thomas Janis, a United States citizen, and Sergeant Luis Alcides Cruz, a Colombian citizen, were seized on Feb. 13, 2003, by the FARC, after their single-engine aircraft made a crash landing in the Colombian jungle.

Members of the FARC murdered Mr. Janis and Sgt. Cruz at the crash site.  Mr. Gonsalves, Mr. Howes, and Mr. Stansell were held by the FARC at gunpoint and were advised by FARC leadership that they would be used as hostages to increase pressure on the government of Colombia to agree to the FARC’s demands.  At various times, the FARC marched the hostages from one site to another, placing them in the actual custody of various FARC fronts.

At the conclusion of one 40-day long march, in or about November 2004, the hostages were delivered to members of the FARC’s 27th Front, who imprisoned the hostages for nearly two years.  During part of this period, Beltran Herrera was responsible for moving the hostages and keeping them imprisoned.  Throughout the captivity of these three hostages, FARC jailors and guards used choke harnesses, chains, padlocks and wires to restrain the hostages, and used force and threats to continue their detention and prevent their escape. In July 2008, the Colombian military conducted a daring operation which resulted in the rescue of the hostages.

All told, members of the FARC held the Americans hostage for 1,967 days.

“This case underscores our resolve to hold accountable those who target our citizens with violence anywhere in the world,” said Acting Assistant Attorney General Carlin. “With this guilty plea, Alexander Beltran Herrera has admitted his participation in the hostage taking and captivity of three Americans by the FARC, a Colombian terrorist organization.  I want to thank all of the prosecutors, agents, and analysts who made this result possible.”

“Alexander Beltran Herrera was a terrorist and commander in the FARC organization who held three Americans hostage in the Colombian jungle,” said U.S. Attorney Machen. “With today's guilty plea, he admitted to his role in terrorizing these Americans, who were held in captivity for more than five years. His extradition and prosecution reflect our determination to bring to justice anyone who sets out to harm our fellow citizens overseas.”

“Alexander Beltran Herrera was a commander within FARC, a foreign terrorist organization based in Colombia that considered U.S. citizens to be targets for murder and hostage taking,” said Special Agent in Charge Piro. “First captured, then extradited to the United States, Herrera has now admitted to his role in moving and keeping hostage three American citizens, Marc D. Gonsalves, Thomas R. Howes and Keith Stansell.  Once again, the excellent, longstanding cooperation between the Colombian National Police and U.S. law enforcement has ended another terrorist’s career of violence and thuggery.”

This case was investigated by the FBI’s Miami Division. The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and Fernando Campoamor-Sanchez from the National Security Section of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Cora, from the Counterterrorism Section of the Justice Department’s National Security Division. The case was indicted by Assistant U.S. Attorney Kenneth Kohl, of the National Security Section of the U.S. Attorney’s Office.

The FBI’s Miami Division partnered in the investigation with the Justice Department’s Office of International Affairs, the Department’s Judicial Attachés in Colombia, and the FBI’s Office of the Legal Attaché in Bogota, Colombia. The Directorate of Intelligence (DIPOL) and the Anti-Kidnapping Unit (GAULA) of the Colombian National Police also provided valuable support during the investigation.

The Justice Department announced today that it has reached an agreement in principle with the city of New York and intervening plaintiffs to settle an employment discrimination lawsuit involving the New York City Fire Department (FDNY).  Under the agreement in principle, the city of New York will pay a total of approximately $98 million to resolve allegations that the FDNY engaged in a pattern or practice of employment discrimination against African-American and Hispanic applicants for the entry-level firefighter position by using two discriminatory written tests in 1999 and 2002.  The parties’ agreement in principle will be incorporated into a consent decree that is subject to a fairness hearing and must be approved by the district court. 

“This resolution will help ensure that those who seek to serve as firefighters in New York City have an equal opportunity to do so, regardless of their race,” said Associate Attorney General Tony West.  “The agreement we are announcing today – which is the result of the collective efforts of the Justice Department, the private plaintiffs, and the city of New York – not only will compensate victims of discriminatory hiring practices, it will also put in place an entry-level hiring process that should more accurately identify firefighter candidates who are best qualified to do the job.”

“This agreement in principle to settle will provide significant and long-awaited relief to African-American and Hispanic applicants for employment with the FDNY who were harmed by the FDNY’s discriminatory hiring practices,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “We applaud the city of New York and Mayor de Blasio for their efforts to bring this important matter to a resolution.  The Department of Justice stands committed to ensuring justice and compensation to those who are victims of unfair employment practices.”

The lawsuit originated in 2007 when the department filed its complaint alleging that the FDNY’s use of two written tests violated Title VII of the Civil Rights Act of 1964 by disproportionately screening out African-American and Hispanic applicants for the entry-level firefighter position.  The FDNY was unable to show that these screening devices identified the candidates who were best qualified to perform the job of firefighter, as required in order to keep the tests in place.

“We commend the city for its commitment to rectifying past discrimination against qualified African-American and Hispanic firefighter applicants,” stated U.S. Attorney Loretta Lynch for the Eastern District of New York.  “We look forward to a new era in which African-American and Hispanic firefighters are full and equal participants in the FDNY’s proud tradition of protecting and serving the people of the city of New York.”

Under the terms of the agreement in principle, the FDNY will pay $98 million to those African-American and Hispanic victims of discrimination who filed claim forms and who have already been found eligible for relief by the court.  The method of distribution has not yet been determined and must be approved by the court before any money is distributed.  With today’s agreement in principle, the parties have committed to streamline the claims process and to expedite the distribution of monetary relief to eligible claimants. 

In addition to today’s agreement in principle, the court has already ordered several changes to take place within the FDNY to remedy the city’s discriminatory hiring practices.  In September 2012, the court approved the use of an entry-level firefighter exam which was jointly developed by the United States, the intervening plaintiffs and the city.  As a result, for the first time in at least 15 years, the FDNY is using an entry-level firefighter exam that accurately predicts which candidates will perform better on the job and complies with Title VII.  In May 2013, the Second Circuit Court of Appeals upheld on appeal most of an order outlining changes that must be made to the FDNY’s recruiting, post-examination hiring and Equal Employment Opportunities Office processes, and appointing a court monitor to oversee this reform.  In addition, the court has ordered the city to appoint up to 293 eligible claimants as priority hires to the FDNY, provided that they take and pass all of the same tests and other steps in the hiring process as the other candidates for appointment with the FDNY.  The first groups of priority hires joined the FDNY in July 2013 and January 2014, and additional priority hires are expected to join in July 2014.

The parties expect to release further details about the terms of the proposed settlement agreement in the next few weeks.  For more information about this litigation, please see the Department of Justice website.  Eligible claimants in this lawsuit may obtain more information about how the settlement affects their claims for relief at this page, which will have updated information about the settlement in the coming days and weeks.

Alex Wisidagama, a citizen of Singapore formerly employed by Glenn Defense Marine Asia (GDMA), pleaded guilty today to one count of conspiracy to defraud the United States for his role in a scheme to overbill the U.S. Navy for ship husbanding services. Wisidagama’s plea is the second in an expanding investigation into acts of alleged fraud and bribery committed by GDMA and several United States Navy officers and personnel.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement after the plea was accepted by U.S. Magistrate Judge Jan M. Adler of the Southern District of California. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing is set for June 13, 2014, before Judge Sammartino.

Wisidagama, who was arrested in San Diego, Calif., on Sept. 16, 2013, served as the general manager of global government contracts for GDMA, which was owned and operated by his cousin, Leonard Glenn Francis . GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided the U.S. Navy with hundreds of millions of dollars in husbanding services, which involve the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.

In his plea agreement, Wisidagama admitted to conspiring to defraud the U.S. Navy in different ways. Wisidagama and other GDMA employees generated bills charging the U.S. Navy for port tariffs that were far greater than the tariffs that GDMA actually paid. In some cases, Wisidagama and others created fictitious port authorities for ports visited by U.S. Navy ships, and in other cases, Wisidagama and GDMA created fake invoices from legitimate port authorities purporting to bill the U.S. Navy at inflated tariff rates. Wisidagama and GDMA also overbilled the U.S. Navy for fuel by creating fraudulent invoices which represented that GDMA acquired fuel at the same cost that it charged the U.S. Navy when in fact GDMA sold the fuel to the U.S. Navy for far more than it actually paid. Wisidagama and GDMA also defrauded the U.S. Navy on the provision of incidental items by creating fake price quotes purportedly from other vendors to make it appear that the other vendors’ offering prices were greater than GDMA’s prices.

Wisidagama is the second defendant to plead guilty as part of this investigation. On Dec. 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, travel accommodations, lavish dinners, and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of a bribery and fraud scheme designed to defraud the U.S. Navy. The charges against Misiewicz, Sanchez and Francis are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. Significant assistance was provided by the Criminal Division’s Office of International Affairs, as well as the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Royal Thai Police and the Corrupt Practices Investigation Bureau in Singapore.

The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline , or call (800) 424-9098.

The Justice Department, the Internal Revenue Service (IRS) and the Treasury Inspector General for Tax Administration (TIGTA) announced that Matthew Bender, of Detroit, was convicted today of obstructing the IRS and nine counts of aiding and assisting in the preparation of false federal income tax returns following a jury trial in the U.S. District Court for the Eastern District of Michigan.

According to court documents and evidence produced at trial, Bender prepared over 3,000 tax returns between 2006 and 2011 and earned over $500,000 in tax preparation fees.  However, Bender failed to report his own income to the IRS, either by filing false tax returns for himself or by failing to file his own tax returns at all.  The evidence showed that Bender caused his customer’s tax refunds to be inflated by placing false deductions on their returns. 

Following the conviction, Bender remains detained pending sentencing.  For each of the 10 counts of conviction, Bender faces a statutory maximum sentence of three years in prison and a maximum fine of $250,000.

The case was investigated by special agents of IRS – Criminal Investigation and TIGTA.  Trial Attorneys Kenneth Vert and Jeffrey McLellan of the Tax Division prosecuted the case.

California attorney Christopher M. Rusch was sentenced to serve 10 months in prison for helping his clients Stephen M. Kerr and Michael Quiel, both businessmen from Phoenix, hide millions of dollars in secret offshore bank accounts at UBS AG and Pictet & Cie in Switzerland, the Justice Department and the Internal Revenue Service (IRS) announced today. U.S. District Judge James A. Teilborg also ordered Rusch to serve three years of supervised release following his prison sentence. On Feb. 6, 2013, Rusch pleaded guilty to conspiracy to defraud the government and failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Kerr and Quiel were sentenced in September 2013 to each serve 10 months in prison after both were tried and convicted of filing false income tax returns for 2007 and 2008. The jury also convicted Kerr of failing to file FBARs for 2007 and 2008.

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts in Switzerland to conceal Kerr and Quiel’s ownership and control of stock and income they deposited in these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts. Rusch further testified that, at Kerr and Quiel’s direction, he transferred some of the money in the secret accounts back to the United States through Rusch’s Interest on Lawyer’s Trust Account before dispersing the money for Kerr and Quiel’s benefit, including the purchase of a multi-million dollar golf course in Erie, Colo. According to court documents and evidence presented at trial, with Rusch’s assistance, Kerr and Quiel each failed to report more than $ 4,600,000 and $2,000,000 of income, respectively, during 2007 and 2008 which they hid in the undeclared accounts with Rusch’s assistance.

“We are getting more and more information all the time about offshore banking activities,” said Assistant Attorney General Kathryn Keneally for the Tax Division. “We are committed to investigating and prosecuting those who continue to evade taxes and reporting requirements. As these sentences show, those who fail to come into compliance risk high penalties and jail.”

“This prosecution serves notice that the Department of Justice will not tolerate fraudulent activity designed to undermine the integrity of our income tax system,” said U.S. Attorney John S. Leonardo for the District of Arizona.

“Today, Mr. Rusch has been held accountable for his actions in assisting wealthy individuals hide millions of dollars in secret offshore bank accounts and dodge the tax system,” said Chief of IRS-Criminal Investigation Richard Weber. "In addition, Mr. Rusch used his attorney trust account to funnel money from the secret offshore accounts back to Mr. Kerr and Mr. Quiel for their personal benefit, including the purchase of a multi-million dollar golf course. As the investigation into offshore tax evasion continues, Criminal Investigation will leave no financial stone unturned as we continue to vigorously pursue new leads."

The case was investigated by special agents of IRS-Criminal Investigation, and was prosecuted by Trial Attorney Timothy J. Stockwell for the Tax Division and Assistant U.S. Attorney Monica Edelstein for the District of Arizona.

Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at the website.

American Family Care Inc. has agreed to pay the government $1.2 million to resolve allegations under the False Claims Act that it knowingly submitted claims to Medicare for outpatient office visits that were billed at a higher rate than was appropriate, the Justice Department announced today.  American Family Care is a network of walk-in medical clinics headquartered in Birmingham, Ala., with offices in Alabama, Tennessee and Georgia.

“Mischarging the government for office visits wastes valuable government resources that could be used to care for other patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “At a time of increasing concern about the cost of medical care, it is especially important to ensure that health care providers are not overbilling the government by improperly inflating their claims.”

Following guidance adopted by the Centers for Medicare and Medicaid Services, health clinics such as American Family Care bill Medicare for their services by selecting a corresponding Evaluation and Management code.  The codes are divided into five different levels - from basic (level 1) to most complex (level 5).  Higher level codes result in higher reimbursement from Medicare than lower level codes.  The government alleged that American Family Care knowingly selected Evaluation and Management codes for a level of services that exceeded those actually provided in order to artificially increase the amount of reimbursement it received for those visits.

“The False Claims Act is a critical tool for weeding out fraud and protecting the taxpayers,” said U.S. Attorney for the Northern District of Alabama Joyce White Vance.  “My office will continue to return funds, like the $1.2 million in this case, to the taxpayers by proceeding against those who abuse our public health programs."

“Billing the government for services not provided as claimed cheats both taxpayers and patients,” said Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services region including Alabama.  “We will pursue aggressively providers like American Family Care alleged to have improperly maximized reimbursements.”

The civil settlement resolves a lawsuit filed by Anita C. Salters, a former employee of American Family Care, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the government for false claims and to obtain a portion of the government’s recovery.  Salters’ share has not yet been determined. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused on efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement with American Family Care was the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of Alabama; the Department of Justice’s Civil Division, Commercial Litigation Branch; the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation. 

The lawsuit is captioned United States ex rel. Anita C. Salters v. American Family Care Inc. (N.D. Ala.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Dmitry Firtash, 48, a Ukrainian businessman, was arrested Wednesday by Austrian authorities in Vienna on a provisional arrest request based on charges filed in the Northern District of Illinois, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

The charges result from an investigation, which the FBI has conducted for several years, of an alleged international corruption conspiracy. Firtash’s arrest is not related to recent events in Ukraine.

Firtash, who controls Group DF, an international conglomerate of companies, remains in Austrian custody unless he meets the bail condition of posting a €125 million bond, which was set today in a Vienna court. The U.S. government will seek his extradition.

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

The department has worked closely with and has received significant assistance from its law enforcement counterparts in Austria and greatly appreciates their assistance in this matter.  Significant assistance was also provided by the Criminal Division’s Office of International Affairs. The Chicago Office of the FBI conducted the investigation.

Several patient recruiters, including a medical clinic owner, were sentenced today for their participation in a health care fraud scheme involving Flores Home Health Care Inc., a defunct home health care company.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Lerida Labrada, 59; Mayra Flores, 49; and German Martinez, 36, all of Miami, were sentenced by U.S. District Judge Ursula Ungaro of the Southern District of Florida to serve 37 months, 24 months, and 24 months in prison, respectively. In addition to their prison terms, all of the defendants were sentenced to three years of supervised release and ordered to pay between $200,000 and $400,000 in restitution.

On Jan. 7, 2014, Labrada pleaded guilty to conspiracy to commit health care fraud, and Flores and Martinez pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks.

According to court documents, the defendants worked as patient recruiters for the owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. Labrada also owned and operated a Miami medical clinic that provided fraudulent prescriptions to patient recruiters and to the owners and operators of Flores Home Health.

The defendants would recruit patients for Flores Home Health and would solicit and receive kickbacks and bribes from the owners and operators of Flores Home Health in return for allowing the company to bill the Medicare program on behalf of the recruited Medicare patients. These Medicare beneficiaries were billed for home health care and therapy services that were not medically necessary and/or were not provided.

From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services.

The 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 Southern District of Florida. This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged 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 owner and operator of a Miami medical clinic, Merfi Corp., was sentenced today to serve 108 months in prison for her participation in multiple health care fraud schemes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Isabel Medina, 49, of Miami, was sentenced by U.S. District Judge Ursula Ungaro of the Southern District of Florida. In addition to her prison term, Medina was also sentenced to serve three years of supervised release and was ordered to pay $8,437,393 in restitution.

On Jan. 7, 2014, Medina pleaded guilty before Judge Ungaro to conspiracy to commit health care fraud.

According to court documents, Medina was an owner and operator of Merfi Corp., a Miami medical clinic that employed physicians, physician assistants and other medical professionals who were authorized by law to dispense prescriptions for home health care services. Through Merfi Corp., Medina and her co-conspirators provided fraudulent home health and therapy prescriptions to the owners and operators of Flores Home Health Care Inc. and other home health care agencies, as well as to patient recruiters, in return for kickbacks and bribes.

Flores Home Health and these other home health care agencies purported to provide home health and therapy services to Medicare beneficiaries, but were in fact operated for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

Medina has acknowledged that her involvement in fraudulent schemes at multiple home health care companies resulted in losses to the Medicare program exceeding $20 million.

The 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 Southern District of Florida. This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged 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

A federal court in the Northern District of Georgia permanently barred Andrew R. Heath, an Acworth, Ga., area tax preparer from preparing tax returns for others, the Justice Department announced today.  Heath agreed to the civil injunction order without admitting the allegations against him.  The government’s complaint in the injunction suit was brought against both Andrew Heath and his brother, Larry J. Heath, who previously agreed to a civil injunction order. 

The government complaint alleged that Andrew Heath, who operated Excellent Tax Service, repeatedly prepared federal tax returns that unlawfully understated customers’ federal tax liabilities.  The suit alleged that Andrew Heath concocted bogus losses, expenses, education credits, business expenses and charitable contributions, which he falsely reported on his customers’ federal income tax returns.    

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. Andrew R. Heath, etc.
Complaint for Permanent Injunction and Other Relief
Stipulated Final Judgment of Permanent Injunction and Order Against Defendant Andrew R. Heath

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

According to the plea agreement, from October 2005 to June 2009, Murray and Bio-Tech provided monthly pest control services to nursing homes in Georgia by spraying pesticides in and around their clients’ facilities. Bio-Tech employees routinely applied the pesticide Termidor indoors, contrary to the manufacturer’s label instructions.  After the Georgia Department of Agriculture made inquiries regarding Bio-Tech’s misuse of Termidor and other pesticides, Murray directed several of his Bio-Tech employees to alter company service reports with the intent to obstruct an investigation.

“These defendants misapplied potentially harmful pesticides around senior citizens and conspired to obstruct an investigation by state and federal law enforcement,” said Acting Assistant Attorney General Dreher. “It is essential that companies and individuals who handle pesticides do so lawfully and honestly, and those that fail to do so will be held accountable under the law.”

“When our loved ones make the transition to a nursing home, the last thing any of us wants to worry about is whether our parents or grandparents are being subjected to improperly applied chemicals,” said U.S. Attorney Moore.  “When Mr. Murray and his company used this pesticide like they did, they created a potentially harmful situation for the residents and another reason to worry for the residents’ families.”

“The defendants took advantage of some of our most vulnerable citizens by deliberately applying pesticides contrary to federal law in nursing homes around the state of Georgia,” said Maureen O'Mara, Special Agent in Charge of EPA's Criminal Enforcement Program in Georgia. “What is even more shameful is they then took steps to conceal it. This plea agreement shows that we will not tolerate individuals or companies who put profit over protection.”

Dustin Norris and Ryan Lohr, former officers at Roxbury Correctional Institution (RCI) in Hagerstown, Md., were sentenced today for conspiring with other RCI officers on March 9, 2008, in connection with the assault of an inmate at the state prison, identified as K.D.  Lohr and Norris were the first two former RCI officers to enter guilty pleas in the federal investigation of the assault and ensuing cover up.

Both Norris and Lohr previously pleaded guilty to conspiracy.  Norris admitted that he had conspired with other officers to assault K.D. during the day shift, while Lohr acknowledged that he had agreed with other officers to cover up the day shift officers’ assault.  Both Norris and Lohr cooperated with the government during the federal investigation, and testified for the prosecution at the trial of former RCI Sergeant Josh Hummer, who was convicted of obstruction of justice.  U.S. District Judge James K. Bredar sentenced Dustin Norris to serve 15 months in prison.  Ryan Lohr was ordered to serve one year and one day in prison.   

During his testimony at Hummer’s trial and in court documents filed in connection with his respective guilty pleas, Norris admitted that he and other day shift officers had assaulted K.D. in retaliation for a prior incident involving K.D. and another officer.  Lohr, meanwhile, admitted that he watched Norris and other officers assault the inmate, then observed a supervisor use a magnet in an apparent attempt to destroy surveillance footage related to the assault.

“Correctional officers are expected to uphold the law,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue to vigorously prosecute correctional officers who use their position either to commit violent crimes or to cover up criminal conduct by other officers.”

To date, 16 current or former officers at RCI have been convicted in connection with a series of assaults carried out on K.D. on March 8-9, 2008.  Eight former RCI officers still await sentencing before Judge Bredar. 

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

Memorial Hospital (Memorial), an Ohio nonprofit corporation that operates an acute care hospital in Fremont, Ohio, has agreed to pay $8.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

“Improper financial relationships between health care providers and their referral sources can undermine physicians' judgment about patients' true health care needs and drive up health care costs for everyone,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  "The Justice Department is firmly committed to recovering the taxpayer dollars lost due to these arrangements and making sure that all health care providers follow the rules.” 

 The Anti-Kickback Statute and the Stark Statute restrict the financial relationships that hospitals may have with doctors who refer patients to them.  The settlement announced today involved allegations that financial relationships that Memorial had with two physicians – a joint venture between Memorial and a pain management physician and an arrangement under which an ophthalmologist purchased intraocular lenses and then resold them to Memorial at inflated prices - violated statutory requirements.  These issues were disclosed to the government by Memorial.

 "Physician referrals should be made exclusively based on what's best for the patient, not on financial relationships," said U.S. Attorney for the Northern District of Ohio Steven M. Dettelbach.  "We hope that this settlement will once again help drive that message home."

 The improper referrals at issue in this matter included Medicaid patients.  Medicaid is funded jointly by the states and the federal government.  The State of Ohio, which paid for some of the Medicaid claims at issue, will receive $600,383 of the settlement amount.

 “The price of such arrangements can be very costly to the nation’s health care system, taxpayers and provider organizations,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “So, we are pleased that Memorial stepped forward to disclose these improper financial relationships and is working to avoid future occurrences.”

 This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

 This case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio and the Department of Health and Human Services Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

John Bryan Villegas, 23, of Kittery, Maine, was sentenced today in federal court in New Hampshire to serve 33 months in prison for engaging in a type of cyber stalking known as “sextortion,” announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney John P. Kacavas of the District of New Hampshire.

On Sept. 18, 2013, Villegas pleaded guilty to an information charging him with one count of engaging in cyber stalking. The information charges that Villegas attempted to extort a New Hampshire female into providing him with sexually explicit photographs and videos of her. He sent her e-mail messages in which he threatened to publish on the internet – and distribute to the victim’s neighbors and work and social acquaintances – other sexually explicit photographs of the victim that were stored on her laptop computer, which had been recently stolen during a burglary of her residence. On Jan. 9, 2014, Villegas pleaded guilty in New Hampshire state court to charges that he committed that burglary.

The case was investigated by the U.S. Secret Service and was prosecuted by Senior Trial Attorney Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.

The department would like to thank the Dover, N.H., and Kittery, Maine, police departments and the Naval Criminal Investigative Service for their cooperation.

Christopher Davis, of Montgomery, Ala., was sentenced today to serve 60 months in prison, 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.  Davis was also ordered to forfeit $300,559, which represented the proceeds of his offenses.  Davis previously pleaded guilty to charges of conspiracy to defraud the United States, wire fraud and aggravated identity theft.

According to court documents and evidence from the sentencing, Davis was the leader of a multi-state tax fraud conspiracy that operated by filing false tax returns using stolen identities, causing the Internal Revenue Service (IRS) to issue tax refunds.  Davis obtained personal identifying information from different sources, including a medical facility in Alabama.  He and a co-conspirator, Kenneth Blackmon, who was sentenced to serve 51 months in prison in April 2013, would then file false tax returns using the stolen identities in which they would direct the fraudulently claimed tax refunds to be deposited onto prepaid debit cards. 

According to court documents, Davis recruited Blackmon and several other individuals involved in the conspiracy to act as paid runners to help with obtaining the refund money.  Davis and Blackmon, who both lived in Alabama, would organize trips to Georgia and South Carolina during which the runners would use the debit cards loaded with fraudulently obtained tax refunds to make cash withdrawals at numerous locations across both states, and then provide the cash to Davis and Blackmon.  The runners would also buy new debit cards for use in the ongoing scheme.  In his plea agreement, Davis admitted that at one point during the scheme he had over 600 stolen identities and 200 prepaid debit cards with him in Georgia.    

The case was investigated by special agents of IRS - Criminal Investigation.  Trial Attorney Jason Poole for the Tax Division and Assistant U.S. Attorney Todd Brown prosecuted the case.  The Alabama Department of Pardons and Paroles and the Gwinnett County Sheriff’s Department in Georgia provided assistance in the investigation.

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

A licensed psychiatrist formerly employed by the Department of Veterans Affairs (VA) was sentenced today to serve 18 months in prison for falsely claiming to provide at-home services to Medicare beneficiaries.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Dr. Mikhail L. Presman, 56, of Brooklyn, N.Y., was sentenced by Judge I. Leo Glasser in the Eastern District of New York. Presman was sentenced to serve three years of supervised release following his prison term and ordered to forfeit $1.2 million and pay restitution to Medicare.

According to court documents, from Jan. 1, 2006, through May 10, 2013, Presman submitted approximately $4 million in Medicare claims for home treatment of Medicare beneficiaries notwithstanding his full-time salaried position as a psychiatrist at the VA hospital in Brooklyn. Presman did not provide any treatment to a substantial number of the beneficiaries he claimed to have treated. For example, Presman submitted claims to Medicare for home medical visits at locations within New York City even though he was physically located in China at the time of these purported home visits. Presman also submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.

The case was investigated by the HHS-OIG, with assistance from the VA Office of Inspector General, and brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case was prosecuted by Trial Attorney Bryan D. Fields of the Fraud Section and Assistant United States Attorney Patricia E. Notopoulos of the Eastern District of New York.

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.

A former correctional officer in Puerto Rico was sentenced to serve 37 months in prison for attempting to smuggle heroin into state prison by delivering it to an inmate in the parking lot of the Medical Center in San Juan, Puerto Rico.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico made the announcement.

William Joel Medina, 32, of Quebradillas, Puerto Rico, pleaded guilty on Nov. 22, 2013, to conspiracy and attempt to distribute controlled substances. Medina was sentenced by U.S. District Judge Carmen C. Cerezo of the District of Puerto Rico.

From July through August 2009, Medina and a co-conspirator agreed to receive $2,500 to deliver heroin to an inmate at the Medical Center in San Juan. On Aug. 5, 2009, Medina and his co-conspirator met with an undercover agent, who they believed was a drug dealer, and were given what they believed to be a package of heroin. Medina delivered the purported heroin to an inmate in the parking lot of the Medical Center that same day.

In September 2009, Medina and a co-conspirator agreed to receive $4,000 to deliver another package of heroin to the same inmate at the Medical Center in San Juan. On Sept. 9, 2009, Medina and his co-conspirator met with an undercover agent, who they believed was a drug dealer, and were given what they believed to be a package of heroin. Medina’s co-conspirator delivered the purported heroin to the inmate that same day.

Medina also admitted in his plea agreement that he had engaged in a similar scheme on a third occasion.

The case was investigated by the FBI’s San Juan Division. The case was prosecuted by Trial Attorney Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Hector Ramirez-Carbó of the District of Puerto Rico.

George Despotopoulos and Steve Tepelidis pleaded guilty to tax evasion today in the District Court for the Eastern District of New York, the Justice Department and the Internal Revenue Service (IRS) announced.

According to court documents, Despotopoulos and Tepelidis jointly owned and operated Furniture Design by Knossos, a custom furniture and cabinetry business.  They caused business checks to be cashed and used some of the cash to supplement their reported income.  The informations allege that Despotopolous and Tepelidis filed or caused to be filed false individual income tax returns for the 2007 tax year.  Both Despotopoulos and Tepelidis have agreed to pay over $300,000 each in restitution. 

Tax evasion carries a statutory maximum sentence of five years in prison, three years of supervised release, and a $250,000 fine.

This case was investigated by special agents of IRS-Criminal Investigation and prosecuted by Trial Attorney Jennifer Laraia of the Tax Division.

The Justice Department and Internal Revenue Service (IRS) announced today that construction company owner Tomas Olazabal, of Fresh Meadows, N.Y., was convicted of two counts of filing false corporate tax returns for his corporation, Tupac Construction Corporation.  Olazabal was convicted by a jury sitting in the U.S. District Court for the Eastern District of New York.

According to the evidence admitted at trial, Olazabal was the sole owner and operator of Tupac Construction.  Between 2006 and 2008, Olazabal cashed a large number of checks representing gross receipts to Tupac Construction at a commercial check cashing service.  Olazabal did not tell his tax return preparer about the cashed checks and failed to report those gross receipts on Tupac Construction’s 2007 and 2008 corporate tax returns.

Olazabal faces a statutory maximum potential sentence of six years in prison and a fine of up to $500,000.

Assistant Attorney General Kathryn Keneally for the Tax Division commended the IRS-Criminal Investigation Special Agents who investigated the case, as well as Trial Attorneys Steve Descano and Mark Kotila of the Tax Division, who prosecuted the case.

In testimony delivered before the U.S. Sentencing Commission Thursday, Attorney General Eric Holder endorsed a proposed change to the Federal Sentencing Guidelines that would reserve the harshest penalties for the most serious drug offenders.

The Sentencing Commission proposal, first unveiled in January, would lower by two levels the base offense associated with various drug quantities involved in drug trafficking crimes. If adopted, the change would impact nearly 70% of all drug trafficking offenders and reduce the average sentence by 11 months, or nearly 18%, according to the Commission.

As an added result of the new proposal, the Commission projects that the Bureau of Prisons population would drop by 6,550 inmates at the end of five years.

“This straightforward adjustment to sentencing ranges – while measured in scope – would nonetheless send a strong message about the fairness of our criminal justice system,” Holder testified. “And it would help to rein in federal prison spending while focusing limited resources on the most serious threats to public safety.”

The move is Holder’s latest step to alter the federal government’s approach to dealing with nonviolent drug offenders. Last August, Holder announced his “Smart on Crime” initiative, which included a major change to the department’s charging policy intended to reserve strict, mandatory minimum sentences for high-level or violent drug traffickers.

The “Smart on Crime” initiative would help ease the nation’s overcrowded prison system. Today, the United States comprises just five percent of the world’s population but it incarcerates almost a quarter of the world’s prisoners. In 2010 alone, state and federal governments spent $80 billion on incarceration. And of the 216,000 current federal inmates, nearly half are serving time for drug-related crimes.
 
The Commission is expected to vote on the proposal endorsed by Holder in April. Until then, the Justice Department will direct prosecutors not to object if defendants in court seek to have the newly proposed guidelines applied to them during sentencing.
 
The complete text of the Attorney General’s statement to the Sentencing Commission, as prepared for delivery, is below.
 
Testimony by Attorney General Eric H. Holder, Jr.
U.S. Sentencing Commission
March 13, 2014

Chief Judge [Patti] Saris and Members of the Commission: good morning, and thank you for the invitation to appear before you to discuss our shared goals – and to provide the Justice Department’s views on proposed changes to the Federal Sentencing Guidelines related to certain drug trafficking crimes.

In particular, I appreciate the opportunity to speak in support of the amendments under consideration today.  The Justice Department strongly supports the Commission’s proposed change to the Drug Quantity Table.  If adopted, this amendment would lower by two levels the base offense levels associated with various drug quantities involved in drug trafficking crimes.  This would have the effect of modestly reducing guideline penalties for drug trafficking offenses while keeping the guidelines consistent with current statutory minimums – and continuing to ensure tough penalties for violent criminals, career criminals, or those who used weapons when committing drug crimes. 

This straightforward adjustment to sentencing ranges – while measured in scope – would nonetheless send a strong message about the fairness of our criminal justice system.  And it would help to rein in federal prison spending while focusing limited resources on the most serious threats to public safety.  Let me be clear, my primary obligation as Attorney General is to ensure the safety of the American people.  The changes that I have implemented over the past year are designed to do exactly that – while making our system more fair and more efficient.

This proposed amendment is consistent with the “Smart on Crime” initiative I announced last August.  Its implementation would further our ongoing effort to advance commonsense criminal justice reforms.  And it would deepen the Department’s work to make the federal criminal justice system both more effective and more efficient when battling crime and the conditions and behaviors that breed it.

As it stands – and as this Commission has recognized – certain types of cases result in too many Americans going to prison for too long, and at times for no truly good public safety reason.  Although the United States comprises just five percent of the world’s population, we incarcerate almost a quarter of the world’s prisoners.  One in 28 American children currently has a parent behind bars.  State and federal governments spent a combined $80 billion on incarceration during 2010 alone.  And as you know – of the more than 216,000 current federal inmates – nearly half are serving time for drug-related crimes.

This focused reliance on incarceration is not just financially unsustainable – it comes with human and moral costs that are impossible to calculate.  That’s why, in recent years – under the leadership of President Obama and alongside members of this Commission; with the support of policymakers as well as prosecutors; and with the expertise of advocates and researchers, law enforcement officials, and government leaders on both sides of the aisle – we have taken significant steps to improve criminal justice policies and implement targeted reforms.  I am particularly proud of the work we did together to reduce the inappropriate and unjust 100-to-1 sentencing disparity between crack and powder cocaine – a disparity that this Commission had correctly found to be unjustifiable, and which President Obama alleviated with the signing of the Fair Sentencing Act in 2010.

 Just over a year ago, in an effort to take our collective work to a new level, I launched a targeted Justice Department review of the federal criminal justice system – to identify areas for improvement, and to seek ways to make the system more efficient, more effective, and more closely aligned with our highest ideals, while not sacrificing our duty to promote public safety.  Last August, I announced a new “Smart on Crime” initiative – based on the results of that review – and it is already allowing the Justice Department to make critical improvements; to conserve precious resources; to improve outcomes; and to disrupt the destructive cycle of poverty, incarceration, and crime that traps too many Americans and weakens entire communities.

 Among the key changes I mandated as part of this initiative is a modification of the Justice Department’s charging policies – to ensure that people convicted of certain low-level, nonviolent federal drug crimes will face sentences appropriate to their individual conduct – rather than stringent mandatory minimums, which will now be applied only to the most serious criminals.  The Commission’s proposed amendment to the Federal Sentencing Guidelines would help to further advance and institutionalize this work, controlling the federal prison population and ensuring just and proportional sentences.

I’m pleased to note that this approach enjoys significant bipartisan support on Capitol Hill, where a number of leaders, including Senators Patrick Leahy, Dick Durbin, and Mike Lee – along with Representatives Bobby Scott and Raul Labrador – have introduced legislation that would give judges more discretion in determining appropriate sentences for those convicted of certain crimes.  By reserving the most severe penalties for dangerous and violent drug traffickers, we can better promote public safety, deterrence, and rehabilitation while saving billions of dollars and strengthening communities.  And as my colleagues and I work with Congress to refine and pass this legislation, we are simultaneously moving forward with a range of other reforms.

We’re investing in evidence-based diversion programs – like drug treatment initiatives and veterans courts – that can serve as alternatives to incarceration in some cases.  We are working to reduce unnecessary collateral consequences for formerly incarcerated individuals seeking to rejoin their communities.  And we are building on innovative, data-driven reinvestment strategies that have in many cases been pioneered at the state level.

In recent years, no fewer than 17 states – supported by the Department’s Justice Reinvestment Initiative, and led by officials from both parties – have directed significant funding away from prison construction and toward evidence-based programs and services, like supervision and drug treatment, that are proven to reduce recidivism while improving public safety.  Rather than increasing costs, a new report – funded by the Bureau of Justice Assistance – projects that these 17 states will actually save $4.6 billion over a 10-year period.  Many have already seen drops in recidivism rates – as well as overall crime rates – even as their prison populations have declined.  And although the full impact of our justice reinvestment policies and other reforms remains to be seen, it’s clear that these efforts are bearing fruit – and showing significant promise across the country.

We can be encouraged by this ongoing work – which is enabling us to better promote public safety, deterrence, and rehabilitation while making our expenditures smarter and more productive.  Yet each of us is here this morning because we recognize that we cannot yet be satisfied.  And a great deal remains to be done.

By adopting these proposed amendments to the Federal Sentencing Guidelines, this Commission can take an important step to allow judges to make commonsense determinations; to provide legal professionals and law enforcement leaders with the 21st-century solutions they need to address 21st-century challenges; and to build on the progress we’ve already seen in constructing a criminal justice system that deters and punishes crime, keeps us safe, and ensures that those who have paid their debts have the chance to become productive citizens.

As the Commission considers these and other actions – and as you hear testimony from a diverse group of expert panelists over the course of today’s hearing – I urge you to seize this opportunity to make our criminal justice system more fair and to keep the American people more safe.

I look forward to continuing to work closely with each of you – and with leaders in Congress and throughout the Administration – to strengthen America’s criminal justice system and forge the more just society that everyone in this country deserves.

I thank you, once again, for the opportunity to appear before you today.  And I would be happy to take a few questions at this time.

A U.S. Army soldier was sentenced to serve 12 months and one day in prison for his role in stealing fuel at Forward Operating Base (FOB) Fenty near Jalalabad, Afghanistan.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after sentencing by U.S. District Court Judge Thomas B. Russell in the Western District of Kentucky.

According to court documents, in May and June 2010, U.S. Army Sergeant Kevin Bilal Abdullah, 40, of Clarksville, Tenn., was involved in overseeing the delivery of fuel from FOB Fenty to other military bases. Abdullah created fraudulent documents called Transportation Movement Requests purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required. After the trucks were filled with fuel, these fraudulent documents were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint to justify the trucks’ departures. In truth, the fuel was simply stolen, and Abdullah and his co-conspirators received payment in cash from a representative of the Afghan trucking company that allegedly stole the fuel.

Abdullah pleaded guilty on Aug. 29, 2013, to receiving payments from a representative of the trucking company in exchange for facilitating the theft of fuel in approximately 25 fuel trucks. He pleaded guilty to conspiracy to commit bribery and to the substantive count of bribery. At sentencing, he was ordered to pay $466,250 in restitution.

Abdullah’s sentencing was the fourth conviction arising from this investigation of fuel thefts at FOB Fenty. On Aug. 3, 2012, Jonathan Hightower, a civilian employee of a military contractor who had conspired with Abdullah and others, pleaded guilty to similar charges. After cooperating with the government, he was sentenced on Oct. 28, 2013, to serve 27 months in prison. On Oct.10, 2012, Christopher Weaver, another conspirator, pleaded guilty to fuel theft charges and, after cooperating with the government, was sentenced on Oct. 28, 2013, to serve 37 months in prison. On Sept. 5, 2013, former Specialist Stephanie Charboneau pleaded guilty, and on Feb. 4, 2014, she was sentenced to serve 87 months in prison. Weaver, Hightower and Charboneau were prosecuted in the District of Colorado.

These cases were investigated by the Special Inspector General for Afghanistan Reconstruction (SIGAR), the Department of the Army - Criminal Investigation Division, the Defense Criminal Investigative Service and the FBI.

The Abdullah case was handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, on detail from SIGAR, and Assistant U.S. Attorney Michael Bennett.

Andreas Bachmann, 56, of Switzerland, pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS) in connection with his work as a banking and investment adviser for U.S. customers. 

Deputy Attorney General James Cole, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, Acting U.S. Attorney Dana J. Boente for the Eastern District of Virginia and IRS-Criminal Investigation Chief Richard Weber made the announcement after the plea was accepted by U.S. District Judge Gerald Bruce Lee.

“Today’s plea is just the latest step in our wide-ranging investigations into Swiss banking activities and demonstrates the Department of Justice's commitment to global enforcement against those that facilitate offshore tax evasion,” said Deputy Attorney General Cole.  “We fully expect additional developments over the course of the coming months.”

Bachmann was charged in a one-count superseding indictment on July 21, 2011, and faces a maximum penalty of five years in prison when he is sentenced on Aug. 8, 2014.

In a statement of facts filed with the plea agreement, Bachmann admitted that between 1994 and 2006, while working as a relationship manager in Switzerland for a subsidiary of an international bank, he engaged in a wide-ranging conspiracy to aid and assist U.S. customers in evading their income taxes by concealing assets and income in secret Swiss bank accounts.

As part of that conspiracy, Bachmann traveled to the United States twice each year to provide banking services and investment advice to his U.S. customers.  As a matter of practice, prior to traveling to the United States, Bachmann notified his executive management, including the head of the subsidiary’s private bank in Zurich and the chief executive officer of the subsidiary, of the planned trip and its objectives.

Although Bachmann had been informed of limitations under U.S. law on his ability to provide investment advice to U.S. account holders regarding U.S. securities, the highest ranking executive at the subsidiary was aware that Bachmann was violating U.S. law.  According to the statement of facts, Bachmann was effectively told by the chief executive officer for the subsidiary, “Mr. Bachmann, you know what we expect of you, don’t get caught.”

According to the statement of facts, Bachmann also engaged in cash transactions while traveling in the United States.  In the course of arranging meetings with U.S. customers, some clients would request that Bachmann either provide them with cash as withdrawals from their undeclared accounts or take cash from them as a deposit to their undeclared accounts.  As part of that process, Bachmann agreed to receive cash from U.S. customers and used that cash to pay withdrawals to other U.S. clients.  In one instance, Bachmann received $50,000 in cash from one U.S. customer in New York City and intended to deliver the money to another U.S. client in Southern Florida.  Airport officials in New York discovered the cash but let Bachmann keep the money after questioning him.  The client in Florida refused to take the money after the client learned about the questioning by New York airport officials, and Bachmann returned to Switzerland with the $50,000 in cash in his checked baggage.  Bachmann advised the executive management of the subsidiary about the incident with the cash.

Bachmann also understood that a number of his U.S. customers concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities, or structures, which were frequently created in the form of foreign partnerships, trusts, corporations or foundations.

Bachmann dealt with Josef Dӧrig, a co-defendant, regarding the formation and/or maintenance of structures for U.S. customers, among others.  In approximately 1997, the international bank instructed Dӧrig to form his own company specializing in the formation and management of nominee tax haven entities because it was “too risky” to have Dörig perform that work from inside the international bank.  The international bank then directed the subsidiary and others to use Dӧrig and his Swiss trust company, Dӧrig Partner AG, as the preferred choice for the formation and management of structures.

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

A copy of this press release may be found on this website for the United States Attorney’s Office for the Eastern District of Virginia.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia here and here.

Related Materials:

United States v. Andreas M. Bachmann, etc.
Plea Agreement
Statement of Facts

Today, the Justice Department sought a federal court order temporarily restraining the Ohio Department of Youth Services (DYS) from unlawfully secluding boys with mental health needs in its juvenile correctional facilities.  The requested order would require DYS to abide by safeguards in its use of seclusion until a final ruling on the claims that DYS’ seclusion practices violate the constitutional rights of boys in DYS custody.  In conjunction with its request for a temporary restraining order, the department sought to expand its existing complaint regarding the Scioto Juvenile Correctional Facility, to include claims of unlawful seclusion at all of the DYS facilities.

The department’s request for a restraining order detailed the state’s excessive use of seclusion, including the following information:  

·          In the second half of 2013, the state imposed a total of almost 60,000 hours of seclusion on 229 boys with mental health needs;

·          One boy spent 1,964 hours in seclusion over six months; the state gave another boy 21 straight days of seclusion;

·          Ten boys at one facility spent over 10 percent of their time in custody in seclusion;

·          While secluded, several boys were on suicide watch, had suicidal thoughts or hurt themselves.  

“The Ohio Department of Youth Services must stop violating the rights of youth in its custody through unlawful seclusion,” said Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division.  “The way in which Ohio uses seclusion to punish youth with mental health needs, victimizes one of the most vulnerable groups in our society.”

“Ohio’s juvenile correctional facilities must comply with the Eighth and 14th Amendments,” said U.S. Attorney Carter Stewart for the Southern District of Ohio.  “We will remain vigilant in protecting the constitutional rights of all our citizens, particularly young people and those with mental illness.”

“The facts in this case reveal a serious disregard for the rights of young people with mental health needs in Ohio’s custody,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio.  “The Ohio Department of Youth Services has a responsibility to ensure the health and safety of these young people, including providing appropriate mental health treatment, so that they can overcome challenging behaviors and return to the community to become successful adults.”

Following an investigation under the Violent Crime Control and Law Enforcement Act of 1994 and the Civil Rights of Institutionalized Persons Act (CRIPA), the Justice Department issued findings in May 2007 detailing significant constitutional deficiencies regarding use of physical force, grievance investigation and processing and use of seclusion.  In June 2008, the department entered into a consent decree with the state to correct these deficiencies at the Scioto Juvenile Correctional Facility.  However, the recent discovery that DYS continued to unlawfully seclude boys with mental health needs at Scioto Juvenile Correctional Facility and had moved boys to other DYS facilities also using unlawful seclusion prompted the department today to seek a temporary restraining order and an order allowing it to add the remaining DYS facilities to its complaint.

This case is being litigated by attorneys from the Special Litigation Section of the Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio and the U.S. Attorney’s Office for the Northern District of Ohio.  Copies of both motions and additional information about the Civil Rights Division will be available on its website.

A federal jury in Houston today convicted two owners of a former Houston mental health care company, Spectrum Care P.A. (Spectrum), several of its employees and the owners of certain Houston group care homes for their participation in a $97 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office and Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of Inspector General (HHS-OIG), the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Joseph J. Del Favero of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG) and Special Agent in Charge Scott Rezendes of Field Operations of the Office of Personnel Management’s Office of Inspector General (OPM-OIG) made the announcement following a jury trial before U.S. District Judge Vanessa Gilmore in the Southern District of Texas.

Physicians Mansour Sanjar, 81, and Cyrus Sajadi, 66, the owners of Spectrum, were each convicted of conspiracy to commit health care fraud and conspiracy to pay kickbacks as well as related counts of health care fraud and paying illegal kickbacks. Adam Main, 33, a physician’s assistant, was convicted of conspiracy to commit health care fraud and related counts of health care fraud. Shokoufeh Hakimi, 66, administrator of Spectrum, was convicted of conspiracy to commit health care fraud, conspiracy to pay kickbacks and a related count of paying an illegal kickback. Chandra Nunn, 35, a group home owner, was also convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and related counts of receiving illegal kickbacks. Sharonda Holmes, 40, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks and a related count of receiving an illegal kickback. Shawn Manney, 51, a group home owner, was convicted of conspiracy to pay and receive illegal kickbacks.

According to evidence presented at trial, Sanjar and Sajadi orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until their arrest in December 2011.  Sanjar and Sajadi owned Spectrum, which purportedly provided partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for severe mental illness. The Medicare beneficiaries for whom Spectrum billed Medicare for PHP services did not qualify for or need PHP services.  Sanjar, Sajadi, Main and Moore signed admission documents and progress notes certifying that patients qualified for PHP services, when in fact, the patients did not qualify for or need PHP services.  Sanjar and Sajadi also billed Medicare for PHP services when the beneficiaries were actually watching movies, coloring and playing games–activities that are not covered by Medicare.

Evidence presented at trial showed that Sanjar, Sajadi and Hakimi paid kickbacks to Nunn, Holmes, Manney and other group care home operators and patient recruiters in exchange for delivering ineligible Medicare beneficiaries to Spectrum.  In some cases, the patients received a portion of those kickbacks. According to evidence presented at trial, Spectrum billed Medicare for approximately $97 million in services that were not medically necessary and, in some cases, werenot provided.

Sanjar, Sajadi and Nunn are scheduled to be sentenced on Sept. 8, 2014. Main, Hakimi, Holmes and Manney are scheduled to be sentenced on Sept. 15, 2014.

The case was investigated by the FBI, HHS-OIG, Texas MFCU, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Assistant Chief Laura M.K. Cordova and Trial Attorneys Jonathan T. Baum and William S.W. Chang of the Fraud Section.

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

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

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL Washington Director Shawn A. Bray Presents at the 2014 Symantec Government Symposium

WASHINGTON - On Tuesday, March 11, 2014, Director Bray attended the annual Symantec Government Symposium where he presented on the topic “Fighting Cybercrime in a Borderless World.” The theme for this year's symposium was “Resilient Security for Today's World.” Other distinguished members of the panel included Department of Justice's Principal Deputy Chief Richard Downing, Computer Crime and Intellectual Property; Catherine Lotrionte, Director of the Institute for Law, Science and Global Security from Georgetown University; and Senior Advisor for Cybercrime James Vigil, Bureau for International Narcotics and Law Enforcement Affairs at the Department of State. The Symantec Government Symposium is the world's largest annual information security event for government audiences where the nation's top IT leaders can discuss how government and industry can collaborate and best secure America's critical infrastructure.

Richard Castle, 47, a resident of the United Kingdom, has been sentenced to serve 192 months in prison in connection with a trip he made to Ohio from his home in the United Kingdom to have illicit sexual activity with a minor in June 2011.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Marlon Miller of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan made the announcement after the sentencing proceeding before U.S. District Judge Timothy S. Black in Dayton, Ohio.

Members of the Metropolitan Police Service’s Extradition Team and International Assistance Unit, housed within New Scotland Yard, arrested Castle at his home in Northampton, England, on Jan. 12, 2012.

A federal grand jury indicted Castle on Feb. 15, 2012, and Castle pleaded guilty on Oct. 3, 2013, to charges of coercion of a minor, travelling with intent to engage in illicit sexual contact with a minor and transferring obscene material to a minor. Castle admitted that, posing as a male named Richard Joshua Parker, he used the Internet between March 2009 and June 2011 to coerce a minor to engage in illicit sexual activity. He flew to Dayton in June 2011 to engage in illicit sexual relations with the minor and stayed approximately three weeks. Castle also admitted that he transferred obscene materials to this same minor.

The case was investigated by HSI, the Englewood Police Department, and the Vandalia Police Department. The Department is grateful for the invaluable support provided by the Miami Valley Regional Computer Forensics Laboratory, the Ohio Internet Crimes Against Children Task Force, the U.S. Marshals Service, the HSI Attaché London Office, and the ICE Office of the Principal Legal Advisor. The Criminal Division’s Office of International Affairs also provided assistance with Castle’s extradition.

The case was prosecuted by Assistant U.S. Attorney Sheila Lafferty of the Southern District of Ohio and Trial Attorney Mi Yung C. Park of the Criminal Division’s Child Exploitation and Obscenity Section.

WASHINGTON — Following a four-week trial, a federal jury today convicted two real estate investors for conspiring to rig bids at public real estate foreclosure auctions held in San Joaquin County, Calif.  One of the investors was also convicted of obstruction of justice for destroying evidence related to the crimes.

Andrew B. Katakis and Donald M. Parker were found guilty in the U.S. District Court for the Eastern District of California, of conspiring to rig bids at real estate foreclosure auctions held in San Joaquin County from at least September 2008 until at least October 2009.  Katakis was also found guilty of obstruction of justice for deleting electronic records related to the conspiracy.

Katakis was the owner of California Equity Management Group Inc. and managing partner of Lenders Financial Group LLC, both real estate investing companies based in Modesto, Calif.  Parker owned and worked for several real estate investing companies based in and around Sacramento and Stockton, Calif.

“Today’s convictions send a clear signal that conspirators who illegally seek to line their pockets at the expense of distressed homeowners will be held accountable for their crimes,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division and its law enforcement partners are committed to vigorously prosecuting the perpetrators of anticompetitive schemes.”

“The depressed real estate market in the Central Valley provided opportunities for fraud, including bid-rigging at foreclosure auctions,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California.  “The Antitrust Division has done great work in partnering with this office to attack this aspect of mortgage fraud.”

According to the evidence presented at trial, Katakis, Parker and co-conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County.  The bid-rigging conspiracy lasted from at least September 2008 until at least October 2009.  The government also offered evidence that in September 2010, Katakis deleted electronic records related to the conspiracy after he received a letter notifying him that a federal grand jury had subpoenaed his bank account.

Evidence showed that after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay.  The conspirator who bid the highest amount at the end of the private auction won the property.  The difference between the price at the public auction and that at the second auction was the group’s illicit profit, and it was divided among the conspirators in payoffs.

Also today, the jury could not reach a verdict on a count of mail fraud against Katakis and Parker. The jury also found W. Theodore Longley, an auctioneer who worked on behalf of various trustee companies to sell foreclosed houses at public auctions in San Joaquin County, not guilty on both counts.

Katakis and Parker were convicted of bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million 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.  The obstruction of justice conviction carries a maximum sentence of 20 years in prison and a $250,000 fine.

In addition to today’s convictions, 11 individuals have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; Robert Rose; Kenneth A. Swanger; Wiley Chandler; and Anthony B. Joachim.

These convictions arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County.  The investigation is being conducted by the Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division, and the San Joaquin County District Attorney’s Office.  Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

The charges in this indictment 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 is 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.

Two Northern California real estate investors pleaded guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed on June 30, 2011, in the U.S. District Court for the Northern District of California in Oakland, against Grant Alvernaz, of Pleasant Hill, Calif., and Douglas Moore, of Walnut Creek, Calif.  Alvernaz pleaded guilty to the charges on Sept. 7, 2011.  Moore pleaded guilty to the charges on Aug. 24, 2011.  The charges and the guilty pleas were unsealed yesterday.  Including Alvernaz and Moore, a total of 46 individuals have pleaded guilty or agreed to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Alvernaz and Moore conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa and Alameda counties, Calif.  Alvernaz and Moore were also charged with conspiring to commit mail fraud by fraudulently acquiring title to selected Contra Costa and Alameda County properties sold at public auctions and making and receiving payoffs and diverting money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.  The private auctions often took place at or near the courthouse steps where the public auctions were held.   Alvernaz and Moore pleaded guilty to participating in the conspiracies in Contra Costa County beginning as early as February 2009 and continuing until in or about December 2010 and in Alameda County from as early as March 2009 and continuing until about November 2010.

“The integrity of real estate foreclosure markets depends on open and honest competition, which the perpetrators of these collusive schemes undermined,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division.  “The division will continue to pursue those who illegally enrich themselves at the expense of lenders and financially distressed homeowners.”

The department stated that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties and, in some cases, the defaulting homeowner.

“The unsealed court documents narrate the criminal actions taken as part of this real estate bid-rigging conspiracy in northern California,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The public should consider this an example of how a competitive marketplace can be taken advantage of by those who are shortsighted by greed.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.  A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, or call the FBI tip line at 415-553-7400.

 
Today’s cases 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 is 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.

**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**

Anthony Merrell Tyler, 33, pleaded guilty in federal court today to violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act for his role in a 2011 racially motivated attack on a white man and an African-American woman in Marysville, Calif.  Tyler’s co-defendants, Billy James Hammett, 30, and Perry Sylvester Jackson, 28, pleaded guilty to the same offense on Dec. 17, 2013.

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.

“These defendants attacked the victims simply because of race,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “Such violence and intimidation have no place in our society.  Where these acts occur, the Department will continue to aggressively prosecute them.”

“Diligently prosecuting hate crimes such as the unprovoked, racially motivated assault in this case has been a core mission of the U.S. Attorney’s Office in this district,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “That mission will continue.”

Tyler’s sentencing is scheduled for July 8, 2014.  Hammett is scheduled to be sentenced on March 25, 2014, and Jackson has requested a sentencing date of April 22, 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.  The case is being prosecuted by U.S. Attorney Wagner and Trial Attorney Chiraag Bains of the Civil Rights Division.

Pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, have agreed to pay the government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries .  Teva Pharmaceuticals USA is located in North Wales, Pa., and IVAX LLC is a Florida company. 

“The Department of Justice is committed to ensuring that pharmaceutical manufacturers who make payments to doctors to influence prescribing decisions are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as the one alleged in this case undermine the health care system and take advantage of vulnerable patients.”

“ Pharmaceutical companies must not be allowed to improperly influence physicians’ decisions in prescribing medication for their patients,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.  “Instead, those decisions must be made solely on the basis of the patient’s best medical interests.”

The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Dr. Michael J. Reinstein, to induce the prescription of generic clozapine, an anti-psychotic medication.  Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients.  While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.  The United States alleged that the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva Pharmaceuticals’ parent corporation, agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein , in violation of the federal Medicare and Medicaid Anti-Kickback Statute In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and several of his employees.  Reinstein quickly became the largest prescriber of generic clozapine in the country, and prescribed the drug for many elderly patients.  Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years, and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs. 

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

 
On Nov. 15, 2012, the United States filed a civil action against Reinstein in United States v. Reinstein , alleging that he violated the False Claims Act as a result of his involvement in the payment scheme with Teva and IVAX.   The civil action against Reinstein remains pending in the Northern District of Illinois. 

The government’s settlement of these allegations illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Teva Pharmaceuticals and IVAX was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.

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

The Justice Department today announced a settlement under Title II of the Americans with Disabilities Act (ADA) with Blair County, Pa., to greatly improve physical accessibility at the county’s polling places for individuals who use wheelchairs and other mobility aids and for individuals who are blind or have vision impairments.  Title II prohibits discrimination on the basis of disability by a state or local government in any of its programs or services, including its voting program.

Under the terms of the settlement, accessibility will be a major criterion in the county’s selection of polling places.  To make that assessment, the county will use an evaluation form for each prospective polling place based on ADA architectural standards.  The settlement requires the county to either relocate inaccessible polling places to accessible facilities or to use temporary measures such as portable ramps, signs, traffic cones and doorbells where appropriate to ensure accessibility on Election Day.  The settlement will provide individuals with disabilities the opportunity to vote at the polls throughout Blair County, rather than solely through the use of an absentee ballot.

“The right to vote is the cornerstone of our democracy,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “This agreement will ensure that persons with mobility disabilities and vision impairments have equal opportunities to exercise their right to vote in person at their assigned polling place, just like their neighbors.  The Justice Department is committed to continued, vigorous enforcement of the panoply of federal civil rights laws aimed at securing the right to vote for all Americans, including the Americans with Disabilities Act.”

More information about this settlement and the ADA is available at the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), and via its ADA website.

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL Stolen/Lost Travel Document Database

INTERPOL's Stolen/Lost Travel Document database (SLTD) is a searchable repository of information on passports, visas, and identity documents that have been reported stolen or lost, helping prevent the illicit international travel of criminals and terrorists. Currently containing over 40 million records, SLTD is available to police and border security authorities in 190 INTERPOL member countries through their respective National Central Bureaus (NCBs). INTERPOL's General Secretariat administers the database, which became operational in July 2002.

Designed as an investigative tool for law enforcement and border protection entities, SLTD allows authorized users to query specific passport numbers. The database returns information on suspect documents that includes the issuing country, document type, document number, date of theft/loss, and certain information related to the circumstances of the theft or loss.

A country's passport issuing authority, through its corresponding NCB, is the only entity authorized to enter and modify records in SLTD pertaining to the loss or theft of its national travel documents. The United States is one of the largest contributors to SLTD, with over 3 million records currently on file and updates occurring on a daily basis.

INTERPOL Washington, the U.S. National Central Bureau, manages U.S. participation in the SLTD program. Its related responsibilities include ensuring the timely and accurate entry of stolen/lost U.S. passport data into SLTD upon receipt from the U.S. Department of State, establishing and maintaining SLTD query access by U.S. law enforcement and border inspection authorities, and performing verification and resolution in cases involving foreign passports recorded in SLTD presented to U.S. Customs and Border Protection officers at all U.S. ports of entry. INTERPOL Washington also coordinates with its foreign counterparts to resolve any cases involving lost, stolen, and fraudulent U.S. passports presented at foreign border control points.

In May 2007, Congress, the Department of Homeland Security, and the Department of State formally recognized the importance of SLTD as a screening tool for all travelers seeking to enter the United States. International organizations such as the G8, the European Union, the Organization for Security and Co-operation in Europe and the United Nations Security Council have also endorsed the program. Presently all countries participating in the U.S. Visa Waiver Program report their stolen/lost passport data to INTERPOL for entry into SLTD, as set forth in the Implementing Recommendations for the 9/11 Commission Act of 2007, Pub. L. No. 110-53.

The United States currently screens the passports of all persons entering the country against SLTD. Additionally, the U.S. Department of State queries all U.S. visa applicants' passports against the database. In 2013, U.S. authorities conducted over 238 million SLTD queries, the majority of which came from the U.S. Department of Homeland Security.

Halifax Hospital Medical Center and Halifax Staffing Inc. (Halifax), a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law, the Justice Department announced today.   

The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital.  In this case, the government alleged that Halifax knowingly violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare.  The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.

“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law.  The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.  

“This settlement illustrates our firm commitment to pursue health care fraud," said U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks.  Where necessary, we will continue to investigate and pursue these violations in our district.”

As part of the settlement announced today, Halifax also has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.

“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson.  “Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations.  Both of these independent reviewers will submit regular reports to my agency.”

The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit.  The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations.  Baklid-Kunz will receive $20.8 million of the settlement. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs. 

The investigation and litigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG.  The claims settled by this agreement are allegations only, and there has been no determination of liability, except as determined by the court’s Nov. 13, 2013, ruling.

The lawsuit is captioned United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.). 

A federal inmate pleaded guilty today for the murder of United States Correctional Officer Jose Rivera, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Benjamin Wagner for the Eastern District of California.

James Ninete Leon Guerrero, 48, of Guam, pleaded guilty before U.S. District Judge Phillip Pro to one count of murder by a federal prisoner serving a life sentence. According to court documents, Guerrero aided and abetted co-defendant Jose Cabrera Sablan in the stabbing death of Officer Rivera.

Court documents allege that on June 20, 2008, as Officer Rivera was on duty, conducting his daily count in the United States Penitentiary in Atwater, Calif., Sablan attacked him with an eight-inch homemade shank. Officer Rivera tried to flee, but he was knocked backwards by Sablan and tackled by Guerrero. Guerrero held Officer Rivera down as Sablan stabbed him with the shank more than 20 times. Officer Rivera was 22 years old at the time of his death and was a United States Navy veteran.

Sablan and Guerrero were indicted for murder on Aug. 14, 2008. As a result of Guerrero’s plea, he faces a mandatory sentence of life in prison. His sentencing has been scheduled for May 30, 2014, in the Eastern District of California.

Sablan’s case is set for trial on April 6, 2015. He is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The investigation was conducted by the Bureau of Prisons and the FBI. This case is being prosecuted by Trial Attorney Bonnie Hannan of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Duce Rice of the Eastern District of California.

A Dominican national was sentenced today for his leading role in trafficking the identities and corresponding identity documents of Puerto Rican U.S. citizens.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico, Deputy Director Daniel Ragsdale of U.S. Immigration and Customs Enforcement (ICE), Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS), Director Gregory B. Starr of the U.S. State Department’s Diplomatic Security Service (DSS) and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Wilfredo Blanco-Diaz, 40, formerly of Caguas, Puerto Rico, was sentenced to serve 61 months in prison and three years of supervised release by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. Blanco-Diaz was also ordered to forfeit $422,793 in proceeds and to be removed from the United States after the completion of his sentence.

On Sept. 24, 2013, Blanco-Diaz pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit human smuggling for financial gain and one count of aggravated identity theft. To date, 53 individuals have been charged for their roles in the identity trafficking scheme. All 49 arrested defendants have pleaded guilty and 42 defendants have been sentenced.

According to court documents, individuals located in the Savarona area of Caguas obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The identity brokers in the United States ordered the identity documents from the document suppliers in Savarona on behalf of their customers by making coded telephone calls. The conspirators were charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.

The court documents indicate that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

Blanco-Diaz was a supplier of Puerto Rican identity documents who operated in Caguas and provided Puerto Rican identities to brokers in Florida, Nebraska, North Carolina and Virginia, knowing that the identities would be sold to undocumented aliens who would then pose as U.S. citizens. Blanco-Diaz admitted that he was a manager and supervisor in the conspiracy.

Various identity brokers were operating in Rockford, DeKalb and Aurora, Ill.; Seymour, Columbus and Indianapolis, Ind.; Hartford, Conn.; Clewiston, Fla.; Lilburn and Norcross, Ga.; Salisbury, Md.; Columbus and Fairfield, Ohio; Dorchester, Lawrence, Salem and Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington and Hickory, N.C.; Hazelton and Philadelphia, Pa.; Houston; Abingdon and Albertville, Ala.; and Providence, R.I.

The charges are the result of Operation Island Express, an ongoing, nationally coordinated investigation led by the ICE Homeland Security Investigations’ (ICE-HSI) Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable support.

The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, Middle District of Pennsylvania, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.

Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html . Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline . Anyone who may have information about particular crimes in this case should also report them to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft . Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html ; www.ssa.gov/pubs/10064.html ; www.fbi.gov/about-us/investigate/cyber/identity_theft ; and www.irs.gov/privacy/article/0,,id=186436,00.html .

Lanny Harris, a former sergeant at Roxbury Correctional Institution (RCI) in Hagerstown, Md., and Philip Mayo, a former correctional officer at RCI, were sentenced today for conspiring with other RCI officers on March 8-9, 2008, to assault an inmate at the prison, identified as K.D. 

Both Mayo and Harris previously pleaded guilty to conspiring to assault K.D. during the midnight shift (11 p.m. to 7 a.m.).  Mayo and Harris cooperated with authorities during the federal investigation and testified for the prosecution at the trial of former RCI officer James Kalbflesh, who was convicted for his role in the assaults on K.D. and the subsequent coverup.  U.S. District Judge James K. Bredar sentenced Harris and Mayo to each serve 30 months in prison.     

During their testimony at Kalbflesh’s trial and in court documents filed in connection with their respective guilty pleas, Harris and Mayo each admitted that they met with other officers at RCI during the midnight shift and agreed to assault K.D. in retaliation for a prior incident involving K.D. and another officer.  Harris, Mayo and two other correctional officers entered K.D.’s cell in order to assault the inmate, and the officers then went through with their plan and assaulted K.D.

“Every person in America has the right to be free from cruel and unusual punishment,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “To ensure that this right is protected, the Justice Department will continue to vigorously prosecute correctional officers who violate the rights of inmates.”

To date, 16 current or former officers at RCI have been convicted in connection with a series of assaults that K.D. suffered on March 8-9, 2008.  There are 12 former RCI officers still awaiting sentencing before Judge Bredar, and two who were convicted in state court have already been sentenced. 

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