District Not Recorded

The Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced the federal government’s largest auto loan discrimination settlement in history to resolve allegations that Detroit-based Ally Financial Inc. and Ally Bank have engaged in an ongoing nationwide pattern or practice of discrimination against African-American, Hispanic and Asian/Pacific Islander borrowers in their auto lending since April 1, 2011.  The agreement is the first joint fair lending enforcement action by the department and CFPB.  With this agreement, eight of the top 10 largest fair lending settlements in the department’s history have been under Attorney General Eric Holder’s leadership.

 
The settlement provides $80 million in compensation for victims of past discrimination by one of the nation’s largest auto lenders and requires Ally to pay $18 million to the CFPB’s Civil Penalty Fund.  Ally also must refund discriminatory overcharges to borrowers for the next three years unless it significantly reduces disparities in unjustified interest rate markups.  This system will create a strong financial incentive to eliminate discriminatory overcharges.

 
“With this largest-ever settlement in an auto loan discrimination case, we are taking a firm stand against discrimination in a critical lending market,” said Attorney General Eric Holder.  “By requiring Ally to provide refunds to those who are overcharged because of their race or national origin, this agreement will ensure relief for Americans who are victimized. It will enable the Justice Department and the CFPB to work closely with Ally and others to prevent discriminatory practices in the future. And it will reinforce our determination to respond aggressively to discrimination in America’s lending markets – wherever it is found.”

 
The settlement resolves claims by the department and the CFPB that Ally discriminated by charging approximately 235,000 African-American, Hispanic and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers.  The agencies claim that Ally charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.  The average victim paid between $200 and $300 extra during the term of the loan.  The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending.  Ally’s settlement with the DOJ, which is subject to court approval, was filed today in the U.S. District Court for the Eastern District of Michigan in conjunction with the DOJ’s complaint.  Ally resolved the CFPB’s claims by entering into a public administrative settlement.

“Discrimination is a serious issue across every consumer credit market,” said CFPB Director Richard Cordray. “We are returning $80 million to hard-working consumers who paid more for their cars or trucks based on their race or national origin. We look forward to working closely with the Justice Department and Ally to make sure this serious issue will be addressed appropriately in the years ahead as well.”

Rather than taking applications directly from consumers, Ally makes most of its loans through over 12,000 car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Ally.  Ally’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Ally initially sets based on the borrower’s objective credit-related factors.  Dealers receive greater payments from Ally on loans that include a higher interest rate markup.  The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Ally’s qualified African-American, Hispanic and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers.

 
The agencies claim that Ally fails to adequately monitor its interest rate markups for discrimination or require dealers to document their markup decisions.  Ally’s first effort to monitor for discrimination in interest rate markups began only earlier this year after it learned of the CFPB’s preliminary findings of discrimination, and resulted in only two dealers being sanctioned and subjected to nothing more than voluntary training. 

 
“This settlement provides relief to those who were harmed by this discrimination,” said U.S. Attorney for the Eastern District of Michigan Barbara McQuade.  “Lenders must consider an individual borrower’s credit worthiness, based on income, savings, credit history and other objective factors when determining the terms of a loan.  This settlement will ensure that in the future, borrowers will be able to obtain loans from Ally based on their own credit history free from discrimination based on race or national origin.” 

Today’s settlement represents the first resolution of the department’s joint effort with the CFPB to address discriminatory auto lending practices.  The 2010 Dodd-Frank Act gave both the DOJ and the CFPB authority to take action against large banks like Ally for violating the ECOA.  Although the department has filed previously filed lawsuits alleging violations of ECOA involving car loans, today is the first ECOA lawsuit against an auto lender that operates nationwide.

 
In addition to the $98 million in payments for its past conduct and requirement to refund future discriminatory charges, the settlement requires Ally to improve its monitoring and compliance systems.  The settlement allows Ally to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results.  The department commends Ally for working cooperatively to reach an appropriate resolution of this case.  The department looks forward to Ally’s commitment, as part of the settlement, to work with the Civil Rights Division and the CFPB to find improved ways to fairly charge all consumers while also fairly compensating auto dealers for the services they provide.

 
The department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 30 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act.  The settlements in these matters provide for a minimum of $775 million in monetary relief for impacted communities and more than 535,000 individual borrowers.  The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .

 
The settlement provides for an independent administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Ally’s discrimination.  The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available.  Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.  Individuals who have auto loan questions or would like to submit a complaint can contact the CFPB at (855) 411-2372.

 
The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Michigan and the CFPB are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov

The Department of Justice announced today that it has entered a consent decree with the Reading Parking Authority (RPA) in the City of Reading, Pa., which, if approved by the court, will resolve a lawsuit filed by the United States on June 27, 2013.  The complaint alleged that the RPA violated Title VII of the Civil Rights Act of 1964 when it discriminated against former employee Henry Perez and other current and former employees of the RPA by subjecting them to harassment based on national origin (Hispanic), and then retaliating against Perez when he complained about the discrimination and harassment. 

Under the terms of the consent decree, the RPA will institute new policies and procedures to ensure that its employees are not subjected to discrimination, harassment and retaliation.  These policies and procedures will include a new reporting and investigation process to ensure that employees may report allegations of discrimination, harassment and retaliation, and that upon receiving such complaints, designated individuals will ensure that all such complaints are investigated appropriately.  Additionally, the RPA will be required to provide training to all employees regarding discrimination, harassment and retaliation, as well as the terms of the new policies and procedures put in place as a result of the consent decree.  Finally, the RPA will pay a total of $77,500 in monetary relief to individuals harmed by the discrimination, harassment and retaliation.

“No one should have to endure harassment due to their national origin or retaliation for speaking out against such discrimination,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “This lawsuit sends a clear message that the department will vigorously protect the rights of those in the public sector facing discrimination.  The department commends the RPA for working to put in place new policies and procedures to protect its employees from discrimination, harassment and retaliation.”

The Philadelphia District Office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Perez’s charge of discrimination before referring it to the Department of Justice for litigation. 

 
“By working together closely in appropriate cases, the EEOC and Department of Justice can marshal public resources more effectively and strategically,” said EEOC District Director Spencer H. Lewis Jr. of the EEOC’s Philadelphia District Office.  “This settlement demonstrates once again that our partnership can yield significant results and will ensure all public employees are protected from egregious and unlawful discrimination, harassment and retaliation in the workplace.”

 
More information about the EEOC is available on its website at www.eeoc.gov .  The enforcement of the Title VII is a top priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt .  

The Justice Department secured $3. 8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2013, Assistant Attorney General for the Civil Division Stuart F. Delery announced today.  This dollar amount, which is the second largest annual recovery of its type in history, brings total recoveries under the False Claims Act since January 2009 to $ 17 billion – nearly half the total recoveries since the Act was amended 27 years ago in 1986.

The Justice Department’s fiscal year 2013 efforts recovered more than $3 billion for the fourth year in a row and are surpassed only by last year’s nearly $5 billion in recoveries. As in previous years, the largest recoveries related to health care fraud, which reached $2. 6  billion.  Procurement fraud (related primarily to defense contracts) accounted for another $ 890  million – a record in that area.

“It has been another banner year for civil fraud recoveries, but more importantly, it has been a great year for the taxpayer and for the millions of Americans, state agencies and organizations that benefit from government programs and contracts,” said Assistant Attorney General Delery.  “The $3. 8 billion in federal False Claims Act recoveries in fiscal year 2013, plus another $443 million in recoveries for state Medicaid programs, restores scarce taxpayer dollars to federal and state governments.  The government’s success in these cases is also a strong deterrent to others who would misuse public funds, which means government programs designed to keep us safer, healthier and economically more prosperous can do so without the corrosive effects of fraud and false claims.”

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans benefits, federally insured loans and mortgages, transportation and research grants, agricultural supports, school lunches and disaster assistance. In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government, which has led to more investigations and greater recoveries.

Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions, which allow private citizens to file lawsuits alleging false claims on behalf of the government.  If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 perc ent of the recovery.  The number of qui tam suits filed in fiscal year 2013 soared to 752 –100 more than the record set the previous fiscal year.  Recoveries in qui tam cases during fiscal year 2013 totaled $2. 9 billion , with whistleblowers recovering $345 million.

Health Care Fraud

The $2. 6 billion in health care fraud recoveries in fiscal year 2013 marks four straight years the department has recovered more than $2 billion in cases involving health care fraud.  This steady, significant and continuing success can be attributed to the high priority the Obama Administration has placed on fighting health care fraud. In 2009, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement.  This coordination has yielded historic results: From January 2009 through the end of the 2013 fiscal year, the department used the False Claims Act to recover $12 .1 billion in federal health care dollars.  Most of these recoveries relate to fraud against Medicare and Medicaid.  Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the Departments of Justice and Health and Human Services.

Some of the largest recoveries this past fiscal year involved allegations of fraud and false claims in the pharmaceutical and medical device industries.  Of the $2. 6 billion in federal health care fraud recoveries, $1.8 billion were from alleged false claims for drugs and medical devices under federally insured health programs that, in addition to Medicare and Medicaid, include TRICARE, which provides benefits for military personnel and their families, veterans’ health care programs and the Federal Employees Health Benefits Program.  The department recovered an additional $443 million for state Medicaid programs.

Many of these settlements involved allegations that pharmaceutical manufacturers improperly promoted their drugs for uses not approved by the Food and Drug Administration (FDA) – a practice known as “off-label marketing.”  For example, drug manufacturer Abbott Laboratories Inc. paid $1.5 billion to resolve allegations that it illegally promoted the drug Depakote to treat agitation and aggression in elderly dementia patients and schizophrenia when neither of these uses was approved as safe and effective by the FDA.  This landmark $1.5 billion settlement included $575 million in federal civil recoveries, $225 million in state civil recoveries and nearly $700 million in criminal fines and forfeitures.  In another major pharmaceutical case, biotech giant Amgen Inc. paid the government $762 million, including $598.5 million in False Claims Act recoveries, to settle allegations that included its illegal promotion of Aranesp, a drug used to treat anemia, in doses not approved by the FDA and for off-label use to treat non-anemia-related conditions.  For details, see Abbott, Abbott sentencing, and Amgen.

The department also settled allegations relating to the manufacture and distribution of adulterated drugs.  For example, generic drug manufacturer Ranbaxy USA Inc. paid $505 million to settle allegations of false claims to federal and state health care programs for adulterated drugs distributed from its facilities in India.  The settlement included $237 million in federal civil claims, $118 million in state civil claims and $150 million in criminal fines and forfeitures. For details, see Ranbaxy.

Adding to its successes under the False Claims Act, the Civil Division’s Consumer Protection Branch, together with U.S. Attorneys across the country, obtained 16 criminal convictions and more than $1. 3 billion in criminal fines, forfeitures and disgorgement under the Federal Food, Drug and Cosmetic Act (FDCA).  The FDCA protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bears true, complete and accurate information.

In other areas of health care fraud, the department obtained a $237 million judgment against South Carolina-based Tuomey Healthcare System Inc., after a four-week trial, for violating the Stark Law and the False Claims Act.  The Stark Law prohibits hospitals from submitting claims to Medicare for patients referred to the hospital by physicians who have a prohibited financial relationship with the hospital.  Tuomey’s appeal of the $237 million judgment is pending.  If the judgment is affirmed on appeal, this will be the largest judgment in the history of the Stark Law. For the court’s opinion, see Tuomey.

The department also recovered $26.3 million in a settlement with Steven J. Wasserman M.D., a dermatologist practicing in Florida, to resolve allegations that he entered into an illegal kickback arrangement with Tampa Pathology Laboratory that resulted in increased claims to Medicare.  Tampa Pathology Laboratory previously paid the government $950,000 for its role in the alleged scheme.  The $26.3 million settlement is one of the largest with an individual in the history of the False Claims Act.  For details, see Wasserman.

Procurement Fraud

Fiscal year 2013 was a record year for procurement fraud matters.  The department secured more than $887 million in settlements and judgments based on allegations of false claims and corruption involving government contracts.  Prominent among these successes was the department’s $664 million judgment against Connecticut-based defense contractor United Technologies Corp. (UTC).  A federal court found UTC liable for making false statements to the Air Force in negotiating the price of a contract for fighter jet engines.  In 2004, the department had won a smaller judgment after a three-month trial.  Both sides appealed, but the government’s arguments prevailed, resulting in the case being returned to the trial court to reassess damages. The $664 million judgment, which UTC has appealed, is the largest judgment in the history of the False Claims Act and, if the appellate court affirms, will be the largest procurement recovery in history.  For details, see UTC.

The department also settled allegations of false claims with two companies in connection with their contracts with the General Services Administration (GSA) to market their products through the Multiple Award Schedule (MAS) program.  To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must provide GSA with complete, accurate and current information about their commercial sales practices, including discounts afforded to their commercial customers.  The government alleged that W.W. Grainger Inc., a national hardware distributor headquartered in Illinois, and Ohio-based RPM International Inc. and its subsidiary, Tremco Inc., a roofing supplies and services firm, failed to disclose discounts given to their commercial customers, which resulted in government customers paying higher prices.  The department recovered $70 million from W.W. Grainger in a settlement that also included allegations relating to a U.S. Postal Services contract and $61 million from RPM International Inc. and Tremco.  For details, see Grainger, RPM/Tremco.

Other Fraud Recoveries

A $45 million settlement with Japan-based Toyo Ink S.C. Holdings Co. Ltd. and its Japanese and United States affiliates (collectively Toyo) demonstrates the breadth of cases the department pursues.  This settlement resolved allegations that Toyo misrepresented the country of origin on documents presented to the Department of Homeland Security’s U.S. Customs and Border Protection to evade antidumping and countervailing duties on imports of the colorant carbazole violet pigment into the United States.  These duties protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.  For details, see Toyo.

The False Claims Act also is used to redress grant fraud.  In a significant case involving a grant from the Department of Education, Education Holdings Inc. (formerly The Princeton Review Inc.) paid $10 million to resolve allegations that the company fabricated attendance records for thousands of hours of afterschool tutoring of students that was funded by the federal grant.  For details, see Education Holdings.

Recoveries in Whistleblower Suits

Of the $3. 8 billion the department recovered in fiscal year 2013, $2. 9 billion related to lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the department paid out more than $345 million to the courageous individuals who exposed fraud and false claims by filing a qui tam complaint.  (The average share paid to whistleblowers in fiscal year 2013 cannot be determined from these numbers because the awards paid to whistleblowers in one fiscal year do not always coincide with the fiscal year in which the case was resolved, and the fiscal year’s recoveries may include amounts to settle allegations outside the whistleblower’s complaint.)

Whistleblower lawsuits were in the range of three to four hundred per year from 2000 to 2009, when they began their climb from 433 lawsuits in fiscal year 2009 to 752  lawsuits in fiscal year 2013.  Due to the complexity of fraud investigations generally, the outcomes of many of the qui tam cases filed this past fiscal year are not yet known, but the growing number of lawsuits filed since 2009 have led to increased recoveries.  Qui tam recoveries exceeded $2 billion for the first time in fiscal year 2010 and have continued to exceed that amount every year since.  Qui tam recoveries this past fiscal year bring the department’s totals since January 2009 to $13.4 billion.  During the same period, the department paid out $1.98 billion in whistleblower awards.

“These recoveries would not have been possible without the brave contributions made by ordinary men and women who made extraordinary sacrifices to expose fraud and corruption in government programs,” said Assistant Attorney General Delery. “We are also grateful to Congress and its continued support of strengthening the False Claims Act, including its qui tam provisions, giving the department the tools necessary to pursue false claims.”

In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud.  In 2009, Senator Patrick J. Leahy, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.  And in 2010, the passage of the Affordable Care Act provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute.

Assistant Attorney General Delery also expressed his deep appreciation for the dedicated public servants who investigated and pursued these cases.  These individuals include attorneys, investigators, auditors and other agency personnel throughout the Justice Department’s Civil Division, the U.S. Attorneys’ Offices, the Departments of Defense and Health and Human Services, the various Offices of Inspector General and the many other federal and state agencies that contributed to the department’s recoveries this past fiscal year.

“The department’s continued success in recovering fraudulent claims for taxpayer money this past fiscal year is a product of the tremendous skill and dedication of the people who worked on these cases and investigations and continue to work hard to protect against the misuse of taxpayer dollars,” said Delery.

The U.S. Department of Justice today announced the opening of a comprehensive grant solicitation for funding to support public safety, victim services, and crime prevention by American Indian and Alaska Native governments. The department’s FY 2014 Coordinated Tribal Assistance Solicitation (CTAS) is available at www.justice.gov/tribal/open-sol.html .

“Over the past four years, more than $437 million in much-needed assistance has been provided to American Indian and Alaska Native communities through the Coordinated Tribal Assistance Solicitation,” said Associate Attorney General Tony West.  “These resources are helping to strengthen justice, hope, and healing in tribal communities and are supporting efforts to intervene in the lives of at-risk youth, prevent violence against women, improve community policing, and explore alternatives to incarceration.”

CTAS is administered by the Justice Department’s Office of Justice Programs (OJP), the Office of Community Oriented Policing Services (COPS) and the Office on Violence Against Women (OVW). The funding can be used to enhance law enforcement; bolster adult and juvenile justice systems; prevent and control juvenile delinquency; serve victims of sexual assault, domestic violence, and elder abuse; and support other efforts to combat crime.

Applications for CTAS are submitted through the Justice Department’s Grants Management System (GMS) which enables grantees to register and apply for CTAS online. Applicants should register early, and no later than Tuesday, March 4, 2014, in order to resolve difficulties in advance of the application deadline. The deadline for submitting applications in response to this grant announcement is 7:00 p.m. EST on Monday, March 24, 2014 .

The FY 2014 CTAS reflects improvements and refinements from earlier versions. The department received feedback from tribal leaders during tribal consultations and listening sessions, from written comments from applicants and grantees, and from a specially developed assessment tool that was used to obtain information about the application experience.

For the FY 2014 CTAS, a tribe or tribal consortium will submit a single application and select from nine competitive grant programs referred to as Purpose Areas. This approach allows the department’s grant-making components to consider the totality of a tribe’s overall public safety needs.

The nine purpose areas are:

1.       Public Safety and Community Policing (COPS)

2.       Comprehensive Tribal Justice Systems Strategic Planning (BJA)

3.       Justice Systems, and Alcohol and Substance Abuse (BJA)

4.       Corrections and Correctional Alternatives (BJA)

5.       Violence Against Women Tribal Governments Program (OVW)

6.       Children’s Justice Act Partnerships for Indian Communities (OVC) 

7.       Comprehensive Tribal Victim Assistance Program (OVC)

8.       Juvenile Justice (OJJDP)

9.       Tribal Youth Program (OJJDP)   

Tribes or tribal consortia are encouraged to explore other funding opportunities for which they may be eligible under non-tribal, government-specific federal grant programs. Additional funding information may be found at www.grants.gov or the websites of individual agencies.

Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination, and action on public safety in tribal communities.

Genzyme Corp. has agreed to pay $22.28 million to resolve allegations that it marketed, and caused false claims to be submitted to federal and state health care programs for use of, a “slurry” version of its Seprafilm adhesion barrier, the Justice Department announced today.  Seprafilm is a thin film intended to reduce adhesions after surgery by forming a bio-resorbable barrier between abdominal tissue and organs.  Genzyme is a biotechnology corporation based in Cambridge, Mass., and was acquired by Sanofi-Aventis SA in April 2011.
 
“There will be consequences when medical device companies alter products to increase sales and profits without regard for risks to patient safety,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Federal health care participants should receive only devices that are medically reasonable and necessary.”

The government alleges that Genzyme sales representatives taught doctors and other staff to cut the Seprafilm sheets into small pieces, add saline and allow the pieces to dissolve until the desired consistency was reached.  This mixture was referred to as “slurry.”  Genzyme sales representatives traded recipes for slurry, and trained each other in how to create it.  The slurry was used in laparoscopic or “key hole” surgeries by inserting a catheter filled with the mixture into the body and squirting it into the abdominal cavity.  Seprafilm is FDA-approved for use in open abdominal surgery but not for minimally invasive surgeries, such as laparoscopic or key hole surgery.  Allegedly, as a result of this conduct, Genzyme knowingly caused hospitals and other purchasers of Seprafilm to submit false and fraudulent claims to federal health care programs for uses of Seprafilm that were not reimbursable.
 
“Beneficiaries of federal health care plans, including Medicare recipients and military families, should not be treated with devices that have been improperly altered,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “When companies promote such practices, resulting in the submission of health care claims that cannot legally be reimbursed, they will be made to pay by this office and the Department of Justice.”

“As with drugs, patients need assurance that medical devices are safe and effective,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “The government contends that Genzyme marketed an altered, untested device.  Taxpayers and patients deserve better.”
 
The allegations resolved by today’s settlement were originally raised in two lawsuits filed against Genzyme under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the government and to share in any recovery.  The whistleblowers, or relators’, share of the settlement has not been determined.

Assistant Attorney General Delery thanked the Office of Chief Counsel for the Food and Drug Administration, the U.S. Attorney’s Office for the Middle District of Florida, the Justice Department’s Commercial Litigation Branch, the Defense Health Agency, the Office of Personnel Management, the Department of Veterans Affairs and the Department of Health and Human Services Office of Inspector General for the collaboration that resulted in the settlement. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary 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 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 claims settled by this agreement are allegations only, and there has been no determination of liability.  The two lawsuits are captioned United States ex rel. Fuentes, Russo v. Genzyme Corp., No. 09-cv-1245 (M.D. Fla.) and United States ex rel. Kelley v. Genzyme Corp., No. 10-cv-549 (M.D. Fla.).  

WASHINGTON – El Departamento de Justicia y la Oficina para la Protección Financiera del Consumidor [Consumer Financial Protection Bureau (CFPB)] anunciaron hoy el mayor acuerdo conciliatorio realizado por el gobierno federal en relación a alegatos de discriminación en el otorgamiento de préstamos para la compra de vehículos alegando que Ally Financial Inc. y Ally Bank, con sede en Detroit, exhibieron un patrón o práctica nacional de discriminación contra prestatarios afroestadounidenses, hispanos y asiáticos/isleños del Pacífico en sus préstamos de vehículos desde el 1° de abril de 2011. El acuerdo es la primera acción conjunta del departamento y la CFPB para hacer valer las leyes de otorgamiento justo de préstamos. Con este acuerdo, ocho de los 10 principales acuerdos conciliatorios asociados con el otorgamiento justo de préstamos en la historia del departamento se han producido bajo el liderazgo del Secretario de Justicia de los Estados Unidos Eric Holder.

El acuerdo dispone que se destinen 80 millones de dólares para indemnizar a víctimas de discriminación pasada por uno de los mayores prestamistas de crédito para vehículos y exige que Ally pague 18 millones de dólares al Fondo de Multas Civiles de la CFPB. Asimismo, Ally debe reembolsar los sobrecargos discriminatorios a prestatarios durante los próximos tres años, si no reduce significativamente las disparidades en incrementos injustificados de la tasa de interés. Este sistema creará un fuerte incentivo financiero para eliminar los sobrecargos discriminatorios.

"Con este acuerdo conciliatorio, el mayor logrado en un caso de discriminación en el otorgamiento de crédito para vehículos, estamos adoptando una postura firme contra la discriminación en un mercado crítico de préstamos ", señaló el Secretario de Justicia de los Estados Unidos Eric Holder. "Al exigir que Ally reembolse a los prestatarios a los que se les cobró demás debido a su raza u origen nacional, este acuerdo asegurará la reparación para los estadounidenses victimizados. Esto permitirá que el Departamento de Justicia y la CFPB trabajen estrechamente con Ally y otros para prevenir prácticas discriminatorias en el futuro. Y reforzará nuestra determinación de tener una respuesta enérgica a la discriminación en los mercados de préstamos de los Estados Unidos, donde sea que se produzca".

El acuerdo conciliatorio resuelve las alegaciones del departamento y la CFPB de que Ally discriminó al cobrarles tasas de interés más altas a alrededor de 235,000 prestatarios afroestadounidenses, hispanos y asiáticos/isleños del Pacífico que a los prestatarios blancos no hispanos. Las agencias alegan que Ally les cobró a prestatarios tasas de interés más altas debido a su raza u origen nacional, y no debido a la solvencia de los prestatarios u otros criterios objetivos relacionados con el riesgo que presentaban. La víctima media pagó entre 200 y 300 dólares más a lo largo de la vida del préstamo. La Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act (ECOA)] prohíbe la discriminación en todas las formas de préstamo, incluidos los préstamos para la compra de vehículos. El acuerdo conciliatorio de Ally con el Departamento de Justicia [Department of Justice (DOJ)] se presentó hoy en el Tribunal Federal de Distrito para el Distrito Este de Michigan en junto con la demanda del DOJ. Con respecto a la acción iniciada por la CFPB, Ally realizó un acuerdo conciliatorio administrativo público.

"La discriminación es un problema grave en todos los mercados de crédito de consumo", indicó el Director de la CFPB Richard Cordray. "Les estamos devolviendo 80 millones de dólares a consumidores trabajadores que pagaron más por sus automóviles o camionetas debido a su raza u origen nacional. Nos complacerá trabajar estrechamente con el Departamento de Justicia y Ally para asegurarnos que se tomen las medidas correspondientes para resolver este grave problema en los próximos años también".

En lugar de recibir solicitudes directamente de los consumidores, Ally otorga la mayoría de sus préstamos a través de 12,000 concesionarios de automóviles de todo el país que ayudan a sus clientes a pagar por sus vehículos nuevos o usados al presentar sus solicitudes de crédito a Ally. La práctica comercial de Ally, así como la de otras importantes sociedades de préstamos de vehículos, permiten que los concesionarios varíen la tasa de interés de un préstamo de la tasa inicialmente establecida por Ally según factores objetivos crediticios del prestatario. Los concesionarios reciben pagos más altos de Ally por préstamos que incluyan una tasa de interés más alta. Las investigaciones coordinadas por el departamento y la CFPB que precedieron al acuerdo conciliatorio de hoy determinaron que este sistema de determinación subjetiva y libre de los precios hace con que los prestatarios de Ally afroestadounidenses, hispanos y asiáticos/isleños del Pacífico acaben pagando más que los prestatarios blancos no hispanos calificados.

Las agencias alegan que Ally no controla adecuadamente que los incrementos de tasa de interés no se produzcan debido a la discriminación, ni exige que los concesionarios documenten sus decisiones de aumento de tasa de interés. La primera iniciativa por parte de Ally de controlar que no ocurra discriminación en los incrementos de la tasa de interés recién comenzó hace unos meses después de que se enteró de la determinación preliminar por parte de la CFPB de hechos de discriminación, y como resultado, solo dos concesionarios fueron sancionados y lo único que se les exigió fue la realización de capacitación voluntaria.

"Este acuerdo conciliatorio brinda reparación a las personas perjudicadas por esta discriminación", señaló la Fiscal Federal para el Distrito Este de Michigan Barbara McQuade. "Los prestamistas deben tener en cuenta la solvencia crediticia del prestatario individual basado en sus ingresos, ahorros, historial de crédito y otros factores objetivos al determinar los términos de un préstamo. Este acuerdo conciliatorio garantizará que, en el futuro, los prestatarios puedan obtener préstamos de Ally basado en su propio historial de crédito, libres de discriminación debido a su raza u origen nacional".

El acuerdo conciliatorio de hoy representa la primera resolución de la labor conjunta del departamento y la CFPB respecto de las prácticas discriminatorias en el otorgamiento de préstamos de vehículos. La Ley Dodd-Frank de 2010 le otorgó al DOJ y a la CFPB autoridad para tomar medidas contra bancos grandes como Ally por violaciones de la ECOA. Si bien el departamento presentó demandas anteriormente por violaciones de la ECOA asociadas a préstamos de vehículos, la de hoy es la primera demanda relacionada con la ECOA contra una sociedad de préstamos de vehículos con operaciones en todo el país.

Además de los 98 millones de dólares en pagos por su conducta en el pasado y la exigencia de reembolsar futuros cargos discriminatorios, el acuerdo conciliatorio exige que Ally mejore sus sistemas de control y cumplimiento. El acuerdo conciliatorio le permite a Ally probar diferentes medios de reducir la discriminación y exige que informe al departamento y a la CFPB periódicamente los resultados de sus iniciativas y que discuta posibles maneras de mejorar los resultados. El departamento considera encomiable la cooperación de Ally para alcanzar una resolución adecuada para este caso. El departamento ve con agrado el compromiso de Ally, como parte del acuerdo conciliatorio, de trabajar con la División de Derechos Civiles y la CFPB en encontrar mejores maneras de cobrarles a todos los consumidores de manera justa, sin dejar de recompensar de forma justa a los concesionarios de vehículos por los servicios que brindan.

La Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles es responsable, en el departamento, de hacer valer las leyes de otorgamiento justo de préstamos. Desde su fundación en febrero de 2010, la Unidad de Préstamos Justos ha iniciado o resuelto 30 casos asociados con préstamos bajo la Ley de Vivienda Justa [Fair Housing Act], ECOA y la Ley de Amparo Civil para Militares [Servicemembers Civil Relief Act]. Los acuerdos conciliatorios logrados en estos casos consistieron en casi 775 millones de dólares en indemnizaciones a comunidades afectadas y más de 535,000 prestatarios individuales. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso bajo ECOA destacan los logros del Departamento en el otorgamiento de préstamos justos y están disponibles en www.justice.gov/crt/publications.

El acuerdo conciliatorio propuesto dispone que un administrador independiente ubique a las víctimas y distribuya los pagos indemnizatorios sin ningún costo a los prestatarios identificados por el departamento y la CFPB como víctimas de la discriminación por parte de Ally. El departamento y la CFPB realizarán un anuncio público y publicarán información en sus portales en Internet cuando existan más detalles disponibles sobre el proceso de indemnización. Los prestatarios elegibles para indemnización debido al acuerdo conciliatorio serán contactados por el administrador y no necesitan comunicarse con el departamento o la CFPB en este momento. Las personas con preguntas sobre préstamos de vehículos o que deseen presentar una queja pueden comunicarse con la CFPB llamando al (855) 411-2372.

La División de Derechos Civiles, la Fiscalía Federal para el Distrito Este de Michigan y la CFPB son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama estableció la Fuerza de Tarea Interagencial para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de dependencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando unidos, aportan un poderoso espectro de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.

A retired colonel and a sergeant in the Army National Guard have been charged in a nine-count indictment in Albuquerque, N.M., for allegedly defrauding the National Guard Bureau and its contractor of approximately $12,000 by fraudulently obtaining recruiting bonuses, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Retired Colonel Isaac Alvarado, 74, of Albuquerque, N.M. was charged with one count of conspiracy to commit wire fraud, four counts of wire fraud and four counts of aggravated identity theft in an indictment that was filed this week in the U.S. District Court for the District of New Mexico. Sergeant First Class Travis Nau, 40, also of Albuquerque, N.M., was charged with one count of conspiracy to commit wire fraud, three counts of wire fraud and three counts of aggravated identity theft.

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

According to court documents, between approximately November 2007 and February 2012, Alvarado participated as a recruiting assistant in the G-RAP. Nau, who worked in a recruiting office and is Alvarado’s son-in-law, allegedly provided Alvarado with the names and Social Security numbers of potential soldiers. This enabled Alvarado to claim that he was responsible for referring these potential soldiers to join the military, when in fact he did not recruit any of them. In addition, Nau advised at least two potential soldiers to falsely report that Alvarado had assisted in their recruitment even though he had not. As a result, Alvarado allegedly received a total of approximately $12,000 in fraudulent recruiting bonuses.

An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted, the defendants face up to five years in prison on the conspiracy count. Each wire fraud count carries a maximum penalty of 20 years in prison. Each count of aggravated identity theft carries a mandatory two-year sentence in prison. Each charged count carries a maximum fine of up to $250,000, or twice the gross gain.

The case is being investigated by special agents from the Fort Bliss Army Criminal Investigation Command. The case is being prosecuted by Trial Attorneys Sean F. Mulryne, Mark J. Cipolletti and Heidi Boutros Gesch of the Criminal Division’s Public Integrity Section.

A subsidiary of Archer Daniels Midland Company (ADM) pleaded guilty today and has agreed to pay more than $17 million in criminal fines to resolve charges that it paid bribes through vendors to Ukrainian government officials to obtain value-added tax (VAT) refunds, in violation of the Foreign Corrupt Practices Act (FCPA).

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney James A. Lewis of the Central District of Illinois and Special Agent in Charge David A. Ford of the FBI’s Springfield Division made the announcement.

“As today’s guilty plea shows, paying bribes to reap business benefits corrupts markets and undermines the rule of law,” said Acting Assistant Attorney General Raman.  “ADM’s subsidiaries sought to gain a tax benefit by bribing government officials, and then attempted to deliberately conceal their conduct by funneling payments through local vendors.  ADM, in turn, failed to implement sufficient policies and procedures to prevent the bribe payments, although ultimately ADM disclosed the conduct, cooperated with the government, and instituted extensive remedial efforts.  Today’s corporate guilty plea demonstrates that combating bribery is and will remain a mainstay of the Criminal Division’s mission.  We are committed to working closely with our foreign and domestic law enforcement partners to fight global corruption.”

Alfred C. Toepfer International Ukraine Ltd. (ACTI Ukraine), a subsidiary of ADM, pleaded guilty in the Central District of Illinois to one count of conspiracy to violate the anti-bribery provisions of the FCPA and agreed to pay $17.8 million in criminal fines. The Department of Justice also entered into a non-prosecution agreement (NPA) with ADM in connection with the company’s failure to implement an adequate system of internal financial controls to address the making of improper payments both in Ukraine and by an ADM joint venture in Venezuela.

In a parallel action, ADM consented with the U.S. Securities and Exchange Commission (SEC) to a proposed final judgment that orders the company to pay roughly $36.5 million in disgorgement and prejudgment interest, bringing the total amount of U.S. criminal and regulatory penalties to be paid by ADM and its subsidiary to more than $54 million.

According to the charges, from 2002 to 2008, ACTI Ukraine, a trader and seller of commodities based in the Ukraine, together with Alfred C. Toepfer International G.m.b.H. (ACTI Hamburg), another subsidiary of ADM, paid third-party vendors to pass on bribes to Ukrainian government officials to obtain VAT refunds. The charges allege that, in total, ACTI Ukraine and ACTI Hamburg paid roughly $22 million to two vendors, nearly all of which was to be passed on to Ukrainian government officials to obtain over $100 million in VAT refunds, resulting in a benefit to ACTI Ukraine and ACTI Hamburg of roughly $41 million.

According to the NPA with ADM, a number of concerns were expressed to ADM executives, including an e-mail calling into question potentially illegal “donations” by ACTI Ukraine and ACTI Hamburg to recover the VAT refunds, yet nonetheless failed to implement sufficient anti-bribery compliance policies and procedures to prevent corrupt payments.

In addition to the monetary penalty, ADM and ACTI Ukraine also agreed to cooperate with the department, to periodically report the companies’ compliance efforts, and to continue implementing enhanced compliance programs and internal controls designed to prevent and detect FCPA violations.

The agreements acknowledge ADM’s timely, voluntary and thorough disclosure of the conduct; ADM’s extensive cooperation with the department, including conducting a world-wide risk assessment and corresponding global internal investigation, making numerous presentations to the department on the status and findings of the internal investigation, voluntarily making current and former employees available for interviews, and compiling relevant documents by category for the department; and ADM’s early and extensive remedial efforts.

The department acknowledges and expresses its appreciation for the cooperation and assistance of German law enforcement authorities, which, in a parallel investigation, reached a resolution with ACTI Hamburg regarding its role in the bribery scheme.

In addition, the department acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.

This ongoing investigation is being conducted by the FBI. The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eugene Miller of the Central District of Illinois, with significant assistance from the Criminal Division’s Office of International Affairs.

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

A woman from Trinidad and Tobago was sentenced today to serve 20 years in prison for her role in the 2005 kidnapping of naturalized U.S. citizen Balram “Balo” Maharaj, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office.

Doreen Alexander, 47, of Arima, Trinidad and Tobago, was sentenced by U.S. District Judge Emmet G. Sullivan in the District of Columbia. Alexander pleaded guilty on Oct. 3, 2013, to conspiracy to commit hostage taking, a lesser included offense under count one of the indictment, which charged conspiracy to commit hostage taking that resulted in death. Judge Sullivan also sentenced Alexander to serve five years of supervised release to follow her prison term.

Alexander was the last charged co-conspirator involved in the kidnapping of Maharaj, Alexander’s former boyfriend and the father of one of her sons.  The other 12 co-conspirators were previously extradited and prosecuted by the U.S. Attorney’s Office for the District of Columbia.

According to court documents, Alexander initiated the April 2005 kidnapping of Maharaj and provided information that allowed the kidnappers to identify, locate and track Maharaj.  Alexander alerted the kidnappers to Maharaj’s visits to Trinidad and Tobago; gave them information on his wealth, which was used to calculate the ransom; and reassured the kidnappers that they had the right man after the ransom negotiations went awry. Maharaj died as a result of the kidnapping.

The case was investigated by the FBI’s Miami Division Extraterritorial Squad with the assistance of the Criminal Division’s Office of International Affairs and the FBI’s Legal Attache’s Office in Port of Spain, Trinidad and Tobago. Special assistance was further provided by the Trinidad & Tobago Police Service Anti-Kidnapping Squad and Homicide Bureau.

The case is being prosecuted by Senior Trial Attorneys Matthew C. Singer and Teresa A. Wallbaum of the Criminal Division’s Human Rights and Special Prosecutions Section. 

Cardiologist Dr. Elie H. Korban will pay $1.15 million to resolve False Claims Act allegations that he billed Medicare and Medicaid for medically unnecessary cardiac stent placements, the Justice Department announced today.  Korban owns Delta Clinic, with offices in Jackson, Tenn., and Lexington, Tenn., and has privileges at Jackson-Madison County General Hospital and Regional Hospital of Jackson, both in Jackson, Tenn.

 
“ Billing Medicare for cardiac procedures that are not necessary or appropriate contributes to the soaring costs of health care and can harm patients ,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “ Protecting public funds and safeguarding Medicare beneficiaries continues to be a Department of Justice priority .”

Cardiac stents are mesh tubes placed in coronary arteries of patients to keep their arteries open during the treatment of coronary heart disease.  The government contends that, from January 1, 2005, through December 31, 2008, Korban placed cardiac stents in Medicare and Medicaid patients when the stents were not medically necessary .  The government also claims that Korban improperly billed Medicare for work performed by substitute doctors when he was available to perform the services himself. 

 
“This case is one of many that underscores our commitment to holding accountable those who would cheat the health care system for their own personal profit,” said U.S. Attorney for the Western District of Tennessee Edward L. Stanton III.  “We will continue to vigorously protect citizens from schemes that damage the ability of health care providers and patients to participate in a system free of false claims and dishonesty.”

 
As part of the settlement, Korban entered into an Integrity Agreement with the Department of Health and Human Services Office of Inspector General intended to deter wrongful conduct in the future.  The agreement requires enhanced accountability and monitoring activities to be conducted by both internal and independent external reviewers. 

“Too many recent frauds involve medically unnecessary heart stents,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General region including Tennessee.  “Providers are warned that they can be aggressively investigated and held accountable for falsely billing federal health programs.”

Assistant Attorney General Delery thanked the Department of Health and Human Services Office of Inspector General, the Tennessee Bureau of Investigation, the U.S. Attorney’s Office for the Western District of Tennessee and the Commercial Litigation Branch of the Justice Department’s Civil Division for the collaboration that resulted in the settlement. 

The allegations resolved by the settlement were first raised in a lawsuit filed against Korban under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.  As part of the settlement, the whistleblower, Dr. Wood M. Deming, will receive a share of the settlement amount.  Deming’s share has not been determined. 

 
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary 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 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. Wood M. Deming  v. Jackson-Madison County General Hosp., et al., Case No. 07-1116-BBD (W.D. Tenn.).  The claims settled by this agreement are allegations only, and there has been no determination of liability.  

Zhifei Li, the owner of an antique business in China, pleaded guilty today to being the organizer of an illegal wildlife smuggling conspiracy in which 30 rhinoceros horns and numerous objects made from rhino horn and elephant ivory worth more than $4.5 million were smuggled from the United States to China.

The guilty plea was announced by Robert G. Dreher, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, Paul J. Fishman, U.S. Attorney for the District of New Jersey, Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and Dan Ashe, Director of the U.S. Fish and Wildlife Service (USFWS).

Li, 29, of Shandong, China, the owner of Overseas Treasure Finding in Shandong, pleaded guilty today before U.S. District Judge Esther Salas in Newark, N.J., to a total of 11 counts: one count of conspiracy to smuggle and violate the Lacey Act; seven counts of smuggling; one count of illegal wildlife trafficking in violation of the Lacey Act; and two counts of making false wildlife documents.

Li was arrested in Florida in January 2013 on federal charges brought under seal in New Jersey and shortly after arriving in the country. Before he was arrested, he purchased two endangered black rhinoceros horns from an undercover USFWS agent in a Miami Beach hotel room for $59,000 while attending an antique show. Li was arrested as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

In papers filed in Newark federal court, Li admitted that he was the “boss” of three antique dealers in the United States whom he paid to help obtain wildlife items and smuggle them to him via Hong Kong. One of those individuals was Qiang Wang, aka “Jeffrey Wang,” who was sentenced to serve 37 months in prison on Dec. 5, 2013, in the Southern District of New York . Li played a leadership and organizational role in the smuggling conspiracy by arranging for financing to pay for the wildlife, purchasing and negotiating the price, directing how to smuggle the items out of the United States and obtaining the assistance of additional collaborators in Hong Kong to receive the smuggled goods and then smuggle them to him in mainland China.

“The take-down of the Li smuggling ring is an important development in our effort to enforce wildlife protection laws,” said Acting Assistant Attorney General Dreher for the Justice Department’s Environment and Natural Resources Division. “Rhino horn can sell for more than gold and is just as rare, but rhino horn and elephant ivory are more than mere commodities. Each illegally traded horn or tusk represents a dead animal, poaching, bribery, smuggling and organized crime.  The Justice Department will continue to vigorously enforce the law designed to protect wildlife. This is a continuing investigation."

“The brutality of animal poaching, wherever it occurs, feeds the demand of a multibillion-dollar illegal international market,” said U.S. Attorney Fishman. “As a major hub of international commerce through our ports and busy airport, the District of New Jersey plays an important role in curbing the escalation of this devastating trade. Zhifei Li’s conviction is a warning to those who would be lured by the profits of dealing in cruelty.”

“The illegal trade in rhino horn has devastated the wild population of these magnificent animals, with the real possibility emerging that all sub-species will be extinct in the wild within our lifetimes,” said U.S. Attorney Ferrer. “Additionally, the poaching activities have cost the lives of enforcement rangers and wardens as the traffickers have resorted to greater levels of violence to feed the black market. This case reflects the seriousness with which we regard these activities and our commitment to work collectively to quash the conduct and hold the law-breakers accountable.”

“The staggering prices paid for rhino horn by criminals like Zhifei Li and his accomplices ensure that unscrupulous poachers continue to slaughter these animals, and it’s our hope that his conviction serves as a warning to other traffickers of the severe consequences they face,” said Fish and Wildlife Service Director Ashe. “The unparalleled greed of criminal trafficking rings like Li’s fuel the poaching epidemic that is decimating rhinoceros populations in the wild. Regardless of whether the horns he smuggled were sawed off the corpse of a rhino last year or a decade ago, each one represents the death of one of the world’s most endangered animals.”

Rhinoceros are a herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under United States and international law.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (known as CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.

In pleading guilty, Li admitted that he sold 30 smuggled, raw rhinoceros horns worth approximately $3 million – approximately $17,500 per pound – to factories in China where raw rhinoceros horns are carved into fake antiques known as Zuo Jiu (which means “to make it as old” in Mandarin). In China, there is a centuries-old tradition of drinking from an intricately carved “libation cup” made from a rhinoceros horn. Owning or drinking from such a cup is believed by some to bring good health, and true antiques are highly prized by collectors.  The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including recently carved fake antiques.

According to the charges, plea agreement and a detailed joint factual statement filed in in Newark federal court , the investigation of Li began in November 2011, after a confidential informant sold two raw rhino horns to a middleman at the Vince Lombardi rest stop on the New Jersey Turnpike in an Operation Crash undercover sale. These government-supplied rhino horns were, in turn, sold to a Long Island City antiques dealer who was working for Li.

At Li’s direction, raw rhino horns were hidden by wrapping them in duct tape, hiding them in porcelain vases and falsely describing them on customs and shipping documents, including by labeling them as porcelain vases or handicrafts.

Li purchased 25 raw rhino horns, including 13 endangered black rhinoceros horns weighing approximately 151 pounds, through connections in New York and New Jersey, and another five raw rhino horns weighing at least 20 pounds through an accomplice in Dallas.

Li sold whole rhino horns to factories where they would be carved into fake antiques. The leftover pieces from the carving process were sold for alleged “medicinal” purposes even though rhino horn is made of compressed keratin, the same material in human hair and nails and has no proven medical efficacy.

Between 2011 and 2013, Li purchased approximately 60 carved ivory items from U.S. auction houses with an approximate market value of $500,000, all of which were smuggled to China at Li’s direction.

Before arriving in Miami, Li sent a text message to the Long Island City antiques dealer saying that he had as much as $500,000 to spend in the U.S. on antiques and rhino horn. When purchasing two rhino horns from an undercover USFWS agent at a Miami Beach hotel, Li told the covert agent that he was interested in buying more rhino horns regardless of quality, as much as the agent could find, and inquired if the horns could be shipped directly to Hong Kong.

In April 2012, after a Dallas-based accomplice purchased a large, eight-pound raw rhino horn for Li in Florida worth more than $140,000, Li sent the dealer an email directing him to cut the horn into two pieces, wrap them in electrical tape, and send them to Hong Kong in separate packages. The email included a photo of the rhino horn with a red line drawn though it indicating where the lengthy horn should be cut.

After Li’s conspirator in Long Island City purchased two raw elephant tusks for Li weighing more than 100 lbs, Li sent instructions by email that the shipper should declare the contents as “automobile parts” and not use the word “tusk” on the shipping documents.

Li smuggled libation cups carved from rhinoceros horns from the U.S. to Hong Kong. Rhino carvings valued as much as $242,500 were sold to Li’s customers in China. In early 2013, one of those customers, Shusen Wei, pleaded guilty in the Southern District of Florida to knowingly buying a smuggled rhino carving from Li.

The plea agreement requires Li to forfeit $3.5 million in proceeds of his criminal activity as well as several Asian artifacts. Also, various ivory objects seized by the USFWS as part of the investigation will be surrendered. The maximum potential penalty is 10 years for each of the smuggling counts and five years for each of the other offenses, as well as a $250,000 fine per count, or twice the gross gain or loss from the offense. Sentencing before Judge Salas has been scheduled.

The investigation is continuing and is being handled by the U.S. Fish & Wildlife Service’s Office of Law Enforcement, the U.S. Attorney’s Office for the District of New Jersey, the U.S. Attorney’s Office for the Southern District of Florida and the Justice Department’s Environmental Crimes Section. The government is represented by Assistant U.S. Attorneys Kathleen P. O’Leary and Barbara Ward of the New Jersey U.S. Attorney’s Office Criminal Division and Asset Forfeiture and Money Laundering Unit, Assistant U.S. Attorney Thomas Watts-FitzGerald of the U.S. Attorney’s Office for the Southern District of Florida and Senior Counsel Richard A. Udell of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.

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Terrance Anderson, aka Scooby, has been sentenced to federal prison on charges of sex trafficking of a minor and two counts of transporting adults in interstate commerce for prostitution. Anderson, 42, of Ellenwood, Ga., was sentenced by U.S. District Judge Thomas W. Thrash to serve 25 years in prison to be followed by seven years supervised release. Anderson was ordered to pay restitution to three victims totaling $154,500. Anderson pleaded guilty to the charges on July 19, 2013.

 
“This sentence makes clear that those who prey upon women and girls and coerce them into prostitution will be punished severely,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Department of Justice will continue to devote its full efforts to investigating and prosecuting those who commit such heinous crimes.”

 
“This defendant chose to earn a living exploiting minors, even continuing to do so after previously serving a federal sentence for sex trafficking-related conduct,” said U.S. Attorney Sally Quillian Yates of the Northern District of Georgia. “Our office will remain vigilant in our efforts to prosecute those who exploit children and young women in this district.”

"Today's sentencing removes a dangerous individual from our streets who has repeatedly shown a callous disregard for the basic human rights of others,” said Acting Special Agent in Charge Ricky Maxwell for the Federal Bureau of Investigation (FBI) Atlanta Field Office. “Human trafficking and child exploitation cases such as this reaffirm the FBI's mission as we work to protect and help those that may not be able to help themselves."

According to U.S. Attorney Yates, the charges and other information presented in court, from February 2008 through December 2011, Anderson ran a prostitution ring in which he advertised the sexual services of a minor and young women on the internet, including K.B., T.B., A.C. and other victims. He advertised on sites such as Backpage, Craig’s List and Eros, as well as his own website, Rentsomethingsexy.com. Anderson caused K.B., a 17-year-old girl, to engage in commercial sex acts in multiple states, requiring her to earn $1,000 a day, work seven days-a-week and give all of her earnings to him. Anderson also transported 18-year-old T.B. and 24-year-old A.C. from Georgia to Virginia, where he required the young women to perform numerous commercial sex acts for his financial gain.

Anderson previously pleaded guilty in August 2001 to using a cell phone, which is a facility of interstate commerce, to cause a juvenile to engage in prostitution and to being a felon in possession of a firearm. He received a sentence of seven years in federal prison after providing information to federal investigators about other sex trafficking crimes and testifying at the trial of two other human traffickers. However, Anderson resumed his sex trafficking activities after completing his prison sentence.

This case was investigated by Special Agents of the FBI. If anyone has any information about human trafficking, they are encouraged to report the information to the FBI at 404-679-9000.

Assistant U.S. Attorney Susan Coppedge of the Northern District of Georgia and Deputy Chief Karima Maloney of the Civil Rights Division prosecuted the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.

Today President Barack Obama granted clemency to 21 individuals, consisting of eight commutations and 13 pardons.

The President granted commutations to the following eight individuals:

• Clarence Aaron - Mobile, Ala.
  Offense: Conspiracy to possess with intent to distribute cocaine and cocaine base; possession with intent to distribute cocaine; attempt to possess cocaine with intent to distribute (Southern District of Alabama)
  Sentence:  Life imprisonment, five years' supervised release (Dec. 10, 1993)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 
• Stephanie Yvette George - Pensacola, Fla.
  Offense: Conspiracy to possess cocaine base with intent to distribute (Northern District of Florida)
  Sentence:  Life imprisonment, ten years' supervised release (May 5, 1997)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 
• Ezell Gilbert - Tampa, Fla.
  Offense: Possession with intent to deliver cocaine base; possession with intent to distribute marijuana (Middle District of Florida)
  Sentence:  292 months' imprisonment, five years' supervised release (Mar. 25, 1997)
  Commutation Grant: Prison sentence commuted to time already served 
• Helen R. Alexander Gray - Ty Ty, Ga.
  Offense: Conspiracy to possess with intent to distribute cocaine base; possession with intent to distribute cocaine base; possession of a firearm by a convicted felon (Middle District of Georgia)
  Sentence:  240 months' imprisonment; 10 years’ supervised release (Oct. 8, 1996)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 
• Jason Hernandez - McKinney, Tex.
  Offense: Conspiracy to possess with intent to distribute controlled substances; possession with intent to distribute cocaine base; possession with intent to distribute methamphetamine; possession with intent to distribute a mixture of methamphetamine and cocaine hydrochloride; distribution of a controlled substance within 1,000 feet of a protected property; establishing a place for manufacture and distribution of controlled substances (Eastern District of Texas)
  Sentence:  Life imprisonment; eight years' supervised release; $5,000 fine (Oct. 2, 1998)
  Commutation Grant: Prison sentence commuted to 240 months (20 years) 
• Ricky Eugene Patterson - Fort Pierce, Fla.
  Offense: Conspiracy to possess with intent to distribute cocaine base; possession with intent to distribute cocaine base (Southern District of Florida)
  Sentence: Life imprisonment, 10 years’ supervised release (Aug. 3, 1995)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 
• Billy Ray Wheelock - Belton, Tex.
  Offense: Conspiracy to distribute more than 50 grams of crack cocaine; possession with intent to distribute more than 5 grams of crack cocaine within 1,000 feet of a school; possession with intent to distribute crack cocaine; aiding and abetting possession with intent to distribute and distributing more than 5 grams of crack cocaine within 1,000 feet of a school (Western District of Texas)
  Sentence: Life imprisonment, 10 years' supervised release, $3,000 fine (Jun. 9, 1993)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 
• Reynolds Allen Wintersmith, Jr. - Rockford, Ill.
  Offense: Conspiracy to possess with intent to distribute and distribute cocaine and cocaine base; possession with intent to distribute cocaine base (Northern District of Illinois)
  Sentence: Life imprisonment, five years' supervised release, $1,000 fine (Nov. 23, 1994)
  Commutation Grant: Prison sentence commuted to expire on April 17, 2014 

The President granted pardons to the following thirteen individuals:

• William Ricardo Alvarez - Marietta, Ga.
  Offense: Conspiracy to possess with intent to distribute heroin ; conspiracy to import heroin (District of Puerto Rico)
  Sentence:  Time served after service of nine months' imprisonment, four years' supervised release (Apr. 30, 1997; amended Jul. 31, 1997) 
• Charlie Lee Davis, Jr . - Wetumpka, Ala.
  Offense: Possession with intent to distribute and distribution of cocaine base; use of a minor to distribute cocaine base (Middle District of Alabama)
  Sentence: 87 months' imprisonment, five years' supervised release (Mar. 21, 1995) 
• Ronald Eugene Greenwood - Crane, Mo.
  Offense: Conspiracy to violate the Clean Water Act  (District of South Dakota)
  Sentence: Three years' probation, conditioned on six months' home confinement and 100 hours’ community service, $5,000 restitution, $1,000 fine (Nov. 18, 1996) 
• Little Joe Hatch , aka Joe Hatch Sr. - Lake Placid, Fla.
  Offense: Possession with intent to distribute marijuana  (Southern District of Florida)
  Sentence: 60 months' imprisonment, four years' supervised release (May 15, 1990) 
• Martin Alan Hatcher . - Foley, Ala.
  Offense: Distribution and possession with intent to distribute marijuana (Southern District of Alabama)
  Sentence: Five years' probation (Nov. 9, 1992) 
• Derek James Laliberte - Auburn, Me.
  Offense: Money laundering (District of Maine)
  Sentence: 18 months imprisonment, 2 years' supervised release (Oct. 2, 1992, as amended May 21, 1993) 
• Alfred J. Mack - Manassas, Va.
  Offense: Unlawful distribution of heroin  (District of Columbia Superior Court)
  Sentence: 18 to 54 months' imprisonment (Apr. 5, 1982) 
• Robert Andrew Schindler - Goshen, Va.
  Offense: Conspiracy to commit wire fraud; conspiracy to commit mail and wire fraud (District of Utah)
  Sentence: Three years' probation conditioned on four months' home confinement, $10,000 restitution (May 14, 1996) 
• Willie Shaw, Jr. - Myrtle Beach, S.C.
  Offense: Armed bank robbery (District of South Carolina)
  Sentence: Fifteen years' imprisonment (Aug. 7, 1974) 
• Kimberly Lynn Stout , formerly known as Kimberly Lynn Cooley - Bassett, Va.
  Offense: Bank embezzlement; false entries in the books of a lending institution (Western District of Virginia)
  Sentence: One day of imprisonment, three years' supervised release, conditioned on five months’ home detention) (Nov. 9, 1993) 
• Bernard Anthony Sutton, Jr. - Norfolk, Va.
  Offense: Theft of personal property (Eastern District of Virginia)
  Sentence: Three years' probation, $825 restitution, $500 fine (Apr. 4, 1989) 
• Chris DeAnn Switzer , formerly known as Chris DeAnn Rasco - Omaha, Neb.
  Offense: Conspiracy to violate narcotics laws (methamphetamine) (District of Nebraska)
  Sentence: Four years' probation, conditioned on six months’ home confinement and 200 hours' community service (Jun. 25, 1996) 
• Miles Thomas Wilson - Williamsburg, Ohio.
  Offense: Mail fraud (Southern District of Ohio)
  Sentence: Three years’ probation (Jul. 15, 1981)

The Justice Department announced today that the United States and a coalition of mental health advocacy organizations have entered into a comprehensive settlement agreement with the state of New Hampshire that will transform New Hampshire’s mental health system by significantly expanding and enhancing mental health service capacity in integrated community settings.

The settlement agreement will provide people with serious mental illness in New Hampshire with robust community alternatives that will reduce or eliminate the need for hospitalization. Individuals who receive expanded services in New Hampshire will have fewer visits to emergency rooms and will avoid unnecessary institutionalization at state mental health facilities, including New Hampshire Hospital and the Glencliff Home.

“Today’s agreement realizes the promise of the Americans with Disabilities Act for people with serious mental illness in New Hampshire,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “It will better ensure that effective community services will get to the people most in need when and where they need services – in their homes and communities. These services will help people with mental illness avoid and respond to crises without escalating them and without giving up their important connections to their communities. This agreement is also a testament to the vision and leadership of Governor Maggie Hassan and Attorney General Joe Foster.”

“The settlement of this landmark federal civil rights lawsuit marks a major step forward in New Hampshire’s treatment of one of its most vulnerable populations – those who suffer from mental illness,” said U.S. Attorney John P. Kacavas for the District of New Hampshire. “I commend the progressive leadership of Governor Hassan and New Hampshire Attorney General Joe Foster and their respective staffs, without whose efforts and will this achievement would not have been possible.”

The agreement requires the state to create and expand services over the next six years. The state will: create new mobile crisis teams and new community crisis apartments in Manchester, Concord and Nashua; expand and enhance Assertive Community Treatment team services, which will provide state-wide coverage for at least 1,500 people; add hundreds of new supported housing units and work to create community alternatives for people with complex health care needs; and expand effective supported employment services for hundreds of people. An independent expert reviewer will evaluate the state’s compliance with the agreement and will issue public reports on the state’s ongoing implementation efforts.

The settlement resolves outstanding issues in a 2012 federal class action lawsuit brought under the Americans with Disabilities Act (ADA) – Amanda D. v. Hassan; United States v. New Hampshire. The ADA and the Supreme Court’s landmark decision in Olmstead v. L.C. affords individuals with disabilities the right to receive services in the most integrated setting appropriate to their needs, and today’s agreement will help ensure that adults with serious mental illness in New Hampshire can exercise that right.

 
In recent years, the Justice Department’s Civil Rights Division has entered into a number of statewide ADA/Olmstead settlements, including comprehensive agreements with Georgia, Delaware, Virginia, North Carolina, and now New Hampshire, that give thousands of persons with disabilities new and meaningful opportunities to live in and be active members of their communities – outside of segregated institutional settings.  Visit www.ada.gov/olmstead to learn more about these settlement agreements, the Olmstead decision, the ADA, and other laws enforced by the Civil Rights Division.

The parties’ proposed class action settlement agreement must still be approved by U.S. District Court Judge Steven J. McAuliffe, who is presiding over the lawsuit. In September 2013, the Court certified a class of plaintiffs that includes all persons with serious mental illness who are unnecessarily institutionalized in NHH or Glencliff or who are at serious risk of unnecessary institutionalization in these facilities. The parties have proposed that appropriate notice of the settlement be provided to class members, that they be able to submit concerns or comments to the proposed settlement by the end of January 2014, and that the Court schedule a fairness hearing on or after Feb. 17, 2014.

The New Hampshire settlement agreement was realized due to the efforts of the following attorneys in the Special Litigation Section: Deputy Chief Judy C. Preston and Trial Attorneys Richard J. Farano, Deena S. Fox, Katherine V. Houston and Alexandra L. Shandell. In addition, the Civil Rights Division received ongoing support and assistance from Assistant U.S. Attorney John J. Farley for the District of New Hampshire.

The Justice Department announced today that Fort Davis State Bank, based in Fort Davis, Texas, will implement uniform pricing policies, conduct employee training and pay $159,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin.

The settlement, which is subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Western District of Texas.  The complaint alleges that Fort Davis State Bank violated the Equal Credit Opportunity Act (ECOA) by charging higher prices for unsecured consumer loans to Hispanic borrowers than to similarly qualified non-Hispanic borrowers. 

 
Fort Davis State Bank is a community bank with three branches that for many years has been a significant presence in the local Hispanic community. 

 
“This settlement ensures that Hispanic borrowers who paid more for their loans will be properly compensated,” said Acting Assistant Attorney General Jocelyn Samuels for the department’s Civil Rights Division.  “We commend Fort Davis State Bank’s commitment to meeting the special lending needs of all individuals within its community on an equal basis and to working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”

The lawsuit originated from a 2011 referral to the Department by the Federal Deposit Insurance Corporation (FDIC).  Fort Davis State Bank is regulated by the FDIC.

 
The proceeds of the settlement will be used to compensate Hispanic victims of Fort Davis State Bank’s alleged discrimination.  Under the proposed settlement, a list of individual victims will be identified by the United States and receive notification of eligibility from the bank, and the department will monitor the compensation process. 

Prior to the settlement, Fort Davis State Bank implemented uniform pricing policies that substantially reduced the discretion of its loan officers to vary a loan’s interest rate from the price it set based on borrower’s objective credit-related factors.  Today’s settlement requires Fort Davis State Bank to keep its improved policies in place for at least the next three years, as well as to continue to monitor its lending for signs of discrimination and provide monitoring reports to the United States.

The department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 29 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act.  The settlements in these matters provide for nearly $700 million in monetary relief for impacted communities and individual borrowers.  The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .

The Civil Rights Division and the FDIC are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, along with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov .

A copy of the complaint and proposed order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justive.gov/fairhousing .

The Justice Department announced today that developer Douglas Pauley and entities affiliated with him have agreed to pay $110,000 and make all retrofits required to remove accessibility barriers at 30 apartment complexes, involving more than 750 units, in West Virginia that were developed through the federal government’s Low-Income Housing Tax Credit program. The parties’ agreement will settle the United States’ claims that defendants violated the Fair Housing Act by building the complexes with a variety of features that made them inaccessible to persons with disabilities.

 
Under the terms of the parties’ agreement, Pauley, as general partner of 30 limited liability partnerships, must take extensive actions to make the complexes accessible to persons with disabilities.  These corrective actions include replacing cabinets in bathrooms and kitchens to provide sufficient room for wheelchair users, reducing door threshold heights, replacing excessively sloped portions of sidewalks and installing properly sloped curb ramps that allow persons with disabilities access to sidewalks from the parking areas. In addition, the defendants will pay $100,000 to establish a settlement fund for the purpose of compensating disabled individuals impacted by the accessibility violations and $10,000 as a civil penalty.

 
“The Fair Housing Act protects the rights of persons with disabilities to have equal opportunities to enjoy the housing of their choice,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division .  “The Justice Department is strongly committed to the enforcement of the fair housing laws. It is especially important that multi-family properties developed using federal programs are designed to provide accessible and affordable housing to those who need it the most.”

 
“When developers and building professionals fail to design and construct homes with the required accessibility features, we will vigorously enforce the law," said U.S. Attorney R. Booth Goodwin for the Southern District of West Virginia. 

 
Individuals who are entitled to share in the settlement fund will be identified through a process established in the settlement.  Notices of the settlement and a list of subject properties will be published in the Charleston Gazette. Persons who believe they were subjected to unlawful discrimination at one of those properties either when they lived there or considered living there should contact the Justice Department toll-free at 1-800-896-7743 mailbox # 9993 or e-mail the Justice Department at fairhousing@usdoj.gov

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt .  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov or contact The Department of Housing and Urban Development at 1-800-669-9777.

Siarhei Baltutski, aka Sergey Boltutskiy, 41, of Minsk, Belarus, was sentenced today to serve 180 months in prison for conspiracy to violate the Arms Export Control Act, conspiracy to violate the International Emergency Economic Powers Act and conspiracy to commit money laundering.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting Assistant Attorney General John Carlin of the Justice Department’s National Security Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania made the announcement.

Baltutski pleaded guilty on Jan. 25, 2013.  In addition to the prison term, U.S. District Court Judge Paul S. Diamond of the Eastern District of Pennsylvania ordered Baltutski to serve three years of supervised release.

Between Jan. 1, 2008, and Sept. 21, 2011, Baltutski organized a network of buyers in the United States to obtain and illegally export to Belarus high-tech military hardware such as Scorpion Thermal Weapon Sights, ThOR 2 Thermal Imaging Scopes, Thermal-Eye Renegade 320’s, and other night vision targeting devices.  During the course of the conspiracy, Baltutski and his associates illegally exported hundreds of these items.  Baltutski then arranged for hundreds of thousands of dollars to be secretly wired, via offshore shell companies, to purchase these items, to pay for shipping, and to pay his network of buyers.

The Arms Export Control Act and the International Emergency Economic Power Act prohibit the export of high-tech military technology.  Keeping this technology out of the hands of current and potential adversaries is critical to national interest and the safety and success of U.S. service members in combat.

This case was investigated by the U.S. Immigration and Customs Enforcement Homeland Security Investigations and the FBI.  The case was prosecuted by Trial Attorney Jerome Maiatico of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Robert Livermore of the Eastern District of Pennsylvania, with assistance from Trial Attorney David Recker of the National Security Division’s Counterespionage Section.

The owner of a Miami home health care company was sentenced to serve 235 months in prison today for her participation in a $7 million health care fraud scheme involving defunct home health care company Anna Nursing Services Corp.

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. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Dora Moreira, 46, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. In addition to her prison term, Moreira was sentenced to serve three years of supervised release and ordered to pay $6,928,931 in restitution.

In October 2013, Moreira was convicted by a jury of one count of conspiracy to commit health care fraud, one count of conspiracy to defraud the United States and receive and pay health care kickbacks, one count of payment of kickbacks in connection with a federal health care program, one count of conspiracy to commit money laundering and five counts of money laundering.

Moreira was the owner and operator of Anna Nursing, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

According to evidence presented at trial, Moreira operated Anna Nursing for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or not provided.

Moreira paid kickbacks and bribes to patients, negotiated and interacted with patient recruiters, and coordinated and oversaw the submission of fraudulent claims to the Medicare program. Moreira also laundered money received from Medicare in order to conceal her financial transactions and generate cash needed to pay kickbacks to patients, patient recruiters, and others in return for assisting her in the fraudulent scheme at Anna Nursing.

From approximately July 2010 through approximately May 2013, Anna Nursing was paid approximately $7 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.

This case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case was prosecuted by Assistant Chief Benton Curtis and Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.

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

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

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy, the nation’s second largest natural gas producer, will spend an EPA-estimated $6.5 million to restore 27 sites damaged by unauthorized discharges of fill material into streams and wetlands and to implement a comprehensive plan to comply with federal and state water protection laws at the company’s natural gas extraction sites in West Virginia, many of which involve hydraulic fracturing operations.

The company will also pay a civil penalty of $3.2 million, one of the largest ever levied by the federal government for violations of Section 404 of the Clean Water Act (CWA), which prohibits the filling or damming of wetlands, rivers, streams, and other waters of the United States without a federal permit.

“With this agreement, Chesapeake is taking important steps to comply with state and federal laws that are essential to protecting the integrity of the nation’s waters, wetlands and streams,” said Robert G. Dreher, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “We will continue to ensure that oil and gas development, including development through the use of hydraulic-fracturing techniques, complies with the Clean Water Act and other applicable federal laws.”

“Ensuring environmentally-sound and legal natural gas production is critical to protecting wetlands and local water supplies that communities depend on,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “By enforcing the law with a large producer like Chesapeake Appalachia, we’re also helping to level the playing field for businesses in this industry.”

The federal government and the West Virginia Department of Environmental Protection (WVDEP) allege that the company impounded streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit in order to construct well pads, impoundments, road crossings and other facilities related to natural gas extraction. The alleged violations being resolved by today’s settlement occurred at 27 sites located in the West Virginia Counties of Boone, Kanawha, Lewis, Marshall, Mingo, Preston, Upshur and Wetzel, including 16 sites involving hydraulic fracturing operations.  The government alleges that the violations impacted approximately 12,000 linear feet of stream, or approximately 2.2 miles, and more than three acres of wetlands.

The settlement requires that the company fully restore the wetlands and streams wherever feasible, monitor the restored sites for up to 10 years to assure the success of the restoration, and implement a comprehensive compliance program to ensure future compliance with the CWA and applicable state law. To offset the impacts to sites that cannot be restored, the company will perform compensatory mitigation, which will likely involve purchasing credits from a wetland mitigation bank located in a local watershed.

EPA discovered some of the violations through information provided by the public and routine inspections. In addition, the company voluntarily disclosed potential violations at 19 of the sites following an internal audit. In 2010 and 2011, EPA issued administrative compliance orders for violations at 11 sites. Since that time, the company has been correcting the violations and restoring those sites in full compliance with EPA’s orders.

The settlement also resolves alleged violations of state law brought by WVDEP. The state of West Virginia is a co-plaintiff in the settlement and will receive half of the civil penalty.

In a related case, in December 2012, the company pleaded guilty to three violations of the CWA related to natural gas extraction activity in Wetzel County, at one of the sites subject to today’s settlement. The company was sentenced to pay a $600,000 penalty to the federal government for discharging crushed stone and gravel into Blake Fork, a local stream, to create a roadway to improve access to a drilling site. The company has already fully restored the damage done to the site.

Filling wetlands illegally and damming streams can result in serious environmental consequences. Streams, rivers, and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.

Chesapeake Appalachia engages in the exploration and production of natural gas in the Appalachian Basin. The company has oil and natural gas properties in West Virginia, Pennsylvania, and Ohio.

The consent decree, lodged today in the Northern District of West Virginia, is subject to a 30-day public comment period and court approval. The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html.

More information about the settlement: www2.epa.gov/enforcement/chesapeake-appalachia-llc-clean-water-settlement.

El Departamento de Justicia anunció hoy que Fort Davis State Bank, con sede en Fort Davis, Texas, implementará políticas de precios uniformes, brindará capacitación a empleados y pagará 159,000 dólares como parte de un acuerdo conciliatorio en resolución de alegatos que había mantenido un patrón o práctica de discriminación basado en origen nacional.

El acuerdo conciliatorio, que está sujeto a aprobación del tribunal, fue presentado junto con la demanda del departamento en el Tribunal Federal de Distrito del Distrito Oeste de Texas. La demanda alega que Fort Davis State Bank violó la Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act [ECOA]) al cobrar precios más altos a prestatarios hispanos por préstamos de consumidor sin garantía, que a prestatarios no hispanos con cualificaciones similares.

Fort Davis State Bank es un banco comunitario con tres sucursales con presencia significativa en la comunidad hispana local hace muchos años.

"Este acuerdo conciliatorio asegura que los prestatarios hispanos que pagaron más por sus préstamos serán debidamente indemnizados", señaló la Secretaria de Justicia Auxiliar Interina de la División de Derechos Civiles del departamento Jocelyn Samuels. "Consideramos encomiable el compromiso de Fort Davis State Bank de satisfacer las necesidades especiales de préstamo de consumidor de esta comunidad de manera igualitaria y trabajar en conjunto con el Departamento de Justicia para lograr una resolución adecuada para este caso".

La demanda surgió de una remisión al departamento realizada en 2011 por la Federal Deposit Insurance Corporation (FDIC). Fort Davis State Bank está regulada por la FDIC.

Los fondos del acuerdo conciliatorio se utilizarán para indemnizar a víctimas hispanas de la presunta discriminación llevada a cabo por Fort Davis State Bank. Según el acuerdo conciliatorio propuesto, los Estados Unidos identificarán una lista de víctimas, quienes recibirán un aviso de elegibilidad del banco, y el departamento controlará el proceso de indemnización.

Con anterioridad al acuerdo conciliatorio, Fort Davis State Bank implementó políticas de precios uniformes que redujeron significativamente la libertad de sus agentes de crédito de variar la tasa de interés de un préstamo respecto del precio establecido con base en factores crediticios objetivos del prestatario. El acuerdo conciliatorio de hoy exige que Fort Davis State Bank mantenga sus políticas optimizadas como mínimo durante los próximos tres años, siga controlando su otorgamiento de préstamos de modo a evitar la discriminación y provea informes de sus controles a los Estados Unidos.

La Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles es responsable, en el departamento, de hacer valer las leyes de otorgamiento justo de préstamos. Desde su fundación en febrero de 2010, la Unidad de Préstamos Justos ha iniciado o resuelto 29 casos asociados a préstamos bajo la Ley de Vivienda Justa [Fair Housing Act], ECOA y la Ley de Amparo Civil para Militares [Servicemembers Civil Relief Act]. Los acuerdos conciliatorios logrados en estos casos consistieron en casi 700 millones de dólares en indemnizaciones a comunidades y prestatarios individuales afectados. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso bajo ECOA destacan los logros del Departamento en el otorgamiento de préstamos justos y están disponibles en www.justice.gov/crt/publications.

La División de Derechos Civiles y la FDIC son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama estableció la fuerza de tarea interagencial para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de dependencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando unidos, aportan un poderoso espectro de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.

Para obtener una copia de la demanda y la orden propuesta, así como también información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en www.justice.gov/fairhousing.

A Canadian man was arrested today in St. John, New Brunswick, Canada, on an extradition warrant requested by the United States for money laundering crimes related to the illegal importation and illegal trafficking of narwhal tusks, announced Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division .

On Nov. 14, 2012, a federal grand jury sitting in Bangor, Maine, returned an indictment that was partially unsealed today upon the arrest of Gregory R. Logan of Grand Prairie, Alberta, Canada. The indictment also names Jay G. Conrad of Lakeland, Tenn., and Andrew L. Zarauskas of Union, N.J. Logan was arrested on charges in the indictment for money laundering conspiracy and substantive money laundering violations. The indictment also charges Conrad and Zarauskas with conspiracy to smuggle narwhal tusks, money laundering conspiracy, smuggling narwhal tusks and money laundering violations. According to the indictment, Logan illegally laundered the money earned from his illegal imports and sales of narwhal tusks in the United States. It further charges that Conrad and Zarauskas bought the narwhal tusks from Logan, knowing the tusks had been illegally imported into the United States, and sold or attempted to sell the tusks after their illegal importation.

The arrest of Logan on an extradition warrant in Canada begins the extradition process to the U.S. The extradition process is governed by a 1971 extradition treaty between the U.S. and Canada.

The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law. If convicted of these charges, the defendants each face up to twenty years in prison on each of the most serious charges, as well as fines up to $250,000.

The case was investigated by agents from National Oceanic and Atmospheric Administration Office of Law Enforcement and the U.S. Fish and Wildlife Service Office of Law Enforcement. The case is being prosecuted by Trial Attorney Todd S. Mikolop of the Justice Department’s Environmental Crimes Section, with assistance from the Justice Department's Office of International Affairs.

A south Florida man has pleaded guilty today for his role in a $10.5 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 for the Middle District of Florida A. Lee Bentley III, 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) Office of Investigations made the announcement.

Luis Alberto Garcia Perojo, 42, pleaded guilty in the U.S. District Court for the Middle District of Florida to conspiring to commit health care fraud. He faces a maximum penalty of 10 years in prison, and his sentencing will be scheduled at a later date.

According to documents filed in the case, Garcia conspired with others to execute a health care fraud scheme through Renew Therapy Center of Port St. Lucie LLC, a comprehensive outpatient rehabilitation facility that he helped operate. From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed and not legitimately provided to Medicare beneficiaries. As a result of those fraudulent claims, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account. The fraud proceeds in that account were later disbursed to various entities, including a combined total of $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc. Garcia was President of Ariguanabo Investment Group and had authority over bank accounts for Ariguanabo Investment Group and IRE Diagnostic Center, both of which were shell companies. Garcia and others used this money from Renew Therapy for, among other purposes, paying kickbacks to obtain Medicare beneficiary identifying information that was used in Renew Therapy’s fraudulent reimbursement claims.

This case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorney Christopher J. Hunter 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, 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 Reno, Nev. man has been charged with providing material support to terrorism groups in India and Pakistan in order to intimidate the Indian government and to harm persons that were not supporting their cause, announced John Carlin, Acting Assistant Attorney General for National Security, Daniel G. Bogden, U.S. Attorney for the District of Nevada, and Laura A. Bucheit, Special Agent in Charge of the FBI for Nevada.

 
“A thorough investigation and cooperation among agencies led to these charges,” said U.S. Attorney Bogden.  “Investigating and prosecuting matters of national security is the top priority of the U.S. Department of Justice.”

Balwinder Singh, aka Jhajj, aka, Happy, aka Possi, aka Baljit Singh, 39, of Reno, is charged in an indictment with one count of conspiracy to murder, kidnap, and maim persons in a foreign country, one count of conspiracy to provide material support to terrorists, one count of making a false statement on an immigration document, two counts of use of an immigration document procured by fraud, and one count of unlawful production of an identification document.   Singh was arrested on Tuesday, Dec. 17, 2013, in Reno, and is scheduled to appear before a U.S. Magistrate Judge on Friday, Dec. 20, 2013, for an initial appearance and arraignment. 

 “After an extensive investigation, the FBI-led Joint Terrorism Task Force (JTTF) of Northern Nevada has disrupted an individual’s involvement in facilitation activities in support of a foreign terrorist organization, targeting an ally of the United States,” said FBI Special Agent in Charge Bucheit. “We will continue to work with our international partners to prevent acts of terrorism on U.S. soil or, as in this case, on that of an ally. This investigation demonstrates the importance of law enforcement coordination and collaboration here and around the world.”

According to the indictment, Singh was a citizen of India who fled to the United States and claimed asylum.  Singh lived in the United States where he eventually obtained a permanent resident card from the United States.  The indictment alleges that Singh is a member of two terrorist organizations, Babbar Khalsa International (BKI) and Khalistan Zindabad Force (KZF), whose members aim to establish an independent Sikh state in part of the Punjab region of India known as Khalistan. These groups engage in bombings, kidnappings and murders in India to intimidate and compel the Indian government to create the state of Khalistan.  These groups also target for assassination persons they consider traitors to the Sikh religion and government officials who they consider responsible for atrocities against the Sikhs. 

 
The indictment alleges that the object of the conspiracy was to advance the goals of BKI and KZF by raising money and obtaining weapons to support acts of terrorism in India.  It is alleged that the conspiracy began on a date unknown but no later than Nov. 30, 1997.  It is alleged that Singh used a false identity and obtained false identification documents in the United States so that he could travel back to India without being apprehended by the Indian authorities.  It is alleged that Singh communicated with other coconspirators by telephone while he was in the United States to discuss acts of terrorism to be carried out in India.  It is alleged that Singh sent money from Reno, Nev., to co-conspirators in India for the purchase of weapons that would be provided to members of the BKI and KZF to support acts of terrorism in India. It is alleged that Singh traveled from the United States to Pakistan, India, and other countries to meet with coconspirators to assist in the planning of terrorism in India, and that Singh provided advice to coconspirators about how to carry out acts of terrorism.

If convicted, Singh faces up to life in prison and fines of up to $250,000 on each count. 

The case is being investigated by the FBI-led Joint Terrorism Task Force in northern Nevada, and prosecuted by Assistant U.S. Attorneys Sue Fahami and Brian L. Sullivan, and Trial Attorney Mara M. Kohn of the U.S. Department of Justice Counterterrorism Section.      

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

Today, we announce significant developments in a securities fraud investigation involving the large-scale theft of client funds by a global brokerage and trading firm.

This afternoon, ConvergEx Global Markets Limited, or CGM – a brokerage subsidiary of ConvergEx Group located in Bermuda – pleaded guilty to conspiring to commit securities and wire fraud and to substantive wire fraud charges.  In addition, two traders, Jonathan Daspin – who was the head of trading at CGM – and Thomas Lekargeren – who was a sales trader of a ConvergEx affiliate – also pleaded guilty to conspiracy to commit wire and securities fraud.  The Justice Department has also charged CGM Limited’s parent company, ConvergEx Group, for its role in the same criminal conduct. ConvergEx Group has entered into a two-year deferred prosecution agreement to resolve those charges.  Together, ConvergEx Group and CGM are paying criminal penalties and restitution of over $43 million.

As described in the guilty plea agreements and charging documents, ConvergEx – which was a broker for some of the most sophisticated institutional investors in the world – engaged in a concerted and coordinated effort to fleece its clients by charging them millions of dollars in unwarranted fees – which ConvergEx called “trading profits,” or “spread” – and then concealing those charges from its clients through a pattern of deception. Although the theft of money from ConvergEx’s clients was large in scale, the fraud scheme was committed in the most basic of ways:  ConvergEx and its traders, plain and simple, lied to their clients to hide that they were stealing their money.

As described in the court documents, ConvergEx’s lies were repeated, deliberate, and came in many different forms.  As one example, ConvergEx employees simply doctored up false transaction reports – which included completely fabricated details about execution orders, including the number of shares involved in a trade, the time a trade was executed, and the price at which shares were bought or sold – to hide that they were charging a “spread” to their clients. In one instance, Jonathan Daspin (the head trader at CGM) instructed a sales trader while creating a false report to “Please put all Prints in one spreadsheet in the least Friendly Format….If possible take this out of spreadsheet Format and make a PDF – Or put this in picture file or something tricky to manipulate.” At other times, when clients questioned the payments, ConvergEx employees intentionally provided misleading explanations to conceal the “spread” they were charging. And, to avoid having their scheme uncovered, ConvergEx employees deliberately took smaller spreads on their more sophisticated, price-sensitive clients; and they took larger spreads when they were less likely to be discovered. In addition, at times, they used multiple local brokers during the course of a trade so that a client would not be able to track the execution of its order through publicly available resources.

The scheme itself, and the lies told by ConvergEx to its clients to conceal the scheme, were astonishingly brazen.  As just one example, when certain clients instructed ConvergEx to provide them their transactional data in real time so that they could more closely track the trades that ConvergEx was executing for them, Jonathan Daspin, along with others, quickly realized that such a real-time data feed would make it far more difficult for them to steal client funds and conceal the theft from their clients.  So, their response was simply to “turn off” the real-time data feed for certain portions of their clients’ orders – during which periods they took the spread on their clients’ trades – and then blamed the purported failure of the real-time data feed on “IT issues.”

This coordinated bilking of clients by a broker-dealer – accomplished through intentional and repeated misrepresentations – caused significant harm.  This kind of scheme not only inflicts real financial losses on investors, but also undermines investors’ confidence in the integrity and reliability of the financial markets.  As today’s announcement demonstrates, we will not tolerate this type of criminal conduct and we will hold both institutions and individuals to account.

We would like to thank the FBI and Postal Inspection Service, which tirelessly investigated the case.  We are also grateful to the SEC for referring the matter to the Criminal Division and for its significant assistance in the investigation.  We also acknowledge the substantial cooperation that ConvergEx provided during the investigation. Finally, I would like to thank the dedicated prosecutors at the Criminal Division’s Fraud Section for their excellent work on this important, and ongoing, investigation.

Robin Smith, a former corrections officer at the Alvin S. Glenn Detention Center in Richland County, S.C., pleaded guilty today in federal court in Columbia, S.C., to violating the civil rights of a pre-trial detainee.

During his guilty plea, Smith admitted that on Feb. 11, 2012, while working as a corrections officer, he used unreasonable, unprovoked force against a restrained inmate with mental illness.  During the course of a routine search of the victim’s cell, Smith twisted the victim’s wrist and arm and kicked him in the upper body.  During the assault, the victim was lying on the floor of the cell with one hand cuffed.  The victim was not combative and did not pose a threat to Smith.

“The overwhelming majority of correctional officers dispatch their difficult duties with honor and professionalism,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will aggressively prosecute those who cross the line to engage in acts of criminal misconduct.”           

“Every minute of every day, corrections officers across this state handle extraordinarily difficult situations in a way that protects the detainees, the institution and the public,” said U.S. Attorney Bill Nettles for the District of South Carolina.  “However, when a corrections officer’s conduct crosses the line between lawful use of force and an abuse of authority, we will take that case before the grand jury.”  

U.S. Attorney Nettles thanked Sheriff Lott and the Richland County Sheriff’s Department for their commitment to the investigation, without which the prosecution would have been nearly impossible.  Today’s plea resulted from the investigative work of the Federal Bureau of Investigation and the Richland County Sheriff’s Office.  The case is being prosecuted by Trial Attorneys Jared Fishman and Nicholas Murphy for the Civil Rights Division, and First Assistant U.S. Attorney Beth Drake for the District of South Carolina.

Kurt Mix, a former engineer for BP plc, was convicted today of intentionally destroying evidence requested by federal criminal authorities investigating the April 20, 2010, Deepwater Horizon disaster.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Division made the announcement after the verdict was announced by U.S. District Judge Stanwood R. Duval Jr.

Mix, 52, of Katy, Texas, was convicted by a federal jury in the Eastern District of Louisiana of one count of obstruction of justice and was acquitted on a second count of obstruction of justice. He faces a maximum penalty of 20 years in prison when he is sentenced on March 26, 2014.

“Today a jury in New Orleans found that Kurt Mix purposefully obstructed the efforts of law enforcement during the investigation of the largest environmental disaster in U.S. history,” said Acting Assistant Attorney General Raman. “This prosecution shows the commitment of the Justice Department to hold accountable those who attempt to interfere with the administration of justice.  I want to thank the committed prosecutors and agents who have worked tirelessly over so many years on the Deepwater Horizon Task Force for their dedication and tenacity.”

According to court documents and evidence at trial, on April 20, 2010, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions while closing the Macondo well.  The catastrophe killed 11 men on board and resulted in the largest environmental disaster in U.S. history.

Mix was a drilling and completions project engineer for BP.  Following the blowout, Mix worked on internal BP efforts to estimate the amount of oil leaking from the well and was involved in various efforts to stop the leak.  Those efforts included Top Kill, the failed BP effort to pump heavy mud into the blown-out wellhead to try to stop the oil flow.  BP sent numerous notices to Mix requiring him to retain all information concerning Macondo, including his text messages.

On or about Oct. 4, 2010, after Mix learned that his electronic files were to be collected by a vendor working for BP’s lawyers, Mix deleted on his iPhone a text string containing more than 300 text messages with his BP supervisor.  The deleted messages included a text sent on the evening of May 26, 2010, at the end of the first day of Top Kill.  In the text, Mix stated, among other things, “Too much flowrate – over 15,000.”  Before Top Kill commenced, Mix and other engineers had concluded internally that Top Kill was unlikely to succeed if the flow rate was greater than 15,000 barrels of oil per day (BOPD).  At the time, BP’s public estimate of the flow rate was 5,000 BOPD – three times lower than the minimum flow rate indicated in Mix’s text.

By the time Mix deleted these texts, he had received numerous legal hold notices requiring him to preserve such data and had been put on notice of the Department of Justice’s criminal investigation of the Deepwater Horizon disaster.

The Deepwater Horizon Task Force, based in New Orleans, is supervised by Acting Assistant Attorney General Raman and led by William Pericak, a deputy chief in the Criminal Division’s Fraud Section who serves as the director of the task force.  The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Louisiana and other U.S. Attorney’s Offices, and investigating agents from the FBI, Environmental Protection Agency, Department of Interior, U.S. Coast Guard, U.S. Fish and Wildlife Service and other federal law enforcement agencies.  The task force’s investigation of this and other matters concerning the Deepwater Horizon disaster is ongoing.

The case is being prosecuted by Senior Trial Attorney Jennifer L. Saulino and Trial Attorney Leo R. Tsao of the Fraud Section.

A brokerage subsidiary of ConvergEx Group LLC pleaded guilty today to charges of wire fraud and conspiracy to commit securities fraud and wire fraud. ConvergEx Group has also agreed to pay $43.8 million in criminal penalties and restitution as part of a deferred prosecution agreement with the Department of Justice. In addition, Jonathan Daspin, the head trader at the brokerage subsidiary, and Thomas Lekargeren, a sales trader at a different ConvergEx subsidiary, both pleaded guilty today to conspiracy to commit securities and wire fraud before U.S. District Judge Jose Linares in the District of New Jersey.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office, and Inspector in Charge Phillip Bartlett from the U.S. Postal Inspection Service (USPIS) made the announcement.

ConvergEx Global Markets Limited (CGM Limited), a former broker-dealer registered in Bermuda, has also agreed to plead guilty today.  The department also filed today a criminal information in connection with a deferred prosecution agreement, charging ConvergEx Group with one count of conspiracy to commit securities fraud and wire fraud and one count of wire fraud. To resolve the charges, ConvergEx Group and CGM Limited have agreed to pay in total a criminal penalty of approximately $18.0 million and forfeit approximately $12.8 million, for a total penalty of $30.8 million, and additionally to pay restitution of approximately $12.8 million to defrauded customers.

In a parallel action, the U.S. Securities and Exchange Commission also reached a resolution today with three ConvergEx Group subsidiaries, Daspin and Lekargaren.

“As described in the guilty plea agreements and charging documents announced today, ConvergEx – which was a broker for some of the most sophisticated institutional investors in the world – along with several of its employees, engaged in a concerted and coordinated effort to fleece its clients by charging them millions of dollars in unwarranted fees – which ConvergEx called “trading profits,” or “spread” – and then concealing those charges from its clients through a pattern of deception,” said Acting Assistant Attorney General Mythili Raman. “Although the theft of money from ConvergEx’s clients was large in scale, the fraud scheme was committed in the most basic of ways:  ConvergEx and its traders, plain and simple, lied to their clients to hide that they were stealing their money.  This coordinated bilking of clients by a broker-dealer – accomplished through intentional and repeated misrepresentations – not only inflicted real financial losses on investors, but also undermines investors’ confidence in the integrity and reliability of the financial markets.  As the guilty pleas and resolutions announced today show, we will not tolerate this type of criminal conduct and we will hold both institutions and individuals to account.”

“With today’s guilty pleas, ConvergEx and two of its employees admitted their roles in a scheme in which they committed securities fraud,” said Assistant Director in Charge Parlave.  “By doing so, they hid the fact that they were secretly earning millions of dollars by deliberately fabricating transaction reports which were provided to clients with false details regarding their orders. The FBI will continue to investigate allegations of securities fraud and abuse to ensure those who participate in the global trading market are doing so fairly.”

“This is yet another example of the significant results that can be achieved when law enforcement agencies partner, share information, and collaborate,” said USPIS Inspector Bartlett. “The Inspection Service values its partnership with the FBI and SEC in this case.”

According to court documents, certain ConvergEx Group broker-dealers that provided agency brokerage services and disclosed to clients that they would charge commissions for their services regularly routed securities orders to CGM Limited in Bermuda so that it could take a mark-up (an additional amount paid for the purchase of a security) or mark-down (a reduction of the amount received for the sale of a security) when executing the orders. ConvergEx employees referred to such mark-ups and mark-downs as “spread,” “trading profits,” or “TP.”

To hide the fact that spread had been taken on trades, traders at CGM Limited and sales traders at a ConvergEx Group subsidiary in New York sent false transaction reports to clients with fabricated details regarding the execution orders, including the number of shares involved in a trade, the time at which a trade was executed and the price at which shares were either purchased or sold. CGM Limited traders, including Daspin, created these false reports using exchange data from transactions entered into by others on the same trade date as the trades that had been executed by CGM Limited on behalf of its clients. Daspin instructed a sales trader while creating a false report to “Please put all Prints in one spreadsheet in the least Friendly Format….If possible take this out of spreadsheet Format and make a PDF – Or put this in picture file or something tricky to manipulate.” In another instance, Daspin notified an executive that “We need to be creative putting something together as did not have time and sales for the price given. Fyi.” In total, CGM Limited took approximately $12.8 million in trading profits from these clients after it had sent the false statements to them.

Daspin and others also came up with a plan to continue taking spread on a client by violating the client’s instructions to provide “real-time” transactional data, i.e., an immediate data feed of the details of trades that CGM Limited executed for the client in offshore markets through foreign brokers. If the client’s instructions had been followed, CGM Limited’s traders would not have been able to take spread on the client’s trades. Daspin and other CGM Limited traders “turned off” real time for certain portions of the client’s orders and took spread while “real-time” was turned off. On several occasions, when the client asked why it was not receiving real-time data, Lekargeren falsely blamed it on various “IT” issues.

Certain employees of CGM Limited and the broker-dealers offering agency brokerage services also took other steps designed to conceal the fact that CGM Limited was taking spread and the fact that spread was included in the trade prices reported to clients, including: taking smaller amounts of spread on certain price-sensitive clients; taking larger amounts of spread when it was less likely to be discovered; insuring that the marked-up price they charged to clients was within the high or low price at which the security traded that day; and using multiple local brokers during the course of a trade so that a client would not be able to track the execution of the client’s order through publicly available resources.

The head of the division offering transition management services – which provided clients in the process of changing fund managers or investment strategies the ability to execute large orders to buy and sell securities – provided several clients with false information to hide trading profits. In July 2010, for example, this executive caused a client to be told that “no principal trading has been carried out in any transition” for that client, when this executive knew CGM Limited had traded in a principal capacity and had taken approximately $1.75 million of trading profits on the client’s trades a month earlier. After that false response was sent to the client, CGM Limited’s traders took approximately $4.5 million of additional trading profits on that client’s trades.

In addition, ConvergEx employees assisted an unaffiliated provider of transition services in concealing that it was receiving a 50 to 60 percent share of the trading profits CGM Limited was taking on the unaffiliated company’s clients, in violation of the unaffiliated company’s client agreements. The unaffiliated company sent invoices addressed to ConvergEx Group that falsely stated that they were for trading cost analysis, when in fact the invoices were sent to cover up that the payments were in fact for the unaffiliated company’s share of the spread taken by CGM Limited on its clients.

As part of the deferred prosecution agreement with ConvergEx Group, the department highlighted the internal investigation conducted by the company; its extraordinary and ongoing cooperation; its extensive remediation, including terminating officers and employees, ceasing all trading activities at CGM Limited and voluntarily relinquishing the subsidiary’s Bermudan securities license; and enhancing its compliance program and internal controls; as well as the guilty plea by CGM Limited and its agreement to pay restitution and the significant sanctions imposed by the SEC.

The case was investigated by the FBI’s Washington Field Office and the Washington, D.C., and New York offices of the U.S. Postal Inspection Service. The case is being prosecuted by Trial Attorneys Justin Goodyear, Jason Linder and Patrick Pericak of the Criminal Division’s Fraud Section.

The SEC referred the matter to the Justice Department for investigation, and the department expresses its appreciation for the significant assistance provided by the SEC.

The department also recognizes the assistance of the Criminal Division’s Office of International Affairs, the Financial Industry Regulatory Authority, and the United States Attorney’s Office for the District of New Jersey.

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

Felony charges were filed today in the U.S. District Court for the Northern District of California, in San Francisco, against Florence Fung of Sacramento, Calif, and Michael Navone of San Rafael, Calif.  Fung and Navone are the 39th and 40th individuals to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Fung and Navone conspired with others, for various lengths of time between February 2009 and January 2011, not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Mateo County.   Fung and Navone also were charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others.  Navone was also charged with participating in similar conspiracies in San Francisco County beginning as early as October 2009 until about January 2011.

“Instead of competing at real estate foreclosure auctions, the conspirators agreed not to bid against one another and determined among themselves who would submit the winning bid, stifling honest and fair competition,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division and its partners at the FBI continue to remain committed to holding accountable investors who attempt to subvert the competitiveness of the bidding process.”

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

“The FBI continues to join the Antitrust Division in holding criminals accountable for bid rigging and fraudulent practices at public real estate foreclosure auctions,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “Anticompetitive practices disrupt a fair marketplace and the FBI will investigate these types of crimes.”

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

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

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

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

A special agent with the Naval Criminal Investigative Service (NCIS) pleaded guilty today to participating in a massive international fraud and bribery scheme, admitting he shared with a foreign Navy contractor confidential information about ongoing criminal probes into the contractor’s billing practices in exchange for prostitutes, cash and luxury travel.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service, and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement after the plea was accepted by U.S. Magistrate Judge Jan Adler of the Southern District of California. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing is set for March 9, 2014, before Judge Sammartino.

Supervisory Special Agent John Bertrand Beliveau Jr., 44, pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison, and bribery, which carries a maximum penalty of 15 years in prison. In his plea agreement, Beliveau acknowledged that he regularly searched confidential NCIS databases for reports of investigations related to the contractor, Leonard Glenn Francis, chief executive of Singapore-based Glenn Defense Marine Asia (GDMA). Beliveau admitted that, over the course of years, he helped Francis avoid multiple criminal investigations by providing copies of these reports plus advice and counsel on how to respond to, stall and thwart the NCIS probes. This duplicity began while Beliveau was stationed in Singapore and continued for more than a year after Beliveau returned to the NCIS office in Quantico, Va.

Beliveau is one of five Navy officials and civilian contractors who are implicated so far in the widening corruption case involving hundreds of millions of dollars in Navy contracts. In addition to Beliveau and Francis, also charged are U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez and GDMA executive Alex Wisidagama. The charges against Francis, Misiewicz, Sanchez and Wisidagama are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

“Today, John Beliveau has admitted to accepting lavish gifts in exchange for revealing sensitive law enforcement information to a primary target of this massive bribery investigation,” said Acting Assistant Attorney General Raman.  “For nearly two years, Beliveau deliberately leaked the names of cooperating witnesses, reports of witness interviews, and plans for future investigative steps.  Through his corrupt conduct, Beliveau helped the target of the investigation evade the reach of law enforcement, and cost the U.S. Navy millions of dollars.  Thanks to the Navy’s extensive cooperation and assistance, and the hard work of the NCIS and DCIS agents assigned to this ongoing investigation, we have now been able to hold him to account.”

“Instead of doing his job, John Beliveau was leaking confidential details of investigations to the target himself,” said U.S. Attorney Duffy. “This is an audacious violation of law for a decorated federal agent who valued personal pleasure over loyalty to his colleagues, the U.S. Navy and ultimately his own country. His admissions are a troubling reminder that corruption may exist even among those entrusted with protecting our citizens and upholding our laws.”

“John Beliveau's reprehensible actions, providing sensitive information to the targets of ongoing fraud investigations and accepting bribes, tragically tarnished his NCIS badge,” said NCIS Director Traver. “Nevertheless, the tireless and dedicated work of NCIS and DCIS effectively brought this to a halt, and these agencies continue to vigilantly protect Department of Navy personnel and resources.”

“Today’s guilty plea of former NCIS Special Agent John Beliveau is part of an ongoing joint effort by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and our enforcement partners to identify, investigate and bring to justice those seeking to enrich themselves at the expense of U.S. taxpayers,” said Deputy Inspector General for Investigations Burch. “While the conduct of a vast majority of those in the U.S. Navy and law enforcement community is beyond reproach, we will vigorously pursue those individuals who put the safety and security of U.S. Navy personnel at risk. The conduct of former Special Agent Beliveau is reprehensible and today’s guilty plea demonstrates the Defense Criminal Investigative Service will continue to pursue allegations of fraud and corruption that puts the Warfighter at risk.”

Among the law enforcement-sensitive information provided by Beliveau to Francis were the identities of the subjects of the investigations; information about witnesses, including identifying information about cooperating witnesses and their testimony; the particular aspects of GDMA’s billings that were of concern to the investigations; the fact that the investigations had obtained numerous email accounts and the identities of those accounts; the reports to prosecutors and their interactions with the investigations; and planned future investigative activities.

According to information provided in court, when authorities became aware of Beliveau’s duplicity, they began tracking Beliveau’s efforts to misappropriate information from the criminal investigation and then provide it to Francis. Soon after that, Francis came to San Diego from Singapore for a meeting with Navy brass, where Francis was arrested. Beliveau was taken into custody the same day in Virginia.

All told, Beliveau leaked information to Francis about criminal investigations into GDMA’s overbilling scheme that cost the Navy at least $7 million in fraudulent overpayments for “husbanding” services such as food, fuel and other supplies and services to the ships, according to the plea agreement.

In return for leaks of internal NCIS information and advice from Beliveau, Francis allegedly provided the agent with envelopes containing cash on at least five occasions, along with luxury travel from Virginia to Singapore, the Philippines and Thailand, the plea agreement stated. On many occasions, beginning in 2008 and continuing through 2012 while Beliveau was posted in Singapore, Francis allegedly provided the NCIS agent with prostitutes, lavish dinners, entertainment and alcohol at high-end nightclubs. The tab for each of these outings routinely ran into the thousands of dollars.

According to court records, in April of 2012 Beliveau complained to Francis, saying, “You give whores more money than you give me,” and, “I can be your best friend or worst enemy.”

Court records state that Beliveau and Francis tried to hide their illicit activity by employing techniques that Beliveau had learned from his specialized training as a law enforcement agent. These steps included deleting emails, changing email accounts, creating covert email accounts shared by Beliveau and Francis, not transferring funds through the normal banking channels and using Skype chat and calls to transmit information.

This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service (DCIS) and the Defense Contract Audit Agency. Significant assistance was provided by the Drug Enforcement Administration, Homeland Security Investigations and the DOJ Criminal Division’s Office of International Affairs, the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore. This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, as well as Special Trial Attorney Wade Weems on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.

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

The Justice Department today filed a lawsuit against the owner and manager of rental apartments in Jaffrey, N.H., for violating the Fair Housing Act by discriminating against families with children.

The lawsuit, filed in the U.S. District Court for the District of New Hampshire, alleges that Bruce R. Edwards, as Trustee of the Bruce R. Edwards Revocable Trust of 2004 and in his personal capacity, engaged in a pattern or practice of violating the Fair Housing Act or denied rights protected by the Act.  According to the complaint, the defendant allegedly established and implemented a discriminatory “no children” policy for prospective tenants in a boarding house that he owned and managed.  The suit also alleges that the defendant violated the Fair Housing Act by enforcing the “no children” provision of the lease against a tenant and requiring the tenant to immediately find other housing arrangements for his daughter, who visited the boarding house on weekends.

“The Fair Housing Act protects tenants with children from facing unfair terms and conditions of rental that do not apply to tenants without children,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue its vigorous enforcement of fair housing laws that ensure that tenants can secure rental housing for their families without fear of discrimination.”

“This lawsuit demonstrates the Department of Justice’s commitment to ensuring fair and equal access to housing for all New Hampshire citizens and attempts to erect discriminatory barriers to this fundamental civil right will not be tolerated,” said U.S. Attorney John P. Kacavas for the District of New Hampshire. 

This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by a tenant who lived in the defendant’s boarding house and had joint custody of his minor daughter.  The defendant’s lease stated that no children were allowed in the building, and the defendant made additional oral statements to the tenant that children were not permitted.  After receiving noise complaints about the tenant’s child, the defendant notified the tenant in a letter marked “Eviction Notice” that he was enforcing the “no children” provision of the lease and that the tenant had to immediately find other arrangements for his daughter on the weekends.  As a result, the tenant began taking his daughter to stay with family members, which resulted in both economic and emotional costs.  After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.

“It’s surprising that 25 years after Congress outlawed housing discrimination against families with children, many landlords don’t know it’s illegal or don’t take the law seriously,” said Acting Assistant Secretary Bryan Greene for HUD’s Office of Fair Housing and Equal Opportunity.  “HUD will continue work alongside the Department of Justice in educating people on the law and obtaining housing relief for families denied housing."

The lawsuit seeks a court order prohibiting future discrimination by the defendant, monetary damages for those harmed by the defendant’s actions and a civil penalty.  Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, ext. 3.

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt .  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov or contact HUD at 1-800-669-9777.

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

A Houston doctor has been arrested on charges related to her alleged participation in a $158 million Medicare fraud scheme involving false claims for mental health treatment.

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 the Department of Health and Human Services Office of the Inspector General (HHS-OIG) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

Sharon Iglehart, 56, of Houston, was charged in an indictment, filed in the Southern District of Texas and unsealed today, with one count of conspiracy to commit health care fraud and four counts of health care fraud. If convicted, Iglehart faces a maximum penalty of 10 years in prison on each count. Iglehart was arrested on Dec. 16, 2013, and made her initial appearance in federal court in Houston today.

According to the indictment, Iglehart allegedly participated in a scheme to defraud Medicare beginning in 2005 and continuing until May 2012.  The defendant allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through a Houston hospital.  A PHP is a form of intensive outpatient treatment for severe mental illness.

The indictment alleges that the defendant and her co-conspirators submitted or caused to be submitted approximately $158 million in claims to Medicare for PHP services purportedly provided by the hospital, when in fact the PHP services were medically unnecessary or never provided.

In February 2012, Mohammad Khan, an assistant administrator at the hospital who managed many of the hospital’s PHPs, was indicted for his role in the scheme. Khan pleaded guilty to one count of conspiracy to commit health care fraud, one count of conspiracy to pay illegal kickbacks, and five counts of paying illegal kickbacks. Khan has not yet been sentenced.

In October 2012, Earnest Gibson III, the administrator of the hospital, along with Earnest Gibson IV, William Bullock III, Robert Ferguson, Regina Askew, Leslie Clark and Robert Crane, were indicted for their roles in the scheme. Leslie Clark pleaded guilty to one count of conspiracy to pay and receive illegal kickbacks. Clark has not yet been sentenced.

An indictment is merely an allegation, and the defendant is 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, MFCU, Internal Revenue Service’s Houston Field Office, the Chicago Field Office of the Railroad Retirement Board’s Office of Inspector General, and the Office of Personnel Management’s Office of Inspector General 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 Assistant Chief Laura M.K. Cordova 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, 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 .

Attorney General Eric Holder today announced a $1,519,713 grant to reimburse organizations and agencies that provided direct support to victims, first responders and the community in the immediate aftermath of the mass shooting at Sandy Hook Elementary School in Newtown, Conn., on Dec. 14, 2012.  The Justice Department’s Office for Victims of Crime (OVC) provided this grant to the Connecticut Judicial Branch, which administers funding for services to victims of violent crime.  This initial award will be used toward costs incurred by those organizations that provided crisis intervention services, trauma-informed care, select victim-related law enforcement support and costs incurred in moving students from Sandy Hook to a new school location.  OVC is working directly with Newtown city officials and the state of Connecticut to develop an additional grant application to provide more funding for long-term victim recovery.

“This funding will provide critical support to the brave women and men who responded to the devastating violence at Sandy Hook Elementary School, as well as the counselors and others who are helping the community to recover,” said Attorney General Eric Holder.  “One year after the senseless violence in Newtown, we continue to mourn the innocent children and selfless adults who were taken from us on that terrible day.  We admire and continue to support the community that has displayed such strength and resilience since then.  And through this grant, and the additional funds that have already been provided to the Newtown Police Department and their law enforcement partners, we reaffirm our commitment to standing with the people of Newtown, the families of the victims, and all who are helping to bring help and healing to those affected by this heartbreaking tragedy.”

“OVC is committed to ensuring that the community of Newtown has the resources necessary to assist victims of this horrific crime,” said OVC Director Joye Frost.  “Almost one year ago, our country was shocked to its core with this senseless slaughter of innocents; we have all mourned the loss of these young children and their courageous teachers.  Through this funding, which will be administered by the Connecticut state government, OVC is supporting the critically important work of the school system, social service and medical organizations and the city government as they continue to assist victims.  I am humbled by the courage and resoluteness of the victims, first responders, educators, town leaders and residents of Newtown for their support of one another and their incredible grace and dignity in the aftermath of this tragedy.”

In 1995, following the Oklahoma City bombing, Congress authorized OVC to set aside and administer up to $50 million annually from the Crime Victims Fund for the Antiterrorism Emergency Reserve Fund to assist victims in extraordinary circumstances.  Following an act of terrorism or mass violence, jurisdictions can apply for an Antiterrorism and Emergency Assistance Program (AEAP) grant award for crisis response, criminal justice support, crime victim compensation and training and technical assistance expenses.  OVC also provided AEAP funds and assistance following the shootings in Oak Creek, Wis. (2012); Aurora, Colo. (2012); Tucson, Ariz. (2011); Binghamton, N.Y. (2009); and at the Virginia Polytechnic Institute and State University (2007).

 For more information on the AEAP program, please visit: www.ojp.usdoj.gov/ovc/AEAP/index.html.

 OVC is one of six components in the Justice Department’s Office of Justice Programs (OJP), which is headed by Assistant Attorney General Karol V. Mason.  OJP provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims.  In addition to OVC, OJP’s components include: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking.  More information about OJP can be found at www.ojp.gov.

William R. “Rusty” Miller, a real estate developer from Fairhope, Ala., pleaded guilty today in federal district court in Gulfport, Miss., to the unpermitted filling of wetlands near Bay St. Louis, Miss., in violation of the Clean Water Act, announced U.S. Attorney for the Southern District of Mississippi Gregory K. Davis and Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division.

Miller, admitted to having caused the excavation and filling of wetlands on a 1,710 acre parcel of undeveloped property in Hancock County, west of the intersection of Route 603 and Interstate 10. The charging document to which the defendant pleaded guilty states that Miller was a part-owner of corporations that purchased and intended to develop the land. It alleges that in 2001 when Miller and his companies acquired the property, he was informed by a wetland expert that as much as 80 percent of the land was federally protected wetland connected by streams and bayous to the Gulf of Mexico and as such could not be developed without a permit from the U.S. Army Corps of Engineers. Wetland permits typically require that developers protect and preserve other wetlands to compensate for those they are permitted to fill and destroy. In spite of additional notice he had received of the prohibition against filling and draining wetland without authorization, it is alleged that Miller hired excavation contractors to trench, drain, and fill large portions of the property to lower the water table and thus to destroy the wetland that would otherwise be an impediment to commercial development.

In pleading guilty, defendant Miller has acknowledged that he knowingly ditched, drained and filled wetlands at 10 locations on the Hancock County property without having obtained a permit from the U. S. Army Corps of Engineers.

“This conviction is the latest in a series of enforcement actions the Department of Justice has initiated to preserve the wetlands that protect the Gulf coast from storms and that nourish the Gulf’s fisheries and support its marine life,” said Acting Assistant Attorney General Dreher. “Those who unlawfully destroy this valuable natural resource, either by pollution or by development, will face vigorous prosecution.”

It is a felony under the Clean Water Act for any person knowingly to discharge pollutants into waters of the United States without a permit. Any person convicted of this offense is subject to imprisonment of up to three years and a penalty of not more than $250,000. A sentencing hearing has been scheduled before Chief District Court Judge Louis Guirola, Jr. of the Southern District of Mississippi on March 17, 2014.

Six individuals have been indicted for their role in an investment scam perpetrated from the United States and Switzerland, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office announced today.

The U.S. District Court for the District of Nevada has unsealed indictments against Anthony Brandel, 46, of Las Vegas; Joseph Micelli, 59, of Las Vegas; James Warras, 67, of Waterford, Wis.; Sean Finn, 44, of Whitefish, Mont.; Martin Schlaepfer, 55, of Zurich, Switzerland; and Hans-Jurg Lips, 50, of Zurich, Switzerland. Brandel and Micelli were arrested on Dec. 12, 2013, in Las Vegas, and Warras was arrested on Dec. 13, 2013, in Wisconsin. Finn, Schalepfer and Lips remain at large.

According to court documents, from October 2009 through October 2013, the defendants used a Swiss corporation known as Malom Group AG to promote investments in European equities and debt offerings, which they said would yield high rates of return. The indictment alleges that the defendants created and provided to investors fake bank statements representing that Malom Group AG had large deposit balances at prominent European banks. The defendants collected payments of between $200,000 and $1.2 million per investor but did not put the funds toward the advertised investments. Instead, the defendants used the money for their own purposes. Court documents allege that Brandel, Micelli, Finn and Warras attempted to conceal the proceeds of the conspiracy by not filing tax returns with the Internal Revenue Service (IRS).

According to allegations in the indictment, the investments that the defendants promoted did not yield any returns to their victims. When victims complained, the defendants told investors that the Malom Group AG would refund their money with the proceeds of pending transactions the defendants knew were fictitious and would not generate any proceeds. Despite the defendants’ promises of refunds, court documents allege that none of the investors identified in the indictment received a refund. The indictment alleges that Micelli, Warras and Lips went so far as to submit to a U.S. Bankruptcy Court declarations they knew contained false statements about a transaction that the Malom Group AG had promoted to an investor who had an interest in a company that had filed for bankruptcy protection.

According to the indictment, Anthony Brandel acted as the director of MY Consultants Inc., a Nevada corporation that purported to review potential investments for the Malom Group AG. Micelli, a disbarred former attorney, identified himself to victims as Malom Group AG’s “compliance officer.” Warras served as Malom Group AG’s Executive Vice President for U.S. Operations and Finn acted as a broker who recruited victims and referred them to Malom Group AG. Schlaepfer was Malom Group AG’s Chief Executive Officer and Lips identified himself as the head of Malom Group AG’s Structured Finance Group. Schlaepfer and Lips presently reside in Switzerland.

The case was investigated by the Las Vegas Field Office of the FBI. The Enforcement Division of the U.S. Securities and Exchange Commission, which referred the matter to the Department of Justice, provided valuable assistance and is conducting a parallel civil enforcement investigation. The Public Prosecutor of the Canton of Zurich State Attorney’s Office assisted with the investigation.

This case is being prosecuted by Trial Attorneys Brian R. Young, Stephen J. Spiegelhalter and Anna Kaminska of the Criminal Division’s Fraud Section, with assistance from the Criminal Division’s Office of International Affairs and the Office of the United States Attorney for the District of Nevada.

Today’s indictment was a result of efforts 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 is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the Task Force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed 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 .

The Department of Justice announced today that it will require Gannett Co. Inc., Belo Corp. and Sander Media LLC to divest their interests in KMOV‑TV, a CBS affiliate in St. Louis, in order to proceed with Gannett’s acquisition of Belo, and Sander’s related acquisition of six Belo television stations that Gannett cannot hold under Federal Communications Commission (FCC) rules. The department said that, without the required divestiture, Gannett would have gained a dominant position in broadcast television spot advertising in the St. Louis area, resulting in higher prices advertisers.

 
In addition to acquiring the six stations from Belo, Sander will enter into several agreements with Gannett in order to both finance purchasing the stations and facilitate operating the stations. KMOV-TV is one of the six stations Sander would acquire from Belo and would be subject to agreements between Sander and Gannett. These agreements, however, do not include any joint negotiation of retransmission rights in St. Louis. The Gannett-Belo acquisition is valued at approximately $2.2 billion.

The department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed acquisition and related agreements between Gannett and Sander, including an option for Gannett to assign or acquire the Belo stations sold to Sander, a financing guarantee and a long-term shared services agreement. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.

“Gannett’s KSDK‑TV and Belo’s KMOV‑TV compete head-to-head in the sale of broadcast television spot advertising in the St. Louis area, and this rivalry constrains advertising rates,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis.”

The department’s complaint alleges that the proposed acquisition would lessen competition in broadcast television spot advertising in the St. Louis Designated Market Area (DMA). Even though the two stations would maintain separate sales forces, the various agreements between Gannett and Sander, KMOV‑TV’s new owner, would align the incentives of the two stations. To remedy this harm, the proposed settlement requires Gannett, Belo and Sander to divest all assets primarily used in the operation of KMOV‑TV to an independent purchaser to be approved by the United States. That purchaser will not be permitted to have any agreements with Gannett concerning KMOV-TV that could limit competition with KSDK-TV, including options to acquire or assign, financing agreements and shared services or joint sales agreements.

Gannett, a Delaware corporation with headquarters in McLean, Va., owns and operates 23 broadcast television stations nationwide, 12 of which are in the top 25 markets, as well as numerous newspapers. Gannett’s KSDK‑TV is the NBC affiliate in St. Louis.

Belo, a Delaware corporation with headquarters in Dallas, owns and operates 20 broadcast television stations nationwide, nine of which are in the top 25 markets. Belo’s KMOV‑TV is the CBS affiliate in St. Louis.

Sander, a Delaware limited liability company with headquarters in Scottsdale, Ariz., has no current business activity other than preparing to acquire six Belo stations, including KMOV‑TV in St. Louis, as part of the transactions between Gannett, Belo and Sander.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60‑day comment period to Scott A. Scheele, Chief, Telecommunications and Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530. At the conclusion of the 60‑day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL and INTERPOL Washington request public assistance to track international fugitives across Americas

LYON, France - INTERPOL is calling for the public's assistance in helping to track down international fugitives linked to organized crime networks and wanted for offenses including murder and drug trafficking.

Operation Infra (International Fugitive Round Up and Arrest) Americas was launched in Costa Rica on 18 November, involving 46 countries and territories and targeting 266 fugitives. Members of the public are now being asked to provide information to help locate 15 individuals, including Rafael Caro-Quintero the former leader of the Guadalajara Cartel in Mexico.

The fugitives are believed to be hiding out in Central America, Colombia, Ecuador, Peru, Venezuela or the Caribbean. They are all cases where no new leads were generated during the initial phase of Infra Americas or where there is no current intelligence on the potential location of these individuals.

“Any piece of information, no matter how small or apparently insignificant could be the missing piece in the puzzle which will help locate these dangerous criminals,” said Ervin Prenci, criminal intelligence officer with INTERPOL's Fugitive Investigative Unit.

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A former repair contractor of a Florida property management company was sentenced to serve time in prison for his participation in a wire fraud scheme related to housing repairs made under a contract between Ocwen Loan Servicing LLC, and the U.S. Department of Veterans Affairs (VA), the Department of Justice announced today.

Ronald B. Hurst was sentenced by Judge Philip G. Reinhard of the U.S. District Court for the Northern District of Illinois in Rockford to serve 24 months in prison for his role in the conspiracy.

In addition, a second former repair contractor, Bryant A. Carbonell, was sentenced by Judge Reinhard to serve six months of home confinement for his role in the conspiracy.  Hurst and Carbonell were sentenced to pay $147,825 jointly and severally in restitution to the VA.  Hurst pleaded guilty on Feb. 15, 2013, to two wire fraud counts of a 10-count indictment and Carbonell pleaded guilty on Sept. 21, 2012, to the same charges.

An indictment, originally filed in January 2012, charged Hurst, Carbonell and Ryan J. Piana with conspiring to commit bribery and wire fraud from at least January 2006 until as late as September 2007.  Hurst, Carbonell and Piana were also charged with bribery and wire fraud.  As part of the plea agreements, the United States agreed to dismiss the remaining counts against Hurst and Carbonell at the time of their sentencing.

“By paying kickbacks in exchange for contracts to companies they secretly owned or with which they were affiliated, the conspirators created the illusion of competition while illegally steering contracts to themselves,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Today’s sentencing reaffirms the Antitrust Division’s commitment to prosecuting schemes that undermine competition in the VA Mortgage Guarantee Program.”

           
Hurst and Carbonell were former contractors for West Palm Beach, Fla.-based Ocwen Loan Servicing LLC. Piana was a former residential sales manager at Ocwen.  According to court documents, Ocwen managed foreclosed properties under contract with the VA, which guaranteed qualifying residential mortgages for veterans.  Under the contract between the VA and Ocwen, if a veteran defaulted, Ocwen completed necessary repairs and re-sold the property.  Proceeds from the re-sale of VA-acquired properties directly benefit the VA by reducing the cost of guaranteeing residential mortgages to veterans.

           
According to the charges, Hurst and Carbonell paid Piana to steer housing repair work to companies affiliated with Hurst and Carbonell.  Piana recruited other Ocwen employees into the scheme and paid them on behalf of himself and the other conspirators.  The department said in order to execute the scheme, the conspirators sent, or caused to be sent, various transmissions via wire communication.

This is the third case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract.  On Jan. 25, 2012, Joshua R. Nusbaum, another former Ocwen employee, and Andrew J. Nusbaum, a former Ocwen contractor, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the same VA contract.  Piana pleaded guilty to the same counts as Carbonell and Hurst on July 16, 2013, in U.S. District Court in Orlando, Fla.  Piana was sentenced on Sept. 30, 2013, to serve 24 months in prison and to pay $147,285 in restitution to the VA.

The sentence announced today resulted from a federal investigation of housing repair contracts performed under contract with the VA.  The investigation is being conducted by the Antitrust Division’s Chicago Office and the Central Field Office of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, located in Hines, Ill.  Anyone with information concerning suspicious activity relating to housing repairs performed under a contract with the VA should contact the Antitrust Division s Chicago Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.

Two U.S. Army National Guard soldiers pleaded guilty for their roles in bribery and fraud schemes that caused a total of at least $70,000 in losses to the U.S. Army National Guard Bureau. 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.

Specialist Edia Antoine, 28, and former Staff Sergeant Ernest Millien, 49, both of Houston, each pleaded guilty to one count of conspiracy and one count of bribery. The cases against both defendants arise from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against 25 individuals, 19 of whom have pleaded guilty.

According to court documents filed in both cases, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program that offered monetary incentives to soldiers of the Army National Guard who referred others to join the Army National Guard. Through this program, a participating soldier could receive up to $3,000 in bonus payments for referring another individual to join. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.

Antoine and Millien both admitted they paid Army National Guard recruiters for the names and Social Security numbers of potential Army National Guard soldiers. They used the personal identifying information for these potential soldiers to claim that they were responsible for referring these potential soldiers to join the Army National Guard, when in fact they had not referred them. As a result of these fraudulent representations, Antoine and Millien collected approximately $17,000 and at least $12,500 in fraudulent bonuses, respectively.

The charge of bribery carries a maximum penalty of 15 years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss. The charge of conspiracy carries a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss.

Antoine and Millien are scheduled to be sentenced before U.S. District Judge Lee H. Rosenthal of the Southern District of Texas on June 24, 2014.

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

A man has been charged in federal court with attempting to explode a car bomb at Wichita Mid Continent Airport, Acting Assistant Attorney General for National Security, John Carlin and U.S. Attorney Barry Grissom announced today. The defendant was arrested as part of an FBI undercover investigation, and the device used by the defendant was, in fact, inert and at no time posed a danger to the public.

 
Terry Lee Loewen, 58, of Wichita, Kan., is charged in a criminal complaint filed today in U.S. District Court in Wichita with one count of attempting to use a weapon of mass destruction, one count of attempting to damage property by means of an explosive and one count of attempting to provide material support to a designated foreign terrorist organization.

 
“There was no breach of Mid-Continent’s Airport’s security,” said U.S. Attorney Grissom.  “At no time was the safety of travelers or members of the public placed in jeopardy.”

 
Loewen, who works as an avionics technician, is alleged to have spent months developing a plan that involved using his access card to airport grounds to drive a van loaded with explosives to the terminal.  He planned to pull the trigger on the explosives himself and die in the explosion.

 
Agents arrested Loewen about 5:40 a.m. Friday after he attempted to enter the airport tarmac and deliver a vehicle loaded with what he believed were high explosives.  Members of the FBI’s Joint Terrorism Task Force (JTTF) took him into custody without incident.

 
Loewen has been under investigation by the Wichita Joint Terrorism Task Force since early summer 2013. It is alleged that, prior to his attempted attack, he made statements that he was resolved to commit an act of violent jihad against the United States. Over a period of months, he took a series of actions to advance the plot. According to an affidavit filed in support of the criminal complaint, Loewen:

• studied the layout of the airport and took photographs of access points;
• researched flight schedules;   
• assisted in acquiring components for the car bomb;
• and talked about his commitment to trigger the device and martyr himself.

 
On Friday, Loewen went to Mid-Continent Airport to detonate the car bomb.  He was taken into custody when he attempted to open a security access gate. FBI Evidence Response Teams are executing search warrants related to the case.  Although the investigation is ongoing, no additional arrests are anticipated.

 
“Lone wolves - home grown violent extremists remain a very serious threat to our nation’s security, said FBI Special Agent in Charge Michael Kaste.  “Today’s arrest emphasizes the continual need for the public to remain vigilant as law enforcement relies on the public’s assistance.” 

If convicted, Loewen would face a maximum penalty of life in federal prison.

 
The investigation was conducted by the Wichita FBI Joint Terrorism Task Force, which includes members from the FBI, Sedgwick County Sheriff’s Office and Kansas Highway Patrol. Assisting with the investigation were the FBI Kansas City Division, the Transportation Security Administration, the Wichita Airport Authority, and the Wichita Police Department. 

 
The case is being handled by prosecutors from the United States Attorney’s Office and the Justice Department’s National Security Division.

In all cases, defendants are presumed innocent until and unless proven guilty. The charges merely contain allegations of criminal conduct.

One of the world’s most prolific cybercriminals was sentenced today to serve 18 years in prison for his role in co-founding the notorious website CarderPlanet. At the time of his arrest, Vega possessed more than half a million stolen credit card numbers.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, and Special Agent in Charge Steven G. Hughes of the U.S. Secret Service’s New York Field Office made the announcement after sentencing by Senior U.S. District Judge Allyne R. Ross of the Eastern District of New York.

Roman Vega, 49, a Ukrainian national, pleaded guilty in 2009 to conspiracies to commit money laundering and access device fraud. According to court documents, Vega – who at various times was also known as “Boa,” “Roman Stepanenko” and “Randy Riolta” – conspired with others to steal large volumes of credit card information through hacking and other sophisticated means, and then sold that stolen information to others, who ultimately used the information to purchase merchandise and services. Vega founded two different online marketplaces for this stolen credit card information.

“Today’s sentence is a significant milestone in our ongoing effort to aggressively target and dismantle global cybercrime organizations that operate from every corner of the world,” said Acting Assistant Attorney General Raman.  “Vega helped create one of the largest and most sophisticated credit card fraud sites in the cybercrime underworld – a distinction that has earned him the substantial sentence he received today.”

“The defendant and his group of cybercriminals emulated the mafia in organizing their criminal operations,” said U.S. Attorney Lynch. “Now, the defendant shares the same fate as so many mafia bosses – a long term of imprisonment. This investigation has spanned the globe and should send the unmistakable message that when it comes to dismantling global cybercrime organizations, we will not be held back by distance or complexity.”

“The Secret Service is pleased to have participated in this multi-agency criminal investigation that lead to the arrest of Roman Vega also known as ‘Boa’,” said Secret Service Special Agent in Charge Hughes.  “This case demonstrates by constricting this criminal enterprise, there is no such thing as anonymity in the cyber world.  The Secret Service continues to seek new and innovative ways to combat emerging cyber threats.  Our success in this case and other similar investigations is a result of our close work with our network law enforcement partners.”

In the late 1990s, Vega founded the Boa Factory, one of the earliest websites to provide a forum for sellers of stolen credit card information to meet potential buyers. In the early 2000s, he co-founded and became a high-ranking administrator of a second criminal website, CarderPlanet, which became one of the first and busiest online marketplaces for the sale of stolen financial information, computer hacking services and money laundering.

At its height, CarderPlanet had more than 6,000 members and had a hierarchical leadership structure that borrowed its leadership titles from La Cosa Nostra. For example, CarderPlanet was headed by a “Godfather.” Immediately below the Godfather were a number of “Dons,” including the defendant, who used the name “Boa” when serving in this role. Three levels below the Dons was the “Consigliere,” who was an advisor. Vega, using the name “RioRita,” also served as the Consigliere.

CarderPlanet became a premier online criminal bazaar in significant part as a result of Vega’s leadership. Most notably, the defendant helped institute a quality control system for sales. If a cyberthief wanted to sell stolen credit card information on CarderPlanet, the information was subjected to a vetting process overseen by a manager to ensure that buyers obtained usable stolen data. In addition, the website used e-currencies, such as WebMoney, to provide the participants with security and a layer of anonymity. Vega and his co-conspirators thus created an efficient and trustworthy online marketplace for the buyers and sellers of stolen financial information not unlike legitimate e-commerce sites.

Vega also sold stolen data on the marketplaces he founded and managed. He directed cells of cybercriminals located throughout the globe who hacked into financial institutions to steal credit card and other financial information that would in turn be sold on carding forums, including CarderPlanet. Vega’s criminal career was cut short when he was arrested in Cyprus in February 2003 and extradited to the Northern District of California for prosecution. In November 2007, Vega was transferred to the Eastern District of New York following his indictment on the instant charges, and he pleaded guilty in January 2009. Vega has been incarcerated continuously since 2003.

The case was investigated by the U.S. Secret Service, with assistance from the U.S. Postal Inspection Service. The case was prosecuted by Senior Counsel Thomas Dukes of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William P. Campos of the Eastern District of New York.

WASHINGTON - Two patient recruiters for Miami health care companies were sentenced today for their participation in a $48 million home health 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. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement after sentencing by U.S. District Judge Joan A. Lenard in the Southern District of Florida.

Elizabeth Monteagudo, 33, of Miami, was sentenced to serve 70 months in prison, followed by three years of supervised release, and ordered to pay $3.5 million in restitution jointly and severally with co-defendants. Cristobal Gonzalez, 39, of Miami, was sentenced to serve 46 months in prison, followed by two years of supervised release, and ordered to pay $2 million in restitution jointly and severally with co-defendants.

In September 2013, Monteagudo and Gonzalez each pleaded guilty to one count of conspiring to receive health care kickbacks. Monteagudo also pleaded guilty to receiving kickbacks in connection with a federal health care program.

According to court documents, Monteagudo and Gonzalez were patient recruiters who worked for Caring Nurse Home Health Care Corp., and Gonzalez also worked for Good Quality Home Health Care Inc. Caring Nurse and Good Quality were Miami home health care agencies that purported to provide home health and therapy services to Medicare beneficiaries.

According to court documents, from approximately January 2009 through approximately June 2011, Monteagudo and Gonzalez would recruit patients for Caring Nurse and/or Good Quality and would solicit and receive kickbacks and bribes from the owners and operators of Caring Nurse and/or Good Quality in return for allowing the agency to bill the Medicare program on behalf of the recruited patients. These Medicare beneficiaries were billed for home health care and therapy services that were medically unnecessary and/or not provided.

Monteagudo also admitted to her involvement with $7 million in fraudulent billings for Starlite Home Health Agency Inc., which she owned and operated.

In a related case, on Feb. 27, 2013, Rogelio Rodriguez and Raymond Aday, the owners and operators of Caring Nurse and Good Quality, were sentenced to serve 108 and 51 months in prison, respectively. Their sentencings followed their December 2012 guilty pleas each to one count of conspiring to commit health care fraud charged in an October 2012 indictment. According to that indictment, from approximately January 2006 through June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. Medicare actually paid approximately $33 million for these fraudulent claims.

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

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 .

A former licensed mental health counselor at the defunct health provider Health Care Solutions Network Inc. (HCSN) pleaded guilty today in Fort Lauderdale, Fla., for his role in a $63 million health care 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. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Ruben Busquets, 50, of Miami, pleaded guilty before U.S. District Judge William J. Zloch in the Southern District of Florida to one count of conspiracy to commit health care fraud. He faces a maximum penalty of 10 years in prison when he is sentenced on Feb. 20, 2014.

According to court records, Busquets was employed as a licensed therapist at HCSN, a mental health facility that purported to provide Partial Hospitalization Program (PHP) services. A PHP is a form of intensive treatment for severe mental illness. HCSN of Florida (HCSN-FL) operated community mental health centers at two locations. Court records indicate that Busquets was aware that HCSN-FL personnel were routinely fabricating patient medical records. Many of these medical records were created weeks or months after the patients were admitted to HCSN-FL for purported PHP treatment and were utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and Florida Medicaid. During his employment at HCSN-FL, Busquets and his co-conspirators signed fabricated PHP therapy notes and other medical records used to support false claims to government-sponsored health care programs.

According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

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 Southern District of Florida. This case was prosecuted by Trial Attorney Allan J. Medina of the Fraud Section.

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

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

A Pennsylvania man was sentenced to serve 18 months in prison for his role in a scheme to hack into computer networks and sell access to those networks.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U .S. Attorney Carmen M. Ortiz of the District of Massachusetts made the announcement after sentencing by U.S. District Judge Mark Wolf in the District of Massachusetts on Dec. 11, 2013.

Andrew James Miller, 23, of Devon, Pa., pleaded guilty to conspiracy and computer fraud on Aug. 26, 2013. According to court documents, from 2008 to 2011, Miller remotely hacked into a variety of computers located in Massachusetts and elsewhere, and, in some instances, surreptitiously installed “backdoors” into those computers. These “backdoors” were designed to provide future administrator-level, or “root,” access to the compromised computers.

Miller obtained login credentials to the compromised computers. He and his co-conspirators then sold access to these backdoors, as well as other login credentials. The access sold by Miller and his co-conspirators allowed unauthorized people to access various commercial, education and government computer networks. Miller attempted to sell access for $50,000 to two supercomputers at the Lawrence Berkeley Laboratory in California that were part of the National Energy Research Scientific Computing Center.

The case was investigated by the FBI and prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the U.S. Attorney’s Office for the District of Massachusetts.

The Tax Division of the Department of Justice today strongly encouraged Swiss banks that want to seek non-prosecution agreements to resolve past cross-border criminal tax violations to submit letters of intent by the Dec. 31, 2013 deadline required by the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the Program).  The Program was announced on Aug. 29, 2013, in a joint statement signed by Deputy Attorney General James M. Cole and Ambassador Manuel Sager of Switzerland. 

“The Program offers Swiss banks a unique opportunity to resolve criminal issues relating to their offshore banking activities that will not be available after the deadline,” said Assistant Attorney General Kathryn Keneally.  “Banks that facilitated U.S. tax evasion but do not come forward by the December 31 deadline bear significant risks that information provided by others may cause the bank to be targeted and prosecuted.  As the Program and our ongoing investigations provide the U.S. government a wealth of additional information, the risk for those that have engaged in or facilitated U.S. tax evasion grows by the day.  The Program offers Swiss banks that engaged in this wrongdoing their best chance to resolve outstanding criminal issues.” 

The Program provides a framework that permits every Swiss bank not currently under formal criminal investigation concerning offshore activities to provide the cooperation necessary to resolve potential criminal matters with the department.  Currently, the department is actively investigating the Swiss-based activities of 14 banks.  Those banks, referred to as Category 1 banks in the Program, are expressly excluded from the Program.  The Swiss Federal Department of Finance has released a model order and guidance note that will allow all other Swiss banks to cooperate with the Department of Justice and fulfill the requirements of the Program. 

Swiss banks that have committed violations of U.S. tax laws and wish to cooperate and receive a non-prosecution agreement under the Program, known as Category 2 banks, must submit a letter of intent by Dec. 31, 2013.  To be eligible for a non-prosecution agreement, Category 2 banks must meet several requirements, which include agreeing to pay penalties based on the amount held in undeclared U.S. accounts, fully disclosing their cross-border activities, and providing detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest.  Providing detailed information regarding other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed is also a stipulation for eligibility. 

The Tax Division has committed that it will not authorize formal criminal investigations of any additional Swiss banks prior to the Dec. 31, 2013, deadline.  However, the Tax Division continues to aggressively pursue those who attempt to evade the law by hiding income and assets outside the United States and those who assist them.  In the last six months, the Tax Division has secured two convictions after trial and six guilty pleas of defendants who maintained, or assisted others in maintaining, undeclared bank accounts in foreign countries.  Some of those cases include: 

·          In October 2013, Dr. Patricia Lynn Hough of Englewood, Fla., was convicted by a jury in Fort Myers, Fla., of conspiring to defraud the IRS and of filing false individual income tax returns.  According to evidence presented at trial, Hough concealed millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks, and filed tax returns that failed to report the existence of those foreign accounts or the income earned in those accounts. 

·          In October 2013, Ashvin Desai, the owner of a medical device company in San Jose, Calif., was convicted of filing false tax returns, aiding and assisting in the preparation of false tax returns and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) following a three-week trial.  According to evidence presented at trial, Desai, his wife and two adult children maintained bank accounts worth more than $7 million with The Hongkong and Shanghai Banking Corporation Ltd. (HSBC) in India.  Desai prepared and filed income tax returns for his family members that failed to report the accounts or over $1.1 million in interest generated by them over three years.    

·          In August 2013, Edgar Paltzer, a former partner at a Swiss law firm, pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars from the IRS in offshore accounts and to evade U.S. taxes on the income earned in those accounts. 

·          In August 2013, Henry Seggerman of New York and Los Angeles pleaded guilty to charges related to his participation in a scheme with family members to hide over $12 million in secret Swiss bank accounts inherited upon their father’s death.  Seggerman’s siblings Suzanne Seggerman, Yvonne Seggerman and Edmund Seggerman each previously pleaded guilty to one count of conspiracy to defraud the United States and two counts of subscribing to false and fraudulent tax returns. 

In addition, in July 2013, Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein, entered into a non-prosecution agreement and agreed to pay more than $23.8 million stemming from its offshore banking activities, and turned over more than 200 account files of U.S. taxpayers who held undeclared accounts at the bank.

The Tax Division is committed to using every tool available to identify, investigate and prosecute those who hide income and assets in offshore bank accounts.  Two court orders entered in November 2013 in a New York federal court will further aid these investigations by authorizing the IRS to serve what are known as “John Doe” summonses on five banks to obtain information about possible tax fraud by individuals whose identities are unknown.  The John Doe summonses direct the five banks to produce records identifying U.S. taxpayers holding interests in undisclosed accounts at Zurcher Kantonalbank (ZKB) and its affiliates in Switzerland and at The Bank of N.T. Butterfield & Son Limited (Butterfield) and its affiliates in Switzerland, the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta and the United Kingdom.  The summonses also direct the five banks to produce information identifying foreign banks that used ZKB’s and Butterfield’s correspondent accounts at the five banks to service U.S. clients.

The Program also provides that Swiss banks that did not engage in wrongful acts with U.S. taxpayers, but nonetheless want a resolution of their status, may apply for a non-target letter.  Those banks may not submit a letter of intent until July 1, 2014.

The U.S. Department of Justice today hosted a meeting to launch a joint task force between the United Kingdom and the United States to counter online child exploitation.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.K. Minister for Policing, Criminal Justice and Victims Damian Green made the announcement.

“Sexual predators are using technology to exploit and harm children, and we need to consider whether technology-based solutions can help curb this abuse and give parents the tools they need to keep their children safe,” said Acting Assistant Attorney General Raman.  “Law enforcement is committed to protecting children from abuse, but we know that the help and support of the innovators in the tech community are critical to this important effort.  We look forward to collaborating with experts throughout the digital industry on the work of this taskforce.”

“Child abuse is a vile crime,” said Minister Green. “ The UK government is working hard with partners in the US to ensure the Internet cannot be used to sexually abuse children or  trade child abuse imagery no matter how technically savvy an offender may be. We have set up the US-UK task force to counter online child exploitation and are drawing on the brightest and best minds from across industry, law enforcement and academia to tackle the dark web, catch abusers and make it much more difficult to access child abuse images online. Today experts from the online industry were invited to attend the first task force meeting, and more companies, both large and small, will be invited to join us in the coming months.”

The task force – co-chaired by Acting Assistant Attorney General Raman and Minister Green – was established to find new technological solutions to combat child sexual exploitation crimes on the Internet and to reduce the volume of child sexual exploitation images online. The task force members include the FBI, Homeland Security Investigations of the Department of Homeland Security, and the U.K. National Crime Agency’s Child Exploitation and Online Protection Centre Command.

The growth of crimes involving the sexual exploitation of children on the Internet is a significant law enforcement challenge shared by all countries. An epidemic volume of child sexual exploitation images is stored and transmitted online by offenders whose crimes are increasingly facilitated by evolving and complex technologies. The task force will seek to leverage the intellectual talent and technical resources of the digital industry by forming and collaborating with an Industry Solutions Group, which will include experts from sectors across the industry to help address the varied and complex technical issues and challenges raised by online child exploitation offenses.

The task force will report back to the U.S. Attorney General and U.K. Prime Minister on its achievements in November 2014.

John Charles McCluskey, 48, will receive a life prison sentence for a host of crimes arising out of the carjacking and murder of a couple from Tecumseh, Okla., after a federal jury today announced that it could not reach a unanimous decision on whether to impose the death penalty.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Steven C. Yarbrough of the District of New Mexico, Special Agent in Charge Carol K.O. Lee of the FBI’s Albuquerque Division, and New Mexico State Police Chief Pete N. Kassetas made the announcement.

McCluskey was charged with several capital offenses in a 20-count indictment arising out of the carjacking and murders of Gary and Linda Haas, both 61, in Quay County, N.M., on Aug. 2, 2010. On Oct. 7, 2013, the jury found McCluskey guilty on all counts of the indictment after an eight-week trial. On Nov. 5, 2013, the jury found McCluskey eligible for the death penalty following a three-week proceeding. The capital trial concluded today when the jury said it was unable to reach a unanimous verdict on the death penalty. McCluskey will receive a sentence of life in prison. The court has not yet scheduled a date for the imposition of the sentence.

“During an exceptionally violent criminal episode in the summer of 2010, John Charles McCluskey escaped from prison where he was serving a sentence for attempted murder, committed multiple kidnappings during his interstate flight from justice, and mercilessly killed two innocent victims to eliminate them as witnesses,” said Acting Assistant Attorney General Raman.  “Through the hard work of federal and state law enforcement and Department of Justice prosecutors, McCluskey and his co-defendants have been brought to justice.  Our thoughts are with the victims and their family.”

“The men and women on this jury dedicated the last six months of their lives to performing a very difficult, but necessary, civil service. I respect their verdict and thank them for their personal sacrifice,” said Acting U.S. Attorney Steven C. Yarbrough. “Hopefully, the fact that John Charles McCluskey has been found guilty of every count charged and will now spend the rest of his life in prison with no possibility of parole will bring some measure of comfort and closure to the friends and family Gary and Linda Haas left behind. The prosecutors and investigators who so tirelessly have worked toward the pursuit of justice are also to be commended.”

According to the evidence presented at trial, on July 30, 2010, McCluskey and co-defendant Tracy Allen Province, 46, escaped from an Arizona state prison with the aid of co-defendant Casslyn Mae Welch, 47. On Aug. 2, 2010, McCluskey, Province and Welch carjacked Mr. and Mrs. Haas and their pickup truck and camping trailer at a rest stop off Interstate 40 in Quay County, N.M. McCluskey shot and killed Mr. and Mrs. Haas in the trailer in a remote location east of Tucumcari, N.M. The three confederates then drove the Haases’ truck and trailer to a remote area in Guadalupe County, N.M., where they unhitched, burned and abandoned the trailer with the Haases’ remains still inside. On Aug. 4, 2010, the New Mexico State Police discovered the burned remains of Mr. and Mrs. Haas in the trailer. Province was arrested in Wyoming on Aug. 9, 2010, and McCluskey and Welch were arrested in Arizona on Aug. 19, 2010, following a nationwide, multi-agency manhunt.

The trial evidence also established that McCluskey has the following prior convictions:  convictions in 1993 in Pennsylvania for aggravated assault with a firearm and three armed robberies for which he served 15 years in state custody; convictions in 2009 in Arizona for attempted second degree murder and aggravated assault with a firearm, for which he received a 15-year state prison sentence in Arizona; and convictions in 2011 in Arizona for escape, kidnapping, armed robbery, aggravated assault, and felon in possession of a firearm, for which he received a 43-year prison sentence to run consecutive to his 15-year sentence.

On Jan. 20, 2012, Province and Welch each entered a guilty plea to numerous crimes arising out of the carjacking and murder of Mr. and Mrs. Haas, and both testified during the guilt phase of McCluskey’s trial. Under the terms of his plea agreement, Province will be sentenced to five consecutive terms of life in prison without the possibility of release. Welch faces a maximum penalty of life in prison under her plea agreement. Both remain in custody pending their sentencing hearings, which have yet to be scheduled.

“A long, painful ordeal for the Haas family has finally come to an end. Nothing we can do or say here today can return Gary and Linda Haas to their loved ones, but we hope this sentence gives them some measure of closure,” said FBI Special Agent in Charge Carol K.O. Lee.  “I would like to recognize the FBI investigators and support personnel who contributed to this case, as well as the federal prosecutors, victim/witness specialists, the New Mexico State Police, and U.S. Marshals Service.  The Albuquerque FBI Division will continue to combat violent crime in our big cities and small towns by working closely with our state and local partners.”

“I hope the conviction of John McCluskey brings a sense of closure to the family of Gary and Linda Haas,” said New Mexico State Police Chief Pete N. Kassetas.  “This was a difficult and complex investigation but is yet another example of the exemplary relationship the New Mexico State Police maintains with our Federal law enforcement partners.  I would like to thank the Federal Bureau of Investigation, United States Attorney’s Office, the Criminal Division of the Department of Justice and all the other New Mexico and Arizona law enforcement agencies that participated in the investigation, capture of John McCluskey and subsequent successful prosecution.”

The case was investigated by Albuquerque and Phoenix Divisions of the FBI and the New Mexico State Police. It is being prosecuted by Assistant U.S. Attorneys Linda Mott and Gregory J. Fouratt of the District of New Mexico and Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Section.

Bilfinger SE, an international engineering and services company based in Mannheim, Germany, has agreed to pay a $32 million penalty to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials of the Federal Republic of Nigeria to obtain and retain contracts related to the Eastern Gas Gathering System (EGGS) project, which was valued at approximately $387 million.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

As part of the agreed resolution, the department today filed a three-count criminal information in U.S. District Court for the Southern District of Texas charging Bilfinger with violating and conspiring to violate the FCPA’s anti-bribery provisions. The department and Bilfinger agreed to resolve the charges by entering into a deferred prosecution agreement for a term of three years. In addition to the monetary penalty, Bilfinger agreed to implement rigorous internal controls, continue cooperating fully with the department, and retain an independent corporate compliance monitor for at least 18 months. The agreement acknowledges Bilfinger’s cooperation with the department and its remediation efforts.

According to court documents, from late 2003 through June 2005, Bilfinger conspired with Willbros Group Inc. and others to make corrupt payments totaling more than $6 million to Nigerian government officials to assist in obtaining and retaining contracts related to the EGGS project. Bilfinger and Willbros formed a joint venture to bid on the EGGS project and inflated the price of the joint venture’s bid by 3 percent to cover the cost of paying bribes to Nigerian officials. As part of the conspiracy, Bilfinger employees bribed Nigerian officials with cash that Bilfinger employees sent from Germany to Nigeria. At another point in the conspiracy, when Willbros employees encountered difficulty obtaining enough money to make their share of the bribe payments, Bilfinger loaned them $1 million, with the express purpose of paying bribes to the Nigerian officials.

Including today’s action, the department has filed criminal charges in the Southern District of Texas against three institutions and four executives and consultants in connection with the EGGS bribery scheme:

·          On Sept. 14, 2006, Jim Bob Brown, a former Willbros executive, pleaded guilty to one count of conspiracy to violate the FCPA in connection with his role in making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract and in connection with his role in making corrupt payments in Ecuador. Brown was sentenced on Jan. 28, 2010, to serve 12 months and one day in prison, to be followed by two years of supervised release, and ordered to pay a $17,500 fine.

·          On Nov. 5, 2007, Jason Steph, also a former Willbros executive, pleaded guilty to one count of conspiracy to violate the FCPA in connection with his role in making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract. Steph was sentenced on Jan. 28, 2010, to serve 15 months in prison, to be followed by two years of supervised release, and ordered to pay a $2,000 fine.

·          On May 14, 2008, Willbros Group Inc. and Willbros International Inc. entered into a deferred prosecution agreement and agreed to pay a $22 million criminal penalty in connection with the company’s payment of bribes to government officials in Nigeria and Ecuador. On March 30, 2012, the government moved to dismiss the charges against Willbros on the grounds that Willbros had satisfied its obligations under the deferred prosecution agreement, and on April 2, 2012, the court granted the United States’ motion.

·          On Dec. 19, 2008, Kenneth Tillery, a former Willbros executive, was charged with conspiring to make and making bribe payments to Nigerian and Ecuadoran officials in connection with the EGGS project and pipeline projects in Ecuador and conspiring to launder the bribe payments. Tillery remains a fugitive. The charges against Tillery are merely accusations, and he is presumed innocent unless and until proven guilty.

·          On Nov. 12, 2009, Paul Grayson Novak, a former Willbros consultant, pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA in connection with his role in making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract. Novak was sentenced on May 3, 2013, to serve 15 months in prison, to be followed by two years of supervised release, and ordered to pay a $1 million fine.

The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases. The case is being prosecuted by Senior Trial Attorney Laura N. Perkins of the Criminal Division’s Fraud Section.

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

The Justice Department and Internal Revenue Service (IRS) announced today that John T. Hoang, of Woodbridge, Va., was sentenced in federal district court in Washington, D.C., for willfully aiding and assisting in the preparation of false income tax returns for the 2004 tax year.  U.S. District Judge Richard J. Leon sentenced Hoang to serve 48 months in prison, 24 months of supervised release and 240 hours of community service.  Judge Leon also ordered him to pay $331,896 in restitution to the IRS.  Hoang previously pled guilty on July 31, 2013. 

According to court documents and statements made in court, Hoang was a certified public accountant (CPA) and an attorney.  From January 2005 through April 2007, Hoang operated John T. Hoang CPA, a tax return preparation business,, and was one of two partners who owned Tax-Smart Technology Services.  Hoang operated these businesses from various locations in Washington, D.C., and Fairfax, Va.  In 2008, a federal district court in Virginia barred Hoang from preparing federal tax returns.

As alleged in court documents, in his capacity as a tax return preparer, Hoang prepared and supervised the preparation of client tax returns to be filed with the IRS and various state taxing authorities.  For the tax years 2004, 2005 and 2006, Hoang prepared hundreds of U.S. Individual Income Tax Returns and earned substantial income from his tax preparation activities.  Hoang further received a substantial portion of the refunds issued by the IRS to his clients through his businesses.  Despite earning revenue through his businesses of approximately $1 million in 2004; $2 million in 2005; and $3 million in 2006, Hoang failed to file any federal income tax returns or pay any federal income taxes for himself or his businesses during this time.

Hoang admitted that he prepared and caused the preparation of false and fraudulent 2004, 2005 and 2006 income tax returns for his clients.  When preparing these false tax returns and related schedules for his clients, Hoang created wholly fictitious business income and expenses for what seemed to be a technology licensing business.  The false information resulted in the client-taxpayers reporting fake losses from business activity and receiving either refunds larger than those they were entitled or decreases in the amount of taxes due.  Hoang admitted that the tax loss caused by certain false returns he prepared was greater than $30,000 per return, and that he prepared at least 24 such false returns for the 2004 through 2006 tax years. 

As part of the plea agreement, Hoang admitted that the total tax loss caused by his criminal conduct is greater than $1.5 million.

The case was investigated by IRS-Criminal Investigation and was prosecuted by Trial Attorneys Jorge Almonte and Jeffrey B. Bender of the Justice Department’s Tax Division.

Earl Gross, 74, of Las Vegas, the former President and Chief Executive Officer of U.S. Mortgage, a loan servicing company, was sentenced to serve 18 months in prison for his role in an $8 million scheme to defraud Wells Fargo Bank.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office made the announcement after the sentence was imposed by U.S. District Court Judge Andrew P. Gordon of the District of Nevada.

On June 11, 2013, Gross pleaded guilty to one count of bank fraud. In addition to his prison term, Gross was ordered to forfeit $8,440,439 in fraudulent proceeds.

According to plea documents, Wells Fargo Bank contracted with U.S. Mortgage to service pools of residential mortgage loans held by investors in mortgage backed securities. Under the agreement, Gross and U.S. Mortgage were obligated to collect from the borrowers the monthly payments that the borrowers made toward their mortgage obligations and forward these proceeds to Wells Fargo Bank. In the event that a borrower paid off the loan – usually by selling the mortgaged property – U.S. Mortgage was obligated to remit to Wells Fargo Bank the full payoff amount. U.S. Mortgage agreed to provide Wells Fargo Bank with monthly reports that described the status of the loans, and it received servicing fees for each loan it serviced.

According to the indictment, from 2004 to 2009, Mr. Gross and U.S. Mortgage withheld over $8 million in loan payoffs that were due Wells Fargo Bank by submitting to the bank reports stating that numerous borrowers were continuing to make monthly payments when in fact they had paid off the loans in full. Rather than remit the full payoff amount to Wells Fargo Bank, Gross and U.S. Mortgage forwarded only what the borrowers’ monthly payments would have been and retained the difference in U.S. Mortgage’s bank account. To deceive Wells Fargo Bank about the status of paid-off loans, Gross and U.S. Mortgage created fake amortization schedules indicating that borrowers who had sold and paid off homes were continuing to make monthly payments. In addition to withholding loan payoff amounts to which he was not entitled, Gross charged Wells Fargo Bank fees to service mortgage loans that had been paid off.

The case was investigated by the FBI and prosecuted by Deputy Chief Charles La Bella and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section, with assistance from Roberto Iraola of the Office of International Affairs and the United States Attorney’s Office for the District of Nevada.

Today’s guilty plea was a result of efforts 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 is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the Task Force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed 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 .

A federal court in Atlanta permanently barred Matthew Adegbite and his companies, MAS & Associates CPA LLC and Mathew A. Adegbite CPA PC, from preparing federal income tax returns for others, the Justice Department announced today.  The permanent injunction order was signed today by Judge Clarence Cooper of the U.S. District Court for the Northern District of Georgia.

According to the complaint, Adegbite has prepared more than 1,000 returns since 2008.  Allegedly, Adegbite repeatedly understated his clients’ federal tax liabilities by claiming false or inflated tax deductions and credits his clients were not eligible to take.  Adegbite’s alleged schemes include claiming the First Time Home Buyer Credit for taxpayers who did not actually purchase homes, deducting fictitious business expenses for taxpayers who did not operate a business and inflating deductions for legitimate businesses to claim losses for otherwise profitable enterprises.  The complaint further alleged that the harm to the U.S. Treasury as a result of his conduct could amount to millions of dollars and that a permanent injunction was warranted to prevent further harm.

Return preparer fraud is one of the Internal Revenue Service’s 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 department’s 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. Matthew Adegbite, et al.
Final Judgment and Permanent Injunction