District Not Recorded

The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Indiana announced the filing of a nine count federal indictment this afternoon against Jerry Mitchell, aka Tre da Great, age 24, of Indianapolis. The charges include sex trafficking, sex trafficking of a child, transporting a child to engage in prostitution and the production of child pornography. The indictment follows Mitchell’s arrest by Indianapolis law enforcement and the filing of charges by Marion County Prosecutor Terry Curry, and comes as federal and local authorities have joined forces to combat human trafficking and child exploitation.

“This indictment shows the importance of partnerships across all levels to address the horrific crime of human trafficking,” said Acting Assistant Attorney General Jocelyn Samuels for the division. “The Civil Rights Division and U.S. Attorneys offices across the country will continue their aggressive work to combat these types of crimes.”

“The scourge of human trafficking is a global crisis, but the fight against modern day slavery begins right here at home,” said U.S. Attorney Joseph H. Hogsett for the Southern District of Indiana. “That is why we have teamed up with law enforcement partners across this state and around the country to combat the types of horrific abuse that are alleged in this case.”

According to the federal indictment and state probable cause affidavit, an investigation into Mitchell’s alleged criminal activity began in July 2013, when officers with the Indianapolis Metropolitan Police Department were flagged down and informed by a woman that her niece, a reported runaway, had returned home and reported she had been the victim of sexual assault. Further investigation resulted in the identification of a suspect who went by the name of Tre, an alleged alias of Mitchell, as well as information indicating that the defendant was running a prostitution operation in the near-northside area of Indianapolis.

The indictment alleges that from May 2013 through June 27, 2013, Mitchell engaged in sex trafficking by means of force, fraud or coercion. The allegations include the trafficking of females between the ages of 19 and 21, as well as three minors aged 12, 16 and 17. Mitchell also allegedly transported the minors to facilitate their prostitution activities and sexually assaulted these female minors on a number of occasions. The federal indictment alleges that on June 22, 2013, Mitchell also made a video recording the sexual abuse of the 12-year-old female victim.

Mitchell had an initial appearance before a federal magistrate judge in Indianapolis this afternoon, and was ordered detained pending trial. Mitchell faces a statutory maximum sentence of life in federal prison if convicted of all counts. Under federal law, the defendant would be required to serve a minimum of 85 percent of his prison term within a correctional facility.

This case was the result of a collaborative investigation spearheaded by the Indiana Protection for Abused and Trafficked Humans (IPATH) Task Force, one of 42 task forces nationwide funded by the Department of Justice to address the issue of human trafficking. IPATH was created in 2006 and is chaired by the U.S. Attorney’s Office and the Indiana Attorney General’s Office. The group meets regularly to collaborate on cases and projects, provide additional training to law enforcement and raise awareness in our community about human trafficking.

Informations, indictments and criminal complaints are only a charge and are not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Today, a federal court in the Eastern District of North Carolina permanently barred Sharon D. Rhodes and her businesses, R&S Freedom Tax Service and Changing Faces Annoited Tax Services, from preparing tax returns for others.  Rhodes consented to the entry of the injunction without admitting she was guilty of the allegations against her.

According to the complaint, Rhodes prepared over 600 tax returns for the 2008 through 2010 tax years.  The complaint alleges that Rhodes prepared returns claiming false charitable deductions and false credits such as the Earned Income Tax Credit and education credits.  Rhodes also allegedly improperly understates her customers’ federal tax liabilities by creating phony businesses and then listing those fake businesses on returns and fabricating expenses and losses for them.  The United States contended that the false items generated larger refunds for Rhodes’ customers than they were entitled to receive, and that the losses to the U.S. Treasury could amount to as much as $3 million.

Return preparer fraud is one of the IRS' Dirty Dozen Tax Scams for 2013, which can be viewed at  www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 .  The IRS has tips for choosing a tax preparer:  www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional .  In the past decade, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the  Justice Department website  at  www.justice.gov/tax/taxpress2013.htm . 

Related Materials:

United States v. Sharon D. Rhodes
Agreed Final Judgment of Permanent Injunction and Order Against Sharon D. Rhodes

A former U.S. Army soldier was sentenced to serve 87 months in prison for her role in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced today.

Former U.S. Army Specialist Stephanie Charboneau, 35, of Colorado Springs, Colo., was sentenced on Feb. 3, 2014, by U.S. District Court Philip A. Brimmer. Charboneau pleaded guilty on Sept. 5, 2013.

According to court documents, from approximately February through May 2010, Charboneau was involved in overseeing the delivery of fuel from FOB Fenty to other military bases. As part of this process, documents generally described as “transportation movement requests” (TMRs or mission sheets) were created to authorize the movement of fuel.

According to court documents, Charboneau conspired with others to steal and sell fuel. The essence of the scheme was that the conspirators would create fraudulent TMRs that purported to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation mission was required. After the trucks were filled with fuel, the fraudulent TMRs were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint to justify the trucks’ departures from FOB Fenty. In truth, the fuel was simply stolen, and the conspirators would receive money from the trucking company that stole the fuel.

Charboneau pleaded guilty to bribery and conspiracy to commit bribery for having received payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 truckloads of fuel. According to court documents, the loss to the United States as a result of the thefts was in excess of $1,225,000.

Charboneau’s plea was the fourth guilty plea arising from the investigation of fuel thefts at FOB Fenty. On Aug. 3, 2012, Jonathan Hightower, a civilian employee of a military contractor who had conspired with Charboneau, pleaded guilty to similar charges. After cooperating with the government, he was sentenced to serve 24 months in prison on Oct. 28, 2013. On Oct.10, 2012, Christopher Weaver, who also conspired with Charboneau, pleaded guilty to fuel theft charges, and, after cooperating with the government, was sentenced to serve 37 months in prison on Oct. 28, 2013. Both Weaver and Hightower were prosecuted in the United States District Court for the District of Colorado. On Aug. 29, 2013, Sergeant Bilal Kevin Abduallah, who succeeded Charboneau at FOB Fenty, pleaded guilty in the United States District Court for the Western District of Kentucky to fuel theft-related charges. His sentencing is set for Feb. 12, 2014.

The cases were investigated by the Special Inspector General for Afghanistan Reconstruction (SIGAR); the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the Federal Bureau of Investigation.

These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from SIGAR.

A Florida man who had been the owner and operator of multiple physical therapy rehabilitation facilities pleaded guilty today for his role in organizing and leading a $28.3 million Medicare fraud scheme involving physical and occupational therapy services.

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

Luis Duluc, 53, formerly of southwest Florida, pleaded guilty in the U.S. District Court for the Middle District of Florida to conspiracy to commit health care fraud and making a false statement relating to health care matters. His sentencing date will be set by the court. He faces a maximum penalty of 15 years in prison.

According to documents filed in the case, Duluc and his co-conspirators used various physical therapy clinics and other business entities throughout Florida and elsewhere to submit approximately $28,347,065 in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14,424,865 on those claims.

Duluc was chairman and president of a Delaware holding company known as Ulysses Acquisitions Inc. Duluc and his co-conspirators used Ulysses Acquisitions to purchase comprehensive outpatient rehabilitation facilities (CORFs) and outpatient physical therapy providers (OPTs) including West Coast Rehab Inc. in Fort Myers, Fla.; Rehab Dynamics Inc. in Venice, Fla.; Polk Rehabilitation Inc. in Lake Wales, Fla.; and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Fla., in order to gain control of these clinics’ Medicare provider numbers.

Working with co-conspirators in Miami and elsewhere, Duluc obtained identifying information of Medicare beneficiaries by paying kickbacks and stealing beneficiaries’ identifying information. Duluc and his co-conspirators also obtained unique identifying information of physicians. They then used this information to create and submit false claims to Medicare through the clinics Ulysses Acquisitions purchased. These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided. The conspirators created and used false and forged patient records in an effort to conceal the fact that services had not actually been provided.

Part of the conspiracy included what came to be known as the 80/20 deal, which Duluc developed and marketed. The 80/20 deal involved extensive kickback arrangements with co-conspirators who owned other therapy clinics that were used to further the overall fraud scheme. For example, Duluc and co-conspirators used the clinics they controlled to submit false reimbursement claims to Medicare on behalf of Miami-based therapy clinics such as Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc., and West Regional Center Inc. Duluc and co-conspirators would retain approximately 20 percent of the money Medicare paid on these claims and pay the other 80 per cent of the fraud proceeds to the co-conspirator clinic owners.

When Duluc and his co-conspirators were done using the clinics they acquired through Ulysses Acquisitions, they engaged in sham sales of the clinics to nominee or straw owners, all of whom were recent immigrants to the United States who had no background or experience in the health care industry. Duluc did this in an effort to try to disassociate himself from the fraudulent operations of the rehabilitation facilities.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.

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

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

A Las Vegas attorney pleaded guilty today for his role in multiple schemes to defraud his clients, to defraud the IRS and to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to ensure that the HOAs would steer business to a certain law firm and a certain construction company.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Laura Bucheit of the FBI’s Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Acting Special Agent in Charge Shea Jones of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Barry Levinson, 47, pleaded guilty before U.S. District Judge James C. Mahan in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Levinson is the 30th person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area. Levinson simultaneously pleaded guilty to one count of tax evasion and one count of wire fraud, with the latter charge relating to his embezzlement of his legal clients’ funds.

Levinson admitted that from approximately August 2003 through February 2009, he participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to his law firm and construction company designated by Levinson’s co-conspirators. This scheme was carried out in part by straw buyers who purchased properties in their names that were in reality paid for and controlled by other co-conspirators. According to plea documents, Levinson’s co-conspirators managed and operated the payments associated with maintaining straw properties by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.

Levinson admitted that he was hired to represent the Park Avenue condominium complex, but he treated a co-conspirator as his client rather than the HOA itself. Levinson also admitted that several of his co-conspirators rigged an HOA board election at Park Avenue. Levinson admitted that, after a lawsuit was filed by the homeowners and a special election master was designated for the make-up election, he attempted to bribe the special election master.

Similarly, Levinson admitted that after a rigged election at the Pebble Creek HOA, the homeowners filed a recall petition. Levinson was hired as the HOA general counsel at the direction of a co-conspirator and took several steps to deter the recall election, including firing the property management company and filing a lawsuit to stop the recall election.

Related to the tax evasion charge, Levinson admitted that he failed to file taxes for the 2005 to 2010 tax years and filed a false 2011 tax return. Levinson also admitted that he took affirmative steps to evade taxes for the tax years 2009, 2010 and 2011, including concealing cash earnings from the IRS and telling the IRS that his business was no longer operating.

Finally, related to the wire fraud charge, Levinson admitted that between March 2010 and September 2011, he embezzled nearly $180,000 from at least nine different minor personal injury clients. Levinson also admitted that he stole another $65,000 from an individual for whom he was serving as an escrow agent.

As part of the plea agreement, Levinson has agreed to be disbarred by the State Bar of Nevada.

Levinson’s sentencing is scheduled for May 5, 2014. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison. The maximum sentence for attempting to evade or defeat federal taxes is five years in prison. The maximum penalty for wire fraud is 20 years in prison.

The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.

The case is being prosecuted by Deputy Chief Charles La Bella, Senior Deputy Chief for Litigation Kathleen McGovern and Trial Attorneys Thomas B.W. Hall and Alison Anderson of the Criminal Division’s Fraud Section. The Department also thanks former Trial Attorneys Mary Ann McCarthy and Nicole Sprinzen for their efforts in prosecuting the case.

Steven Joshua Dinkle, 28, former Exalted Cyclops of the Ozark, Ala., chapter of the International Keystone Knights of the Ku Klux Klan (KKK), pleaded guilty in federal court today to hate crime and obstruction of justice charges for his role in a 2009 cross burning, the Justice Department and the U.S. Attorney’s Office for the Middle District of Alabama announced.

According to documents filed with the court, Dinkle and one of his KKK recruits, Thomas Windell Smith, met at Dinkle’s home on May 8, 2009, and decided to burn a cross in a local African-American neighborhood. 

Dinkle constructed a wooden cross about six feet tall, wrapped jeans and a towel around it to make it more flammable and loaded it into Smith’s truck.  Around 8:00 p.m., Dinkle and Smith drove to an African-American neighborhood in Ozark.  Dinkle unloaded the cross at the entrance to the community and dug a hole in the ground, then poured fuel on the cross, stood it up in the hole in view of several houses and set it on fire.  Dinkle and Smith then drove away.

When questioned by local investigators, Dinkle falsely denied his involvement in the incident and stated that he had resigned his office and withdrawn from the KKK months before the cross burning.  When approached by the FBI, Dinkle again lied and told a special agent that he had been at home with his girlfriend when the cross burning occurred.  He further claimed that he did not know one of his superiors in the KKK at the time of the cross burning.  During the plea hearing, Dinkle admitted that in burning the cross, he intended to scare and intimidate residents of the African-American community by threatening the use of force against them.  He further admitted that he burned the cross because of the victims’ race and color and because they were occupying homes in that area.

Dinkle pleaded guilty to one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing and two counts of obstruction of justice.   

Dinkle faces a statutory maximum sentence of 10 years in prison and a $250,000 maximum fine on the conspiracy and criminal interference counts and a statutory maximum sentence of 25 years in prison and a $500,000 maximum fine for obstructing justice by making false statements to both local investigators and federal agents.  Sentencing for Dinkle has not yet been scheduled.

Dinkle’s co-conspirator, Smith, pleaded guilty to one count of conspiracy to violate housing rights in December 2013.  He is scheduled to be sentenced on March 11, 2014.

“By targeting the victims with a blazing cross in the night, one of the most threatening racial symbols in our nation’s history, the defendant attempted to terrorize a neighborhood because of the color of the residents’ skin,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “Prosecuting these racially motivated crimes will continue to be a priority for the Department of Justice.”

“ As a society we hope to never see this type of hate,” said U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.  “We will continue to prosecute those that commit these horrible acts of hate to the fullest extent of the law.”

This case was investigated by the FBI, with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department.  The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.

A federal district judge in the Atlanta Division for the Northern District of Georgia permanently barred Joan Leger and her company from preparing federal income tax returns for others on Jan. 31, 2014, the Justice Department announced today.  The judgment also requires Leger to send copies of the permanent injunction to her customers.

Leger, who resides in Stone Mountain, Ga., is a paid tax preparer who does business through The 1804 Tax Group Inc. and Liberty Tax Service, and previously did business through J & Company.  The complaint alleges that since 2009, Leger, through her companies, has prepared almost 6,000 tax returns.  Leger allegedly understated her customers’ tax liabilities and overstated their refunds by creating or inflating deductions, wages, income, expenses or credits in order to maximize the earned income tax credit, as well as wrongly claimed other credits and deductions.  Leger’s practices include fabricating losses for non-existent businesses or businesses not owned and operated by the taxpayer, falsely claiming unreimbursed business expenses and falsely claiming the educational tax credit.  Altogether, the complaint alleges that Leger’s activities may have resulted in a loss of more than $2 million to the U.S. Treasury.  Leger and The 1804 Tax Group consented to the entry of the injunction. 

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013.  The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional.  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.

Related Materials:

United States v. Joan Leger, et al.
Complaint for Permanent Injunction
Final Judgment of Permanent Injunction Against Joan Leger and the 1804 Tax Group, Inc., d/b/a Liberty Tax Service

WASHINGTON — Aisan Industry Co. Ltd., an Obu, Japan-based company, has agreed to plead guilty and to pay a criminal fine of $6.86 million for its role in a price-fixing conspiracy involving electronic throttle bodies sold in the United States and elsewhere, the Department of Justice announced today.  

According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Aisan engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of electronic throttle bodies sold to Nissan Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere.  In addition to the criminal fine, Aisan has also agreed to cooperate with the department’s ongoing auto parts investigations. The plea agreement is subject to court approval.

“The Antitrust Division will continue to hold companies accountable for anticompetitive conduct that impacts the automobile industry in the United States,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “To date, 25 companies have been charged as part of the Antitrust Division’s ongoing auto parts investigation.”

According to the charges, Aisan and its co-conspirators carried out the price-fixing conspiracy through meetings and conversations in which they discussed and agreed upon bids and price quotations for electronic throttle bodies.  Aisan’s involvement in the conspiracy to fix prices of electronic throttle bodies lasted from at least as early as October 2003 until at least February 2010.

Aisan manufactures and sells automotive electronic throttle bodies, which are part of the air intake system in an engine that controls the amount of air flowing into an engine’s combustion chamber.  By controlling air flow within an engine, the electronic throttle body controls engine speed.

Including Aisan, 25 corporations have pleaded guilty or agreed to plead guilty in the department’s investigation into price fixing and bid rigging in the auto parts industry.  The companies have agreed to pay a total of more than $1.8 billion in fines.  Additionally, 28 individuals have been charged.

Aisan is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s prosecution 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 charges were brought by the San Francisco Office of the Antitrust Division with assistance provided by the National Criminal Enforcement Section of the Antitrust Division, the Detroit Field Office of the FBI, and the FBI headquarters’ International Corruption Unit.  Anyone with information concerning this investigation 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.

Top officers and a salesman for an investment company based in Nashville, Tenn., have pleaded guilty for their roles in an $18 million Ponzi scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David Rivera of the Middle District of Tennessee, Special Agent in Charge Todd McCall of the FBI’s Memphis Division and Special Agent in Charge Christopher Henry of the IRS-Criminal Investigation in Nashville made the announcement today after the pleas were accepted by U.S. District Judge Todd J. Campbell in the Middle District of Tennessee.

Terry Kretz, 61, of Gallatin, Tenn., the chief executive officer for Hanover Corporation, and Daryl Bornstein, 54, of College Grove, Tenn., a Hanover salesman, pleaded guilty today to securities fraud, money laundering, and conspiracy to commit securities fraud, wire fraud and mail fraud. On Jan. 29, 2014, Hanover’s chief financial officer, Robert Haley, 54, pleaded guilty to the same charges. Kretz and Haley also pleaded guilty to mail fraud.

“The three men who pleaded guilty today schemed, lied, and stole at the expense of innocent investors,” said Acting Assistant Attorney General Raman.  “They ran a classic Ponzi scheme until the bottom fell out, and their clients – people looking to provide stability for their families or save for their retirements – suffered serious financial harm.  We will stay vigilant to ensure that fraudsters like Kretz, Bornstein and Haley are held accountable.”

“Ponzi schemes typically leave unsuspecting investors in financial ruin and many have lost their life’s savings,” said U.S. Attorney Rivera. “The U.S. Attorney’s Office and our law enforcement partners will continue to place a great emphasis on educating the public about investment fraud and will vigorously pursue those who prey upon unsuspecting investors.”

“It is a priority of the FBI to target fraudsters who use criminal investment and Ponzi schemes to scam innocent working families and retirees out of their hard earned money,” said FBI SAC McCall. “These pleas demonstrate the effectiveness of state and federal law enforcement working together to protect the public from financial fraudsters and bring those responsible to justice.”

“Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said IRS-CI SAC Henry.  “Investors should be wary of programs promising unbelievable returns and investments should be looked at carefully. Remember the old cliché, ‘If it seems too good to be true, it probably is’.

The three men were indicted by a federal grand jury on July 27, 2011. Sentencing is scheduled for April 2, 2014.

According to court documents, the defendants carried out the fraudulent scheme from October 2004 through August 2006. During that period, Kretz and Bornstein offered clients the opportunity to invest in Hanover through promissory notes bearing high interest rates. Through representations in the promissory notes, as well as their own discussions with investors, Kretz and Bornstein told clients that their money would be used for specific purposes, such as investing in stock options and startup companies. In fact, as all three defendants knew, more than half the money invested in Hanover went to repay earlier investors, to pay Hanover’s salaries and overhead, or to benefit the defendants personally. Such personal benefits included the purchase of a $600,000 residential building lot in the name of Kretz personally, contributing more than $176,000 to a church, and paying for golf memberships.

Kretz and Bornstein also issued Hanover promissory notes to reimburse individuals who had previously lost money investing in ventures recommended by Bornstein before he joined Hanover. In some cases, these old investors contributed new money to Hanover, while in other cases, they invested nothing. In both cases, money from new investors in Hanover was used to make payments on promissory notes issued to cover non-Hanover losses without the Hanover investors’ knowledge.

Haley, in his role as chief financial officer, furthered the fraud by sending note holders checks that purported to be for “interest” — but were in fact simply transfers of money recently taken in from new investors. Haley also prepared a false balance sheet that overstated Hanover’s financial health and that he knew would be shown to note holders.

The case was investigated by the FBI, IRS-CI, the Tennessee Bureau of Investigation, and the Tennessee Department of Commerce and Insurance. The case is being prosecuted by Assistant United States Attorney Scarlett S. Nokes of the Middle District of Tennessee and Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section.

Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the new Country Pages section of the Virtual Law Library, the agency’s online legal research resource. The new section is an extensive collection of information about the conditions in countries around the world. This unique educational resource, containing publicly-available documents that report on multiple aspects of country conditions, could be relevant to respondents in proceedings before the immigration courts and the Board of Immigration Appeals. The release of these pages is a new effort to provide the public with access to one website that hosts detailed information from many sources.

“EOIR is constantly evaluating its programs to improve the way we serve the public,” said EOIR Director Juan P. Osuna. “The release of country conditions information will allow the public ease of access to more specific and complete information to aid parties in preparing their cases before EOIR’s tribunals. I am so pleased to be able to offer this tremendous resource to the public.”

EOIR’s new section hosts information on 54 countries, including documents addressing areas such as political parties, human rights, religion, sexual orientation and trafficking, as well as maps, citizenship documents, and relevant laws. Information is culled from reports from multiple sources, including the U.S. Government, the United Nations, foreign governments, non-governmental organizations, and media outlets.

- EOIR -

The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.

The Justice Department, the U.S. Attorney’s Office for the District of Maryland and the FBI announced that Josh Hummer, a sergeant at the Roxbury Correctional Institution (RCI) in Hagerstown, Md., was convicted today by a federal jury of obstructing justice during the investigation of an assault against an inmate. 

Hummer faces a statutory maximum of 20 years when he is sentenced by U.S. District Judge James K. Bredar.  The assault against the inmate occurred on March 9, 2008.

In related cases, Judge Bredar has accepted guilty pleas from former RCI officers Ryan Lohr, Dustin Norris, Tyson Hinckle, Reginald Martin, Michael Morgan, Edwin Stigile, Lanny Harris, Philip Mayo, Jeremy McCusker, Walter Steele, Keith Morris and Robert Harvey.  Two former RCI officers previously pleaded guilty in state court.

Two current or former RCI officers still face federal charges in connection with this incident.  The officers, who are presumed innocent until proven guilty, will stand trial in February. 

The investigation by the Fredrick Resident Agency of the FBI is ongoing.  The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorneys Christine Siscaretti and Sanjay Patel for the Civil Rights Division.     

A Queens, N.Y., medical doctor was sentenced today to serve 12 months and a day in prison for his role in a scheme that fraudulently billed Medicare more than $15 million for, among other things, physical therapy and lesion removal services that were medically unnecessary and never provided.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, 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.

Hoi Yat Kam, 59, was sentenced by U.S. District Judge Edward R. Korman in the Eastern District of New York. In addition to his prison term, Kam was sentenced to serve three years of supervised release and to pay $2,217,656 in restitution.

Kam pleaded guilty on Jan. 9, 2013, to conspiracy to commit health care fraud. According to court documents, Kam conspired with others to execute a fraudulent scheme in which he and others provided a variety of spa services, such as massages and facials, as well as free meals and social activities to Medicare beneficiaries at URI Medical Service PC and Sarang Medical PC to induce those beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided and were not medically necessary. URI and Sarang were two clinics in Queens that purportedly provided physical therapy and lesion removals. In total, Kam and his co-conspirators submitted approximately $15.1 million in false and fraudulent claims to Medicare.

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

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 .

Joseph Vito Mastronardo Jr., 63, of Meadowbrook, Pa., pleaded guilty today to conspiring to participate in a racketeering enterprise (RICO), conducting an illegal gambling business, four counts of conspiring to launder money, eight counts of interstate travel in aid of racketeering, transmitting wagering information and aggravated structuring of cash deposits.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Zane D. Memeger of the Eastern District of Pennsylvania made the announcement.

The guilty plea stems from Mastronardo’s leadership of the Mastronardo Bookmaking Organization, a multi-million dollar sports betting operation with bettors throughout the U.S. No sentencing date has been scheduled.

Mastronardo is one of 19 defendants charged in the case. Three defendants were charged by information and 16 defendants were charged by indictment. In the indictment, 15 of the 16 defendants were charged with conspiring to participate in a racketeering enterprise and conducting an illegal gambling business. With today’s guilty plea, 11 of the 16 defendants charged in the indictment have pleaded guilty.

At its peak, the organization had more than 1,000 bettors and was generating millions of dollars a year. According to the indictment, between Jan. 1, 2005, and Jan. 1, 2011, the organization used websites ( www.betroma.com and www.betrose.com ) and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing and other sporting events. Residents of Costa Rica staffed the websites and answered the telephones. In 2006 and 2010, law enforcement seized over $2 million of cash that Mastronardo had hidden in and around his home, including in specially built secret compartments and in PVC pipes that were buried in his backyard.

Mastronardo ran the organization by using the Internet, telephone, Skype, e-mail, U.S. mail, and in-person communication. The Mastronardo Bookmaking Organization laundered the gambling proceeds by using a check cashing agency, two private bank accounts and numerous international bank accounts. On occasion, Mastronardo also provided instructions so a losing bettor could pay a gambling debt through a charitable donation.

Mastronardo supervised the agents, sub-agents and office employees and oversaw the websites. He laundered millions of dollars of betting proceeds, collected debts, and instructed others to collect debts. Other indicted defendants who have pleaded guilty include: Mastronardo’s son, Joseph F. Mastronardo, who worked as an office employee, collected debts and performed other financial duties; Eric Woehlcke, who worked as an office employee, collected debts and served as a sub-agent; Joseph and Anna Rose Vitelli, who owned J & A Check Cashing, which laundered the gambling proceeds; and Patrick Tronoski, Schuyler Twaddle, Michael Loftus, Michael Squillante, David Rounick and Ronald Gendrachi.

The case was investigated by the FBI, the Internal Revenue Service Criminal Investigation, the Montgomery County Detective Bureau, and the Montgomery County District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Jason P. Bologna of the Eastern District of Pennsylvania and Trial Attorney Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section.

The former president and vice president of Osaka, Japan-based Diamond Electric Mfg. Co. Ltd. have agreed to plead guilty for their participation in a global conspiracy to fix prices of ignition coils installed in cars sold in the United States and elsewhere, the Department of Justice announced today.  Ignition coils are part of a car’s fuel ignition system and release electric energy suddenly to ignite a fuel mixture.

Separate felony charges were filed today in U.S. District Court for the Eastern District of Michigan in Detroit against Shigehiko Ikenaga and Tatsuo Ikenaga.  According to court documents, from at least as early as July 2003 until at least February 2010, the former executives participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of ignition coils sold to automotive manufacturers for installation in vehicles manufactured in the United States and elsewhere.  The automotive manufacturers included Ford Motor Co., Toyota Motor Corp. and Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries.

Shigehiko Ikenaga, president of Diamond Electric during the relevant period, agreed to serve 16 months in a U.S. prison.  Tatsuo Ikenaga, Diamond Electric’s managing director, and then vice president beginning in 2008, agreed to serve 13 months in a U.S. prison.  Tatsuo Ikenaga also simultaneously served as president of Diamond Electric’s U.S. subsidiary during the relevant period.  Additionally, the former executives have each agreed to pay a $5,000 criminal fine and to cooperate with the department’s ongoing investigation.  Each of the Ikenaga’s plea agreements is subject to court approval.  On Sept. 10, 2013, Diamond Electric pleaded guilty for its involvement in the conspiracy and was fined $19 million.

 
“The two former executives charged today once again demonstrate the Antitrust Division’s vigorous commitment to hold individuals accountable for engaging in anticompetitive conduct,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The division’s ongoing investigation has resulted in more than two dozen executives serving prison time for their participation in illegal, auto parts conspiracies.”

Diamond Electric is a manufacturer of ignition coils and was engaged in the sale of ignition coils in the United States and elsewhere. According to the charges, the Diamond Electric executives and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to automobile manufacturers. 

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

Including today’s charges, 28 individuals and 24 companies have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry.

Today’s charges 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 pleas are the result of the National Criminal Enforcement Section 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.

An Aryan Brotherhood of Texas (ABT) gang member and an ABT associate were sentenced to prison today for their involvement in the May 2008 murder of an ABT prospect member.

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 made the announcement after sentencing by U.S. District Judge Sim Lake in the Southern District of Texas.

Shane Gail McNiel, aka “Dirty,” 34, of San Antonio, was sentenced to serve 120 months in prison and Destiny Nicole Feathers, 24, of Jourdanton, Texas, was sentenced to serve 78 months in prison. In addition to their prison terms, McNiel and Feathers were sentenced to serve three years of supervised release.

On Aug. 21, 2013, McNiel pleaded guilty to the charge of accessory after the fact in the murder. Feathers pleaded guilty to the same offense on Aug. 14, 2013.

According to information presented in court, McNiel was a member of the ABT and Feathers was associated with the gang, a powerful, race-based, statewide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. According to court documents, an ABT prospective member was murdered by Jim Flint McIntyre, 43, aka “Q-Ball,” Michael Dewayne Smith, 30, aka “Bucky,” and another ABT gang member for allegedly stealing drugs he was ordered to deliver to a customer on behalf of the ABT. According to court documents, the murder was a result of a “discipline” ordered by Frank Lavell Urbish, aka “Thumper,” and his superiors. The victim’s body was discovered in Atascosa County, Texas, on May 4, 2008. McIntyre, Smith, and Urbish each pleaded guilty to this racketeering murder in 2011.

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, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy. Over time, the ABT has 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 violate the rules or pose 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, 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 time he is referred to as a prospect, while his conduct is observed by the members of the ABT.

McNiel and Feathers are two of 36 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges.

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; Tarrant County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.

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

Three Miami residents have been indicted for their alleged participation in a $190 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement after the indictment was unsealed.

On Jan. 28, 2014, a federal grand jury in Miami returned a 10-count indictment charging Nelson Rojas, 43, Roger Bergman, 64, and Rodolfo Santaya, 54, for allegedly participating in a scheme to defraud Medicare by submitting false and fraudulent claims, from approximately December 2002 to October 2010.

Rojas was charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, conspiracy to commit money laundering, two counts of money laundering and one count of aggravated identity theft. Bergman and Santaya were each charged with conspiracy to commit health care fraud and wire fraud. In addition, Bergman was charged with conspiracy to make false statements relating to health care matters. Santaya was also charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, as well as two counts of receiving bribes and kickbacks in connection with a federal health care benefit program.

According to the indictment, Rojas, Bergman and Santaya allegedly participated in a scheme orchestrated by the owners and operators of American Therapeutic Corporation (ATC) and its management company, Medlink Professional Management Group Inc. ATC and Medlink were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida. Both corporations have been defunct since October 2010.

The indictment alleges that Bergman was a licensed physician’s assistant who participated in the scheme by, among other things, admitting Medicare beneficiaries to ATC facilities for PHP treatment even though they did not quality for such treatment and falsifying patient records to make it appear as though patients needed, qualified for and actually received legitimate PHP treatment when they did not. The indictment alleges that Santaya served as a patient recruiter who provided ineligible patients to ATC in exchange for kickbacks. The indictment alleges that Rojas was the co-owner of a check cashing business and that he facilitated the payments of bribes and kickbacks from ATC to various patient recruiters.

ATC, Medlink and various owners, managers, doctors, therapists, patient brokers and marketers of ATC and Medlink have pleaded guilty or have been convicted at trial. In September 2011, ATC owner Lawrence Duran was sentenced to 50 years in prison for his role in orchestrating and executing the scheme to defraud Medicare.

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

The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorney Nicholas E. Surmacz.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,700 defendants who collectively have falsely billed the Medicare program for more than $5.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Attorney General Eric Holder today released the following statement regarding the case of Dzhokhar Tsarnaev:

“After consideration of the relevant facts, the applicable regulations and the submissions made by the defendant’s counsel, I have determined that the United States will seek the death penalty in this matter. The nature of the conduct at issue and the resultant harm compel this decision.”

The Justice Department announced today that it has reached an agreement with the city of Waterloo, Iowa, resolving allegations that the city violated the anti-discrimination provision of the Immigration and Nationality Act (INA). 

The department initiated its investigation after a charge was filed by a work-authorized, lawful permanent resident alleging that the city refused to consider him for a fire fighter position because he was not a U.S. citizen.  The department’s investigation confirmed that the city of Waterloo improperly restricted fire fighter positions to U.S. citizens despite the fact that no law, regulation, executive order or government contract authorized the city to legally restrict employment in such a manner under the INA.  The investigation further revealed that the city of Waterloo had refused to consider the charging party’s application on the basis of his citizenship status.   

Under the settlement agreement, the city of Waterloo must provide the charging party with another opportunity to apply for the position and must hire or otherwise compensate the charging party if the charging party’s performance on the city’s hiring tests confirm that he would have been hired in the absence of discrimination.  In addition, the city of Waterloo will pay $13,000 in civil penalties to the United States, and has agreed to make changes to its policies and practices to ensure unlawful citizenship requirements are not imposed, to provide training to city officials, and to be subject to monitoring by the department for one year.

“Employers must make sure that they are not erecting unlawful, discriminatory barriers in hiring,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The department is committed to knocking down these barriers through its enforcement of the INA and making sure that work-authorized applicants have equal employment opportunities.”
 

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  For more information about protections against employment discrimination under the immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired), call OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TTY for hearing impaired), sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php , email osccrt@usdoj.gov or visit the website at www.justice.gov/crt/about/osc

Jason McGuire of Detroit, Mich., and Delvin Davis of Saint Clair Shores, Mich., were found guilty by a jury sitting in Detroit in the Eastern District of Michigan of conspiracy and filing $3.4 million in false claims in the form of false individual income tax returns and false trust tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.  The defendants were also found guilty of filing or aiding and abetting in the filing of false, fictitious and fraudulent claims; Davis was found guilty of five such counts and McGuire of 18 counts.  Witness testimony revealed that the defendants attended the same high school in Detroit and began the scheme in 2008.  Prior to that time, McGuire had worked as a mechanic and Davis had worked as a mortgage broker and operated a “credit repair” business.

According to court documents and evidence introduced at trial, McGuire, 37, and Davis, 36, recruited individuals from the Detroit area with whom they had existing, long-standing business and personal relationships to sign fraudulent trust and income tax returns.  McGuire had the taxpayers sign blank trust return forms, and the taxpayers never saw the filled-out forms before they were filed.  McGuire attached bogus forms to the income tax returns.   McGuire included fictitious withholdings in both types of return forms, resulting in the taxpayers receiving large refunds.  The defendants recruited at least nine different taxpayers to participate in the fraudulent scheme.  The IRS received returns requesting more than $3.4 million in false refunds and paid over $1.5 million in false refunds as a result of the fraudulent scheme.  Several taxpayers testified at trial that they were required to pay fines and interest to the IRS as a result of the false tax returns that the defendants submitted to the IRS. 

“Those who prepare and file fraudulent returns cheat all honest taxpayers,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “The Department is committed to investigating, stopping, and prosecuting these crimes.”

"When criminals cheat the IRS, they rob all of us as taxpayers,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “We hope that prosecutions like this one will deter others from stealing taxpayer funds."

Sentencing is scheduled for May 2, 2014, before U.S. District Judge Stephen J. Murphy.  McGuire and Davis each face a statutory maximum potential sentence of 10 years in prison and a $250,000 fine for the conspiracy count and five years in prison and a $250,000 fine for each count of filing a false claim.  

This case was investigated by IRS-Criminal Investigation and was prosecuted by Assistant U.S. Attorney Elizabeth Stafford and Trial Attorney Mark McDonald of the Tax Division.

The Departments of Veterans Affairs, Defense, Education and Justice, along with the Consumer Financial Protection Bureau and the Federal Trade Commission announced today the launch of a new online complaint system designed to collect feedback from veterans, service members and their families who are experiencing problems with educational institutions receiving funding from Federal military and veterans educational benefits programs, including benefits programs provided by the Post-9/11 GI Bill and the DoD Military Tuition Assistance Program.

The centralized online reporting system is designed for veterans, service members and eligible dependents to report negative experiences with educational institutions; and gives the federal government the information needed to identify and address unfair, deceptive, and misleading practices and ensure high quality academic and student support services are available for veterans, service members, and their families. 

“The online complaint system empowers veterans and their dependents and provides them a direct line to VA and our partner agencies,” said Allison A. Hickey, Under Secretary for Benefits, Department of Veterans Affairs. “The feedback we receive from veterans, service members and their families will help us strengthen enforcement of the ‘Principles of Excellence’ for institutions of higher learning serving veterans and their families to ensure students are receiving the education benefits they have earned and deserve.” 

"Our service members and their families now have an easier and efficient way to provide feedback on their civilian educational experiences, which will ensure we have the right information to identify and address any negative practices," said Jessica Wright, Acting Under Secretary of Defense for Personnel and Readiness.

“This launch marks a critical step in an ongoing interagency effort to stop those who engage in fraud and misrepresentation targeting our service members and veterans,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice.  “Individuals who report concerns will not only be able to resolve their personal issue, but also help protect fellow service members and veterans from the same misconduct.”

Students can submit a complaint if they believe their school is failing to follow the Principles of Excellence, (i.e. unfair recruiting practices, credit transfer or change in degree requirements) through the centralized online reporting system accessed via the Department of Defense and GI Bill websites. When feedback is received, agencies will contact the school on behalf of the student and work toward a resolution. Complaints and their resolution will be forwarded to the Federal Trade Commission Consumer Sentinel Network, accessible by over 650 federal, state and local law enforcement agencies for use in enhancing and coordinating law enforcement investigations.

Executive Order 13607, signed April 27, 2012, addresses reports of unfair, deceptive or misleading behavior toward veterans, service members and their families pursuing higher education and directs agencies to establish, implement and promote compliance with “Principles of Excellence” for educational institutions receiving funding from Federal military and veterans educational benefits programs  for America’s veterans, service members and eligible dependents, including preventing abusive and deceptive recruiting practices. The new online complaint system is one of a range of tools being implemented by the federal government to ensure that service members, veterans and eligible dependents have access to meaningful information about the cost and quality of educational institutions.

The Department of Justice published a Notice of Proposed Rulemaking today intended to revise the department’s Americans with Disabilities Act (ADA) Title II and Title III regulations to implement the requirements of the ADA Amendments Act of 2008 (ADAAA).  Congress passed the ADAAA in response to several Supreme Court decisions that had narrowly interpreted the ADA’s definition of disability.  The ADAAA made a number of significant changes to the ADA definition of disability to ensure that it would be easier for individuals seeking the protection of the ADA to establish that they have a disability that falls within the meaning of the statute. 

“The narrow interpretation of the ADA’s definition of disability resulted in the denial of the law’s protection for many individuals with impairments such as cancer, diabetes and epilepsy who had been the subject of adverse actions due to their disabilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The ADAAA and our proposed regulations properly place the focus of ADA cases on whether a covered entity has complied with its obligations and whether discrimination occurred, and not on whether the person has a disability.”

The ADAAA’s revised definition of disability applies to Title I, which deals with employment, as well as to Titles II and III of the ADA.  The Equal Employment Opportunity Commission, which is responsible for developing regulations that implement Title I of the ADA, published its revised Title I regulation incorporating the ADAAA in March 2011.  The department has made every effort to ensure that its proposed revisions to the Title II and Title III regulations are consistent with, if not identical to, the corresponding provisions in the Title I regulation.  This will ensure that the definition of disability is interpreted consistently for all three titles of the ADA. 

The comment period for the proposed rule closes on March 31, 2014.  For more information about the ADAAA and to comment on the proposed rule, please visit www.federalregister.gov/articles/2014/01/30/2014-01668/office-of-the-attorney-general-amendment-of-americans-with-disabilities-act.

Joel Rakower, along with his solely-owned corporation, Transship Discounts Ltd., pleaded guilty today in federal court in Brooklyn, N.Y., to violating the Lacey Act by mislabeling imported piranhas, announced Acting Assistant Attorney General Robert G. Dreher for the Environment and Natural Resources Division of the Department of Justice and Queens County District Attorney Richard A. Brown.

In the plea agreement, Rakower admitted that his company purchased piranhas from a Hong Kong tropical fish supplier and imported them to Queens, N.Y. Each such import must be accompanied by a packing list describing what wildlife is contained in the package being imported, and the importer must provide this packing list to the United States Fish and Wildlife Service upon import for inspection. In March of 2011, shortly after New York City prohibited possession of piranhas, Rakower instructed the foreign supplier to falsely label the piranhas on packing lists as silver tetras, a common and unaggressive aquarium fish. Over the course of 2011 and 2012, Transship submitted packing lists to the Fish and Wildlife Service containing false identifications of 39,548 piranhas, worth approximately $37,376, which Transship then sold to fish retailers in several states.

“Rakower flouted federal laws meant to protect people and the environment from the illegal trade in wildlife species,” said Acting Assistant Attorney General Dreher. “Mislabeling imported wildlife presents dangers to the public and the environment and we will continue to prosecute these cases.”

Under the plea agreements, Rakower agreed to pay a $3,000 fine. Transship agreed to serve a two-year period of probation, pay a $35,000 fine and pay $35,000 in restitution to the State of New York’s Department of Environmental Conservation Division of Law Enforcement. Both parties will be sentenced on April 24, 2014.

Piranhas are freshwater fish originating from South American rivers such as the Amazon, Orinoco, Guyana and the Sao Francisco river systems.  Piranhas are extremely aggressive and territorial, feeding on insects, fish, and larger prey such as amphibians, reptiles and mammals.  As a result of piranhas’ aggressiveness, 25 states have either banned or regulated piranhas, making them illegal to own or sell.  Piranhas, an injurious species, could pose a serious risk if they escaped into native water systems, potentially damaging ecosystems through aggressive predation or injuring people or pets.  Tropical fish enthusiasts can contribute to this possibility by releasing piranhas into the wild when they grow too large for a tank.  Although piranhas originate from tropical waters, they are able to withstand much cooler water temperatures, creating fear that they may even become established in more northern US waters. Effective regulation of piranha possession and sales within the United States depends on accurate reporting of piranha imports; concealing the fish upon import facilitates their entry into the black market in states that have banned or strictly regulated piranhas to protect state waters and ecosystems.

“Driven by greed and without regard for the health and safety of people or the environment, the defendant and his company illegally trafficked in piranha by falsely labeling the imported predatory freshwater fish as being silver tetras, a far more benign fish often kept in home aquariums and having a far less street value than piranha,” said District Attorney Brown. “I thank the New York State Department of Environmental Conservation and our federal colleagues – the U.S. Fish and Wildlife Service and the United States Department of Justice’s Environment and Natural Resources Division – for providing a reasonable and appropriate resolution of the case.”

This case was investigated by the United States Fish and Wildlife Service in conjunction with the New York State Department of Environmental Conservation Division of Law Enforcement, and is being prosecuted by Cassandra Barnum, a trial attorney in the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division. 

Saint Joseph Health System Inc. has agreed to pay $16.5 million to resolve allegations that Saint Joseph Hospital violated the False Claims Act by submitting false claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary cardiac procedures, the Justice Department announced today.  Saint Joseph Health System operates numerous hospitals statewide, including Saint Joseph Hospital, which is based in London, Ky. 

“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “ The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk.”

The government alleged that doctors working at Saint Joseph Hospital performed numerous invasive cardiac procedures, including coronary stents, pacemakers, coronary artery bypass graft surgeries and diagnostic catheterizations, on Medicare and Medicaid patients who did not need them, and that the hospital was aware of these unnecessary procedures.  These doctors were affiliated with Cumberland Clinic which is a physician group that entered an exclusive arrangement with Saint Joseph Hospital in 2008 to provide cardiology services to the hospital’s patients.  Cumberland Clinic is owned by two London-based cardiologists, Satyabrata Chatterjee and Ashwini Anand. 

The settlement also resolves allegations that Saint Joseph Hospital violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements that financially benefitted Chatterjee and Anand as an inducement for Chatterjee and Anand to direct more Cumberland Clinic patients to the hospital.  

Dr. Sandesh Patil, one of the Cumberland Clinic cardiologists working at the hospital, performed many of the medically unnecessary coronary stents.  Patil has since pleaded guilty to a federal health care fraud offense and has been sentenced to serve 30 months in prison.

“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney for the Eastern District of Kentucky Kerry Harvey.  “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs.  We will use every available tool to protect our federal health care programs and the patients who they serve.”

In connection with this settlement, Saint Joseph Hospital has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next five years.

"Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs," said Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson.  "This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures."

In addition to the settlement with Saint Joseph Health System, the government  announced its intervention in a lawsuit alleging False Claims Act violations by Chatterjee and Anand, who referred patients for and performed the unnecessary procedures and tests, and their practice group, Cumberland Clinic, as well the practice groups each of them owned before forming Cumberland Clinic.     

The government actions announced today stem in large part from a whistleblower complaint filed by three Lexington, Ky., cardiologists pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit.  The Act also permits the government to intervene in the lawsuit and take over the allegations as it has done in this case.  Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina will receive a total of $2.46 million of the $16.5 million settlement with Saint Joseph Hospital. 

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 $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs. 

The investigation was conducted by the FBI, HHS-OIG, the Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit, the Commercial Litigation Branch of the Department of Justice Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

The lawsuit is captioned United States ex rel. Jones, Hollingsworth and Rukavina v. Saint Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.) 

The United States has asked a federal court in Fort Lauderdale, Fla., to per manently bar Keisha Stewart and her co mpany, Professional Tax Services Inc., from preparing federal tax returns for others, the Justice Depart ment announced today. 

According to the co mplaint, Stewart and her co mpany prepared federal inco me tax returns that in f lated inco me or included f ictitious inco me to quali fy her custo mers to receive or maximize the earned inco me tax credit.  The co mplaint states that Stewart also clai med tax credits that are refundable or decrease the a mount of tax on her custo mers’ returns, including false education credits (A merican Opportunity Credit) and residential energy credits.  According to the co mplaint, Stewart also falsely clai med head of household status on behalf of custo mers who did not qualify in order to i mproperly decrease her custo mers’ reported tax liabilities.  The co mplaint also alleges that Stewart clai med false dependents on behalf of custo mers and also clai med the child and additional child tax credits on behalf of those custo mers.  Allegedly, Stewart typically included these ite ms on her custo mers’ returns without their knowledge.  The govern ment alleges that Stewart’s returns have resulted in over $1.6 million of loss annually to the United States during the tax years 2010, 2011 and 2012.

Return preparer fraud is one of the IRS' Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013.  The IRS has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional.  In the past decade, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm.

Related Materiala:

United States v. Keisha Stewart, et al.
Complaint for Injunctive Relief

A Utah man was sentenced to serve 24 months in prison for his role in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.

On Oct. 24, 2011, Jose Mendez, 50, of Farr West, Utah, pleaded guilty to conspiracy to commit bribery and procurement fraud, bribery, and procurement fraud.  Mendez was charged in an October 2011 indictment, along with Sylvester Zugrav, 71, and Maria Zugrav, 67, owners of Atlas International Trading Company in Sarasota, Fla.  The Zugravs were sentenced on Jan. 8, 2014.

According to court documents, while Mendez worked as a procurement program manager for the U.S. Air Force at Hill Air Force Base in Ogden, Utah, he conspired to enrich himself and others by exchanging money and other things of value for non-public information and favorable treatment in the procurement process.  Court records state that Mendez was offered approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy.  Mendez admitted that from approximately 2008 to August 2011, he received more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts from the U.S. government.

In return for the bribes offered and paid, Mendez admitted he gave Atlas and the Zugravs favorable treatment during the procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning contracts.

The case was investigated by the FBI and the Air Force Office of Special Investigations. The case was prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah. 

U.S. District Court Judge Susan C. Bucklew sentenced Andrew Blane Fields, 62, of Lutz, Fla., to serve 33 years and nine months in prison followed by five years of supervised release, the Justice Department announced today.  A jury convicted Fields on Nov. 6, 2013, of five counts of sex trafficking by force, fraud and coercion, and three narcotics counts arising from his distribution of controlled substances to the sex trafficking victims as part of his scheme of coercion.

“The Civil Rights Division is committed to pursuing justice on behalf of vulnerable members of our society,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “This defendant preyed on young women living in the shadows and on the margins.  Using false promises to lure them in, he cruelly exploited them for his own profit, destroying them with drugs and selling their bodies for sex.  This sentence sends a clear message that the United States will not tolerate modern-day slavery and will work tirelessly to restore the rights and dignity of its victims.”

“The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “We will continue to work with the Clearwater Area Human Trafficking Task Force and other law enforcement partners throughout the District to prosecute sex traffickers and vindicate victims’ rights.”

During the trial, five victims recounted their intense fear of withdrawal sickness and related that Fields manipulated that fear to coerce them to perform acts of prostitution for the defendant’s profit in exchange for another dose of the addictive drugs.  One of the victims testified that Fields, while watching her suffer through the onset of the excruciating physical and psychological withdrawal symptoms, would compel her to serve another prostitution client by saying, “I’ll give you one pill.  I’m not going to give you another until you get up and go to work.  And you know you need another.”

The case was investigated jointly by Immigration and Customs Enforcement (ICE) and the Clearwater, Fla., Police Department through their participation on the Clearwater Area Human Trafficking Task Force. 

“Andrew Fields used prescription pills to manipulate and coerce his victims to prostitute themselves for his own financial gain,” said Deputy Special Agent in Charge Shane Folden of Homeland Security Investigations Tampa.  “Even though we can’t take away the physical and psychological damage his victims have endured, this nearly 34-year sentence ensures that additional women won’t fall prey to his sex trafficking scheme.”

“Our agency takes these human trafficking cases very seriously because these perpetrators commit unfathomable crimes,” said Chief Anthony Holloway for the Clearwater Police Department.  “This defendant took over the lives of these women.  We cannot – and will not – let that happen.”

Evidence presented at trial showed that Fields identified vulnerable young women, one just 18 years old, who were prostituting or working as exotic dancers, using online advertisements to lure them with promises of safe transportation and protection.  The defendant then provided the victims with addictive drugs such as Oxycodone, Dilaudid and Morphine, at levels designed to intensify their dependency and addiction.  The evidence showed that the defendant rapidly increased the victims’ drug use; while some victims initially used drugs only occasionally and others used a few pills a day, Fields escalated their drug use to full-blown addiction, with some victims requiring up to 15 pills a day to stave off withdrawal symptoms.  The evidence showed that Fields acquired the drugs at low costs and charged the victims inflated prices to saddle them with mounting drug debts.  He then manipulated their fear of withdrawal symptoms to compel them to prostitute and turn over all proceeds to him, leaving them with no money, no other access to the addictive drugs and fully dependent on Fields to avert withdrawal sickness.  At times, Fields demanded that the victims engage in sexual acts with him to pay down the debts.

Evidence seized from Fields’ home included over 4,000 prescription pills, notebooks in which he recorded the victims’ debts, advertisements for prostitution, cash, condoms and books about pimping and prescription drugs. 

Surveillance camera video footage admitted into evidence showed Fields entering a hospital room in the middle of the night to deliver drugs to one of the victims.  The video showed Fields handing the woman pills and another object which she hid under her bed sheet.  At trial, the victim testified that the pills were Dilaudid and the other object was a syringe to inject the drug intravenously. 

Another victim testified that Fields threatened to contact her probation officer and to have her probation violated if she did not continue to engage in prostitution for his profit.  The evidence established that Fields caused her probation to be violated when she did not submit to his demands that she continue prostituting.  The defendant contacted the victim while she was incarcerated to pressure her to recruit other victims, then immediately delivered addictive drugs to her upon her release from prison.

The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Clearwater Police Department, with assistance from members of the Clearwater Area Human Trafficking Task Force.  Assistant U.S. Attorney Josephine W. Thomas and Trial Attorney William E. Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit prosecuted the case.

            ALICIA A.G. LIMTIACO, United States Attorney for Guam, announced that  DWAYNE J. SAN NICOLAS, BALBINO K. LEON GUERRERO and DEDRICK J. AGUON, were sentenced today by Chief Judge Frances Tydingco-Gatewood in the District Court of Guam. 

            DWAYNE J. SAN NICOLAS was sentenced to serve 138 months incarceration.  DEDRICK J. AGUON was sentenced to serve 117 months incarceration.  BALBINO K. LEON GUERRERO was sentenced to serve 91 months incarceration.  Each defendant was placed on a five-year term of supervised release, was ordered to perform community service, and ordered to pay $856.49 in restitution to New Nana’s Market.

            All three defendants pleaded guilty on July 2012 to Hobbs Act Robbery in violation of Title 18 U.S.C. § 1951(a), and to the Discharging or Brandishing of a Firearm During a Crime of Violence, in violation of 18 U.S.C. § 924(c)(1)(a). 

            The defendants admitted to the following facts.  On September 8, 2011, AGUON provided LEON GUERRERO and SAN NICOLAS with a .22 caliber firearm and a .9 mm Beretta.  AGUON then drove SAN NICOLAS and LEON GUERRERO to New Nana’s Mart in Agana Heights.   LEON GUERRERO and SAN NICOLAS entered New Nana’s Mart and pointed the firearms directly at the cashier and demanded money.  SAN NICOLAS chambered a round and fired off a shot shattering a glass door on a cooler.  The cashier handed over approximately $700 in cash to LEON GUERRERO and SAN NICOLAS.     The men then fled New Nana’s Mart, stopping only to grab a 12-pack of beer.  AGUON acted as the getaway driver.   The robbery was captured on video surveillance. 

            U.S. Attorney Limtiaco states, “The use of firearms to commit violent crimes place innocent civilians and the community at great risk of harm.  People who use firearms to commit crimes of violence will face aggressive prosecution and will receive hard time.” 

            U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Neighborhood (PSN) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in violent crime, drug distribution and gang involvement.  

            U.S. Attorney Limtiaco commended the investigative efforts of the Guam Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agents and Task Force Officers.

Pavel Zborovskiy, 57, of Brooklyn, N.Y., pleaded guilty today to conspiracy to pay and receive illegal health care kickbacks in connection with a $13 million health care fraud and money laundering scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, 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.

Zborovskiy pleaded guilty before U.S. District Judge Nina Gershon of the Eastern District of New York and is the sixth defendant to plead guilty in connection with the scheme. At sentencing on May 28, 2014, Zborovskiy faces a maximum penalty of five years in prison and a fine of more than $2.5 million.

According to court documents, from 2010 to 2012, Zborovskiy, working through an ambulette company, recruited patients to attend a Brooklyn clinic called Cropsey Medical Care PLLC. An ambulette is a vehicle that is licensed by New York State’s Medicaid program to transport beneficiaries to and from medical facilities when such transportation is medically necessary. Zborovskiy’s ambulette company transported the patients he had recruited to and from Cropsey Medical, and billed Medicaid for such transportation. Once Zborovskiy’s beneficiaries were transported to Cropsey Medical, Zborovskiy and others paid such beneficiaries cash kickbacks to induce them to continue to attend the clinic and to receive medically unnecessary physical therapy, diagnostic testing and other services. Such purported medical services were then billed by Cropsey Medical to Medicare and Medicaid.

According to court documents, from approximately November 2009 to October 2012, Cropsey Medical submitted more than $13 million in claims to Medicare and Medicaid, seeking reimbursement for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

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 U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.

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

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

A former Puerto Rico Department of Corrections officer was sentenced today to serve 811 months in prison for his role in providing armed security for three drug transactions.

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

Bernis Gonzalez Miranda, 27, was sentenced by U.S. District Judge Juan Perez Gimenez of the District of Puerto Rico. He was charged in a superseding indictment unsealed on Oct. 28, 2010, along with 89 law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack.

In April 2012, a federal jury in San Juan found Gonzalez Miranda guilty of three counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, three counts of attempting to possess with the intent to distribute more than five kilograms of cocaine and three counts of possessing a firearm in furtherance of a drug transaction. According to the evidence presented in court, Gonzalez Miranda provided security for what he believed were illegal cocaine deals on June 15, July 2, and July 7, 2010. In fact, the purported drug transactions were part of an undercover FBI operation. On those days, the defendant’s actions included providing armed protection for the deals and escorting the buyer into and out of the transaction.

In return for the security he provided, Gonzalez Miranda received a cash payment of $2,000 for each transaction, and at sentencing he was ordered to forfeit the $6,000 he received.

The case was investigated by the FBI. The case was prosecuted by Trial Attorneys Kevin Driscoll and Monique Abrishami of the Criminal Division’s Public Integrity Section. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.

Aleksandr Andreevich Panin, a Russian national also known as “Gribodemon” and “Harderman,” has pleaded guilty to conspiracy to commit wire and bank fraud for his role as the primary developer and distributor of the malicious software known as “SpyEye,” which, according to industry estimates, has infected over 1.4 million computers in the United States and abroad.

Acting Assistant Attorney General Mythili Raman of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Acting Special Agent in Charge Ricky Maxwell of the FBI’s Atlanta Field Office made the announcement.

“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Raman.  “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use ‘SpyEye’ to invade the privacy of Americans by infecting their computers through a dangerous botnet.  As this prosecution shows, cyber criminals – even when they sit on the other side of the world and attempt to hide behind online aliases – are never outside the reach of U.S. law enforcement.”

“As several recent and widely reported data breaches have shown, cyber-attacks pose a critical threat to our nation’s economic security,” said U.S. Attorney Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as ‘SpyEye’ that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned: you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”

“This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals,” said Acting FBI SAC Maxwell. “The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber-crime.”

According to the charges and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including “web injects,” “keystroke loggers,” and “credit card grabbers.” The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.

Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including codefendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that specifically targeted designated financial institutions. Panin advertised the SpyEye virus on online, invitation-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made more than $3.2 million in a six-month period using the SpyEye virus.

According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, over 10,000 bank accounts have been compromised by SpyEye infections since 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.

In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled over 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.

In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames “Gribodemon” and “Harderman,” about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the malware.

On Dec. 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.

Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on Jan. 5, 2013 and was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.

Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.

The investigation also has led to the arrest of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.

On Jan. 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg of the Northern District of Georgia.

The case is being investigated by the FBI. Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.

Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: The United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands - National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria and the Australian Federal Police (AFP).

Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer and the Norwegian Security Research Team known as “Underworld.no”.

Attorney General Eric Holder today announced the appointment of the following eight U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee (AGAC): A ndré Birotte Jr., Central District of California; Thomas E. Delahanty II, District of Maine; Zachary T. Fardon, Northern District of Illinois; Wifredo A. Ferrer, Southern District of Florida; Kerry B. Harvey, Eastern District of Kentucky; Zane D. Memeger, Eastern District of Pennsylvania; Tim Q. Purdon, District of North Dakota; and Sarah R. Saldaña, Northern District of Texas.

“In the face of daunting staff and resource constraints, our U.S. Attorneys’ Offices are performing tremendous work in their districts across the country, standing on the front lines of federal law enforcement efforts,” said Attorney General Holder.  “Each of the U.S. Attorneys who serves on the Attorney General’s Advisory Committee plays an indispensable role in guiding the Justice Department’s work as we confront a range of challenging issues and opportunities.  I welcome the eight new members of the AGAC I’ve chosen to appoint today, and look forward to working closely with them to take fresh, and smart, approaches to fighting crime and achieving justice across the nation.”

The Attorney General also thanked the following U.S. Attorneys who have completed their two-year terms and are rotating off the committee: Laura E. Duffy, Southern District of California; Timothy J. Heaphy, Western District of Virginia; Brendan V. Johnson, District of South Dakota; Pamela C. Marsh, Northern District of Florida; Carmen M. Ortiz, District of Massachusetts; Robert L. Pitman, Western District of Texas; James Santelle, Eastern District of Wisconsin; Carter M. Stewart, Southern District of Ohio.

Chaired by U.S Attorney for the Eastern District of New York Loretta E. Lynch, the AGAC represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.

A brief bio on each new appointee is below: A ndré Birotte Jr. was presidentially appointed and sworn in as the U.S. Attorney for the Central District of California on March 4, 2010. He previously served as the Inspector General for the Los Angeles Police Commission from 2003 to 2010 and as an Assistant Inspector General from 2001 to 2003. From 1995 to 1999, Birotte served as an Assistant United States Attorney for the Central District of California. He started his legal career as a Deputy Public Defender in the Los Angeles County Public Defender’s Office from 1991 to 1995. Birotte serves as Co-Chair of the AGAC’s Terrorism/National Security Subcommittee, and as a member of the Border and Immigration Law Enforcement Subcommittee, Civil Rights Subcommittee, Cyber/Intellectual Property Subcommittee, Violent and Organized Crime Subcommittee and White Collar/Fraud Subcommittee.

Thomas E. Delahanty II was presidentially appointed and sworn in as the U.S. Attorney for the District of Maine on July 1, 2010. Prior to his appointment, he served as a Justice for the Maine Superior Court for more than 26 years, and as Chief Justice from 1990 until 1995. From 1981 until 1983, he was a partner in the firm Delahanty & Longley. He previously served as the U.S. Attorney for the District of Maine from 1980 to 1981. Prior to this, Delahanty served as a District Attorney for Prosecutorial District 3 for Androscoggin, Franklin and Oxford Counties (1975 to 1980); as a County Attorney and Assistant County Attorney with the Androscoggin County Attorney’s Office (1971 to 1975); and as an associate at Marshall, Raymond & Beliveau (1970 to 1974). Delahanty serves as Chair of the AGAC’s Controlled Substances and Asset Forfeiture Working Group, as a member of the AGAC’s Medical Marijuana Working Group and the AGAC’s Border and Immigration Law Enforcement Subcommittee, and as a participant in the department’s Arab American and Muslim Outreach Program.

Zachary T. Fardon was presidentially appointed and sworn in as the U.S. Attorney for the Northern District of Illinois on Oct. 23, 2013. Prior to his appointment, Fardon was a partner at the law firm of Latham & Watkins where he served as the Chair of the Litigation Department in their Chicago office. Previously, Fardon served as the First Assistant United States Attorney in the Middle District of Tennessee from 2003 to 2006 and as an Assistant United States Attorney in the Northern District of Illinois from 1997 to 2003. He began his legal career working as an Assistant Public Defender in the Nashville Metropolitan Public Defender’s Office from 1996 to 1997 and as an associate at the law firm of King & Spalding from 1992 to 1996.

Wifredo A. Ferrer was presidentially appointed and sworn in as the U.S. Attorney for the Southern District of Florida on May 4, 2010. Ferrer previously served as an Assistant County Attorney and as Chief of the Federal Litigation Section in the Miami-Dade County’s Attorney’s Office from 2006 to 2010. From 2000 until 2006, he was an Assistant United States Attorney in the United States Attorney’s Office in the Southern District of Florida. While at the U.S. Attorney's Office, he served in the Public Integrity and National Security Section, the Economic Crimes Section, the Major Crimes Section, and the Appellate Division of the Office. Prior to that, he had been Counsel and Deputy Chief of Staff to the United States Attorney General from 1995 to 2000. From 1994 to 1995, Ferrer was a White House Fellow and Special Assistant to the United States Secretary of Housing and Urban Development. From 1991 to 1994, he had been a Litigation Associate with Steel Hector & Davis in Miami, Florida. From 1990 until 1991, Ferrer was a law clerk to then- District (now 11th Circuit) Judge Stanley Marcus. Ferrer serves as Vice Chair of the AGAC’s Controlled Substances and Asset Forfeiture Working Group.

Kerry B. Harvey was presidentially appointed and sworn in as the U.S. Attorney for the Eastern District of Kentucky on May 14, 2010. Harvey previously served as the General Counsel and Acting Inspector General of the Kentucky Cabinet for Health and Family Services from 2008 to 2010. He was a partner at Owen, Harvey, and Carter from 1991 to 2008; at Prince, Harvey, Brien & Carter from 1986 to 1991; and at Prince & Harvey from 1984 to 1986. Mr. Harvey worked as the Marshall County, Kentucky, Attorney from 1986 to 1994. He began his legal career as an associate at Brown, Todd & Heyburn from 1982 to 1984. Harvey serves as a member of the AGAC’s Health Care Fraud Working Group.

Zane David Memeger was presidentially appointed and sworn in as the U.S. Attorney for the Eastern District of Pennsylvania on May 10, 2010. Prior to his appointment, Memeger was a Partner at Morgan, Lewis & Bockius, LLP from 2006 to 2010. Previously, Memeger had served as an Assistant United States Attorney in the United States Attorney’s Office for the Eastern District of Pennsylvania from 1995 until 2006. From 1991 until 1995, Memeger was an Associate at Morgan, Lewis & Bockius, LLP. Memeger serves as a member of the AGAC’s Cyber/Intellectual Property Subcommittee, LECC/Victim/Community Issues Subcommittee, Violent and Organized Crime Subcommittee, White Collar/Fraud Subcommittee and Health Care Fraud Working Group.

Timothy Q. Purdon was presidentially appointed and sworn in as the U.S. Attorney for the District of North Dakota on August 24, 2010. Prior to his appointment, Purdon was a partner at Vogel Law Firm from 2005 to 2010; prior to his promotion he also served as an associate at the firm. From 1996 until 2001, Purdon worked as an associate at Dickson & Purdon, and he became a partner in the firm in 2001. From 1995 through 1996, he was an associate at Olson & Cichy. Purdon has also served as a law clerk for the Honorable Bruce M. Van Sickle of the United States District Court for the District of North Dakota. Purdon serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, Native American Issues Subcommittee, Environmental Issues Working Group, and Local Government Coordination Working Group.

Sarah R. Saldaña was presidentially appointed and sworn in as the U.S. Attorney for the Northern District of Texas on Sept. 29, 2011. She previously served as an Assistant United States Attorney for the Northern District of Texas since 2004, serving as Deputy Criminal Chief for Fraud and Public Corruption since 2009. Ms. Saldaña was an attorney for Baker Botts, L.L.P, from 1987 to 1998, and Haynes Boone from 1985 to 1987. Following law school, she served as a judicial clerk to the Honorable Barefoot Sanders, U.S. District Court Judge for the Northern District of Texas, from 1984 to 1985. Saldaña serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, Cyber/Intellectual Property Subcommittee, LECC/Victim/Community Issues Subcommittee and White Collar/Fraud Subcommittee.

The full AGAC membership is listed below: Loretta E. Lynch, United States Attorney, Eastern District of New York, Chair

Sally Quillian Yates, United States Attorney, Northern District of Georgia, Vice Chair

David Barlow, United States Attorney, District of Utah

Andre Birotte Jr. – Central District of California

Thomas E. Delahanty II – District of Maine

Zachary T. Fardon – Northern District of Illinois

Wifredo A. Ferrer – Southern District of Florida

Richard S. Hartunian, United States Attorney, Northern District of New York

Kerry B. Harvey – Eastern District of Kentucky

Barbara L. McQuade, United States Attorney, Eastern District of Michigan

Zane D. Memeger – Eastern District of Pennsylvania

Wendy J. Olson, United States Attorney, District of Idaho

Timothy Q. Purdon – District of North Dakota

Sarah R. Saldan͂a – Northern District of Texas

Ronald W. Sharpe, United States Attorney, District of the Virgin Islands

Anne Tompkins, United States Attorney, Western District of North Carolina

Ronald C. Machen, United States Attorney, District of Columbia, ex officio

Daniel Bella, Criminal Chief, Northern District of Indiana, ex officio

Suzanne Bauknight, Civil Chief, Eastern District of Tennessee, ex officio

Robert Zauzmer, Appellate Chief, Eastern District of Pennsylvania, ex officio

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendant Trifon Pineda, age 44, was sentenced on January 16, 2014, in the District Court of Guam by Chief Judge Frances Tydingco-Gatewood. Pineda was sentenced to 55 months imprisonment, five years supervised release, ordered to pay a $100 assessment fee, and subject being deported.

            Defendant and his co-defendant, Les Vitug, were arrested on a complaint on March 20, 2011.  On March 23, 2011 the grand jury indicted the defendants for conspiracy to distribute more than 50 grams of methamphetamine and attempted possession with intent to distribute methamphetamine.  On March 6, 2011, postal inspectors seized a package addressed from Les Vitug in California to Joan Vitug in Guam.  Agents searched the package pursuant to a federal search warrant and recovered 27 grams of ice that was 99% pure.  Les Vitug (sentenced on March 27, 2012 to 48 months) claimed the package and was detained by law enforcement agents. Vitug told agents he was picking up the package for his pare’ Pineda.  Vitug called Pineda (with agents listening) to tell him the package was in.  Pineda went to Vitug’s house where he was arrested.  Pineda admitted that the package was his and it was sent to him by his brother Pablito Pineda who has also been indicted and has pled guilty.  Pablito Pineda is awaiting sentencing.

            Credit for the investigation is given to the Drug Enforcement Administration (DEA), U.S. Postal Service Inspectors, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Task Force Agents from the Superior Court of Guam’s Probation Office assigned to the DEA, Guam Customs and Quarantine, and the Guam Police Department.  The case was handled by Assistant U.S. Attorney Clyde Lemons.

The Justice Department’s Medicare Fraud Strike Force has set record numbers for health care prosecutions in Fiscal Year 2013, demonstrating the targeted and coordinated approach remains strong as the strike force enters its eighth year of fighting fraud against the government’s health care programs.

“These record results underscore our determination to hold accountable those who take advantage of vulnerable populations, commit fraud on federal health care programs, and place the safety of others at risk for illicit financial gain,” said Attorney General Eric Holder. “By targeting our enforcement efforts to ‘hot spots’ in nine cities, the Medicare Fraud Strike Force is allowing us to fight back more effectively than ever before.”

“The Medicare Fraud Strike Force is one of this country’s most productive investments,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “We are not only putting hundreds of criminals who steal from Medicare in prison, but also stopping their theft in its tracks, recovering millions of dollars for taxpayers, and deterring potential criminals who ultimately decide the crime isn’t worth it.”

“Those perpetrating Medicare fraud cheat both taxpayers and vulnerable patients, and our Strike Forces are successfully fighting back – holding criminals accountable and recovering stolen dollars,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services. “Our joint commitment to bring the fight against fraud to criminal hotspots around the country is steadfast.”

Under the supervision of the Criminal Division and U.S. Attorney’s Offices, the Medicare Fraud Strike Force is formed by coordinated teams of investigators and prosecutors – including personnel from the Justice Department, the U.S. Department of Health and Human Services and the FBI – who analyze Medicare claims data to target specific geographic areas showing unusually high levels of Medicare billing.

By focusing on the worst offenders engaged in current fraud schemes in the highest intensity regions, the strike force seeks to deter fraud in the target community and prevent it from spreading to other areas. The strike force is currently operating in nine cities: Baton Rouge, La.; Brooklyn, N.Y.; Chicago; Dallas; Detroit; Houston; Los Angeles; Miami and Tampa, Fla. S ince its inception in March 2007, strike force prosecutors have charged more than 1,700 defendants who have collectively billed the Medicare program more than $5.5 billion.

In Fiscal Year 2013, the strike force set records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46). In addition, 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.

According to a recent report by the Inspector General for the U.S. Department of Health and Human Services, for every dollar the Departments of Justice and Health and Human Services have spent fighting health care fraud, they have returned an average of nearly eight dollars to the U.S. Treasury, the Medicare Trust Fund and others.

The Medicare Fraud Strike Force is part of an unprecedented partnership between the Departments of Justice and Health and Human Services called HEAT (Health care Enforcement and Prevention Action Team). Formed in May 2009, this partnership brings together high-level leaders from both departments to share information, spot trends, coordinate strategy and strengthen our fraud prevention efforts.

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

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

“As indicated in the Justice Department’s filing with the Foreign Intelligence Surveillance Court, the administration is acting to allow more detailed disclosures about the number of national security orders and requests issued to communications providers, and the number of customer accounts targeted under those orders and requests including the underlying legal authorities. Through these new reporting methods, communications providers will be permitted to disclose more information than ever before to their customers.
 
“This action was directed by the President earlier this month in his speech on intelligence reforms. While this aggregate data was properly classified until today, the office of the Director of National Intelligence, in consultation with other departments and agencies, has determined that the public interest in disclosing this information now outweighs the national security concerns that required its classification.
 
“Permitting disclosure of this aggregate data resolves an important area of concern to communications providers and the public.  In the weeks ahead, additional steps must be taken in order to fully implement the reforms directed by the President.
 
“The declassification reflects the Executive Branch’s continuing commitment to making information about the Government’s intelligence activities publicly available where appropriate and is consistent with ensuring the protection of the national security of the United States.”

Related Materials:

DAG Letter
Stipulation of Voluntary Dismissal
Notice of Declassification

A federal district judge in the Statesboro Division of the Southern District of Georgia has permanently barred Lakesia Michelle Mills of Adrian, Ga., from preparing federal income tax returns for others, the Justice Department announced today.  The injunction also requires Mills to send copies of the injunction to her customers.

According to the complaint filed by the department on ­­­­Nov. 1, 2013, Mills is a paid tax return preparer who does business as Willis Tax Service.  The complaint alleges that, since January 2011, Mills has prepared at least 455 amended federal income tax returns that claimed overstated refunds based upon fabricated First-Time Homebuyer Credit claims for $8,000, which is the maximum amount.  Mills also allegedly provided customers with false settlement statements and proof of insurance to support the credit.  The complaint also alleges that Mills failed to sign the returns she prepared or to include her tax preparer identification number as required.  Altogether, Mills allegedly claimed over $3.6 million in bogus credits on the amended returns.  Mills consented to the entry of the injunction without admitting to any findings of fact.     

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013.  The Internal Revenue Service has tips for choosing a tax preparer www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the department website.

Related Materials:

United States v. Lakesia Michelle Mills
Complaint for Injunctive Relief
Final Judgment of Permanent Injunction Against Lakesia Michelle Mills d/b/a Willis Tax Service

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant BERNICE RIVERA was sentenced on January 21, 2014, by Chief Judge Frances Tydingco-Gatewood in the District Court of Guam, to time served and two years of supervised release for the offense of Bank Misapplication.

The defendant, BERNICE RIVERA, was a bank employee at Coast 360 Federal Credit Union, and misapplied funds from a customer account in the amount of $11,891.  The defendant had paid full restitution in advance of her sentencing.

This case was investigated by the Federal Bureau of Investigations and was prosecuted by Assistant
U.S. Attorney Frederick A. Black.

Richard Reyes, a member of the Almighty Imperial Gangsters, has been convicted at trial for his role in violent acts as a member of a criminal street gang that operated in Northwest Indiana and is accused of engaging in drug trafficking and acts of violence, including murder, attempted murder and robbery.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement.

Reyes, 41, of Hammond, Ind., was convicted by a federal jury on Jan. 24, 2014, for his role in the murder of rival Latin King gang member Rene Alonzo on Sept. 16, 2007. According to evidence at trial, Reyes fatally shot Alonzo outside of the U.S. Bar in East Chicago. Reyes was convicted of conspiracy to participate in racketeering activity, conspiracy to distribute cocaine and marijuana, and murder in aid of racketeering activity, which each carry a maximum penalty of life in prison; and murder resulting from the use and carrying of a firearm during a crime of violence, which carries a minimum mandatory penalty of 10 years in prison consecutive to any other sentence and a maximum of life in prison.

Reyes was among 24 individuals charged in this investigation, and 22 have pleaded guilty, including six men who pleaded guilty in January 2014. Those charged are accused of having participated collectively in 14 murders and eight attempted murders from 2002 to 2012 as part of their criminal enterprise. Defendants are presumed innocent unless and until proven guilty at trial.

On Jan. 13, 2014, Salvador Chavez, 34, pleaded guilty before U.S. District Chief Judge Philip P. Simon in the Northern District of Indiana to conspiracy to participate in racketeering activity.

On Jan. 10, 2014, Jason Medina, aka Burns, 30; Edward Raye Serna, 34; and Armando Jose Velasquez, aka Money, age 26, all of East Chicago, Ind., pleaded guilty before Chief Judge Simon. Medina pleaded guilty to conspiracy to participate in racketeering activity; murder resulting from the use and carrying of a firearm during a crime of violence; and attempted murder in aid of racketeering activity, which carries a maximum penalty of 10 years in prison. Medina admitted that he used a firearm to murder Guadalupe Trevino on July 24, 2005, and attempted to murder a victim on June 6, 2011. Sentencing for Medina is scheduled for June 19, 2014. Edward Serna pleaded guilty to conspiracy to participate in racketeering activity and attempted murder in aid of racketeering activity and admitted to his participation in the same attempted murder on June 6, 2011. Sentencing for Edward Serna is also set for June 19, 2014. Velasquez pleaded guilty to conspiracy to participate in racketeering activity, murder resulting from the use and carrying of a firearm during a crime of violence, and attempted murder in aid of racketeering activity. Velasquez admitted he used a firearm on Dec. 3, 2011, when he attempted to murder a victim in aid of racketeering activity. Sentencing for Velasquez is scheduled for June 6, 2014.

On Jan. 3, 2014, Julian Guillermo Serna, aka Big Ju, 24, and Vincent Garza, aka Chente, 22, pleaded guilty before Chief Judge Simon. Julian Serna pleaded guilty to conspiracy to participate in racketeering activity and to murder resulting from the use and carrying of a firearm during a crime of violence. Julian Serna admitted that he used a firearm to murder Mario Soriano on March 25, 2008. Sentencing for Julian Serna is scheduled for July 25, 2014. Garza pleaded guilty to conspiracy to participate in racketeering activity and two counts of homicide in aid of racketeering activity, which each carry a maximum penalty of life in prison. Garza admitted that he participated in the murder of Michael Sessum and Miguel Mejias on June 3, 2008. Sentencing for Garza is scheduled for July 24, 2104.

This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the East Chicago Police Department and the Federal Bureau of Investigation, with assistance from the Gary Police Department, the Hammond Police Department and the Lake County High Intensity Drug Trafficking Area. The case is being prosecuted by Assistant United States Attorney David J. Nozick of the United States Attorney’s Office for the Northern District of Indiana and Trial Attorney Bruce Hegyi of the Criminal Division’s Capital Case Section.

Deundra Milhouse was indicted for his role in a stolen identity refund fraud crime, 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 announced today after the indictment was unsealed following Milhouse’s arrest. 

Milhouse was charged with one count of access device fraud, three counts of wire fraud, four counts of aggravated identity theft and two counts of theft of public funds.  According to the indictment, Milhouse filed and caused to be filed false federal income tax returns using the identities of other individuals.  He then directed the refunds claimed on those returns to be deposited into accounts linked to prepaid debit cards and into an account at a credit union, from which Milhouse would then withdraw the fraudulently obtained refunds in cash.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Milhouse faces a statutory maximum potential sentence of 20 years in prison for the wire fraud count, a statutory maximum potential sentence of 10 years in prison for each theft of public money count and a mandatory two-year sentence for the aggravated identity theft counts.  Milhouse is also subject to possible fines, forfeiture and mandatory restitution if convicted.

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

Following a week-long trial, a jury in the Middle District of Alabama convicted Bryant Thompson and Quincy Walton of conspiracy to defraud the United States on Jan. 24, 2014, 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.  Thompson, an Alabama corrections officer, was also convicted of seven counts of wire fraud and seven counts of aggravated identity theft, and Walton, a former Alabama corrections officer, was also convicted of one count of aggravated identity theft.

According to evidence introduced at trial, Thompson was assigned to the shift clerk position at an Alabama state prison, which gave him access to the personal identifying information of every inmate in the custody of the Alabama Department of Corrections, past and present.  Thompson and Walton, his former co-worker, used information stolen from the databases to file false federal income tax returns in the names and Social Security numbers of inmates.  All of the inmates testified that they did not consent to the filing of the tax returns in their names, and many testified that they did not know tax returns were filed in their names until being called as witnesses in this trial. 

According to the evidence introduced at trial, the investigation revealed that several internet protocol (IP) addresses were used to file the fraudulent tax returns, including one IP address directly assigned to Thompson’s residence at the time certain tax returns were filed.  Circumstantial evidence tied both Thompson and Walton to the other IP addresses. 

Also according to evidence introduced at trial, Thompson and Walton directed stolen tax refunds onto prepaid debit cards and requested other refunds in the form of U.S. Treasury Checks.  Evidence showed that the cards and checks were mailed to several addresses associated with Thompson and Walton in Montgomery and Prattville, Ala., and that several of the checks were cashed at a local retail store by Walton’s uncle and at a local check casher.  During this time, Thompson purchased a new paint job and new rims for his SUV and later purchased a BMW.

At sentencing, Thompson and Walton face a statutory maximum sentence of five years in federal prison for the conspiracy count and a statutory minimum of two years in prison for each aggravated identity theft conviction.  Thompson also faces a statutory maximum of 20 years in prison for each wire fraud count.  In addition to prison time, Thompson and Walton also face the possibility of fines and restitution to the IRS and other victims.  Their sentences will be determined by a federal judge after consideration of the sentencing guidelines and statutory factors.

The case was investigated by IRS-Criminal Investigation and was prosecuted by Trial Attorneys Justin Gelfand, Jason Poole and Alexander Effendi of the Tax Division, with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama.  

Two orthopedic clinics will pay a combined $1.85 million to resolve state and federal False Claims Act allegations that they knowingly billed state and federal health care programs for reimported osteoarthritis medications, known as viscosupplements, the Department of Justice announced today.  Tennessee Orthopaedic Clinics P.C., headquartered in Knoxville, Tenn., will pay $1.3 million, and Appalachian Orthopaedic Clinics P.C., headquartered in Kingsport, Tenn., will pay $550,000. 

“The Department of Justice will not tolerate the conduct of companies that impermissibly shift risks onto patients in order to increase their own profits,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The department is committed to maintaining the integrity of the health care system, ensuring that patients receive drugs and devices that are safe and effective and taking action against companies that take chances with the health of consumers so as to improve their own bottom lines.” 

Viscosupplements, such as Synvisc and Orthovisc, are injections approved by the Food and Drug Administration for the treatment of osteoarthritis pain in the knee.  Viscosupplements are reimbursed by Medicare, Medicaid and other federal health care programs at a set rate based on the average sales price of the domestic product.  The government contended that the clinics knowingly purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when such reimported viscosupplements were not reimbursable by those programs.  Allegedly, the reimported product included labeling in foreign languages and in English for additional uses not approved in the United States, which demonstrated that the product was reimported.  Moreover, because the product was reimported, the government alleged there was no manufacturer assurance that it had not been tampered with or that it was stored appropriately.    

“This scheme is yet another example of illegal actions by health care providers to profit from drugs imported into the United States,” said U.S. Attorney for the Eastern District of Tennessee William C. Killian.  “Medicare and FDA requirements are designed to prevent potential harm to patients.  Noncompliance with the law to increase profit at the risk of patients will be pursued by the Department of Justice.”

“Attempts to increase profits by circumventing the law will not be tolerated,” said Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson.  “Health care providers buying cut-rate, cheap drugs from foreign sources will end up paying a steep price.”

The allegations resolved by the settlement were first raised in a lawsuit filed against the clinics under the qui tam, or whistleblower, provisions of the False Claims Act by Douglas Estey, a physician’s assistant who was occasionally paid by Genzyme Corp. to speak to medical providers about the use of Synvisc.  The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.  Estey will receive $323,750. 

The government’s investigation was a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Tennessee, the Department of Health and Human Services Office of Inspector General and Office of General Counsel, the Food and Drug Administration Office of Criminal Investigations and Office of Chief Counsel, the Federal Bureau of Investigation and the Tennessee Bureau of Investigation.

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 $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case is captioned United States ex rel. Estey v. Tennessee Orthopaedic Clinics P.C., Appalachian Orthopaedic Associates P.C. and Appalachian Orthopaedic Partners LLC, Docket No. 3:12-cv-85 Varlan/Guyton.  The claims settled by these agreements are allegations only; there have been no determinations of liability.   

A home health agency owner who participated in a Medicare fraud scheme that totaled almost $11 million was sentenced in Detroit today to serve 120 months in prison.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Chiradeep Gupta, 39, was sentenced by U.S. District Judge Denise Page Hood in the Eastern District of Michigan.  In addition to his prison term, Gupta was sentenced to serve three years of supervised release and was ordered to pay more than $10 million in restitution, jointly and severally with his co-defendants.

On Oct. 26, 2012, Gupta, a physical therapist and part-owner of All American, a home health care company located in Oak Park, Mich., was found guilty at trial of one count of conspiracy to commit health care fraud, one count of conspiracy to commit money laundering and three substantive counts of money laundering.

According to evidence presented at trial, Gupta and his co-conspirators caused the submission of false and fraudulent claims to Medicare through All American and Patient Choice, another Oak Park-based home health care company, which purported to provide skilled nursing and physical therapy services to Medicare beneficiaries in the greater Detroit area.

The evidence showed that Gupta and his co-conspirators used patient recruiters, who paid Medicare beneficiaries to sign blank documents for physical therapy services that were never provided and/or medically unnecessary.  The owners of Patient Choice and All American paid physicians to sign referrals and other therapy documents necessary to bill Medicare.  Physical therapists and physical therapist assistants provided through contractors, including two owned by Gupta, would then create fake medical records using the blank, pre-signed forms obtained by the patient recruiters to make it appear as if physical therapy services had actually been rendered, when, in fact, the services had not been rendered.

According to evidence presented at trial, Gupta provided to Patient Choice and All American physical therapists and physical therapist assistants who created fake patient files using blank, pre-signed forms obtained by patient recruiters to make it appear as if the physical therapy services billed to Medicare had actually been provided.  Gupta also doctored and directed the doctoring of fake patient files.  The evidence at trial showed that Gupta laundered the proceeds of the fraud through multiple shell companies.

This case was investigated by the FBI, HHS-OIG and the Internal Revenue Service and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case was prosecuted by Deputy Chief Gejaa Gobena, Assistant Chief Catherine Dick and Trial Attorney Niall O’Donnell of the Criminal Division’s Fraud Section.

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

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

Four individuals have been charged in the Northern District of Georgia for their alleged roles in piracy groups engaged in the illegal distribution of copies of copyrighted Android mobile device applications, or “apps.”

Acting Assistant Attorney General Mythili Raman of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Acting Special Agent in Charge Ricky Maxwell of the FBI’s Atlanta Field Office made the announcement.

“These crimes involve the large-scale violation of intellectual property rights in a relatively new and rapidly growing market,” said Acting Assistant Attorney General Raman.  “While this represents the first counterfeit apps case by the Department of Justice, it exemplifies our longstanding commitment to prosecute those who steal the creative works of others.”

“Copyright laws are designed to protect creative thinkers and encourage them to use their talents in ways that benefit society,” said U.S. Attorney Yates. “These defendants are charged with violating the law by stealing copyrighted apps, thereby depriving the creators of the apps the fruits of their labor. We are committed to protecting copyright owners, and we will continue to vigorously prosecute those who steal all forms of copyrighted work.”

“The protection of intellectual property is the cornerstone of a free market that rewards innovation and forward thinking,” said FBI SAC Maxwell. “The federal charges presented in this case illustrates the problems facing technology based companies in particular but also highlights the FBI and U.S. government response to those engaged in such wholesale criminal activity involving the piracy of copyrighted products.”

An information filed on Jan. 23, 2014, charges Kody Jon Peterson, 22, of Clermont, Fla., with one count of conspiracy to commit criminal copyright infringement. A separate information filed today charges Thomas Allen Dye, 21, of Jacksonville, Fla.; Nicholas Anthony Narbone, 26, of Orlando, Fla.; and Thomas Pace, 38, of Oregon City, Ore., with one count of conspiracy to commit criminal copyright infringement. Peterson was arraigned on Jan. 23, 2014, and Dye, Narbone and Pace were arraigned today.

According to the information filed yesterday, Peterson and his fellow conspirators identified themselves as the SnappzMarket Group. From May 2011 until August 2012, Peterson conspired with other members of the SnappzMarket Group to reproduce and distribute over one million copies of copyrighted Android mobile device apps through the SnappzMarket alternative online market, without permission from the software developers and other copyright owners of the apps, who would otherwise sell copies of the apps on legitimate online markets for a fee.

According to the information filed today, Dye, Narbone, Pace and their fellow conspirators identified themselves as the Appbucket Group. From August 2010 to August 2012, defendants conspired with other members of the Appbucket Group to reproduce and distribute over one million copies of copyrighted Android mobile device apps through the Appbucket alternative online market without permission from the copyright owners of the apps.

The informations charge the SnappzMarket Group and the Appbucket Group with renting computer servers to host websites such as www.snappzmarket.com and www.appbucket.net , respectively, to provide digital storage for the pirated copies of copyrighted Android apps that each group distributed to their members or subscribers. On Aug. 21, 2012, seizure orders were executed against these two website domain names for the illegal distribution of copies of copyrighted Android mobile device apps – the first time website domains involving mobile device app marketplaces have been seized.

The maximum prison sentence for the charge of conspiracy to commit criminal copyright infringement is five years in prison.

Charges contained in a criminal information are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The investigation of the case was conducted by the FBI. Assistant Deputy Chief for Litigation John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher Bly of the Northern District of Georgia are prosecuting the case on behalf of the United States, with the assistance of Assistant U.S. Attorney Brian M. Pearce of the Northern District of Georgia. The Office of International Affairs provided assistance in the matter. Significant assistance in the case has also been provided by the CCIPS Cybercrime Lab.

A North Carolina woman has pleaded guilty for her involvement in a $28.3 million Medicare fraud scheme involving physical and occupational therapy services.

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

Margarita M. Grishkoff, 59, of Charlotte, N.C., and formerly of southwest Florida, pleaded guilty today in the U.S. District Court for the Middle District of Florida to conspiracy to commit health care fraud. Her sentencing date will be set by the court. She faces a maximum penalty of 10 years in prison.

According to documents filed in the case, Grishkoff and her co-conspirators used various physical therapy clinics and other business entities throughout Florida and elsewhere to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14.4 million on those claims.

Grishkoff, a former attorney who was disbarred in 1997, was vice president, director and registered agent in Florida for a Delaware holding company known as Ulysses Acquisitions Inc. Grishkoff and co-conspirators used Ulysses Acquisitions to purchase comprehensive outpatient rehabilitation facilities and outpatient physical therapy providers, including West Coast Rehab Inc. in Fort Myers, Fla.; Rehab Dynamics Inc. in Venice, Fla.; Polk Rehabilitation Inc. in Lake Wales, Fla.; and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Fla., to gain control of these clinics’ Medicare provider numbers.

Working with co-conspirators in Miami and elsewhere, Grishkoff and her co-conspirators obtained identifying information of Medicare beneficiaries through paying kickbacks. They also obtained unique identifying information of physicians. Grishkoff and her co-conspirators then used this information to create and submit false claims to Medicare through the clinics Ulysses Acquisitions purchased. These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided.

Grishkoff and co-conspirators also paid kickbacks to co-conspirators who owned other therapy clinics that were used to further the fraud scheme. For example, Grishkoff and co-conspirators used the clinics they controlled to submit false reimbursement claims to Medicare on behalf of Miami-based therapy clinics such as Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc., and West Regional Center Inc. Grishkoff and co-conspirators would retain approximately 20 percent of the money Medicare paid on these claims and pay the other 80 percent of the fraud proceeds to the co-conspirator clinic owners.

When Grishkoff and her co-conspirators were done using the clinics they acquired through Ulysses Acquisitions, they engaged in sham sales of the clinics to nominee or straw owners, all of whom were recent immigrants to the United States with no background or experience in the health care industry. Grishkoff and others did this in an effort to try to disassociate themselves from the fraudulent operations of their clinics.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.

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

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

The Justice Department and the Internal Revenue Service (IRS) announced that John Cote, formerly of Danielson, Conn., was convicted today of four counts of tax evasion along with conspiracy to defraud the IRS following a jury trial in the U.S. District Court for the District of Connecticut.

According to court documents and evidence produced at trial, Cote had not filed a timely or valid tax return for the years 1995 through 2009, despite earning income from his work as a consultant in the high technology welding industry.  The evidence showed that Cote and his wife responded to IRS efforts to assess and collect taxes by concealing income and assets from the government and by submitting obstructive letters and other documents, including false criminal complaints against IRS employees.  From 1998 to 2009, Cote caused the companies for which he worked to pay his compensation to nominee entities, including through accounts in Costa Rica and Sweden.  Cote also used a nominee entity in his wife’s name to conceal income and assets from the IRS and in 2003, Cote's wife conveyed their personal residence to this entity.

Following the jury verdict, U.S. District Judge Vanessa Bryant scheduled Cote’s sentencing for April 16, 2014, and Cote remains detained pending sentencing.  For each of the five counts of conviction, Cote faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000.

The case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorneys Jennifer Laraia, Melissa Siskind and Jeffrey McLellan of the Tax Division prosecuted the case.

The government has filed a complaint against Kellogg, Brown & Root Services Inc. (KBR) and Kuwaiti companies La Nouvelle General Trading & Contracting Co. (La Nouvelle) and First Kuwaiti Trading Co. (First Kuwaiti) for submitting false claims in connection with KBR’s contract with the Army to provide logistical support in Iraq, the Department of Justice announced.  KBR is an engineering, construction and services firm headquartered in Houston, Texas.  Kuwait-based La Nouvelle and First Kuwaiti provided transportation, maintenance and other services in support of KBR’s contract with the Army.  

“We depend on companies like KBR and its subcontractors to provide valuable services to our military,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will en sure that contractors do not engage in corrupt practices at the expense of our troops abroad, while profiting at the expense of taxpayers at home.”

Allegedly, KBR made claims to the government, knowing them to be false, under a contract with the Army to provide wartime logistical support, known as the Logistics Civil Augmentation Program (LOGCAP) III.  The award of LOGCAP III paved the way for the company to become a critical source for logistical support services in Iraq, which included transportation, maintenance, food, shelter and facilities management.  KBR performed many of these services through subcontracts awarded to foreign companies local to the region, such as La Nouvelle and First Kuwaiti. 

In its complaint, filed in federal court in Rock Island, Ill., the government alleged that, in 2003 and 2004, KBR employees took kickbacks from La Nouvelle and First Kuwaiti in connection with the award and oversight of subcontracts awarded to these companies.  KBR then claimed reimbursement from the government for costs it incurred under the subcontracts that allegedly were inflated, excessive or for goods and services that were grossly deficient or not provided.  For example, KBR allegedly awarded La Nouvelle a subcontract to supply fuel tankers for more than three times the tankers’ value.  La Nouvelle later rewarded the KBR employee who awarded the subcontract with a $1 million bank draft.  As another example, KBR allegedly continued to make monthly lease payments to First Kuwaiti for trucks KBR had already returned to the subcontractor.  KBR billed the government for the costs of both of these subcontracts.  The lawsuit also alleges that KBR used refrigerated trailers to transport ice for consumption by the troops that had previously been used as temporary morgues without first sanitizing them.

“Our office investigated the actions of KBR and related companies, as well as certain KBR employees,” said U.S. Attorney for the Central District of Illinois Jim Lewis.  “We were able to obtain criminal convictions against several subcontract managers whose actions were illegal and caused damage to our military, and we are now committed to pursue these civil claims against the companies themselves.”

The U.S. Attorney’s Office in Rock Island has convicted 10 companies and individuals in connection with wartime contracts in Iraq.  The convictions include three KBR subcontract managers who admitted taking kickbacks or making false statements in connection with the allegations made in the government’s complaint.  Anthony J. Martin pleaded guilty in 2007 to taking kickbacks in return for awarding First Kuwaiti subcontracts for trucks and trailers and also admitted including the amount of the kickbacks in the price of the subcontracts.  In 2005, Jeff Alex Mazon pleaded guilty to making a false written statement in connection with a subcontract for fuel tankers awarded to La Nouvelle in 2003.  And in 2006, Stephen Lowell Seamans admitted taking kickbacks from La Nouvelle, during a guilty plea to a kickback arrangement with another subcontractor, Saudi Arabia-based Tamimi Global Co. Ltd. (Tamimi).  The government previously entered into criminal and civil agreements with Tamimi in which Tamimi paid the U.S. government $13 million, including $7.4 million for civil claims and $5.6 million in criminal fines, to resolve its liability for the kickbacks.

The government is suing KBR, La Nouvelle and First Kuwaiti under the False Claims Act, as well as the Anti-Kickback Act.

“Contractors and subcontractors are expected to comply with their statutory obligations and act in good faith when dealing with the United States government,” said Special Agent in Charge of the Defense Criminal Investigative Service’s Southwest Field Office Janice M. Flores.  “The lawsuit demonstrates the commitment of DCIS and its partner agencies to prevent false billing and corrupt practices involving the military contracting process.”         

Some of the allegations contained in the government’s complaint were originally alleged in a lawsuit filed in a federal court in Houston by a whistleblower, Bud Conyers, under the qui tam provisions of the False Claims Act.  The case was later transferred to the U.S. District Court for the Central District of Illinois in Rock Island, Ill., where LOGCAP III is administered by the Department of Defense at the Rock Island Arsenal.  The False Claims Act authorizes private parties to sue, on behalf of the government, companies and persons whom they believe have falsely claimed federal funds and to share in any recovery.  The Act also allows the government to intervene and take over the action, as it has done in this case.  The government notified the court earlier this year that it was intervening in Conyers’ case and intended to file its own complaint with additional allegations.

The lawsuit is being handled by the Civil Division of the Department of Justice with investigative support by the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Army Criminal Investigation Command.  The U.S. Attorney’s Office for the Southern District of Texas also participated in the investigation. 

The case is captioned United States ex rel. Conyers v. Kellogg Brown & Root Inc. et al., No. 4:12-cv-04095-SLD-JAG (C.D. Ill.).  The claims asserted in this case are allegations only; there has been no determination of liability except to the extent of admissions made in the criminal proceedings. 

Huey P. Williams Jr., the owner and operator of two durable medical equipment (DME) companies, was arrested yesterday for his alleged role in a $3.4 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office, Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

The indictment charges Williams, 44, of Katy, Texas, with one count of health care fraud, which carries a maximum penalty of 10 years in prison upon conviction. Williams is expected to make his initial appearance in U.S. District Court for the Southern District of Texas in Houston.

According to the indictment, Williams orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until July 2010. Williams allegedly submitted false and fraudulent claims to Medicare through his Houston-area DME companies – Hermann Medical Supplies Inc. and Hermann Medical Supplies II (Hermann Medical) – which purported to provide orthotics and other DME to Medicare beneficiaries.

Hermann Medical allegedly submitted claims to Medicare for DME, including orthotic devices, which were medically unnecessary and/or never provided. Many of the orthotic devices were components of an arthritis kit and were purported to be for the treatment of arthritis-related conditions. From December 2006 through July 2010, Williams submitted claims of approximately $3.4 million to Medicare.

An indictment is merely a formal accusation. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI, HHS-OIG and MFCU and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Trial Attorney Ashlee Caligone McFarlane of the Fraud Section.

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

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

Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division and U.S. Attorney Tammy Dickinson for the Western District of Missouri announced that a man and a woman, both from Independence, Mo., were sentenced in federal court today for violating the civil rights of an African-American family by setting fire to their residence.

On Aug. 28, 2013, Logan J. Smith, 25, and Victoria A. Cheek Herrera, 34, pleaded guilty before U.S. District Judge Brian C. Wimes to one count of conspiring to threaten and intimidate a family in Independence from exercising their constitutional right to reside in their home because of their race or color and one count of a civil rights violation for committing a racially-motivated arson.  At the sentencing hearing today, Judge Wimes sentenced Smith to serve 63 months in prison and Cheek Herrera to serve 77 months in prison.

Smith and Cheek Herrera previously admitted that on June 26, 2008, they conspired to injure, oppress, threaten and intimidate an African-American couple and their children in the free exercise of their constitutional rights to occupy and rent their home in Independence, and that they committed this crime because of the victims’ race and color.  According to the defendants’ plea agreements, the incident began when the defendants discussed their desire to set the victim family’s home on fire and they drew a swastika and wrote the words “White Power” on the driveway.  The defendants then asked a juvenile acquaintance for gasoline and created a Molotov cocktail by filling a glass bottle with gasoline and inserting a rag into the bottle to serve as a wick.  The defendants then lit the wick and threw the bottle into the side of the house, which set the residence on fire.

“Every person in America has the right to occupy a home free from racially-motivated violence and threats,” said Assistant Attorney General Samuels.  “Today’s sentences reflect the Civil Rights Division’s commitment to work together with our United States Attorneys and the FBI to ensure that this right is aggressively enforced.” 

“Today’s tough sentences send a strong message that racially-motivated violence and threats will not be tolerated in our community,” said U.S. Attorney Dickinson.  “No American should feel unwelcome or unsafe in any neighborhood because of their race or color.  We will bring to justice those who violate the civil rights of others and hold them accountable for their actions.”

This case is being prosecuted by First Assistant U.S. Attorney David M. Ketchmark and Trial Attorney Shan Patel of the Civil Rights Division.  It was investigated by the FBI.

The Justice Department reached an agreement today with SD Staffing LLC (SD Staffing), aka Atwork Personnel Services Inc., a company based in Methuen, Mass., resolving claims that the staffing company engaged in citizenship status discrimination in violation of the Immigration and Nationality Act (INA).

The department’s investigation, which was initiated based on a referral from the U.S. Citizenship and Immigration Services (USCIS), found that SD Staffing required work-authorized non-U.S. citizens to produce specific documents in connection with SD Staffing’s use of the E-Verify program.  E-Verify is an Internet-based electronic verification system used by employers and administered by USCIS that confirms an individual’s employment eligibility.  The department’s investigation confirmed that SD Staffing requested unnecessary documents to work-authorized non-U.S. citizens, but not to similarly-situated U.S. citizens.

Under the settlement agreement, SD Staffing will identify and provide back pay to individuals who suffered lost wages between September 2011 and January 2014 as a result of the company’s alleged discriminatory documentary practices; pay $10,500 in civil penalties to the United States; undergo training on the anti-discrimination provision of the INA; and be subject to monitoring of its employment eligibility verification practices for two years. 

“Employers cannot create discriminatory hurdles for work-authorized non-U.S. citizens in the employment eligibility verification process, which includes the E-Verify program,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “We commend SD Staffing for restructuring its hiring processes and documentary practices to ensure that it will no longer treat work-authorized new hires differently based on their citizenship status.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The case was handled by OSC Trial Attorney Luz V. Lopez-Ortiz.  For more information about protections against employment discrimination under immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php, email osccrt@usdoj.gov or visit the website at www.justice.gov/crt/about/osc.  

Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship or immigration status or national origin should contact the above-mentioned worker hotline for assistance.

The operator and director of nursing of a home health agency based in Richmond, Texas, was arrested yesterday for her alleged role in a Medicare fraud scheme and a conspiracy to structure bank withdrawals. The owner and operator of the same home health agency was also arrested yesterday for his alleged role in the conspiracy to structure bank withdrawals.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office, Special Agent in Charge Lucy Cruz of the Houston Field Office of the IRS-Criminal Investigation Division (IRS-CI), Special Agent in Charge William Fergus of the Chicago Regional Office of the United States Railroad Retirement Board-Office of Inspector General (RRB-OIG), Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

The director of nursing, Stella Maduka, 49, of Richmond, was charged with one count of healthcare fraud and eight counts of structuring withdrawals, which each carry a maximum penalty of 10 years in prison, and one count of making false statements relating to healthcare matters and one count of conspiracy to structure bank withdrawals to avoid reporting requirements, which each carry a maximum penalty of five years in prison. The owner, Felix Maduka, 54, of Richmond, who is also Stella Maduka’s husband, was charged with one count of conspiracy to structure bank withdrawals to avoid reporting requirements and eight counts of structuring bank withdrawals.

According to the indictment, Stella Maduka used a Texas-based billing service to bill Medicare for home health services that were never provided and, in many instances, not medically necessary. Stella Maduka also created phony medical records to perpetrate the healthcare fraud. Stella Maduka and Felix Maduka structured more than $100,000 in cash withdrawals from the bank accounts where they received Medicare payments to avoid detection by the federal government.

An indictment is merely a formal accusation. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI, IRS-CI, RRB-OIG, HHS-OIG, and MFCU under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Trial Attorney William S.W. Chang of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, Health and Human Services’ Centers for Medicare & Medicaid Services, working in conjunction with Health and Human Services-Office of the Inspector General, 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 Boeing Company, General Dynamics Corporation, and the United States have formally asked the United States Court of Federal Claims to dismiss, as part of a settlement, their 23-year old dispute involving the Department of the Navy's 1991 default termination of a $4.8 billion contract awarded to Boeing's predecessor, McDonnell Douglas Corporation, and General Dynamics, to develop the A-12 carrier-based stealth aircraft. Under the settlement, the contractors will provide aircraft and services to the military valued at $400 millionand the government will not pay any money in connection with the contractors’ claims against the United States.  The settlement was authorized as part of the National Defense Authorization Act for Fiscal Year 2014.

 
While performing the contract in the late 1980s, the contractors experienced significant schedule delays and cost overruns.  After the secretary of defense declined to recommend that the president provide extraordinary relief to the contractors in early 1991, the Department of the Navy terminated the contract for default and sought the return of $1.33 billion which had been paid to the contractors under the terms of the contract.  The contractors brought suit in the Court of Federal Claims to challenge the default termination, to retain the $1.33 billion paid and to assert a claim for an additional amount well over $1 billion, plus interest, for their purported unreimbursed performance costs.   

 
After five trials and three appeals over two decades of litigation, including an appeal to the United States Supreme Court, the courts resolved most of the case.  Litigation over one unresolved issue remained in the Court of Federal Claims. 

 
“We are gratified that this decades-long litigation has been amicably resolved,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “The resolution provides value to the government and brings this protracted and complex dispute to an end.  The Department of Justice thanks the Department of the Navy for its commitment and support in this long-running effort.”

 
“We are closing a 23-year-long chapter in the annals of naval aviation and further strengthening, through the contractors’ in-kind payment, the Navy’s capabilities and capacities,” said Secretary of the Navy Ray Mabus.  “The litigation was protracted and difficult, but it saved the Navy billions of dollars.  We thank the Justice Department for its superb representation over these many years.”

The contractors will each provide the Navy with approximately $200 million in goods or services under the agreement announced today.  General Dynamics will provide a credit against a contract to build the DDG-1002 guided missile destroyer, and Boeing will provide three EA-18G aircraft and a credit for converting the existing multi-year contract to a firm-fixed price contract.   The settlement was authorized as part of the National Defense Authorization Act for Fiscal Year 2014, which the President signed into law on December 26, 2013.

 
The government’s litigation team was staffed by the Department of Justice, Civil Division, Commercial Litigation Branch, and the Department of the Navy’s Office of the General Counsel. 

The case is captioned The Boeing Co. (successor to McDonnell Douglas Corp.) and General Dynamics Corp. v. United States , No. 91-1204C (Fed. Cl.).