District Not Recorded

Attorney General Eric Holder and HHS Secretary Kathleen Sebelius today released the annual Health Care Fraud and Abuse Control (HCFAC) Program report showing that for every dollar spent on health care-related fraud and abuse investigations through this and other programs in the last three years, the government recovered $8.10.  This is the highest three-year average return on investment in the 17-year history of the HCFAC Program.

The government’s health care fraud prevention and enforcement efforts recovered a record-breaking $4.3 billion in taxpayer dollars in Fiscal Year (FY) 2013, up from $4.2 billion in FY 2012, from individuals and companies who attempted to defraud federal health programs serving seniors or who sought payments from taxpayers to which they were not entitled.  Over the last five years, the administration’s enforcement efforts have recovered $19.2 billion, up from $9.4 billion over the prior five-year period.  Since the inception of the program in1997, the HCFAC Program has returned more than $25.9 billion to the Medicare Trust Funds and treasury.

These recoveries, released today in the annual HCFAC Program report, demonstrate President Obama’s commitment to making the elimination of fraud, waste and abuse, particularly in health care, a top priority for the administration.  This is the fifth consecutive year that the program has increased recoveries over the past year, climbing from $2 billion in FY 2008 to over $4 billion every year since FY 2011.

The success of this joint Department of Justice and HHS effort was made possible in part by the Health Care Fraud Prevention and Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in Medicare and Medicaid and to crack down on individuals and entities that are abusing the system and costing American taxpayers billions of dollars. 

“With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive health care fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations, and commit fraud on federal health care programs,” said Attorney General Eric Holder.  “Thanks to initiatives like HEAT, our work to combat fraud has never been more cooperative or more effective.  And our unprecedented commitment to holding criminals accountable, and securing remarkable results for American taxpayers, is paying dividends.”
“These impressive recoveries for the American taxpayer are just one aspect of the comprehensive anti-fraud strategy we have implemented since the passage of the Affordable Care Act,” said HHS Secretary Sebelius.  “We’ve cracked down on tens of thousands health care providers suspected of Medicare fraud. New enrollment screening techniques are proving effective in preventing high risk providers from getting into the system, and the new computer analytics system that detects and stops fraudulent billing before money ever goes out the door is accomplishing positive results – all of which are adding to savings for the Medicare Trust Fund.”

The new authorities under the Affordable Care Act granted to HHS and the Centers for Medicare & Medicaid Services (CMS) were instrumental in clamping down on fraudulent activity in health care.  In FY 2013, CMS announced the first use of its temporary moratoria authority granted by the Affordable Care Act.  The action stopped enrollment of new home health or ambulance enrollments in three fraud hot spots around the country, allowing CMS and its law enforcement partners to remove bad actors from the program while blocking provider entry or re-entry into these already over-supplied markets.

The Justice Department and HHS have improved their coordination through HEAT and are currently operating Medicare Fraud Strike Force teams in nine areas across the country. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes as well as chronic fraud by criminals masquerading as health care providers or suppliers. The Justice Department’s enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act has produced similar record-breaking results.  These combined efforts coordinated under HEAT have expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud.  

In Fiscal Year 2013, the strike force secured records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46). Beyond these remarkable results, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007.

In FY 2013, the Justice Department opened 1,013 new criminal health care fraud investigations involving 1,910 potential defendants, and a total of 718 defendants were convicted of health care fraud-related crimes during the year.  The department also opened 1,083 new civil health care fraud investigations.

The strike force coordinated a takedown in May 2013 that resulted in charges by eight strike force cities against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings. As a part of the May 2013 takedown, HHS also suspended or took other administrative action against 18 providers using authority under the health care law to suspend payments until an investigation is complete.

In March 2011, CMS began an ambitious project to revalidate all 1.5 million Medicare enrolled providers and suppliers under the Affordable Care Act screening requirements. As of September 2013, more than 535,000 providers were subject to the new screening requirements and over 225,000 lost the ability to bill Medicare due to the Affordable Care Act requirements and other proactive initiatives.  Since the Affordable Care Act, CMS has also revoked 14,663 providers and suppliers’ ability to bill the Medicare program. These providers were removed from the program because they had felony convictions, were not operational at the address CMS had on file, or were not in compliance with CMS rules.

HHS and the Justice Department are leading historic efforts with the private sector to bring innovation to the fight against health care fraud. In addition to real-time data and information exchanges with the private sector, CMS’ Program Integrity Command Center worked with the HHS Office of the Inspector General and the FBI to conduct 93 missions to detect, investigate, and reduce improper payments in FY 2013.

From May 2013 through August 2013, CMS led an outreach and education campaign targeted to specific communities where Medicare fraud is more prevalent.  This multimedia campaign included national television, radio, and print outreach and resulted in an increased awareness of how to detect and report Medicare fraud. 

To read today’s report visit http://oig.hhs.gov/publications/docs/hcfac/FY2013-hcfac.pdf

For previous years’ reports visit https://oig.hhs.gov/reports-and-publications/hcfac/index.asp

For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced her departure from the department today, effective as of March 21, 2014.

“Over the past year, Mythili Raman has done an exemplary job of leading the Criminal Division during a pivotal time,” said Attorney General Eric Holder.  “Since she first joined the department as a Criminal Division trial attorney nearly two decades ago, and throughout her career both in the division and the Maryland U.S. Attorney’s Office, Mythili has proven herself as a tireless and talented prosecutor, and a fearless advocate for the United States.  From combating financial and health care fraud, to fighting foreign and domestic corruption, and safeguarding the American people from crime and drug-fueled violence, Mythili’s tenure as head of the Criminal Division has been defined by extraordinary achievements.  Her strong and steady leadership has made an enormous difference in the past year.  Although I wish her the best as she takes the next step in her career, I will sorely miss her sound judgment, her keen intellect, her close friendship, and her commitment to the work of the department.  I thank her, on behalf of the American people, for her years of dedicated service.”

“I feel so lucky to have started my department career as a trial attorney in the Criminal Division seventeen and a half years ago, and feel even more fortunate that this division has been my last home at the Justice Department,” said Acting Assistant Attorney General Raman. “The Criminal Division is an extraordinary institution, and it has been a singular privilege to lead it for the past year and to serve alongside the dedicated, talented, and simply excellent women and men who work every day to do justice. I will always be grateful to the Attorney General for giving me this opportunity to serve.”

During Raman’s tenure as Acting Assistant Attorney General, the division has obtained significant results in all areas of financial fraud enforcement. Under Raman’s leadership, the Criminal Division, working alongside the Antitrust Division, launched a wide-ranging investigation of the alleged manipulation of foreign exchange rates by multi-national banks around the world. In addition, the division continued aggressively to investigate the manipulation of the London InterBank Offered Rate (LIBOR), charging six individuals at two different financial institutions and reaching a criminal resolution with one financial institution that resulted in the second largest penalty assessed in the department’s ongoing, industry-wide LIBOR probe. The division further announced charges against or convictions of more than a dozen individuals for FCPA-relation violations, and secured three of the ten largest corporate FCPA resolutions in history. In addition, Raman oversaw a record-breaking year for health care fraud enforcement in the number of cases filed, individuals charged, guilty pleas secured and convictions obtained at trial.

Under Raman’s leadership, the division also made significant strides in money laundering enforcement, including bringing charges, with the U.S. Attorney’s Office in Manhattan, against Liberty Reserve, one of the world’s largest digital currency companies, and several of its principals, in the department’s largest-ever money laundering prosecution. The division also continued to emphasize public corruption enforcement, securing several convictions in a wide range of domestic public corruption cases throughout the country, including of former U.S. Congressman Richard Renzi of Arizona, and obtaining separate convictions of several individuals, including a former candidate for U.S. Congress, for violations of federal campaign finance laws.

During Raman’s tenure, the division has aggressively pursued cyber crime and intellectual property crimes, and is currently conducting the ongoing investigation of the data breach at Target. Among other prosecutions, the division, with the U.S. Attorney’s Office in Atlanta, secured the guilty plea of an international cybercriminal from Thailand who was responsible for distributing “Spy Eye” malware that infected 1.4 million computers around the world. The division also charged the first-ever copyright infringement cases involving counterfeit mobile device apps.

The division also continued to make great strides in the fight against violent crime, convicting several members of the Los Zetas cartel for the 2011 murder of an American law enforcement agent in Mexico and, just a few weeks ago, securing the conviction of a leader of the Barrio Azteca gang who was responsible for the murder of employees of a U.S. consulate in Mexico.

Raman joined the department as a trial attorney in the Criminal Division in 1996. In 1999, she joined the U.S. Attorney’s Office in Maryland where she served in a number of leadership positions, including Appellate Chief and Chief of the office’s southern division. She returned to the Criminal Division in 2008, serving first as acting Chief of Staff, and then as Principal Deputy Assistant Attorney General and Chief of Staff, until she was named Acting Assistant Attorney General of the Criminal Division on March 1, 2013.

Aaron H. Kelly, a United States Postal Service employee, was indicted yesterday in the U.S. District Court for the District of Maryland for four counts of mail fraud, two counts of bank fraud, one count of corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS) and two counts of aiding and assisting in the preparation of false tax returns, the Justice Department and IRS announced today following the unsealing of the indictment. 

According to the indictment, Kelly, a resident of Maryland, engaged in a scheme to defraud the IRS, the Thrift Saving Plan and the Educational Systems Federal Credit Union by sending fictitious financial instruments to fraudulently extinguish the taxes he owed to the United States as well as the debts he owed to the Thrift Savings Plan and the Federal Credit Union.  In addition, Kelly submitted two false tax returns to the IRS that requested millions of dollars in fraudulent refunds.

An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Kelly faces a statutory maximum potential sentence of 20 years in prison for each mail fraud count, 30 years in prison for each bank fraud count and three years in prison for each of the tax-related counts.

This case was investigated by the Treasury Inspector General for Tax Administration and special agents of IRS - Criminal Investigation.  Trial Attorneys Ken Vert and Yael T. Epstein of the department’s Tax Division are prosecuting the case.

A Northern California real estate investor has agreed to plead guilty for his role 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 today in the U.S. District Court for the Northern District of California in Oakland against Charles Gonzales, of Alamo, Calif.  Including Gonzales, a total of 44 individuals have pleaded guilty or agreed to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, beginning as early as April 2009 until about October 2010, Gonzales 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 Alameda County, Calif.  Gonzales was also charged with conspiring to commit mail fraud by fraudulently acquiring title to selected 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.

“The Antitrust Division’s ongoing investigation has resulted in charges against 44 individuals for their roles in schemes that defraud distressed homeowners and lenders,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division will continue to work with its law enforcement partners to vigorously protect competition at the local level.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at the 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, the 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 symbolism of holding illegitimate and fraudulent private auctions near a courthouse is deplorable,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The justice system will continue to prevail in this ongoing investigation pursuing bid rigging and fraud at public foreclosure auctions.”

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 victim 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.

Today’s 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 415-934-5300, or call the FBI tip line at 415-553-7400.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it 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.**

The Civil Rights Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Eastern District of Michigan and the FBI announced today that they will not be pursuing federal criminal civil rights charges against the Saginaw Police Department (SPD) officers who shot and killed Milton Hall on July 1, 2012.  After a thorough investigation, federal authorities have determined that this tragic event does not present sufficient evidence of willful misconduct to lead to a federal criminal prosecution of the police officers involved.

The Civil Rights Division, the U.S. Attorney’s Office, and the FBI conducted an independent investigation that carefully considered all of the evidence.  During the investigation, prosecutors thoroughly reviewed the criminal investigation previously conducted by the Michigan State Police in conjunction with the Saginaw County Prosecutor’s Office and the Michigan Attorney General’s Office.  State authorities collected the physical evidence at the scene; photographed the scene; interviewed the two non-shooting SPD officers and dozens of eyewitnesses; acquired the patrol car dashcam and civilian videos of the incident; gathered the dispatch logs, 911 calls and other investigative materials related to the incident; obtained the involved officers’ police reports; and conducted a ballistics and autopsy examination.  At the conclusion of the state investigation, the Saginaw County Prosecutor and the Michigan Attorney General declined to prosecute any of the SPD officers involved in the incident.

In addition to reviewing the evidence previously collected, FBI agents interviewed a number of witnesses who had not been interviewed during the state investigation, including individuals whose names were provided to prosecutors by Hall’s family.

To pursue prosecution under Section 242 in the U.S. Code, the applicable criminal civil rights statute, the government would have to prove beyond a reasonable doubt that the SPD officers deprived Hall of his constitutional right to be free from an unreasonable use of force.  The government would also have to establish beyond a reasonable doubt that the officers acted willfully, that is, for the specific purpose of violating the law.  Law enforcement actions based on fear, panic, misperception or even poor judgment do not constitute willful conduct prosecutable under the statute. 

The evidence in this case shows that on July 1, 2012, SPD officers responded to the Riverview Plaza in Saginaw, Mich., after receiving a 911 call about a confrontation between a man, later identified as Hall, and a clerk at a Mobil gas station.  An SPD sergeant was the first officer to arrive at the scene, where she located Hall in the plaza’s parking lot and saw that he was carrying a knife with an approximately three-inch blade.  After encountering Hall and seeing that he was armed with a knife, the sergeant requested backup.  When the second officer arrived, Hall approached that officer’s patrol car and jabbed the hood of the vehicle with a knife.  The six remaining SPD officers on duty that day, including a K-9 officer and his dog, reported to the plaza, approached Hall and repeatedly ordered him to drop his knife.  Hall did not comply with the officers’ commands, and verbally responded that he would not put the knife down.  While the SPD officers came together on the scene, the K-9 officer and his dog approached and retreated from Hall several times.  During this time, Hall was intermittently shifting his feet and getting into and out of a crouching stance.  When Hall, with the knife still in his hand, moved toward the K-9 officer and his dog, six SPD officers fired at him and fatally wounded him.

Two SPD patrol car dashcams captured a video recording, with no audio, of much of the encounter between Hall and the SPD officers.  The dashcams on the other SPD patrol cars were either not operational or not activated during this incident.  Several civilians witnessed the incident and recorded portions of it on their cellular phones. 

After the shooting, all of the SPD officers at the scene wrote reports.  In these reports, the officers who discharged their weapons explained that they did so because they believed Hall posed an imminent threat to the officers’ safety.   

A fter a careful review of all of the evidence, experienced prosecutors from the Criminal Section of the Civil Rights Division and the United States Attorney’s Office for the Eastern District of Michigan have determined that t he evidence in this case is insufficient to prove , beyond a reasonable doubt, that the SPD officers willfully shot Hall for an unlawful purpose, rather than for their stated purpose of preventing Hall from harming SPD staff.  Even if the officers were mistaken in their assessment of the threat posed by Hall, this would not establish that the officers acted willfully, or with an unlawful intent, when using deadly force against Hall.  Accordingly , this tragic event does not present sufficient evidence of willful misconduct to give rise to a federal criminal prosecution of the police officers involved. 

Today, a federal jury in the U.S. District Court for the Eastern District of Oklahoma in Muskogee, Okla., convicted Raymond A. Barnes, 43, and Christopher A. Brown, 32, the former jail superintendent and assistant jail superintendent, respectively, of the Muskogee County Jail (MCJ) on multiple counts of civil rights offenses related to allegations of excessive force on inmates at MCJ on or between August 2009 and May 2011.  Brown was also convicted of making material false statements to the FBI.

Both Barnes and Brown were found guilty of conspiring to violate the rights of inmates housed at MCJ by assaulting inmates themselves or by directing other jailers employed by MCJ to do so.  Specifically, the defendants did or caused the following to be done: unjustifiably strike, assault, harm and physically punish inmates at MCJ who were restrained, compliant and not posing a physical threat; organize “meet and greets,” whereby jailers would scare, punish and harm incoming inmates from neighboring counties by throwing and slamming the handcuffed inmates to the ground upon their arrival at MCJ; threaten to fire MCJ employees if they reported abusive behavior directly to the sheriff or to outside law enforcement authorities; require and encourage MCJ jailers to write incident reports that falsely justified uses of force and contained misleading or inaccurate accounts of what had occurred when force was used; and perpetuate an environment within MCJ that allowed unlawful beatings and assaults against inmates to continue indefinitely and without consequence.

Both defendants were also convicted of violating the rights of an inmate identified as J.R. when MCJ jailers slammed and threw J.R. head-first to the ground while he was handcuffed.  Barnes was additionally convicted of violating the rights of a second inmate, G.T., for similar conduct.  Brown was acquitted of violating the rights of G.T.

In addition, Brown was convicted of one count of making material false statements to the FBI.  Brown falsely claimed that, during meet and greets, the incoming inmate was ordered out of the transport vehicle and then “gently placed” on the ground.  But in fact, Brown knew at the time of his statement to the FBI that during these meet and greets the MCJ jailers routinely threw and slammed inmates to the ground even though the inmates were restrained and posed no physical threat.

“Our Constitutional system of government requires this nation’s jailers to abide by the laws they enforce, and to protect the Constitutional rights of all persons in their custody,” said Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division.  “Today’s verdict demonstrates that the Department of Justice will vigorously prosecute anyone who abuses their official power to harm the people in their custody.”

The defendants face a statutory maximum penalty of 10 years for each of the civil rights convictions.  Brown faces a statutory maximum penalty of five years for making material false statements to the FBI.

This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and prosecuted by Trial Attorneys Fara Gold and Dana Mulhauser of the Civil Rights Division.

Diagnostic Imaging Group (DIG) has agreed to pay a total of $15.5 million to resolve allegations that its diagnostic testing facility falsely billed federal and state health care programs for tests that were not performed or not medically necessary and by paying kickbacks to physicians.  Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery, U.S. Attorney for the District of New Jersey Paul J. Fishman and U.S. Attorney for the Eastern District of New York Loretta E. Lynch announced the settlement today.

DIG has agreed to pay $13.65 million to the federal government and an additional total of $1.85 million to New York and New Jersey.  DIG operates a chain of diagnostic testing facilities through its subsidiary, Doshi Diagnostic Imaging Services, which is headquartered in Hicksville, N.Y.  DIG previously operated chains in New Jersey and Florida through subsidiaries Doshi Diagnostic Imaging Services of New Jersey and Signet Diagnostic Imaging Services.  

“When health care providers pay kickbacks and submit false claims to Medicare, they not only deplete the Medicare Trust Fund, they undermine the integrity of the health care system,” said Assistant Attorney General Delery.  “The Justice Department will relentlessly pursue those who misuse federal health care funds for their own profit.”  

“Health care providers who make decisions based on profit instead of medical need compromise patient safety and confidence,” said U.S. Attorney Fishman.  “Unnecessary tests and the payment of kickbacks also siphon precious resources from our health care system.  The settlement we’re announcing today is an appropriate response to these unacceptable practices.” 

The settlement announced today resolves allegations that DIG submitted claims to Medicare, as well as the New Jersey and New York Medicaid Programs, for 3D reconstructions of CT scans that were never performed or interpreted.  Additionally, DIG allegedly bundled certain tests on its order forms so that physicians could not order other tests without ordering the additional bundled tests, which were not medically necessary.  Today’s settlement also resolves allegations that DIG paid kickbacks to physicians for the referral of diagnostic tests.  According to the government, the kickbacks were in the form of payments that DIG made to physicians ostensibly to supervise patients who underwent nuclear stress testing.  These payments allegedly exceeded fair market value and were, in fact, intended to reward physicians for their referrals.     

“Patients deserve testing decisions based solely on medical need, not doctors’ pocketbooks,” said U.S. Attorney Lynch.  “We will continue to work with our federal and state law enforcement partners to investigate vigorously allegations of fraud on federal programs like Medicare and to pursue those who seek to fraudulently deplete the Medicare Trust Fund.” 

“Paying physicians for their referrals and submitting false claims to increase Medicare and Medicaid reimbursements – as was alleged in this case – simply cannot be tolerated,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “Besides levying a hefty penalty, the settlement requires an independent organization to review Diagnostic Imaging Group’s claims for five years and to send reports to the government.”

The allegations resolved by today’s settlement were raised in three lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.  The three whistleblowers, Mark Novick, M.D., Rey Solano and Richard Steinman, M.D., will receive $ 1.5 million , $ 1.07 million and $ 209,250 , respectively, as part of today’s 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.

This case was handled by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the District of New Jersey and the U.S. Attorney’s Office for the Eastern District of New York.  The settlement is the culmination of an investigation conducted jointly by special agents of the Department of Health and Human Services Office of Inspector General and the FBI with contributions from the Railroad Retirement Board.  

The claims settled by this agreement are allegations only, and there has been no determination of liability.  The three cases are captioned United States ex rel. Mark Novick, M.D. v. Doshi Diagnostic Imaging Services P.C. , Civil Action No. 09-4992 (D.N.J.), United States ex rel. Rey Solano v. Diagnostic Imaging Group et al., Civil Action No. 10-267 (D.N.J.) and United States ex rel. Richard Steinman, M.D. v. Diagnostic Imaging Group, et al., Civil Action No. 10-4161 (E.D.N.Y.). 

A civilian employee of the U.S. Navy posted at the Capodichino Navy Base near Naples, Italy, was arraigned yesterday in Norfolk, Va., for allegedly obtaining more than $360,000 in housing benefits that he was not entitled to receive.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney Nicholas A. Klinefeldt of the Southern District of Iowa made the announcement.

Steven William Ashton, 41, was charged in a seven-count indictment returned by a grand jury in the Southern District of Iowa on Feb. 19, 2014. He is charged with theft of government funds for obtaining more than $360,000 in housing benefits, called Living Quarters Assistance (LQA), to which he was not entitled. He is also charged with presenting a falsified lease and making false statements in an effort to justify those benefits when confronted by a federal agent from the Naval Criminal Investigative Service (NCIS).

According to court documents, from April 2004 to the present, Ashton has been employed by the Navy as the NATO and Host Nation Programs Manager for the regions of Europe, Africa and Southwest Asia, managing contracts and agreements among the Navy and other countries to support the United States’ military efforts. Because he lived off-base, he was entitled to an LQA allowance to reimburse him for his payments for rent and other housing expenses. But when he allegedly moved in with his future wife and stopped paying rent in November 2005, he continued receiving the rental subsidies even though he was no longer eligible for them. When confronted by an NCIS agent investigating the matter, Ashton allegedly forged a lease in 2013 with his father-in-law – who had died in 2007 – and provided the lease along with false explanations to the NCIS agent.

Ashton is also charged with creating and submitting to the U.S. Navy various fraudulent documents to obtain other benefits. According to the indictment, Ashton created false documents to obtain a Foreigners’ Permit of Stay from the Italian government that allowed him to travel in and out of Italy without a visa and to be tax exempt for wages earned in Italy. He also allegedly created false documents to obtain a Permanent Logistic Support letter that gave Ashton Navy benefits such as purchasing tax-free gas at a savings of more than 50 percent, and a Civilian Access Card that provided him free access to U.S. military facilities world-wide, including use of the tax-free military shopping facilities. In addition, Ashton used fraudulent U.S. Coast Guard documentation purporting to show that Ashton had the licenses needed to moor a boat at discounted rates in the Bay of Naples, which saved him more than $28,000 in mooring fees.

Ashton was arrested on the Navy base in Italy and flown to Norfolk for his initial appearance. A preliminary hearing is scheduled for March 4, 2014 in the Southern District of Iowa.

This case was investigated by the NCIS and the Air Force Office of Special Investigations. The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Clifford Cronk of the Southern District of Iowa.

Three men have pleaded guilty in Brooklyn, N.Y., for their roles in a check cashing scheme designed to evade anti-money laundering reporting requirements, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney Loretta E. Lynch of the Eastern District of New York.

Robert Petrosyants, 32, and his twin brother Zhan Petrosyants, 32, both of Fort Lee, N.J., pleaded guilty today before United States District Judge Frederic Block at the federal courthouse in Brooklyn to conspiring to violate the Bank Secrecy Act by causing the filing of false Currency Transaction Reports (CTRs) for cash transactions in excess of $10,000.  On Feb. 21, 2014, Lasha Goletiani, 34, of Brooklyn, pleaded guilty to the same charge.  They each face a maximum penalty of five years in prison at sentencing, which will be determined at a later date.

According to court filings and facts presented during the plea proceedings, the Petrosyants twins operated medical billing companies, including DJR Capital Inc., formerly located at 45 Main Street in the DUMBO section of Brooklyn.  Those billing companies filed no-fault accident claims with insurance companies on behalf of medical clinics and equipment providers.  Upon receipt of payment from the insurance companies in settlement of the claims, the conspirators drew checks payable to a complex web of shell companies.  These shell companies appeared to be health care related but in fact did no legitimate business and were incorporated in the names of students who had received special short-term visas to study in the United States.  The checks were then cashed by Goletiani and Zhan Petrosyants at Belair Payroll Services Inc., a Flushing-based check cashing business.

Belair and its owner, Craig Panzera, pleaded guilty in November 2013 to failing to maintain an effective anti-money laundering program and agreed to forfeit over $3.2 million.

According to court documents, Goletiani and Zhan Petrosyants provided false names to Belair when cashing checks and caused Belair to file CTRs stating that the shell companies or their nominee owners received the cash.  Goletiani and Zhan Petrosyants received all of the cash from checks in the names of the shell companies.  At the time that many of these transactions occurred, the nominee shell company owners were not even in the country when Goletiani and Zhan Petrosyants were cashing checks in their names. 

Under the Bank Secrecy Act, financial institutions, including check cashers, are required to file a CTR with the Department of the Treasury for any transaction involving more than $10,000 in currency on a single day.  As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction and the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction.   

Goletiani and Zhan Petrosyants pleaded guilty to a second superseding indictment filed on Nov. 6, 2013, charging them with conspiring to cause Belair to file false CTRs.  Robert Petrosyants pleaded guilty to a separate information charging the same conspiracy. 

The investigation was conducted by U.S. Immigration and Customs Enforcement, Homeland Security Investigations and the Internal Revenue Service, Criminal Investigation Division.  The case is being prosecuted by Trial Attorneys Kevin G. Mosley, J. Randall Warden and Claiborne Porter of the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

Michael Edwards was sentenced today to serve two concurrent sentences of 36 months in prison followed by three years of supervised release, and ordered to pay restitution of $573,518 to the Internal Revenue Service (IRS), the Justice Department and IRS announced.  On Dec. 3, 2013, Edwards pleaded guilty to one count of corruptly endeavoring to obstruct the IRS and one count of wire fraud.  Both charges arise from Edwards’ operation of his tax return preparation business, Boston Financial Associates (BFA) and Edwards’ misappropriation of income tax refunds from two of his clients in 2009. 

According to court documents, Edwards admitted that he misled an IRS auditor reviewing one of his client’s 2007 and 2008 income tax returns by giving her false documentation that claimed to support the false entries on the returns.  Edwards misappropriated federal income tax refunds of $573,518 from one client and $202,143 from another client.  As of the sentencing date, Edwards has made restitution to one of his clients and was also ordered to pay restitution to the second client.

This case was investigated by IRS – Criminal Investigation and prosecuted by Senior Litigation Counsel Corey J. Smith of the Tax Division.

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

The Justice Department announced today that a federal district court judge in Jackson, Miss., approved a settlement of the department’s lawsuit against the original owners and developers of nine multifamily housing complexes located in Mississippi, Louisiana and Tennessee.  The complexes contain more than 800 ground-floor units that are required by the Fair Housing Act (FHA) to contain accessible features, and eight of the complexes contain leasing offices that are required by the Americans with Disabilities Act (ADA) to contain accessible features.  The lawsuit alleged that the defendants failed to include important accessible features at these properties.

Under the settlement, defendants The Bryan Company, Bryan Construction Company Inc., Steve Bryan, Mid-South Houston Partners, Mid-South Development LLC aka MSD LLC, The Vineyards Apartments LLC, Windsor Lake Apartment LP and Cypress Lake Development LLC must make extensive retrofits to meet FHA requirements.  These include reducing door threshold heights, replacing excessively sloped portions of sidewalks, installing new and properly sloped curb ramps, installing cane detection at stairwells, installing accessible door hardware and ensuring that there are a sufficient number of accessible parking spaces at the properties. 

“The Justice Department is deeply committed to ensuring equal access to housing for persons with disabilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “This comprehensive settlement will ensure that individuals with disabilities will have an equal opportunity to live in and visit these nine apartment complexes.”

“ The U.S. Attorney’s Office is committed to working with the Civil Rights Division to ensure that those who design and construct multi-family apartment complexes comply with the Fair Housing laws and the Americans with Disabilities Act ,” said U.S. Attorney Gregory K. Davis for the Southern District of Mississippi.  “This office remains vigilant in its efforts to eradicate discrimination and ensure that persons with disabilities have accessible accommodations in which to live.”

In May 2013, as part of the same lawsuit, the court approved a settlement resolving the department’s claims against nine architects and civil engineers who were involved with the properties.  Those defendants paid a total of $865,000 toward accessibility retrofits and $60,000 to compensate aggrieved persons harmed by the inaccessible conditions alleged in the lawsuit.  The following complexes will be retrofitted: Houston Levee Apartments in Cordova, Tenn.; The Vineyard at Castlewoods Apartments in Brandon, Miss.; Windsor Lake Apartments in Brandon, Miss.; Sutton Place Apartments in Horn Lake, Miss.; Twin Oaks Apartments in Hattiesburg, Miss.; Oak Hollow Apartments in Southaven, Miss.; Spring Lake Apartments in Jackson, Miss.; Cypress Lake Apartments in Baton Rouge, La.; and Pelican Pointe Apartments in Slidell, La. 

The FHA prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin, and disability.  Title III of the ADA requires, among other things, that public accommodations comply with specific requirements related to architectural standards to ensure accessible public and common use areas.  More information about the Civil Rights Division and the laws it enforces is available at the website.  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the department or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

Today, the Justice Department announced the results of its ongoing efforts to combat tax refund fraud that involves identity theft.  The Tax Division, in conjunction with the Internal Revenue Service (IRS) and U.S. Attorneys’ Offices (USAOs) nationwide, has prioritized the investigation and prosecution of individuals who engage in stolen identity refund fraud (SIRF).  According to the IRS, from 2008 through May 2012, the IRS identified more than 550,000 taxpayers who have had their identities stolen for the purpose of claiming false refunds in their names.  In fiscal year 2013, the department filed more than 580 indictments or informations charging more than 880 defendants with SIRF-related crimes.  

SIRF is the use of stolen or otherwise wrongfully acquired personal identification information to file a fraudulent claim with the IRS for a tax refund.  These crimes occur when a social security number, or list of numbers, is stolen or bought; a false tax return showing a refund due is filed electronically, usually at the beginning of filing season before the legitimate taxpayer has filed for the year; and the refund is loaded to a prepaid card, sent to a bank account or mailed to an address accessible by those involved in the scheme.

The actual implementation of SIRF schemes is often complex to carry out.  In an increasing number of cases, the identities are stolen or bought in one place; the returns are electronically filed from another location, often through difficult to trace Wi-Fi connections; refunds are directed to a distant location; checks are cashed in yet another location; and the currency then moves again.

“The Department of Justice is committed to constant vigilance in investigating and prosecuting SIRF crimes,” said Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division.  “Too often the victims of identity theft are the most vulnerable in our communities – those whose identities are stolen from medical services or nursing homes, or grieving families who learn that the identities of deceased loved ones have been fraudulently used – and all honest taxpayers are victims when wrongful refund claims are paid out.  We are determined to work with the IRS to stop this crime at the door, and to seek the conviction and punishment of these criminals.”

Some of the prosecutions from 2013 that resulted in significant prison sentences for SIRF crimes include:  

• Vernon Harrison a corrupt U.S. Postal Service mail carrier, was sentenced to serve 111 months in prison in October 2013.  According to court documents, tax refunds were placed on debit cards and mailed to addresses on Harrison’s postal route in Montgomery, Ala., which he then stole from the mail and provided to a co-conspirator in exchange for cash.  

• Lea’Tice Phillips worked for an Alabama state agency and had access to databases that contained personal identifying information.  As alleged in court documents, Phillips conspired with Antoinette Djonret and others to file false tax returns using identities stolen from the database.  In total, Djonret filed over 1,000 false tax returns that claimed over $1.7 million in fraudulent tax refunds.  Djonret was sentenced in February 2013 to serve 12 years in prison, and Phillips was sentenced in September 2013 to serve 94 months in prison.  

• Angela Myers operated “Angie’s Tax Service,” a tax preparation business located in Baton Rouge, La.  According to court documents, Myers electronically filed false claims for refunds using the names and social security numbers of identity theft victims, many of whom were nursing home patients.  Myers was sentenced to serve 132 months in prison in July 2013.  

• Leslie Brewster a tax return preparer from Durham, N.C., was sentenced to serve 70 months in prison.  According to court documents, Brewster was the manager of a branch office of a tax preparation franchise called Nothing But Taxes, and purchased personal identifying information to claim false dependents on tax returns she prepared for clients.  

• Quentin Collick and Deatrice Williams were sentenced in November 2013 to serve 85 and 51 months in prison, respectively.  Corey Thompson, a co-conspirator, was sentenced to serve 30 months in jail.  Williams worked for a debt collection company and stole the identities of a number of individuals, then provided the stolen information to Collick, her son-in-law.  Thompson worked as an independent contractor for a cable company installing cable and internet access for customers.  To conceal the filing of the false tax returns, Thompson used his specialized knowledge and equipment to shut down and hijack his customers' internet service, and, along with Collick, filed false tax returns using the customers' internet access.  Thompson and Collick then directed the fraudulent tax refunds to be placed on pre-paid debit cards.  

In 2014, the department has continued to pursue numerous prosecutions against SIRF criminals.  On Jan. 24, 2014, a jury convicted current and former corrections officers of identity theft and tax fraud; according to court documents and evidence presented at trial, the pair accessed a state prison database and used the stolen identity information to file false tax returns.  A check casher was sentenced to 37 months in prison on Jan. 16, 2014, for cashing refund checks in the names of individuals who did not authorize him to cash the checks, according to court documents.  A nursing home employee was convicted by a jury on Jan. 14, 2014, of conspiracy, aggravated identity theft and other SIRF-related crimes; according to court documents and the evidence presented at trial, she stole the identity information of nursing home patients and used that information to create false tax returns.  An Alabama man pleaded guilty on Jan. 13, 2014, for his role in a SIRF fraud.  According to court documents, he obtained stolen identities from an Alabama state employee, used those identities to file false tax returns, and recruited a bank employee to assist him in having the false tax refunds deposited into various bank accounts.  A social worker pleaded guilty on Jan. 10, 2014, to identity theft and tax fraud charges.  According to court documents, she illegally obtained the identifying information of her clients – minors and disabled adults who may have been abused or neglected – and sold that information to others who used the stolen identities to claim as false dependents on fraudulent tax returns they prepared.  

"We're fighting identity theft head-on at the IRS and making substantial progress with the help of the Justice Department and local law enforcement," said Commissioner John Koskinen for the IRS.  "We're stopping more identity theft before these fraudulent refunds go out the door.  The IRS initiated nearly 1,500 identity theft related criminal investigations last year, an increase of 66 percent over 2012.  Fighting fraud is an ongoing battle as identity thieves continue to create new ways of stealing personal information.  The IRS is continually reviewing our policies to strengthen our systems, minimize the incidence of identity theft and help victims.

The sentences imposed against those committing SIRF crimes are significant and reflect the seriousness of these crimes.  The Justice Department is committed to investigating and prosecuting tax refund fraud that involves identity theft, and will continue to work with the IRS, FBI, U.S. Secret Service, U.S. Postal Inspection Service, other federal law enforcement agencies as well as state and local law enforcement agencies to combat SIRF-related crimes.  Each U.S. Attorney’s Office has a point of contact to coordinate SIRF matters for its district.  

The IRS has taken steps to detect and prevent the fraud before it occurs.  For example, the IRS has designed new software filters to spot false returns before they are processed and before a refund is issued.  The IRS has also expanded efforts to place identity-theft indicators on taxpayer accounts to track and manage identity-theft incidents.  For information from the IRS on how to protect your identity and what to do if you are a victim of identity theft, please visit the IRS’s Identity Protection webpage.

More information on the department’s enforcement efforts is available on the Tax Division’s website, as are links to identity theft information and resources.

The Department of Justice announced today the filing of a lawsuit against the Missouri National Guard (MNG) alleging that the MNG violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by requiring its dual technician employees to resign from their civilian positions prior to active duty service in the U.S. Army Guard and Reserve.

According to the complaint, filed in the U.S. District Court for the Western District of Missouri, the MNG violated the USERRA rights of dual technician Kinata Holt by requiring her resignation, as a civilian dual technician, prior to her being called to active duty with the U.S. Army Guard and Reserve.  According to the complaint, by refusing to place Holt on furlough or leave of absence, the MNG’s resignation requirement denied her the benefit of 15 days of annual, paid military leave to which she would have been entitled as a dual technician.  USERRA not only prohibits employers from placing additional prerequisites on civilian employees before allowing them to serve in the military, but also mandates that employers place employees who depart for military leave on “furlough” or leave of absence status and not require them to quit their civilian jobs.

This lawsuit seeks, among other injunctive relief, a court order enjoining the MNG from requiring the resignation of civilian dual technicians from their civilian positions prior to service in the U.S. Army Guard and Reserve.  The suit also seeks monetary relief for those who were improperly denied military leave benefits as compensation for the damages that were incurred as a result of the USERRA violation.

“Employers have a legal obligation under USERRA to provide promised benefits to individuals who choose to serve in the military,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Civil Rights Division is committed to protecting the rights of those who choose to serve their country through military service.” 

This case stems from a referral by the U.S. Department of Labor (DOL) following an investigation by the DOL’s Veterans’ Employment and Training Service.  The case is being handled by the Employment Litigation Section of the Civil Rights Division.

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

The government has asked a federal court in California to issue an injunction shutting down the importation and sales activities of four California companies and six individuals in connection with their imports of illegal children’s products containing, among other things, lead, phthalates and small parts inappropriate for children under age three.  Phthalates are a chemical plasticizer that make certain products flexible, and certain types of phthalates are banned from use in children’s toys and other child care products.  The Justice Department filed the injunction action in the Central District of California at the request of the Consumer Product Safety Commission (CPSC).

The defendant companies in the case are Toys Distribution Inc. dba TDI International, S&J Merchandise Inc., BLJ Apparel Inc. and All Season Sales Inc.  The defendant individuals are Loan Tuyet Thai, Lan My Lam, Paul Phuong, Cuc T. Thai, Tom Liu and Luan Luu.

“Companies cannot be allowed to import hazardous toys into the United States,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Parents have a right to feel confident that the toys their children play with are safe.”       

The CPSC determined through an investigation that the defendants imported various items into the United States in violation of the Consumer Product Safety Act (CPSA) and the Federal Hazardous Substances Act (FHSA).  The violative products that Toys Distribution Inc. imported included: motorized and “pull-back” toy cars with impermissible lead content and small parts hazards, numerous toy musical instruments with small parts hazards, dolls containing impermissible levels of lead and phthalates and rattles that failed to meet the infant rattle standards.  S & J Merchandise’s imports of violative products included numerous models of toy cars with impermissible lead content or small parts hazards, a toy telephone with small parts hazards and numerous different plastic dolls with impermissible phthalate levels.  The violative products imported by BLJ Apparel included children’s products and toys with illegal levels of total lead content, toys intended for children under three years of age that contained small parts and infant rattles that may cause choking or suffocation.  All Season Sales’ violative imports included a children’s kitchen set and police set that both exceeded the lead content limit.

The government also alleged that the defendants’ operations were associated with each other and that the companies share various personal or professional ties that make joining all the conduct into one lawsuit appropriate. 

 
“CPSC and our federal law enforcement partners are committed to keeping dangerous toys out of the marketplace all year long,” said CPSC Acting Chairman Robert Adler.  “Manufacturers, importers and retailers need to know that CPSC and the Justice Department are actively enforcing the Consumer Product Safety Improvement Act, a law that has strengthened the nation’s product safety net.”

 
Defendant companies S&J Merchandise Inc., BLJ Apparel Inc. and All Season Sales Inc., as well as defendant individuals Tom Liu and Luan Luu have agreed to settle the litigation and be bound by a Consent Decree of Permanent Injunction that enjoins them from committing violations of the CPSA and FHSA.  The proposed consent decree will be filed shortly with the court for judicial approval.  The lawsuit continues against the remaining defendants.

The case is being handled by Patrick Runkle, trial attorney with the Department of Justice’s Consumer Protection Branch, and the U.S. Attorney’s Office for the Central District of California on behalf of the Consumer Product Safety Commission.

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

A former employee of a Florida-based airline fuel supply service company pleaded guilty today to obstructing an investigation into fraud and anticompetitive conduct in the airline charter services industry, the Department of Justice announced.

Craig Perez, a former employee of Aviation Fuel International Inc. (AFI), pleaded guilty to a felony charge filed today in U.S. District Court for the Western District of Missouri in Kansas City.  The charge against Perez stems from the U.S. Department of Defense’s Office of the Inspector General’s Defense Criminal Investigative Service (DCIS)’s investigation into kickback payments made by AFI and its employees to Wayne Kepple, the former vice president of ground operations for Ryan International Airlines.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service.

 
According to court documents, Perez worked for AFI from June 2007 until March 2008 and was vice president of services.  During that time, Kepple received kickback payments from AFI on aviation fuel, services and equipment sold by AFI to Ryan.  In November 2011, a federal agent with DCIS contacted Perez to interview him in relation to its investigation of AFI.  After speaking with the federal agent, and with full knowledge of the purpose of the interview, Perez knowingly destroyed relevant files from his laptop computer relating to his employment at AFI with the intent to impede, obstruct and influence the investigation of AFI and his involvement in that conduct.

 
“The Antitrust Division will hold accountable those who attempt to conceal their illegal actions and obstruct a government investigation ,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Destroying evidence in an attempt to undermine a federal investigation is a crime the division takes very seriously.”

 
Perez is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine for individuals.  He has agreed to cooperate in the ongoing investigation.

Today’s plea is the fifth to arise out of the Antitrust Division’s ongoing investigation into fraud and anticompetitive conduct in the airline charter services industry.  The other four individuals have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution.  A sixth individual, Sean Wagner, the owner and operator of AFI, and AFI itself were indicted on Aug. 13, 2013.

The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, headed by Special Agent in Charge John F. Khin.  Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.

In a video message released today, Attorney General Eric Holder called on Congress to create a strong, national standard for quickly alerting consumers whose information may be compromised by cyberattacks. This legislation would strengthen the Justice Department's ability to combat crime, ensure individual privacy, and prevent identity theft, while also helping to bring cybercriminals to justice.

The complete text of the Attorney General’s weekly address is available below:

“Late last year, Target – the second-largest discount retailer in the United States – suffered a massive data breach that may have compromised the personal information of as many as 70 million people, in addition to credit and debit card information of up to 40 million customers.  The Department of Justice is currently investigating this breach, in close coordination with the U.S. Secret Service.  And we are moving aggressively to respond to hacking, cyberattacks, and other crimes that harm American consumers – and expose personal or financial information to those who would take advantage of their fellow citizens.

"As we’ve seen – especially in recent years – these crimes are becoming all too common.  And they have the potential to impact millions of Americans every year.  Just days after the Target breach was made public, another major retailer – Neiman Marcus – reported that it also suffered a suspected cyberattack during the holiday season.  And although Justice Department officials are working closely with the FBI and prosecutors across the country to bring cyber criminals to justice, it’s time for leaders in Washington to provide the tools we need to do even more: by requiring businesses to notify American consumers and law enforcement in the wake of significant data breaches.
               
“Today, I’m calling on Congress to create a strong, national standard for quickly alerting consumers whose information may be compromised.  This would empower the American people to protect themselves if they are at risk of identity theft.  It would enable law enforcement to better investigate these crimes – and hold compromised entities accountable when they fail to keep sensitive information safe.  And it would provide reasonable exemptions for harmless breaches, to avoid placing unnecessary burdens on businesses that do act responsibly.

“This legislation would strengthen the Justice Department’s ability to combat crime and ensure individual privacy – while bringing cybercriminals to justice.  My colleagues and I are eager to work with Members of Congress to refine and pass this important proposal.  And we will never stop working to protect the American people – using every tool and resource we can bring to bear.”
The full video is available at http://www.justice.gov/agwa.php

Today Mexican authorities announced the capture of Joaquin "Chapo" Guzman Loera, the alleged leader of the Sinaloa Cartel. The Sinaloa Cartel is designated a Significant Foreign Narcotics Trafficker by the U.S. Government.

Attorney General Holder stated:  "Today's apprehension of Joaquin "Chapo" Guzman Loera by Mexican authorities is a landmark achievement, and a victory for the citizens of both Mexico and the United States.  Guzman was one of the world's most wanted men and the alleged head of a drug-running empire that spans continents.  The criminal activity Guzman allegedly directed contributed to the death and destruction of millions of lives across the globe through drug addiction, violence, and corruption. We salute the Government of Mexico, and the professionalism and courage of the Mexican authorities, for this arrest.  We are pleased that we were able to work effectively with Mexico through the cooperative relationship that U.S. law enforcement agencies have with their Mexican counterparts.  We look forward to ongoing cooperation, and future successes."

Secretary of Homeland Security Johnson stated: "The operation led by the Mexican government overnight to capture Joaquin "Chapo" Guzman Loera is a significant victory and milestone in our common interest of combating drug trafficking, violence and illicit activity along our shared border. We congratulate our Mexican partners in this achievement and we will continue to work collaboratively with them to ensure a border region that is safe and secure, for the communities and citizens of both our nations."

An alleged general of the Aryan Brotherhood of Texas gang (ABT) and a fellow gang member pleaded guilty today to racketeering charges related to their membership in the ABT’s criminal enterprise, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

James Francis Sampsell, aka “Skitz,” 44, of Odessa, Texas, and Fredrick Michal Villarreal, aka, “Big Mike,” 35, of Houston, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity.

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

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

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

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

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

At sentencing, scheduled for Oct. 7, 2014, Sampsell and Villarreal each face a maximum penalty of life in prison.

Sampsell and Villarreal are two of 36 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges. To date, 21 defendants have pleaded guilty.

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

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

Kidada Savage, 31, of Philadelphia, was sentenced today to life in prison for her role in the Oct. 9, 2004, firebombing that killed six members of a federal witness’s family. Savage is the sister of Kaboni Savage, who ordered the firebombing and who was sentenced to death for 12 counts of murder in aid of racketeering.

Acting Assistant Attorney General Mythili Raman for the Justice Department’s Criminal Division, United States Attorney Zane David Memeger of the Eastern District of Pennsylvania and Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Division made the announcement.

Kidada Savage was convicted on May 13, 2013, of six counts of murder in aid of racketeering, all related to the firebombing of Eugene Coleman’s family home. Coleman was a federal witness at the time. Six people, including four children, were killed in the arson. Kaboni and Kidada Savage were also convicted of conspiracy to commit murder in aid of racketeering, retaliating against a witness by murder and using fire to commit a felony.

Kidada Savage acted as a go-between for her brother, who was in federal custody awaiting a drug trial, and Lamont Lewis, who committed the firebombing. Lewis pleaded guilty and is awaiting sentencing.  Robert Merritt and Steven Northington were also convicted in the case. Northington was sentenced to life; Merritt is awaiting sentencing.

The case was investigated by the FBI, the Internal Revenue Service – Criminal Investigation Division, the Philadelphia Police Department, the Philadelphia District Attorney’s Office and the Maple Shade Police Department in New Jersey. The United States Bureau of Prisons, United States Marshals Service and the Philadelphia / Camden High Intensity Drug Trafficking Area Task Force also assisted in the investigation.

The case was prosecuted by Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section and Assistant U.S. Attorneys David E. Troyer and John M. Gallagher.

Dr. Chang Ho Lee, 68, of Palisades Park, N.J., pleaded guilty today to health care fraud and agreed to forfeit more than $3.4 million in fraud proceeds.

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

According to court documents, Lee, who is a medical doctor, and two others recruited patients by offering free lunches and recreational classes and provided them with spa services, such as massages and facials, then falsely billed Medicare for more than $13 million using those patients’ Medicare numbers. Lee and the others billed Medicare for physical therapy, lesion removals and other services that were neither medically necessary nor provided. The scheme took place at three clinics: URI Medical Center and Sarang Medical PC in Flushing, N.Y., and 999 Medical Clinic in Brooklyn, N.Y. Lee received more than $3.4 million through the submission of the fraudulent claims.

Lee is scheduled to be sentenced by United States District Judge Raymond J. Dearie of the Eastern District of New York on June 13, 2014. At sentencing, he faces a maximum sentence of 10 years in prison and approximately $3.4 million in mandatory restitution.

The case was investigated by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Senior Trial Attorney Nicholas Acker and Trial Attorney Bryan D. Fields from the Criminal Division’s Fraud Section.

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

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

The United States filed a lawsuit today to bar Margaret Brown, a Detroit tax return preparer, from preparing federal tax returns for others, the Justice Depart ment announced.

According to the complaint, Brown prepared tax returns that falsely clai med business inco me, business expenses and education credits.  For exa mple, the co mplaint states that Brown prepared a tax return in 2011 that reported that the custo mer had a barber business with inco me of $9,673 and expenses of $124.  The custo mer did not have a barber business in 2011, according to the co mplaint, and had no idea where Brown obtained such infor mation.  In another exa mple listed in the co mplaint, Brown allegedly reported $4,000 in qualified education expenses on a custo mer’s 2011 tax return.  The co mplaint alleges that neither the custo mer nor her dependents attended college in 2011.

The complaint also alleges that for tax years 2010 and 2011, Brown failed to co mply with due-diligence require ments i mposed by federal law on tax preparers who claim the Earned Inco me Tax Credit on their custo mers’ 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 at this website.  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. Margaret Brown
Complaint for Permanent Injunction and Other Relief
 

Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution includes a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million. Endo Pharmaceuticals Inc. is a Delaware corporation headquartered in Malvern, Pa.

 
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will hold accountable those who circumvent that process in pursuit of financial gain.”

In a criminal information filed today in the Northern District of New York, the government charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA). The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. The information alleges that, during the relevant time period, the Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.

In a deferred prosecution agreement to resolve the charge, Endo Pharmaceuticals Inc. admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications. Under the terms of the deferred prosecution agreement, Endo Pharmaceuticals Inc. will pay a total of $20.8 million in monetary penalties and forfeiture. Endo Pharmaceuticals Inc. further agreed to implement and maintain a number of enhanced compliance measures, including making publicly available the results of certain clinical trials and requiring an annual review and certification of its compliance efforts by the Chief Executive Officer of its parent company, Endo Health Solutions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court for the Northern District of New York.

“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian. “Drugs marketed for intended uses not approved by the FDA are misbranded because their labeling lacks adequate directions for those uses. This settlement emphasizes that public health is protected by labeling based on product performance, rather than profitability, and promotes enhanced efforts to ensure compliance with all requirements.”

In addition, Endo agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that, from March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs, including Medicaid, a jointly funded federal and state program, by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs. Of the $171.9 million Endo has agreed to pay to resolve these civil claims, Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia.

“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” said U.S. Attorney for the Eastern District of Pennsylvania Zane D. Memeger. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”

“The settlement announced today demonstrates the government’s continued scrutiny of pharmaceutical companies that interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public,” said Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Office Mark Dragonetti.  “We will continue to work with our law enforcement partners to investigate and prosecute pharmaceutical companies that disregard the drug approval process and jeopardize the public health by engaging in the nationwide distribution of misbranded products.”

“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use. The FBI will continue to work with our federal partners to investigate companies such as Endo Pharmaceuticals to ensure patients are safe.”

Also as part of the settlement, Endo Pharmaceuticals Inc. has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which gave rise to this resolution. Among other things, the CIA requires Endo to implement an internal risk assessment and mitigation program and requires numerous internal and external reviews of promotional and other practices. The CIA also requires key executives and individual board members to sign certifications about compliance, and it requires the company to publicly report information about its financial arrangements with physicians.

“By marketing Lidoderm for uses not covered by federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”

The civil settlement resolves three lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery. The actions were filed by Peggy Ryan, a former Lidoderm sales representative, Max Weathersby, another former Lidoderm sales representative and Gursheel S. Dhillon, a physician. The whistleblowers’ share of the settlement has not 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 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 civil settlement was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch. The criminal case was handled by the U.S. Attorney’s Office for the Northern District of New York and the Civil Division’s Consumer Protection Branch. These matters were investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigation, the Department of Health and Human Services Office of Inspector General Office of Investigations, the Defense Criminal Investigative Service of the Department of Defense, the U.S. Postal Service Office of Inspector General and the Office of Personnel Management Office of Inspector General with assistance from the Department of Health and Human Services Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, the Food and Drug Administration’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Ryan v. Endo Pharmaceuticals Inc., Civil Action No. 05-cv-3450, United States ex rel. Weathersby, et al. v. Endo Pharmaceuticals Inc., et al, Civil Action No. 10-cv-2039 and United States ex rel. Dhillon v. Endo Pharmaceuticals, Civil Action No. 11-cv-7767, all docketed in the Eastern District of Pennsylvania.

Two Florida men were sentenced today to serve 84 months in prison for defrauding thousands of homeowners in a $4 million nationwide home loan modification scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Romero made the announcement.

Christopher S. Godfrey, 44, of Delray Beach, Fla., and Dennis Fischer, 42, of Highland Beach, Fla., were sentenced by U.S. District Court Judge Rya W. Zobel of the District of Massachusetts and ordered to serve three years of supervised release following their prison term.

The defendants were convicted on Nov. 14, 2013, after a two-week trial, of one count of conspiracy, eight counts of wire fraud, eight counts of mail fraud and one count of misusing a government seal.

“These men stole millions of dollars from struggling Americans who had achieved the dream of home ownership and sought help to refinance their mortgages and save their homes from foreclosure,” said Acting Assistant Attorney General Raman.  “Today’s sentences should serve as a warning to anyone who exploits distressed homeowners and prevents them from getting the real help they need.”

“These convictions and sentences should send the message that those who prey on the most economically vulnerable among us to line their own pockets will be caught, convicted and given the long prison sentences they deserve,” said U.S. Attorney Ortiz.

“Scamming homeowners by selling for $400 to $2,000 what is a free application to TARP’s housing program is a despicable crime, and for their crimes, Godfrey and Fischer will each spend the next seven years in federal prison,” said Special Inspector General Romero.  “Godfrey and Fischer swindled homeowners out of more than $4 million, which they used for extravagant trips to Dubai and France, luxury shopping sprees, and to pay their own mortgages on waterfront homes in Florida beach communities.  SIGTARP and our law enforcement partners will put an end to scams that exploit TARP and bring swift justice to con men who perpetrate these scams.”

According to the evidence presented at trial, from January 2009 through May 2011, Godfrey, Fischer and their employees, operating under the name Home Owners Protection Economics Inc. (HOPE), made a series of misrepresentations to induce struggling homeowners to pay HOPE a $400 to $2,000 up-front fee in exchange for HOPE’s help obtaining federally funded home loan modifications. Among these misrepresentations were the claims that, with HOPE’s assistance, the homeowner was guaranteed to receive a loan modification under the Home Affordable Modification Program (HAMP), which is part of the Troubled Asset Relief Program (TARP) and is a federally funded mortgage-assistance program. For example, the defendants routinely claimed that the homeowner had already been approved for a loan modification, provided phony “approval codes,” quoted new (and wholly fictitious) mortgage terms and due dates, touted their 98 percent past success rate and claimed that they were “underwriters” or were otherwise affiliated with the homeowners’ mortgage companies. HOPE also claimed that it would offer homeowners refunds in the unlikely event that they did not receive a loan modification.

According to the trial evidence, in exchange for the up-front fees, HOPE sent its customers, including homeowners in Massachusetts, a do-it-yourself application package, which was virtually identical to the application that the government provides free of charge. The HOPE customers had no advantage in the application process, and, in fact, most of their applications were denied. Through these misrepresentations, HOPE was able to persuade thousands of homeowners to pay more than $4 million in fees.

Trial evidence also showed that the defendants claimed that they operated HOPE as a non-profit, when, in fact, they operated as a for-profit telemarketing fraud scheme. Godfrey and Fischer used funds that homeowners had paid into the purported non-profit’s bank account to pay for their trips to Dubai and the South of France, to shop at luxury stores, to pay for their pool service, and to pay the mortgages on their waterfront home and condominium. The remaining two defendants in the case, Vernell Burris Jr. and Brian Kelly, have pleaded guilty and will be sentenced on Feb. 25, 2014.

The case was investigated by SIGTARP and is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder in the District of Massachusetts’s Computer Crimes Unit.

Brice Johnson, 19, of Springtown, Texas, has been charged with willfully causing bodily injury to a person because of the actual or perceived sexual orientation of that person in a federal criminal complaint, the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Northern District of Texas and the FBI Dallas Division announced.  The complaint was filed on Feb. 12, 2014, in the U.S. District Court in Fort Worth, Texas. 

Johnson has been in state custody since his arrest on Sept. 10, 2013, and he made his initial appearance in federal court today.

According to the affidavit filed with the criminal complaint, in the early morning hours of Sept. 2, 2013, the adult male victim, identified as A.K., connected with Johnson through the cell phone application for MeetMe.com.  A.K.’s MeetMe.com page indicated he was a gay man, while Johnson’s page indicated he was not gay.  During their communications, Johnson said that he was interested in engaging in sexual activity with A.K.  He invited A.K. to his home, gave A.K. his cell phone number and address and they exchanged text messages planning their sexual activity.  

After A.K. showed up at the house, Johnson severely beat him, then put him into the trunk of A.K.’s car and drove him to a friend’s home.  Based on ligature marks on A.K.’s wrists, it appears that he was bound with an electrical cord while he was in the trunk of the car.  Individuals at the home told Johnson to take A.K. to the hospital or they would call the police, and Johnson eventually drove the victim to an Emergency Medical Services station in Springtown.   

A.K. was hospitalized for 10 days in Fort Worth, and he was diagnosed and treated for multiple skull and facial fractures.  The investigation revealed that on the night of the incident, Johnson saved A.K.’s cell phone number using a gay slur as a contact name and Johnson later stated that he was playing a prank on the victim because of his sexual orientation, again using a gay slur when referring to A.K.  According to the affidavit, A.K. said that he had no physical contact with Johnson prior to the attack.    

A federal complaint is a written statement of the essential facts of the offenses being charged and must be made under oath before a magistrate judge.  The defendant is presumed innocent until proven guilty.  However, the statutory maximum penalty upon conviction for the offense as charged is 10 years in federal prison and a $250,000 fine.  The U.S. Attorney’s office has 30 days to present the matter to a grand jury for indictment, and an indictment could include other charges that increase the maximum penalty.

The investigation is being conducted by the FBI, the Springtown Police Department and the Parker County Sheriff’s Office.  The case is being prosecuted by Assistant U.S. Attorney Cara Foos Pierce and Trial Attorney Saeed Mody of the Civil Rights Division.

The Department of Justice filed a civil lawsuit today in the federal court in Nashville, Tenn., to stop Gilberto Cortes and his business, Mundo Hispano Services, from preparing federal tax returns.  According to the complaint, Cortes and his business have prepared more than 7,000 tax returns since 2010.

The complaint filed with the U.S. District Court in the Middle District of Tennessee alleges that Cortes understates his customers’ federal tax liabilities or generates larger than warranted refunds by improperly claiming the additional child tax credit on their income tax returns.  According to the complaint, thousands of Cortes’ customers have improperly claimed the additional child tax credit.  As a result, his customers have received, on average. over $2,300 in improper benefits per return.  In total, the complaint alleges that Cortes’ activities over the last three years have potentially cost the U.S. Treasury $12.8 million or more in lost income tax revenue.

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 at this website .  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. Gilberto Cortes, etc.
Complaint

A Georgia real estate investor pleaded guilty today for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

Felony charges were filed on Dec. 19, 2013, in the U.S. District Court for the Northern District of Georgia in Atlanta, against Amy James. According to court documents, from as early as Dec. 6, 2005, until at least Jan. 23, 2009, James conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in DeKalb County, Ga.  James was also charged with a conspiracy to commit mail fraud by fraudulently acquiring title to selected DeKalb 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.

“Today’s guilty plea is the third in the Antitrust Division’s ongoing investigation into anticompetitive behavior at real estate foreclosure auctions in the state of Georgia,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division remains committed to holding accountable individuals who conspire to defraud distressed homeowners and lendersin Georgia and elsewhere.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain real estate offered at DeKalb 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, the 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.

“Today's guilty plea reflects the FBI's commitment toward enforcement of federal antitrust laws that are designed to provide a level playing field among businesses and individuals as they engage in competition for commerce,” said Ricky Maxwell, Acting Special Agent in Charge of the FBI’s Atlanta Field Office.  “The FBI will continue to work with its various law enforcement partners regarding these enforcement matters and asks that the public contact their nearest FBI field office regarding such unfair and illegal business practices.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.  A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals.  The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime.

The investigation is being conducted by Antitrust Division attorneys in Atlanta and the FBI’s Atlanta Division, with the assistance of the Atlanta Field Office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Antitrust Division prosecutors in Atlanta at 404-331-7113, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it 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 Justice Department announced that James Kalbflesh, a former correctional officer at the Roxbury Correctional Institution (RCI) in Hagerstown, Md., was convicted today by a federal jury on three civil rights and conspiracy counts related to his participation in the beating of an RCI inmate in 2008 and the cover-up that followed.  A second defendant, Lt. Jason Weicht, was acquitted on one charge of conspiring to help cover up the assault.

Kalbflesh was one of numerous RCI officers who participated in a series of retaliatory beatings against an inmate as their form of punishment for the inmate’s prior misconduct.  Kalbflesh was convicted of conspiring with other officers to violate the civil rights of the inmate; with violating the inmate’s rights; and with conspiring to obstruct justice after the assault.

In related cases, 12 former RCI officers have pleaded guilty to various charges, and one has been convicted by a jury, in connection with a series of three separate beatings of the same inmate that occurred over the course of three consecutive shifts at the prison, and the cover-up that followed.  Two other former RCI officers involved in the assaults pleaded guilty in state court.

“Sixteen former corrections officials from RCI now stand convicted for their various roles in three brutal assaults against an inmate and in coordinated cover-ups that followed each assault,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “These officers betrayed the public trust by using their official positions to commit violent civil rights abuses and then to try to hide what they had done.  The Department of Justice will continue to prosecute vigorously law enforcement officers who use their power to violate federal law.”

These cases were investigated by the Frederick Resident Agency of the FBI, and were prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel for the Civil Rights Division.

A former executive of Japan-based Denso Corp. has agreed to plead guilty to obstruction of justice charges in connection with the Antitrust Division’s investigation into a conspiracy to fix the prices of heater control panels installed in cars sold in the United States and elsewhere, the Department of Justice announced today.  The executive has also agreed to serve one year and one day in a U.S. prison.

A one-count felony charge was filed today in U.S. District Court for the Eastern District of Michigan in Detroit against Kazuaki Fujitani, a former director of Denso Corp. in Japan.  According to the charge, Fujitani, who was general manager of the Toyota Sales Division at the time of the offense, deleted numerous e-mails and electronic documents in February and March 2010 upon learning that the FBI had executed a search warrant on Denso’s U.S. subsidiary.  The deleted documents contained communications between Denso and one or more of its competitors regarding requests for price quotation made by Toyota for heater control panels for the Toyota Avalon.  The plea agreement is subject to court approval.

“Today’s charge demonstrates the Antitrust Division’s commitment to protecting the integrity of grand jury investigations,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The division will vigorously prosecute individuals who destroy evidence in an attempt to conceal their participation in illegal conspiracies.”

In March 2012, Denso pleaded guilty and was sentenced to pay a $78 million criminal fine for its role in conspiracies to fix the prices of heater control panels and electronic control units.

           
Including Fujitani, 29 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 26 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of over $2.25 billion in fines. 

 
Fujitani is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.

 
Today’s charge arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the National Criminal Enforcement Section and the San Francisco Office of the Antitrust Division, with the assistance of the Detroit Field Office of the FBI.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

Mary Young and her husband, Christian Young were sentenced today, and her son, Octavious Reeves, was sentenced late yesterday, for their involvement in a stolen identity refund fraud scheme, 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.  Mary Young was sentenced to serve 87 months in prison, Christian Young was sentenced to serve 70 months in prison, and Octavious Reeves was sentenced to serve 51 months in prison.  Reeves pleaded guilty in February 2013 to conspiracy and aggravated identity theft and the Youngs pleaded guilty to conspiracy and aggravated identity theft in November 2013.  All three defendants’ prison sentences will be followed by three years of supervised release.  Mary and Christian Young were each ordered to pay restitution in the amount of $415,070, and Reeves was ordered to pay $42,257 in restitution.

According to court documents, between January 2010 and June 2012, Mary Young, Christian Young, Octavious Reeves and others obtained stolen identities from individuals and used this information to file false tax returns.  The false tax returns were filed from the Youngs’ residence and the conspirators directed the false tax refunds to prepaid debit cards in the names of the identity theft victims.  The prepaid debit cards were mailed to several addresses in and around Elmore, Ala.  Both Youngs and Reeves used the prepaid debit cards to withdraw the fraudulent proceeds.  In total, the co-conspirators received over $400,000 in fraudulent tax refunds. 

The case was investigated by Special Agents of the IRS - Criminal Investigation with assistance from the Elmore County Sheriff’s Department.  Trial Attorneys Michael Boteler, Charles Edgar Jr., and Gregory Bailey of the Justice Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.

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

LaQuanta Clayton, a resident of Montgomery County, Ala., and a former bank teller employed by the Community Bank and Trust, was sentenced on Feb. 19, 2014, to serve 21 months in prison to be followed by three years of supervised release for participating in a fraudulent tax refund scheme, 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.  Clayton pleaded guilty in July 2013 to theft of government property. 

According to court documents and statements made in open court, Clayton used her position as a bank teller to open bank accounts in the name of another individual without his knowledge, as well as to open banks accounts in the name of fictitious individuals for the purpose of receiving fraudulent tax refunds.  Tarrish Tellis, the leader of the tax-fraud ring, directed Clayton to open multiple bank accounts in order to receive electronic deposits of fraudulent tax refunds.  Clayton would facilitate the withdrawal of this money, then give it to Tellis and other individuals involved in the scheme.  Clayton opened at least five bank accounts at Community Bank and Trust, which she used to receive fraudulent tax refunds.  Tellis pleaded guilty to related crimes in October 2013.  Approximately $452,225 in fraudulent tax refunds were directed to be deposited into these accounts, and the Internal Revenue Service (IRS) paid approximately $185,730 in fraudulent refunds, which were deposited into accounts Clayton opened and controlled.  At her sentencing, Clayton was also ordered to pay restitution in this amount.

The case was investigated by Special Agents of the IRS - Criminal Investigation.  Trial Attorneys Michael Boteler and Charles Edgar Jr. of the Tax Division prosecuted the case.  Additional information about the Tax Division and its enforcement efforts may be found at the division website .

Medical device manufacturer EndoGastric Solutions Inc. has agreed to pay the government up to $5.25 million to resolve allegations that it violated the False Claims Act by misleading health care providers about how to bill federal health care programs for a procedure using a device manufactured by the company and by paying kickbacks, the Justice Department announced today. EndoGastric Solutions is located in Redmond, Wash.

“Health care providers that cause the government to pay more than it should for medical devices not only cost us money as taxpayers, they raise the cost of health care for everyone,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Medical device manufacturers must deal fairly and honestly with federal health care programs if they want to participate in them.” 

EndoGastric Solutions manufactures and sells a device called EsophyX that is intended to treat gastroesophageal reflux disease. The device was developed as an alternative to a more invasive procedure that requires incisions in the abdomen. The government alleged that EndoGastric Solutions knowingly caused health care providers to bill for the less invasive EsophyX procedure using codes applicable to the more invasive procedure, which provided for a higher level of reimbursement. As a result, federal health care programs allegedly paid more than they should have for the procedures using EsophyX.

The government also alleged that EndoGastric Solutions knowingly paid illegal remuneration to certain physicians for participating in patient seminars and co-marketing agreements to induce them to use EsophyX, in violation of the Federal Anti-Kickback Statute. The Anti-Kickback Statute prohibits offering or paying remuneration to induce referrals of items or services covered by federally funded health care programs. The statute is intended to ensure that physicians’ medical judgments are not compromised by improper financial incentives and are based solely on the best interests of patients.

“A medical device manufacturer violates the law when it advises physicians and hospitals to report the wrong codes to federal health insurance programs in order to increase reimbursement rates,” said U.S. Attorney for the District of Montana Michael W. Cotter. “Health care providers are required to bill federal health care programs truthfully for the work they perform.”

As part of the settlement, EndoGastric Solutions has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.

“Those seeking to maximize profits by encouraging others to bill government health care programs improperly should expect to pay a heavy price,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “Law enforcement agencies will continue using all available tools to bring violators to justice.” 

The civil settlement resolves a lawsuit filed in the U.S. District Court of Montana by Glenn Schmasow, a former employee of EndoGastric Solutions, 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. Schmasow will receive up to $945,000.

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 EndoGastric Solutions was the result of a coordinated effort among the U.S. Attorney’s Office for the District of Montana, the Department of Justice’s Civil Division, the U.S. Department of Health and Human Services Office of Inspector General, the Office of Personnel Management Office of Inspector General and the Office of Program Integrity of the Department of Defense’s Defense Health Agency. 

The civil lawsuit is captioned United States ex rel. Glenn Schmasow v. EndoGastric Solutions Inc., Case No. 1:12-cv-00078 (D. Mont.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.

The government has intervened in a False Claims Act lawsuit against Tenet Healthcare Corp. (Tenet) and four of its hospitals in Georgia and South Carolina, as well as a hospital in Monroe, Ga., owned by Health Management Associates Inc. (HMA), alleging that the hospitals paid kickbacks to obstetric clinics serving primarily undocumented Hispanic women in return for referral of those patients for labor and delivery at the hospitals.  The hospitals then billed the Medicaid programs in Georgia and South Carolina for the services provided to the referred patients and, in some instances, also obtained additional Medicare reimbursement based on the influx of low-income patients.  Tenet and HMA are two of the largest owner/operators of hospitals in the United States.  HMA was acquired by Community Health Systems last month.  The government also is intervening against the clinics and related entities known as Hispanic Medical Management d/b/a Clinica de la Mama.

“The Department of Justice is committed to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”

“My office has made the investigation of health care fraud a priority,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.  “In a time when too many people were struggling to get health care for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need.  This kind of scheme drives up costs for everyone, not just the vulnerable patients and groups like those targeted in this case.”

The lawsuit alleges that four Tenet hospitals, Atlanta Medical Center, North Fulton Regional Hospital, Spalding Regional Hospital and Hilton Head Hospital in South Carolina, and one HMA facility, Walton Regional Medical Center (since renamed Clearview Regional Medical Center), paid kickbacks to Hispanic Medical Management d/b/a Clinica de la Mama (Clinica) and related entities in return for Clinica’s agreement to send pregnant women to their facilities for deliveries paid for by Medicaid, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.  The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.

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. 

“Investigations such as these are a high priority for the FBI, and we are determined to hold accountable providers that enrich themselves at the expense of government programs and damage the public trust,” said FBI Assistant Director Ronald T. Hosko.  “The FBI is dedicated to preventing and combating all forms of health care fraud; working with federal, state and local partners to effectively resolve allegations and engaging with the public to identify potential schemes.”

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case.  The lawsuit is pending in the Middle District of Georgia .

The government’s intervention in this matter 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.

These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the Fraud Section of the department’s Criminal Division, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, the Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation and the Office of the Attorney General for the State of Georgia.

The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., Tenet Healthcare, et al., No. 3:09-CV-130 (M.D. Ga.).

The claims asserted against Tenet, the HMA facility and Clinica are allegations only, and there has been no determination of liability.

Bashar Saroki, a resident of Southfield, Mich., was sentenced today in the U.S. District Court for the Eastern District of Michigan to serve 30 months in prison to be followed by one year of supervised release, the Justice Department and the Internal Revenue Service (IRS) announced.  Previously, Saroki pleaded guilty to filing a false 2009 tax return and offering drug paraphernalia for sale.

According to court documents, Saroki controlled and operated Golden Star Party Store, a liquor store that was located in Detroit.  From 2007 through 2011, Saroki sold more than $1 million worth of a variety of cutting agents to local narcotics dealers out of Golden Star Party Store and from his residence.  Narcotics dealers used these cutting agents to dilute the potency and increase the quantity of the narcotics they sold to customers.  Saroki also filed a false tax return for 2009 that reported very little income despite the significant proceeds from the sale of cutting agents.

Assistant Attorney General Kathryn Keneally for the department's Tax Division commended the efforts of special agents of IRS-Criminal Investigation, who investigated this case, and Tax Division Trial Attorneys Kenneth C. Vert and Yael T. Epstein, who prosecuted the case.

The Barrio Azteca Lieutenant who ordered the murders of a U.S. Consulate employee, her husband and the husband of another U.S. Consulate employee was found guilty by a jury on all counts charged announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Ronald T. Hosko and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).

Arturo Gallegos Castrellon, aka, “Benny,” aka “Farmero,” aka “51,” aka “Guero,” aka “Pecas,” aka “Tury,” aka “86,” 35, of Chihuahua, Mexico, was formally extradited to the United States from Mexico on June 28, 2012.  Today, at the conclusion of a trial before U.S. District Judge Kathleen Cardone in the Western District of Texas, El Paso Division a jury found Gallegos Castrellon guilty to five counts of racketeering, narcotics trafficking, narcotics importation, murder in a foreign country and money laundering conspiracies and six counts of murder.

At trial, prosecutors presented evidence that the defendant was a leader in the Barrio Azteca, or “BA,” a violent street and prison gang that began in the late 1980’s and expanded into a transnational criminal organization.  According to information presented in court, the BA formed an alliance with “La Linea,” which is part of the Juarez Drug Cartel.  The Juarez Drug Cartel is also known as the Vincente Carrillo Fuentes Drug Cartel, or “VCF.”  The purpose of the BA-La Linea alliance was to battle the Chapo Guzman Cartel and its allies for control of the drug trafficking routes through Juarez, Chihuahua, Mexico.  The drug routes through Juarez, which is known as the Juarez Plaza, are important to drug trafficking organizations because it is a principal illicit drug trafficking route into the United States.

In addition, prosecutors presented evidence that the defendant was in charge of Barrio Azteca teams of assassin which he helped create and supervised in 2008 through 2010.  Testimony and other evidence at trial established that his teams killed up to 800 persons between January and August 2010, reaching a total of nearly 1600 in a multi-year period.

Trial evidence also showed that the defendant ordered the March 13, 2010, triple homicide in Juarez, Mexico, of U.S. Consulate employee Leslie Enriquez, her husband Arthur Redelfs, and Jorge Salcido Ceniceros, the husband of another U.S. Consulate employee.  The jury also heard evidence that the defendant was the mastermind of the July 15, 2010, car bombing in Juarez, Mexico, which targeted Mexican Federal Police.

A total of 35 defendants were charged in the Third Superseding Indictment and are alleged to have committed various criminal acts, including the 2010 Juarez Consulate Murders in Juarez, Mexico, racketeering, narcotics distribution and importation, retaliation against persons providing information to U.S. law enforcement, extortion, money laundering, murder, and obstruction of justice.  Of the 35 defendants charged, 26 have been convicted, one committed suicide before the conclusion of his trial, and six are awaiting extradition.  U.S. law enforcement officials are actively seeking to apprehend the two remaining fugitives in this case, including Eduardo Ravelo, an FBI Top Ten Most Wanted Fugitive.

The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and AUSA John Gibson of the U.S. Attorney’s Office of the Western District of Texas - El Paso Division.  Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.

The case was investigated by the FBI’s El Paso Field Office, Albuquerque Field Office (Las Cruces Resident Agency), DEA Juarez, and DEA El Paso.  Special assistance was provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility and Otero County Prison Facility New Mexico.

U.S. Army Sergeant Albert Kelly III, 28, of Fort Knox, Ky., pleaded guilty today to theft charges for his role in the theft of fuel at Forward Operating Base (FOB) Salerno in 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.

The plea was entered in federal court in Louisville, Ky., before Magistrate Judge James D. Moyer of the Western District of Kentucky. Kelly faces a maximum penalty of 10 years in prison when he is sentenced on May 22, 2014, by U.S. District Judge John G. Heyburn II.

According to court records, Kelly was a soldier in the United States Army and was assigned to FOB Salerno from January 2011 to January 2012. For most of that time, Kelly served as a specialist, and his duties included overseeing the delivery of fuel into FOB Salerno. Typically, the fuel was brought into the base by Afghan trucking companies driven by Afghan nationals. Kelly’s duties included verifying the amounts of the fuel that were downloaded at FOB Salerno and preparing and certifying documents that accounted for the fuel that was downloaded.

From in or about November 2011 through January 2012, Kelly diverted and permitted the diversion of fuel delivery trucks from FOB Salerno to other locations, where the trucks would then be downloaded and the fuel stolen. To conceal this diversion, he falsely certified that the diverted fuel was in fact delivered and downloaded at FOB Salerno.

In exchange for assisting the fuel theft, Kelly received approximately $57,000 from the Afghan trucking company for diverting approximately 25,000 gallons of fuel. The loss to the government was approximately $100,000.

This case was investigated by the Special Inspector General for Afghanistan Reconstruction (SIGAR). The prosecution is being handled by Special Trial Attorney Mark H. Dubester, on detail to the Criminal Division’s Fraud Section from SIGAR, and Assistant United States Attorney Michael A. Bennett of the Western District of Kentucky.

Vector Planning and Services Inc. (VPSI), an information technology, systems engineering, program management and consulting firm headquartered in Chantilly, Va. , has agreed to pay the government $6.5 million to settle False Claims Act allegations that the company inflated claims for payment under several Navy contracts, the Justice Department announced today. VPSI’s West Coast center of operations is in San Diego, Calif.

“The Department of Justice will vigorously protect taxpayer funds from false claims,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Contractors who wish to do business with the military must act with honesty and integrity, or they will be held accountable for their actions.”

VPSI has a number of contracts with the Navy and its contractors to provide information technology, systems engineering and management consulting services. Under these contracts, VPSI is entitled to bill the government for its indirect costs, which are costs such as overhead that cannot be allocated directly to a particular contract. The government alleged that, from 2005 to 2009, VPSI inflated its indirect cost billings to the government by improperly including direct costs, for which it had already been paid, in indirect cost accounts that were then allocated across its government contracts and billed again. The government further alleged that VPSI submitted claims for other costs that were never incurred.

“Our office will work aggressively with our investigative partners to protect taxpayer funds from abuse,” said U.S. Attorney for the Southern District of California Laura E. Duffy. “Today’s settlement demonstrates our commitment to pursue defense contractors who knowingly defraud or overcharge military programs.”

The allegations resolved by the settlement were originally brought by a whistleblower in the U.S. District Court for the Southern District of California, under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private parties to sue, on behalf of the government, companies and individuals who have falsely claimed federal funds and to share in any recovery. The whistleblower in this case will receive $1.28 million.

This settlement is the result of a coordinated effort by the Justice Department’s Civil Division, the Civil and Criminal Divisions of the U.S. Attorney’s Office for the Southern District of California, the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Defense Contract Audit Agency.

The case is captioned United States ex rel. Hai Ba Trung v. Vector Planning and Services Inc., et al., 3:12-cv-02353-LAB-BGS (S.D. Calif.). The claims settled by this agreement are allegations only; there has been no determination of liability.

The Justice Department announced today that it has entered into a settlement agreement with the Ganado Unified School District in Ganado, Ariz., to ensure that its English Language Learner (ELL) students have equal opportunities to participate in its educational programs, as mandated by federal law.  The agreement stems from the department’s compliance review of the district’s ELL program under the Equal Educational Opportunities Act of 1974.  The district, which is located on the Navajo Indian Reservation, cooperated throughout the review and is committed to improving its services for its Navajo ELL students and parents.

The settlement agreement requires the district to implement wide-ranging measures, beginning with the proper identification of ELL students when they enroll in the system and language-accessible communication with their parents about ELL program offerings and other essential information.  The agreement further requires the district to: improve language acquisition instruction to ELL students; conduct significant training for staff and teachers of ELL students; provide adequate materials to support their acquisition of English and academic content; monitor students who opt out of ELL services and, after they exit such services, ensure they are participating equally; and evaluate the effectiveness of the ELL program.

“We applaud the Ganado Unified School District for undertaking this significant step toward ensuring the success of every student in the district,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “We look forward to continuing our collaboration with the district as it implements this comprehensive plan to serve effectively its Navajo students who are not yet proficient in English.”

The enforcement of the Equal Educational Opportunities Act is a top priority of the Civil Rights Division.  Additional information about the Civil Rights Division is available on the division website. 

Dwayne Allen Hardman, 44, of Charleston, W.V., pleaded guilty today to paying bribes to public officials.

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

Hardman was charged by criminal information on Feb. 12, 2014, with paying a bribe to public officials. Hardman faces a maximum penalty of 15 years in prison when he is sentenced on June 6, 2014.

According to a statement of facts filed with the plea agreement, in November 2004, Hardman and another businessman established a government contracting corporation in Chesapeake, Va., to provide support to the Military Sealift Command (MSC) on various telecommunications projects. Shortly thereafter, in early 2005, Hardman and his business partner agreed to pay cash bribes to two MSC officials in exchange for official action to steer government contracts to Hardman’s corporation. From March 2005 and until 2007, Hardman, his business partner and others paid the MSC officials approximately $3,000 each month in cash bribes. During this time, Hardman and his business partner withdrew approximately $144,000 in cash, which was then provided to the two MSC officials in exchange for their assistance in securing MSC contracting and subcontracting business for Hardman’s company.

According to court documents, in February 2009, Hardman left his former business and formed another government contracting company in Chesapeake with another businessman. The two MSC officials again agreed to steer contracting work to Hardman’s new company in exchange for receiving bribes from Hardman and his new business partner. In May 2009, Hardman and his new business partner paid each of the two MSC officials $25,000 in cash bribes.

On Feb. 12, 2014, one of the MSC officials, Kenny Toy, who was the Afloat Programs Manager for MSC’s N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to accepting bribes in conjunction with this scheme.

This case was investigated by Special Agents of the FBI, the Naval Criminal Investigative Service, and the Defense Criminal Investigative Service. Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie are prosecuting the case.

A former correctional officer at the Puerto Rico Department of Corrections was sentenced to serve 37 months in prison for attempting to smuggle heroin into the prison where he worked, Bayamón State Penitentiary, in exchange for a $3,000 payment.

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.

Luis Lebron-Lebron, 38, of Maunabo, Puerto Rico, pleaded guilty on Oct. 29, 2013, to a one-count indictment charging him with attempt to distribute a controlled substance. Lebron-Lebron was sentenced by U.S. District Judge José A. Fusté .

On Sept. 9 and 10, 2010, Lebron agreed to introduce 1/8 of a kilogram of heroin to an inmate at the Bayamón State Penitentiary, where Lebron worked as a correctional officer. Lebron was paid $3,000 to make that delivery. On Sept. 10, 2010, Lebron met with an undercover agent, who he believed was a drug dealer, and was given what he believed to be 1/8 of a kilogram of heroin. He delivered the purported heroin to an inmate in the prison that same day.

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.

The former chief executive officer of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, pleaded guilty today for his role in a scheme to pay bribes to foreign government officials and to defraud PetroTiger.

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

Knut Hammarskjold, 42, of Greenville, S.C., the former co-CEO of PetroTiger, pleaded guilty before U.S. District Judge Josephy E. Irenas in Camden, N.J., to an information charging one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud and is scheduled for sentencing on May 16, 2014. Gregory Weisman, 42, of Moorestown, N.J., the former general counsel of PetroTiger, pleaded guilty to the same charges on Nov. 8, 2013. Charges remain pending against Joseph Sigelman, 42, of Miami and the Philippines, the other former co-CEO of PetroTiger, for conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.

According to the charges, the defendants allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million. To conceal the bribes, the defendants allegedly first attempted to make the payments to a bank account in the name of the foreign official’s wife, for purported consulting services she did not perform. The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information. The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.

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

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

The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost.

As to the charges in the complaint pending against Sigelman, they 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 the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

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

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

Three individuals charged in connection with operating a series of fraudulent business opportunity companies pleaded guilty this week in the U.S. District Court for the Southern District of Florida.  Mitchell Berman (aka Brian Griffin) of Boca Raton, Fla., and Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo) of Coconut Creek, Fla., pleaded guilty this morning to one count of conspiracy to commit mail fraud.  Steven Axelrod (aka Michael Hutton) of Wellington, Fla., yesterday entered a plea to one count of conspiracy to commit mail fraud.  With their pleas, the defendants admit they operated a series of fraudulent companies that sold coffee display rack business opportunities to buyers who were told falsely that they would receive display racks and packets of coffee, as well as assistance in establishing and maintaining a business selling the coffee.  The business opportunities the defendants sold cost a minimum of approximately $10,000 each.

 
The defendants admit that they operated, beginning in August 2000 and continuing through October 2011, a series of five companies: Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee and South Beach Coffee.  Each company operated for six months to a year, and after one company closed, the next one opened. 

 
The defendants admit that Berman and Gallo ran the companies, while also working as salesmen together with Axelrod.  All three defendants made numerous false statements to potential purchasers of the business opportunities to induce them to buy.  Among the false statements were that purchasers likely would earn substantial profits, that prior purchasers of the business opportunities were earning substantial profits, that purchasers would be given lucrative “commercial accounts” and that the company would provide assistance in establishing and maintaining the business.  According to the indictment, purchasers made little to no money on their investments, were unable to find profitable locations or accounts and were not provided the support promised by defendants.  In making misrepresentations to potential purchasers, Berman also was violating a December 2000 federal court order barring him from misrepresenting profits, locations and other aspects of business opportunities. 

 
Also according to the indictment, once purchasers began filing complaints with the Better Business Bureau or state authorities, the defendants shut down each of their companies in turn, and opened the next one.  In order to evade detection, all the defendants used aliases and gave out false addresses for the companies.  Berman and Gallo also avoided listing their own names on corporate and promotional documents and instead paid people who did not work at the companies to be titular presidents. 

 
All three defendants will be sentenced later this year by Judge William J. Zloch in Ft. Lauderdale, Fla.  Each faces a maximum statutory term of 20 years in prison, a possible fine and mandatory restitution.

 
Assistant Attorney General of the Justice Department’s Civil Division Stuart F. Delery commended the investigative efforts of the U.S. Postal Inspection Service.  The case is being prosecuted by Trial Attorneys Cindy Cho and Chris Parisi of the Consumer Protection Branch of the Justice Department’s Civil Division. 

           United States Attorney ALICIA A.G. LIMTIACO, Districts of Guam and the Northern Mariana Islands, was invited to speak with the youth of the Tamuning Christian Fellowship on January 26, 2014.  They, along with adult mentors of the youth group, discussed problems experienced by youth, including violence, substance abuse, and discrimination including discrimination because of one’s ethnicity, race and gender identity.  They shared ways to engage the community so as to raise awareness about these issues, including a forum to bring together students, parents, families, educators, law enforcement, victim service providers, social services, health professionals, faith-based organizations, Mayors, Consulate Offices, and other community stakeholders, to dialogue about these problems and establish effective programs, projects and other means to address and prevent violence, abuse and exploitation, and discrimination, and to encourage positive behavior and role-modeling. 

U.S. Attorney Limtiaco also shared information about Department of Justice initiatives, including Project Safe Childhood (PSC), Project Safe Neighborhoods (PSN) and the Diverse Community Outreach.

Launched in May 2006, PSC is a nationwide initiative designed to protect children from online sexual exploitation and abuse.  Led by U.S. Attorneys= Offices, the Child Exploitation and Obscenity Section of the Department=s Criminal Division, and Internet Crimes Against Children task forces, PSC marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims.  PSC’s goal is to educate parents about the potential dangers that their children face online, and warns potential online predators that exploiting a child online is a serious federal offense. 

PSN is a nationwide commitment to aggressively prosecute offenders who engage in drug distribution, gang involvement and violent crime.  U.S. Attorney Limtiaco talked about the Gang Resistance Education And Training (G.R.E.A.T.) Program, a program under PSN aimed at elementary and middle school students, which focuses on developing life skills to help students avoid delinquent behavior and violence, and to solve problems through communication and the exercise of good judgment.

The purpose of the Diverse Community Outreach Initiative is to increase and improve communication and collaboration between the community and law enforcement.  Faith-based community members, Consulate Offices and other stakeholders are invited and participate in the initiative.  Issues discussed at the Diverse Community Outreach Initiative meetings include human trafficking; hate crimes and civil rights; immigration; labor; cultural competency; national security; and crime prevention. 

Photos taken at Tamuning Christian Fellowship.                                                         

United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, was invited to San Vicente Catholic School (SVCS) on January 27, 2014, to be a judge of the middle school’s Human Rights T-Shirt Design Contest in observance of Human Rights Day and as part of its Catholic Schools Week festivities. The school’s 6th – 8th graders were tasked to design a t-shirt advocating the respect of human rights.  This was coordinated by the Middle School Language Arts teacher and SVCS Catholic School Chairperson, Mrs. Belen De Fant, and sponsored by the SVCS Shalom Club.  The contest was judged by U.S. Attorney Limtiaco, Mrs. Tina Blas, SVCS grandparent and wife of the former Lt. Gov. Frank F. Blas, and Ms. Ann Leon Guerrero, SVCS teacher.                                               

Pictured above are some of the students showcasing their t-shirt design at San Vicente
Catholic School’s (SVCS) Human Rights T-Shirt Design contest in observance of
Human Rights Day and part of its Catholic Schools Week festivities.

The contest was judged by Ms. Alicia Limtiaco, the United States Attorney for the
Districts of Guam and the Northern Mariana Islands, Mrs. Tina Blas, SVCS grandparent and wife of the former Lt. Gov. Frank F. Blas, and Ms. Ann Leon Guerrero, SVCS teacher.

Andrew L. Zarauskas, 60, of Union, N.J., was found guilty today by a federal jury in Bangor, Maine, of illegally trafficking and smuggling narwhal tusks, and associated money laundering crimes, announced Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division .

The defendant was convicted of conspiracy, money laundering conspiracy, smuggling, and money laundering violations for buying narwhal tusks knowing the tusks had been illegally imported into the United States from Canada, as well as selling or attempting to sell the tusks after their illegal importation.

“The Justice Department takes seriously our responsibility to prosecute those who engage in the illegal trade of any protected wildlife species,” said Acting Assistant Attorney General Dreher.  “Zarauskas and his co-conspirators flouted U.S. law and international agreements that protect marine mammals such as the narwhal for their own personal financial benefit.  The Justice Department will continue to investigate and prosecute those engaged in this insidious trade in order to protect species for future generations to enjoy.”

"The success of this investigation was a direct result of the uncompromising cooperation between special agents of the U.S. Fish and Wildlife Service, NOAA and Environment Canada. It is this type of international teamwork which exemplifies the ongoing fight against illegal wildlife trafficking."  said William C. Woody, Assistant Director for Law Enforcement for the U.S. Fish and Wildlife Service.

“This investigation is an example of excellent coordinated efforts between NOAA, Office of Law Enforcement (OLE) and the U.S. Fish and Wildlife Service, Office of Law Enforcement” said Logan Gregory, Special Agent In Charge for NOAA. The protection of Marine Mammals and enforcement of the Marine Mammal Protection Act is a high priority for OLE and we will continue to work with our enforcement partners and the Department of Justice to ensure compliance.”

From 2002 to 2008, Zarauskas knowingly purchased approximately 33 narwhal tusks that he knew were illegally imported into the United States in violation of federal law. A narwhal is a medium-sized whale with an extremely long tusk that projects from its upper left jaw, often referred to as the unicorn of the sea. As marine mammals narwhals are protected by the Marine Mammal Protection Act and are listed on Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). It is illegal to import parts of marine mammals into the United States without the requisite permits/certifications, and without declaring the merchandise at the time of importation to U.S. Customs and the U.S. Fish and Wildlife Service. Narwhal tusks are commonly collected for display purposes and can fetch large sums of money.

According to evidence presented at the trial, Zarauskas conspired with others, including persons located in Canada, to illegally import the protected tusks for re-sale in the United States and to launder the funds used to purchase the narwhal tusks by transporting, transmitting, or transferring checks and money orders from New Jersey to Canada, intending that the money be used for further illegal imports of narwhal tusks.

On Jan. 7, 2014, Jay G. Conrad, of Lakeland, Tenn., who had been charged in the same indictment, pleaded guilty to conspiring to illegally import and traffic narwhal tusks, conspiring to launder money, and illegally trafficking narwhal tusks. On that same date, a plea agreement was also unsealed in which Eddie T. Dunn, of Eads, Tenn., pleaded guilty in the District of Alaska to conspiring to illegally traffic, and trafficking, narwhal tusks.

Throughout the conspiracy, Zarauskus and his co-conspirators made payments to the Canadian supplier for the narwhal tusks, by sending the payments to a mailing address in Bangor, Maine, or directly to the supplier in Canada. The payments allowed the Canadian supplier to purchase and re-supply Zarauskus and Conrad with more narwhal tusks that they could then re-sell. Conrad sold between $400,000 and $1 million worth of narwhal tusks and Dunn sold approximately $1.1 million worth of narwhal tusks as members of the conspiracy.

Earlier this week, President Obama announced the National Strategy for Combating Wildlife Trafficking, recognizing that record high demand for wildlife products, coupled with inadequate preventative measures and weak institutions has resulted in an explosion of illicit trade in recent years. Like other forms of illicit trade, wildlife trafficking undermines security across nations. While t he Department of Justice has long worked to protect threatened and endangered wildlife species through its enforcement of the Lacey Act and the Marine Mammal Protection Act, among other laws, the National Strategy identifies priority areas for increased interagency coordination, with the objectives of harnessing and strategically applying the full breadth of U.S. Government resources to end the pernicious trade in protected species both at home and abroad.

Zarauskus and Conrad are to be sentenced by U.S. District Court Judge John A. Woodcock in the District of Maine. A sentencing date has not been set. They each face a maximum of twenty years incarceration for their involvement in this narwhal tusk trafficking scheme, and a fine of up to $250,000. Dunn is scheduled to be sentenced by U.S. District Judge Ralph R. Beistline in the District of Alaska on March 20, 2014, and may be imprisoned up to five years and fined $250,000. Co-defendant Gregory R. Logan is pending extradition from Canada to the District of Maine.

The case was investigated by agents from National Oceanic and Atomospheric Administration Office of Law Enforcement, the United States Fish and Wildlife Service Office of Law Enforcement and in coordination with Environmental Canada Wildlife Enforcement Division and the Department of Justice’s Office of International Affairs. The case is being prosecuted by Trial Attorneys Todd S. Mikolop and James Nelson of the Justice Department’s Environmental Crimes Section.

Monajem Hakimijoo, also known as Manny Hakimi, of Beverly Hills, Calif., pleaded guilty on Feb. 13, 2014, in the U.S. District Court for the Central District of California to filing a false federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced today. 

According to court documents, Hakimijoo, a U.S. citizen, and his brother maintained an undeclared bank account in Israel at Mizrahi Bank in the name of Kalamar Enterprises, a Turks and Caicos Islands entity they used to conceal their ownership of the account.  Hakimijoo and his brother used the funds in the Kalamar account as collateral for back-to-back loans obtained from the Los Angeles branch of Mizrahi Bank.  Although Hakimijoo and his brother claimed the interest paid on the back-to-back loans as a business deduction for federal tax purposes, they failed to report the interest income earned in their undeclared, Israel-based account as income on their tax returns.  In total, Hakimijoo failed to report approximately $282,000 in interest income.  The highest balance in the Kalamar Enterprises account was approximately $4,030,000.

According to court documents, in March 2013, Hakimijoo was scheduled to be interviewed by Justice Department attorneys and IRS special agents.  Prior to the interview, Hakimijoo, through counsel, provided the attorneys and special agents with copies of his amended tax returns for 2004 and 2005.  When asked if the amended tax returns had been filed with the IRS, Hakimijoo indicated that the returns had been filed.  Shortly thereafter, the IRS determined there was no record of the amended returns being filed with the IRS.  When Hakimijoo was asked to provide copies of cancelled checks to prove that the taxes reflected on the amended returns had been paid, none were provided.

Hakimijoo is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with concealing undeclared bank accounts in Israel that were used to obtain back-to-back loans in the United States.

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

Hakimijoo will be sentenced on April 28, 2014, and faces a statutory maximum prison term of three years and a maximum fine of $250,000.  In addition, Hakimijoo has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the highest balance of his one-half interest in the Kalamar account.

Assistant Attorney General Kathryn Keneally of the Tax Division and U.S. Attorney André Birotte Jr. for the Central District of California thanked special agents of IRS-Criminal Investigation, who investigated the cases, Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden for the Tax Division, who prosecuted the cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.

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

Today, the Department of Justice issued a letter of findings describing problems in the Missoula County, Mont., Attorney’s Office’s response to sexual assault, and concluding that there is substantial evidence that the County Attorney’s response to sexual assault discriminates against women.  The department opened civil pattern or practice investigations of the Missoula County Attorney’s Office, along with the Missoula Police Department and the University of Montana’s Office of Public Safety, in May 2012.  The department investigations, brought under the Violent Crime Control and Law Enforcement Act of 1994, and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968, focused on allegations that the three law enforcement agencies were systematically failing to protect women victims of sexual assault in Missoula.   The department, along with the Office for Civil Rights at the Department of Education, also opened an investigation of the University of Montana’s handling of allegations of sexual assault and harassment of students under Title IV of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972.  The investigation of the Missoula Police Department and both investigations of the University of Montana were resolved in May 2013, via cooperative agreements with the Justice Department.

“Prosecutors play a critical role in ensuring that women victims of sexual assault have effective and equal access to criminal justice,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “We uncovered evidence of a disturbing pattern of deficiencies in the handling of these cases by the County Attorney’s Office, a pattern that not only denies victims meaningful access to justice, but places the safety of all women in Missoula at risk.  We hope that this letter will enable us to move forward with constructive discussions with the County Attorney to resolve these serious concerns.”

The department’s investigation uncovered evidence indicating that the Missoula County Attorney’s Office engages in gender discrimination in violation of the Equal Protection Clause of the 14th Amendment to the Constitution as well as relevant federal laws.  In particular, the investigation found evidence that the decisions of the County Attorney’s Office regarding the investigation and prosecution of sexual assaults and rape, particularly non-stranger assaults and rapes, are influenced by gender bias and gender stereotyping and adversely affect women in Missoula.  The investigation found that the following, taken together, strongly suggest gender discrimination:

·          Despite their prevalence in the community, sexual assaults of adult women are given low priority in the County Attorney’s Office;

·          The County Attorney does not provide Deputy County Attorneys with the basic knowledge and training about sexual assault necessary to effectively and impartially investigate and prosecute these cases;

·          The County Attorney’s Office generally does not develop evidence in support of sexual assault prosecutions, either on its own or in cooperation with other law enforcement agencies

·          Adult women victims, particularly victims of non-stranger sexual assault and rape, are often treated with disrespect, not informed of the status of their case and revictimized by the process;  and

·          The County Attorney’s Office routinely fails to engage in the most basic communication about its cases of sexual assault with law enforcement and advocacy partners. 

“Over the past eight months, the City of Missoula, the University of Montana and the Missoula Police Department already have made important strides toward improving their response to sexual assault and strengthening the community’s confidence in its local police,” said U.S. Attorney Michael Cotter for the District of Montana.  “It is our sincere hope that the Missoula County Attorney will follow that example and work cooperatively with the Justice Department to address the deficiencies identified in our investigation, and to improve the safety of women in this community.

The investigation was conducted jointly by the Special Litigation Section of the Civil Rights Division and the U.S. Attorney’s Office for the District of Montana.  The prevention of sex-based discrimination is a top priority of the Civil Rights Division and U.S. Attorney’s Offices.  The Civil Rights Division has worked to ensure that women are not subject to discriminatory practices by law enforcement in New Orleans, Puerto Rico and elsewhere.  Additional information about the Civil Rights Division is available on its website.  Additional information about the U.S. Attorney’s Office for the District of Montana can be found on its website. 

Earlier today at the federal courthouse in Brooklyn, N.Y., Akbar Ahmad Sherzai, 49, of Centreville, Va., an independent contractor for a trucking company operating in Afghanistan that was responsible for delivering fuel to U.S. Army installations, pleaded guilty to his role in offering a U.S. Army serviceman $54,000 in bribes to falsify documents to reflect the successful delivery of fuel shipments that Army records indicate were never delivered.  Sherzai faces a maximum of 15 years imprisonment and a $250,000 fine.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney for the Eastern District of New York Loretta E. Lynch made the announcement.

“The defendant sought to use deception, corruption and greed to enrich his company at the risk of jeopardizing the U.S. Army’s supply lines in Afghanistan,” said U.S. Attorney Lynch.  “Attempts to corrupt American officials will not be tolerated, either at home or abroad.”  U.S. Attorney Lynch extended her grateful appreciation to the Special Inspector General for the Afghanistan Reconstruction, Homeland Security Investigations and the FBI for their assistance in this case.

The U.S. Army regularly contracts with local Afghan trucking companies to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan.  To ensure the companies fulfilled these requests, the U.S. Army used transportation movement requests (TMRs), which, when properly completed, verified that the shipments were successfully completed before approving payments to the trucking companies.

In April 2013, Sherzai approached a U.S. military serviceman to discuss fuel delivery missions that had been classified by the U.S. Army as “no-shows,” meaning that the fuel had not been delivered.  Sherzai offered the serviceman a bribe to falsify the TMRs to reflect successful deliveries so that Sherzai’s company would receive payment and avoid penalties for failed fuel deliveries.  The serviceman, under the supervision of law enforcement, continued to meet with Sherzai to discuss payments for the falsification of records.  On two separate occasions, Sherzai paid the serviceman bribes in cash on American military bases in Afghanistan.  On another occasion, Sherzai arranged for the serviceman’s bribe to be transferred to the United States through a hawala, an informal money transfer system.  In total, Sherzai paid the serviceman $54,000 in cash to falsify fourteen TMRs.  Each “no show” delivery mission, absent the fraudulent TMRs, would have resulted in a fine of the company by the U.S. government of $75,000.

Sherzai was arrested on a criminal complaint on Sept. 24, 2013.  The guilty plea proceeding was held before U.S. Magistrate Judge Robert M. Levy.

The government’s case is being prosecuted by Assistant U. S. Attorney Amir H. Toossi and Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section.

United States Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands, was invited to speak on January 31, 2014, with approximately seventy-five 5th grade students at Harry S. Truman Elementary School, about bullying and cyberbullying, including the dangers and tragic consequences of bullying and cyberbullying, and ways to keep safe.

These students also graduated from the Gang Resistance Education And Training (GREAT) Program in November 2013.  The GREAT Program=s primary objective is to raise awareness about and prevent delinquency, youth violence, and gang membership.  The GREAT lessons taught by GREAT certified law enforcement officers and aimed at elementary and middle school students, focus on developing life skills to help students avoid delinquent behavior and violence, and learn to solve problems through communication and the exercise of good judgment.

U.S. Attorney Limtiaco at Harry S. Truman Elementary School.

Fifth grade students listening to U.S. Attorney Alicia Limtiaco.

Jose A. Santiago, 36, of Springfield, Mass., was sentenced yesterday in Providence, R.I., to serve 40 years in prison for his role in the September 2010 armed robbery and murder of Woonsocket, R.I., gas station manager David D. Main.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, United States Attorney Peter F. Neronha of the District of Rhode Island, Special Agent in Charge Vincent B. Lisi of the FBI’s Boston Field Office, Col. Steven G. O’Donnell of the Rhode Island State Police and Chief Thomas S. Carey of the Woonsocket Police Department made the announcement.

According to court documents, Main, 49, was chased, shot to death at close range and robbed by Jason Wayne Pleau, 36, of Providence, as he approached the doorstep of a Woonsocket bank where he was preparing to deposit thousands of dollars in cash belonging to the gas station. Santiago was the getaway driver of a box truck parked a block away from the bank in which Pleau fled moments after he robbed and fatally shot Main.

Pleau, who pleaded guilty on July 31, 2013, to conspiracy to commit Hobbs Act robbery, Hobbs Act robbery, and carrying, using and discharging a firearm during and in relation to a federal crime of violence resulting in death was sentenced in October 2013 to serve life in prison.

Santiago pleaded guilty on Sept. 5, 2013, to conspiracy to commit Hobbs Act robbery, Hobbs Act robbery, and carrying, using, and discharging a firearm during and in relation to a federal crime of violence resulting in death. No plea agreement was filed in this matter. At sentencing, U.S. District Court Chief Judge William E. Smith also ordered Santiago to serve five years of supervised release upon completion of his prison term.

Co-defendant Kelly Marie Lajoie, 36, of Springfield, pleaded guilty on Dec. 9, 2011, to Hobbs Act conspiracy, aiding and abetting a Hobbs Act robbery and use of a firearm during a federal crime of violence. Lajoie is scheduled to be sentenced on Feb. 19, 2014.

The matter was investigated by the Woonsocket Police Department, Rhode Island State Police and the FBI, with the assistance of the U.S. Marshals Service and the Rhode Island National Guard.

The case was prosecuted by Assistant U.S. Attorneys Adi Goldstein and William J. Ferland of the District of Rhode Island and Trial Attorney Jacabed Rodriguez-Coss of the Criminal Division’s Capital Case Section.

Irene Tamika Smith, a former professional tax-return preparer, was sentenced yesterday to serve 33 months in prison for conspiring with her co-workers to defraud the United States by filing false tax returns in order to receive fraudulently-inflated refunds for clients, Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia announced today.  Smith was also ordered to pay $566,171 in restitution to the Internal Revenue Service (IRS).

According to court documents, Smith worked at Quick Tax, a tax preparation business in Cordele, Ga.  From 2006 through 2009, Smith conspired with her co-workers Greene Wylie Sheppard, Sabrina Johnson-Lavant and Chandra Henderson to obtain higher refunds on their clients’ returns by falsely inflating clients’ wages in order to exploit certain tax credits.  Smith and her co-conspirators also purchased other people’s identities which they then offered to sell to clients so that the clients could obtain higher refunds by falsely claiming additional dependents on their tax returns.  Smith and her co-conspirators maintained notebooks that kept track of the identities they sold and how much clients owed them for the false dependents.  Over the course of the conspiracy, which spanned four years, Quick Tax claimed over $500,000 in fraudulent refunds.

Smith’s co-conspirators each pleaded guilty to participating in the conspiracy and were sentenced in 2013.  Sheppard was sentenced to serve 56 months in prison, Henderson was sentenced to serve 18 months in prison and Johnson-Lavant was sentenced to serve eight months in prison.

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