District Not Recorded

Vantage Oncology LLC (Vantage) has agreed to pay the government more than $2.08 million to settle allegations that it submitted false claims to Medicare for radiation oncology services performed at its Illinois centers from 2007 through June 2012, the Justice Department announced today.  Vantage owns and manages radiation oncology centers in multiple states, including two centers in Spring Valley and Streator, Ill.

                                                           
“Billing Medicare for patient care that is not necessary or appropriate contributes to the soaring costs of health care,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “The Department of Justice is committed to protecting public funds and guarding against abuse of the Medicare system.” 

 

The government alleged that Vantage double billed and overbilled Medicare for certain procedures, billed for services that lacked supporting documentation and improperly billed for radiation treatment provided to patients without proper physician supervision. 

 

“Our office remains committed to ensuring appropriate patient care and protecting the integrity of government insurance programs,” said U.S. Attorney for the Southern District of Ohio C arter M. Stewart . 

 
“Cheating taxpayers by double billing, overbilling and wrongly billing for services without required medical oversight will not be tolerated,” said Special Agent in Charge with the Office of Inspector General of the U.S. Department of Health and Human Services Lamont Pugh III.  “The Office of Inspector General is committed to identifying, investigating and holding accountable those who improperly profit at the expense of the Medicare program.”  

 

This settlement resolves a lawsuit filed by former Vantage employee Suleiman Refaei 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.  Refaei will receive $354,450.

 

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 $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

 

The investigation was jointly handled by the U.S. Attorney’s Office for the Southern District of Ohio; the Justice Department’s Civil Division, Commercial Litigation Branch and the Department of Health and Human Services Office of the Inspector General.

The case is captioned United States ex rel. Suleiman Refaei v. Vantage Oncology, et al., Case No. 1:10-cv-833 (S.D. Ohio).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

A Cleveland federal grand jury returned an indictment against two executives of a Japanese automotive supplier for their roles in an international conspiracy to fix prices of automotive anti-vibration rubber parts sold to Toyota and installed in U.S. cars, the Department of Justice announced today.

 
The indictment, filed yesterday in U.S. District Court for the Northern District of Ohio in Toledo, charges Masao Hayashi and Kenya Nonoyama, both Japanese nationals, with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to allocate the supply of, to rig bids for and to fix, raise and maintain the prices of anti-vibration rubber parts sold to Toyota Motor Corp., Toyota Motor Engineering & Manufacturing North America Inc. and affiliated companies (collectively Toyota) for installation in automobiles manufactured and sold in the United States and elsewhere.

 
Automotive anti-vibration rubber products are comprised primarily of rubber and metal, and include engine mounts and suspension bushings.  They are installed in automobiles for the purpose of reducing road and engine vibration.

 
The indictment alleges, among other things, that from as early as March 1996 until at least December 2008, Hayashi and Nonoyama and their co-conspirators conducted meetings and communications in Japan to reach collusive agreements.  The indictment alleges that the conspiracy involved agreements affecting the Toyota Corolla, Avalon, Tacoma, Camry, Tundra, Sequoia, Rav4, Sienna, Venza and Highlander.

 
“Today’s indictment reaffirms the Antitrust Division’s commitment to hold executives accountable for actions that corrupt the competitive landscape and harm consumers,” said Renata B. Hesse, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division.  “The Antitrust Division continues to work closely with its fellow competition enforcers abroad to ensure that there are no safe harbors for executives who engage in international cartel crimes.”

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

 
Including Hayashi and Nonoyama, 21 companies and 26 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry.  To date, more than $1.6 billion in criminal fines have been obtained and seventeen of the charged executives have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.

 
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at (888) 647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at (216) 522-1400.

Three high-level executives of Tokyo-based Takata Corp. have agreed to plead guilty for their participation in a conspiracy to fix prices of seatbelts installed in cars sold in the United States, the Department of Justice announced today.  The executives have also agreed to serve time in a U.S. prison.

 

According to the one-count felony charges filed separately against each of the executives today in the U.S. District Court for the Eastern District of Michigan in Detroit, Yasuhiko Ueno, Saborou Imamiya and Yoshinobu Fujino participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of seatbelts sold to Toyota Motor Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Fuji Heavy Industries Inc. – more commonly known by its brand name, Subaru – and Mazda Motor Corp. in the United States and elsewhere.  The three executives have agreed to serve prison sentences ranging from 14 to 19 months, and to cooperate with the department’s ongoing investigation.

 

Ueno was employed by Takata’s Auburn Hills, Mich.-based U.S. subsidiary, TK Holdings Inc., in the United States as senior vice president for sales for Japanese manufacturers from at least January 2006 through December 2007.  From early 2008 through June 2009, Ueno was employed by Takata in Japan as deputy division director of the customer relations division, and as director of the customer relations division from June 2009 through at least February 2011.  According to the charge, Ueno’s involvement in the conspiracy lasted from at least as early as January 2006 until at least February 2011.  Ueno has agreed to serve 19 months in prison and to pay a $20,000 criminal fine.

 

Imamiya was employed by Takata in Japan as general manager for Toyota sales from at least January 2008 to July 2009, and as director of the customer relations division from July 2009 through at least February 2011.  According to the charge, Imamiya’s involvement in the conspiracy lasted from at least as early as January 2008 until at least February 2011.  Imamiya has agreed to serve 16 months in prison and to pay a $20,000 criminal fine.

 

Fujino was employed by Takata in Japan as the manager of the Toyota group within the customer relations division from at least January 2004 through June 2005, and as the manager of the Mazda group within the customer relations division from June 2005 through the end of 2007.  From the beginning of 2008 through at least February 2011, Fujino was employed by TK Holdings in the United States as assistant vice president for sales for Japanese manufacturers.  According to the charge, Fujino’s involvement in the conspiracy lasted from at least as early as January 2004 until at least February 2011.  Fujino has agreed to serve 14 months in prison and to pay a $20,000 criminal fine.

 

Takata Corp. is a manufacturer of automotive occupant safety systems, including seatbelts.  Seatbelts are safety strap restraints designed to secure an occupant in position in a vehicle in the event of an accident, and may be sold bundled with related parts according to the needs of the automobile manufacturer.  According to the charges, the Takata executives and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to the automobile manufacturers.

 

On Sept. 26, 2013, Gary Walker, an executive of TK Holdings Inc., agreed to plead guilty and serve a sentence of 14 months in prison for his involvement in the same conspiracy.  On Oct. 9, 2013, Takata Corp. agreed to plead guilty for its involvement in the conspiracy and to pay a criminal fine of $71.3 million.

 

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

 

Including today’s charges, 24 individuals have been charged in the department’s investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 21 corporations have been charged.

 

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

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

 
Sammy Keith Shipman, aka “Stubby,” 31, of Houston, pleaded guilty today before U.S. Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity.

 
William David Maynard, aka “Baby Huey,” 43, of Houston, pleaded guilty Nov. 20, 2013, and Dustin Lee Harris, aka “Lightning,” 29, of Dallas, pleaded guilty Nov. 19, 2013. Each defendant pleaded guilty to one count of conspiracy to participate in racketeering activity.

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

 

By pleading guilty to racketeering charges, Shipman, Maynard and Harris admitted to being members of the ABT criminal enterprise and to committing multiple acts of violence and/or narcotics trafficking on behalf of the ABT.

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

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

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

 
At sentencing, scheduled for Feb. 20, 2014, Shipman, Maynard and Harris each face a maximum penalty of life in prison.

 
Shipman, Maynard and Harris are three of 36 defendants charged with, among other things, conducting racketeering activity through the ABT criminal enterprise. To date, 17 defendants have pleaded guilty.

 

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

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

 

A federal grand jury in Milwaukee has returned an 11-count superseding indictment adding David B. Moore, 45, as a defendant in the federal sex trafficking case involving his son, Najee Moore, 22. 

 

Both men are charged with conspiracy to engage in the sex trafficking and forced labor of a minor and sex trafficking of a minor.  David Moore is also charged with soliciting his son to engage in sex trafficking.  Najee Moore is charged with an additional conspiracy to engage in sex trafficking and forced labor, two counts of sex trafficking of an adult, attempted sex trafficking of a minor, attempted forced labor, evidence tampering and attempted witness tampering.  The previous indictment in the case, returned on June 18, 2013, charged only Najee Moore with sex trafficking, attempted forced labor and related offenses.

 

According to the superseding indictment, between February 2008 and December 2009 David Moore and Najee Moore conspired to compel a minor to engage in prostitution and strip club dancing and caused that minor to engage in acts of prostitution.  In July 2011, David Moore allegedly solicited his son to engage in further acts of sex trafficking.  Between 2011 and 2013, Najee Moore allegedly engaged in the conduct charged in the remaining counts.

 

Both Moores face a statutory maximum sentence of life imprisonment.

 

An indictment is merely an accusation.  All defendants are presumed innocent until proven guilty.   

The case is being investigated by the FBI, the Milwaukee Police Department, DHS Homeland Security Investigations and the Wisconsin Department of Criminal Investigation.  The case is being jointly prosecuted by Assistant U.S. Attorney Karine Moreno-Taxman and Trial Attorney Daniel H.Weiss of the Civil Rights Division's Human Trafficking Prosecution Unit. 

The owner and operator of several Miami health care agencies was sentenced today to serve 120 months in prison for his role in a health care fraud scheme involving defunct home health care company Trust Care Health Services Inc.

 
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; 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; and Acting Special Agent in Charge Michael J. DePalma of the Internal Revenue Service—Criminal Investigation’s (IRS-CI) Miami Field Office made the announcement.

 
Roberto Marrero, 60, of Miami, was sentenced by U.S. District Judge K. Michael Moore in the Southern District of Florida. In September 2013, Marrero pleaded guilty to conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks.

 
Marrero was an owner and operator of Trust Care, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

 
Co-conspirators Sandra Fernandez Viera, 49, Patricia Morcate, 34, and Enrique Rodriguez, 59, all of Miami, have also pleaded guilty to related charges, including conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks. On Nov. 13, 2013, Fernandez Viera was sentenced to serve 120 months in prison; Morcate was sentenced to serve 60 months; and Rodriguez was sentenced to serve 57 months.

 
Together with Marrero, Fernandez Viera was an owner and operator of Trust Care. Morcate worked at and was an investor in Trust Care. Rodriguez served as a patient recruiter on behalf of Trust Care.

 
According to court documents, Marrero and his co-conspirators operated Trust Care 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 were not provided.

 
Marrero primarily controlled Trust Care and, in light of that role, oversaw the schemes operating out of the company. Marrero was also responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims to the Medicare program.

 
Marrero and his co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Trust Care for home health and therapy services that were medically unnecessary and/or not provided.  Marrero and his co-conspirators at Trust Care also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications and other documentation.  Marrero and his co-conspirators used these prescriptions, medical certifications and other documentation to fraudulently bill the Medicare program for home health care services, which Marrero knew was in violation of federal criminal laws.

 
From approximately March 2007 through at least October 2010, Trust Care submitted more than $20 million in claims for home health services.  Medicare paid Trust Care more than $15 million for these fraudulent claims.

 
Marrero and his co-conspirators have also acknowledged their involvement in similar fraudulent schemes at several other Miami health care agencies in addition to Trust Care with estimated total losses of approximately $50 million. Those agencies include A&B Health Services Inc. , Centrum Home Health Care Inc., Global Nursing Home Health Inc., Lovable Home Health Services Corp., New Concepts In Health Inc., Nursemed Home Care Corp., R&M Health Care Inc., Ubieta Health System Inc., and Vital Care Home Health Services Inc.

 
The case was investigated by the FBI and HHS-OIG, with the assistance of IRS-CI, and was brought as part of the Medicare Fraud Strike Force initiative, 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 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

Four commercial fishermen and one company were indicted yesterday by a federal grand jury in Baltimore for a criminal conspiracy involving the illegal harvesting and interstate sale of striped bass on the Chesapeake Bay, announced Robert G. Dreher, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

According to court documents, Michael D. Hayden Jr., his company, William J. Lednum, Kent Sadler and Daniel Murphy engaged in a multi-year conspiracy during which time they harvested tens of thousands of pounds of striped bass on the Chesapeake Bay in violation of Maryland fishing regulations, falsified documents filed with the State of Maryland, and then transported and sold those poached fish in interstate commerce. In addition, after the investigation of these crimes began, it is alleged that Hayden attempted to manipulate some witnesses’ testimony while trying to outright prevent the testimony and cooperation of others. In addition, it is alleged that in at least one incident, Hayden threatened to retaliate against another potential witness he believed to be cooperating with investigators. Hayden was arrested on Sept. 17, 2013, having been charged in a criminal complaint with several counts of witness intimidation and retaliation.

The 26-count indictment charges the defendants with conspiracy, and Lacey Act violations. These charges carry possible terms of incarceration of five years. In addition, the witness intimidation/retaliation charges against Mr. Hayden each carry a maximum-term of 20 years in prison.

An indictment is a charging document and all defendants are innocent until proven guilty.

This case is being investigated by criminal investigators with the Maryland Department of Natural Resources, Natural Resources Police and Special Agents from the U.S. Fish and Wildlife Service. The case is being jointly prosecuted by the United States Attorney’s Office for the District of Maryland and the Environmental Crimes Section of the United States Department of Justice.

A federal district judge in St. Louis has permanently barred defendants Joseph Burns, Joseph Thomas and International Tax Service Inc. from preparing federal tax returns for others, the Justice Department announced today.  The defendants consented to the permanent injunction after the government filed a complaint and a motion for preliminary injunction.  A hearing on that preliminary injunction motion, which resolves the case, was scheduled to commence today.

The complaint alleged that, from 2005 until late 2011, Thomas worked as a tax return preparer for Burns, who was doing business as Electronic Tax Service, but in early 2012, Thomas opened his own tax preparation business, called International Tax Service Inc.  Burns and Thomas operated their respective tax preparation businesses from the same building, located at 4144 Lindell Boulevard in the Midtown neighborhood of St. Louis.  According to the complaint, the defendants repeatedly fabricated expenses and deductions on customers’ returns and falsely claimed head of household status for customers who were married in order to illegally understate  their customers’ federal tax liabilities and to obtain fraudulent tax refunds.  The complaint also alleged that the defendants falsely claimed that some of their customers earned income from businesses that the defendants fabricated or increased the amount of business income their customers earned in order to illegally claim the maximum earned income tax credit on customers’ returns.  In one example cited in the  complaint, a customer of Burns told him that she made approximately $1200 for the year styling hair, but Burns claimed the customer had a beautician business and fabricated $16,900 in income which he reported on the customer’s tax return.  As alleged in the complaint, the IRS estimates that the annual tax loss from the returns prepared by the defendants could be as much as $6 million.

Return preparer fraud is one of the IRS'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 Justice Department website.

Relatd Materials:

United States v. Joseph L. Burns, et al.
Final Stipulated Permanent Injunction Order Against Joseph L. Burns
Final Stipulated Permanent Injunction Order Against Joseph Thomas and International Tax Service, Inc.

The former owner of a defunct durable medical equipment (DME) clinic based in Miami pleaded guilty today for his role in an $11 million Medicare fraud scheme.

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

          
Francisco Enrique Chavez, 36, of Miami, pleaded guilty before U.S. District Judge Patricia A. Seitz in the Southern District of Florida to one count of health care fraud. He faces a maximum penalty of 10 years in prison when he is sentenced on Feb. 11, 2014.

 
According to court records, Chavez served as the president and sole corporate officer of World Class Medical Clinic Corp. (World Class) . From March 27, 2006, through Aug. 22, 2006, Chavez submitted or caused to be submitted approximately $11,303,494 in fraudulent claims to the Medicare program on behalf of World Class for DME that was neither prescribed by a physician nor medically necessary. Medicare paid more than $1,713,959 on these fraudulent claims. The proceeds of the World Class fraud scheme were deposited into corporate bank accounts that were controlled by Chavez, and he made numerous cash withdrawals and deposits into personal and shell entity bank accounts to conceal the nature of the scheme.

 
Chavez was a fugitive who was extradited from Spain to Miami on Aug. 30, 2013.

           
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 Attorneys Allan J. Medina and Sarah M. Hall of the Fraud Section . The Criminal Division’s Office of International Affairs provided significant assistance in the extradition.

                       
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

On November 4, 2013 the United States District Court for the Western District of Washington granted final approval to the amended ABT Settlement Agreement (Agreement). The Agreement provides that individuals who file or intend to file asylum applications with either the United States Citizenship and Immigration Service (USCIS) or the Executive Office for Immigration Review (EOIR) are entitled to new procedures relating to the crediting of time toward eligibility for employment authorization.

The original Agreement was amended in September 2013 to clarify two points. First, a clarification was added to the Agreement, stating that when an asylum case is remanded to an immigration judge from the Board of Immigration Appeals (Board) for adjudication of an asylum claim (including Board remands to an immigration judge following an appeal to a U.S. Court of Appeals), the applicant will not only be credited with the total number of days between the immigration judge's decision and the date of the Board's remand order for employment eligibility purposes, but the time going forward from the date of the Board remand order will also be credited to the applicant, excluding any delays requested or caused by the applicant. Second, the agreement was amended to clarify that Remand Claim relief would be implemented pursuant to the six month timeframe provided for most other provisions of the agreement.

Due to the government shutdown, the six month implementation timeframe was extended by several weeks, so that implementation will now begin by December 3, 2013.

Additional information on the ABT Settlement Agreement is available on www.justice.gov/eoir.

Three former investment advisers were sentenced on Nov. 19, 2013 for their roles in attempting to defraud a wealthy investor of $1 billion through a high-yield investment fraud scheme.

 
Acting Assistant Attorney General Mythili Raman of the Criminal Division and U.S. Attorney Andre Birotte Jr. of the Central District of California made the announcement.

 
William J. Ferry, a former stock broker and investment advisor; Dennis J. Clinton, a former real estate investment manager; and Paul R. Martin, a former senior vice president and managing director of Bankers Trust, were convicted on July 31, 2012, of conspiracy, mail fraud and wire fraud. The investor they attempted to defraud was, in reality, part of an undercover FBI team that posed as wealthy investors and investment managers to stop fraudsters before they actually harmed victims.

 
Ferry, 71, of Newport Beach, Calif., was sentenced to serve 15 months in prison. Clinton, 65, of San Diego, Calif., was sentenced to serve 30 months in prison. Martin, 64, of New Jersey, was sentenced to 30 months in prison.

 
Evidence at trial established that from February to December 2006, Ferry, Clinton, Martin and others conspired to promote a high-yield investment fraud scheme that promised an extremely high return at little or no risk to principal. The defendants claimed their investment program was a “Fed Trade Program” that was regulated by the Federal Reserve Bank, that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer.

 
Investors also were told that once the investment program passed compliance, it would become registered in Washington, D.C., with the Fed. The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ investment program. The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief. The promised profits from investing in a Fed program had to be divided in equal amounts, with one portion going to some humanitarian purpose, another portion to some kind of project financing and the remainder to the investor. The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants.

 
Throughout the scheme, Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; and Clinton acted as a trouble shooter during the compliance phase and transfer of funds to the Swiss banker.

           
Another conspirator, Brad Keith Lee, of California, who acted as the contact with the Swiss banker, pleaded guilty to conspiracy and wire fraud on April 13, 2009, and was sentenced to 24 months in prison on Jan. 11, 2010. Oregon resident John Brent Leiske, who acted as a trader during the scheme, pleaded guilty in the District of Oregon to conspiracy, mail fraud and wire fraud on Jan. 24, 2012, and was sentenced to 120 months in prison on Feb. 14, 2013.

 
This continuing investigation is being conducted by the FBI. This case is being prosecuted by Senior Litigation Counsel David Bybee and Trial Attorney Fred Medick of the Criminal Division’s Fraud Section.

 

 

Former Jefferson Parish Sheriff’s Deputy Mark Hebert, 48, pled guilty today to one civil rights violation, five bank fraud violations and one aggravated identity theft violation, announced Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division, U.S. Attorney Kenneth A. Polite Jr. for the Eastern District of Louisiana, Special Agent in Charge Michael J. Anderson of the FBI New Orleans Field Office and Sheriff Newell Normand from the Jefferson Parish Sheriff’s Office.

 

According to the plea agreement and other documents, Hebert engaged in a scheme to defraud J.P. Morgan Chase Bank (Chase Bank) from Aug. 2, 2007 through Nov. 21, 2007.  The scheme began when Hebert, in his capacity as a Jefferson Parish Sheriff’s Deputy, responded to an automobile accident involving Albert Bloch and stole Bloch’s VISA debit card, as well as other items.  While Bloch was hospitalized following the accident, Hebert used that debit card to make unauthorized purchases of merchandise, including two Global Positioning System units, and to withdraw funds from Bloch’s Chase Bank account via Automatic Teller Machines (ATMs).  After Chase Bank cancelled the debit card due to Bloch filing a dispute with the bank, Hebert continued his scheme to defraud by negotiating and attempting to negotiate forged checks drawn from Bloch’s account.  Hebert then obtained the replacement debit card sent to Bloch and used that card to make further unauthorized transactions at Chase Bank ATMs.  Bloch has not been seen since 2007.

 

By pleading guilty, Hebert admitted that he violated Bloch’s civil rights when he responded in his official capacity to Bloch’s automobile accident and unreasonably seized and converted Bloch’s property, including funds that Bloch had on deposit with Chase Bank.  Hebert also admitted that on at least five occasions he executed his bank fraud scheme against Chase Bank by unlawfully using Bloch’s original ATM card, replacement ATM card and Chase Bank checks.  In addition, Hebert admitted that on at least one occasion he used Bloch’s driver’s license number and social security number in order to execute his bank fraud scheme and thereby committed aggravated identity theft.

“When the defendant officer responded to an automobile accident and stole the victim’s credit cards and used them to commit fraud, he violated not only the law, but the core law enforcement values of trust and respect for civil rights,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Civil Rights Division will continue to work with our partners in the U.S. Attorney Offices and FBI to ensure that civil rights violations are identified and where appropriate prosecuted.”

 

“Mark Hebert’s guilty plea occurred as a result of the successful collaboration of local and state law enforcement agencies in our continued fight to eradicate corruption in our community,” said U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.  “The U.S. Attorney’s Office and its law enforcement partners are delivering the same message in a unified voice:  we will not tolerate abuse of power and official position.  If you violate the public trust in Southeast Louisiana, you will be held accountable.”

 

“In as much as I am very disappointed in the behavior of former JPSO officer Mark Hebert as outlined in his guilty plea today, I am extremely proud of the persistence of my criminal investigators and the efforts of the U. S. Attorney's Office in this investigation,” stated Jefferson Parish Sheriff Newell Normand. “My office will not tolerate any form of corruption.”

           

A sentencing hearing has been scheduled before the Honorable Jane Triche-Milazzo on March 24, 2014.  For each of the five counts of bank fraud, Hebert faces a maximum statutory sentence of 30 years in prison and a $1,000,000 fine.  For the count of aggravated identity theft, Hebert faces a maximum statutory sentence of two years in prison and a $250,000 fine.  For the count charging a civil rights violation, Hebert faces a maximum statutory penalty of one year in prison and a $100,000 fine. 

 

The investigation of this matter was conducted by the Jefferson Parish Sheriff’s Office Detective’s Bureau and the FBI.  The case is being prosecuted by Assistant U.S. Attorney Steve Parker, Assistant U.S. Attorney Tony Sanders and Civil Rights Division Trial Attorney Shan Patel.

Deputy Attorney General James M. Cole today announced the release of a new Department of Justice policy for employees addressing the effects of domestic violence, sexual assault, and stalking in the workplace.  The Department of Justice has long been at the forefront of addressing domestic violence in the workplace.

“With approximately 114,000 employees in 53 components, the Justice Department is a diverse workplace and it is our hope that this policy will serve as a model for other employers to address domestic violence, dating violence, sexual assault, and stalking,” said Deputy Attorney General Cole.  “This new policy, and the steps it requires components to take, will improve the safety of the department’s workplaces and will help us better support victims.” 

On April 18, 2012, President Obama issued a memorandum entitled “Establishing Policies for Addressing Domestic Violence in the Federal Workforce,” which required the Office of Personnel Management to issue guidance on the development of agency-specific policies to address domestic violence in the workplace.  All federal agencies are required to develop an agency-specific policy based on the guidance.  The department welcomed the chance to build upon the existing policy first created by Attorney General Janet Reno in 1999, which established support and resources for department employees who experience domestic violence.  This order unequivocally stated that domestic violence perpetrated in the workplace was unacceptable and would not be tolerated.

Today, the department adopted a robust workplace policy that fully responds to the president’s call to federal agencies, and addresses not only domestic violence in the workplace, but also sexual assault and stalking.

“The impact of domestic and sexual violence is far reaching,” said Acting Director Bea Hanson  of the Office on Violence Against Women.  “And it is clear that we all have a part to play in creating a work environment that is safe for all of us.  As we introduce this new policy, we must educate ourselves on how we can support co-workers who may be experiencing domestic violence, sexual assault, or stalking.  And I am proud that the Office on Violence Against Women has led the charge in supporting organizations that work to address domestic violence, sexual assault and stalking in the workplace.” 

The Office on Violence Against Women (OVW), a component of the U.S. Department of Justice, provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation.  Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking.  In addition to overseeing 22 federal grant programs, OVW often undertakes initiatives in response to special needs identified by communities facing acute challenges.  More information is available at www.ovw.usdoj.gov.

If you, or someone you know, are a victim of domestic violence, please call the National Domestic Violence Hotline at 800-799-SAFE (7233), 800-787-3224 (TTY).  For more information on resources that may be available to you, visit: http://www.ovw.usdoj.gov/statedomestic.htm.

 

Note: The defendants in this case, Joseph Wolfson; Gregg Gehring; Robert Jeffrey; Betty Simon, Trustee LLC.; and Richard Simon, Trustee, were acquitted by a jury of the charges alleged in the indictment.

A federal grand jury in Newark, N.J., returned an indictment against six investors for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S. District Court for the District of New Jersey in Newark, charges four individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  The indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

 
Joseph Wolfson, of Margate, N.J., was a part-owner of two entities that invested in municipal tax liens, Betty Simon Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a bidder for Crusader Servicing Corp., which pleaded guilty to its role in the conspiracy in September 2012, and also a bidder for Crusader’s successor corporation.  Robert Jeffrey, of Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

 
“The individuals and entities charged today demonstrated a blatant disregard for the competitive process by allocating the purchase of certain municipal tax liens by, from time to time, flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,” said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust Division.  “The Antitrust Division remains committed to prosecuting those who thwart the competitive bidding process.”

 
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.  Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

 
The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens. 

           
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Including today’s charges, 20 individuals and entities have been charged as part of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions in New Jersey.  To date, 11 individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick, Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty as part of this investigation.

Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed 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.

This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

SACRAMENTO, California - El procurador general de los EE.UU., Eric Holder, el procurador general auxiliar Tony West y el procurador federal de los Estados Unidos Benjamin B. Wagner anunciaron que los Estados Unidos han llegado a un acuerdo de liquidación civil con JPMorgan Chase relacionado con la venta que hicieron JPMorgan y otros dos bancos que adquirió JPMorgan en el 2008, Bear Stearns y Washington Mutual, de valores respaldados por hipotecas residenciales.

El acuerdo resuelve las posibles reclamaciones de miles de millones de dólares por las sanciones civiles bajo la Ley de Reforma, Recuperación y Ejecución de Instituciones Financieras (FIRREA, por sus siglas en inglés), así como las reclamaciones por las compensaciones de pérdidas de la Agencia Federal de Crédito para la Vivienda (FHFA, por sus siglas en inglés), la Administración Nacional de Cooperativas de Crédito (NCUA, por sus siglas en inglés), la Corporación Federal de Seguros de Depósitos (FDIC, por sus siglas en inglés) y los estados de California, Nueva York, Illinois, Massachusetts y Delaware.  Este requiere que JPMorgan le pague $2 mil millones al Departamento de Justicia de los EE.UU., màs un total de $7 mil millones a las agencias estatales y federales, y provea una compensación adicional de $4 mil millones para los propietarios de viviendas y vecindarios afectados por la crisis financiera que comenzó en el año 2008.

El acuerdo de liquidación, que es de $2 mil millones de dólares, constituye la sanción civil màs grande que jamàs se le haya impuesto a algún banco por emitir valores respaldados por hipotecas defectuosas. Este es el resarcimiento màs grande de la historia de un caso en que haya trabajado la Procuraduría General de los EE.UU. para el Distrito Este de California.

El acuerdo de liquidación fue producto en parte de una investigación que hiciera el procurador auxiliar de los EE.UU. y los agentes especiales de la FHFA-OIG en el Distrito Este de California sobre las posibles violaciones de FIRREA en la titulación y venta de valores respaldados por hipotecas residenciales (RMBS, por sus siglas en inglés) por parte de JPMorgan como tal (no Bear Stearns ni Washington Mutual) entre los años 2005 y 2007. Luego de la investigación, el procurador federal Wagner concluyó que JPMorgan vendió miles de millones de dólares de RMBS con tasa no preferencial respaldados por grupos de préstamos hipotecarios que el banco sabía contenían préstamos que no cumplían con las guías de aseguramiento del tramitador del préstamo, estaban garantizados por propiedades con tasaciones infladas, estaban respaldados por índices incorrectos de préstamo-valor o deuda-ingresos o se originaron en violación a las leyes y regulaciones federales y estatales, a la vez que les dio información falsa a los inversionistas sobre la calidad de los préstamos en los grupos y el riesgo de pérdida.

En el proceso de adquisición de los grupos de préstamos hipotecarios de los tramitadores de préstamos, JPMorgan actuó con la “debida diligencia” al contratar empresas de aseguramiento externas para inspeccionar una muestra de los archivos de préstamos, generalmente entre 20 y 30 por ciento de los préstamos en un grupo. Estas empresas externas examinaron si los préstamos se realizaron de acuerdo con los estàndares de aseguramiento del tramitador del préstamo y si la documentación del préstamo cumplía con las leyes federales y estatales aplicables. Las empresas externas también realizaron las revisiones de valores para garantizar que las propiedades que servían como colaterales de los préstamos hubiesen sido correctamente tasadas.

Los inversionistas de RMBS no pudieron evaluar completamente el riesgo de pérdida de los incumplimientos de los prestatarios porque no tenían acceso directo a los datos subyacentes de los préstamos. JPMorgan sabía esto y les promocionó su supuestamente estricto proceso de diligencia debida a los inversionistas de RMBS potenciales.

Como parte del acuerdo de liquidación, JPMorgan admitió que las empresas externas de diligencia debida le informaron a JPMorgan que varios préstamos en las muestras al azar de préstamos hipotecarios estaban violando las guías de aseguramiento sin factores de compensación para justificar los préstamos. A pesar de esta información, JPMorgan liberó muchos de los préstamos en incumplimiento a los grupos de titulación que compró y luego los vendió a los inversionistas. De acuerdo con un informe de prueba de una de las empresas externas de diligencia debida, el 27 por ciento de los préstamos de la muestra que revisó la empresa en 2006 y a principios de 2007 recibió la clasificación de préstamos hipotecarios en incumplimiento o “rechazados”. JPMorgan luego liberó la mitad de esos préstamos a los grupos que se vendieron a los inversionistas. Aunque la diligencia debida en las muestras al azar indicó que los grupos de titulación muy posiblemente contenían muchos màs préstamos con violaciones de aseguramiento, JPMorgan no identificó ni eliminó esos préstamos del grupo. Por lo tanto, tal y como lo admite JPMorgan en el acuerdo de liquidación, no les reveló a los inversionistas que los RMBS incluían préstamos hipotecarios que no cumplían con las guías de aseguramiento aplicables. El banco también admitió en el acuerdo de liquidación que no reveló que tenía una pràctica establecida de admitir préstamos en el grupo para los que los valores de la propiedad en garantía determinados en el proceso de diligencia debida diferían de la tasación del tramitador en hasta un 15 por ciento, incluso cuando el índice préstamo-valor era tan alta como 100 por ciento.

JPMorgan también admitió que en una ocasión un empleado de JPMorgan, quien participó en la adquisición de grupos de préstamos, les advirtió a sus supervisores que los grupos contenían préstamos hipotecarios de baja calidad que no deberían comprarse ni titularse. A pesar de la advertencia, JPMorgan compró el grupo y tituló muchos de los préstamos.

Entre otros asuntos civiles resueltos como parte del acuerdo de liquidación anunciado hoy se incluyen las reclamaciones relacionadas con la titulación y venta de valores respaldados por hipotecas por parte de Bear Stearns y Washington Mutual entre 2005 y 2007. Ademàs de las reclamaciones del Departamento de Justicia de los EE.UU., el acuerdo de liquidación resuelve las demandas que presentaron la FHFA, NCUA y el procurador general de Nueva York, y las posibles reclamaciones de la FDIC, el procurador general de California y los procuradores generales de los estados de Illinois, Massachusetts y Delaware. La parte de la FHFA del acuerdo de liquidación se anunció previamente. El acuerdo de liquidación solo libera las reclamaciones civiles monetarias en contra de JPMorgan y las corporaciones afiliadas. No libera ninguna posible responsabilidad penal ni a ningún individuo de demandas civiles ni penales.  JPMorgan ha acordado cooperar con el Departamento de Justicia en la investigación actual de esta conducta.

“Los abusos en la industria de valores respaldados por hipotecas favorecieron el deterioro de los estàndares de aseguramiento entre muchos prestamistas hipotecarios, y alimentó la crisis financiera”, dijo el procurador federal Wagner. “Los efectos fueron sorprendentes. JPMorgan vendió màs de $25 mil millones en certificados de RMBS con tasa no preferencial respaldados por préstamos tóxicos. Las cooperativas de crédito, los bancos comerciales y muchos inversionistas en el país fueron víctimas, incluyendo algunos en el Distrito Este de California, y sufrieron pérdidas por miles de millones de dólares. Esta oficina, que sirve a un distrito que fue saqueado por la crisis financiera, tuvo una función importante en que se hiciera justicia en este caso. Quiero agradecer particularmente a Rich Elias, Colleen Kennedy y Kelli Taylor de esta oficina por su extraordinario trabajo en este caso”.

Michael P. Stephens, inspector general interino de la FHFA declaró: "JP Morgan y los bancos que compró, Bear Stearns y Washington Mutual, vendieron miles de millones de dólares de hipotecas defectuosas en los mercados de valores, lo que ayudó a precipitar la crisis financiera. Los inversionistas, incluyendo Fannie Mae y Freddie Mac, sufrieron pérdidas enormes al comprar RMBS de JPMorgan, Washington Mutual y Bear Stearns sin saber sobre esos defectos. El acuerdo de liquidación de hoy es significativo, pero no es de ninguna manera la última medida que tomaran la FHFA-OIG y sus asociados en el cumplimiento de la ley para que los responsables de los actos de fraude y engaño rindan cuentas. Estamos orgullosos de haber trabajado en este caso con el procurador general de los EE.UU. Benjamin Wagner y los abogados de su oficina en el Distrito Este de California y esperamos continuar trabajando juntos".

La investigación del Distrito Este de California fue realizada por los procuradores auxiliares de los EE.UU. Richard M. Elias y Colleen M. Kennedy, junto con Kelli L. Taylor, Jefe de la Unidad Ejecución Civil Afirmativa, y bajo la supervisión de David Shelledy, Jefe de la División Civil, con la asistencia de los agentes especiales de la FHFA OIG, en conjunto con el Grupo de Trabajo de Valores Respaldados por Hipotecas Residenciales, un componente de la Unidad de Ejecución contra el Fraude Financiero.

La unidad de ejecución la creó el presidente Obama en el 2009 para luchar con mano dura, coordinada y proactiva e investigar y procesar los delitos financieros. Con màs de 20 agencias federales, 94 oficinas de procuradores generales de los EE.UU. y socios estatales y locales, es la màs amplia colaboración de agencias de ejecución legal, investigación y regulación que se haya ensamblado nunca para combatir el fraude. Para obtener màs información sobre la unidad de ejecución, por favor visite:

www.StopFraud.gov.

The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today.  Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims:  Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.  

 
“Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

 
Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary.  Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare.  The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue.  These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels.  The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions. 

 

“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said U.S. Attorney for the Central District of California André Birotte Jr.  “This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”

 

In addition to paying the settlement amount, Ensign also agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG).

 
"Billing Medicare for costly, unnecessary skilled nursing services -- as the government alleged here -- inflates health care costs borne by taxpayers," said Special Agent in Charge for the Los Angeles Region of the HHS-OIG Glenn R. Ferry.  “This settlement again puts on notice those who would consider defrauding federally funded health care programs."  

 
This civil 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 more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

 
The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery.  The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined.  The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).

 
The case was handled by the U.S. Attorney’s Office for the Central District of California, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General.  This action was supported by the Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs.  

The claims settled by this agreement are allegations only; there has been no determination of liability. 

*CORRECTION: The release below previously stated that New York is receiving $613.8 million in this settlement, however, the number is $613.0 million. This correction notice was posted on Nov. 20, 2013.*

The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.  As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group. 

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.  The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over.  No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.  I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”

The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines.  Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors.  This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
                                   
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West.  “The conduct JPMorgan has acknowledged - packaging risky home loans into securities, then selling them without disclosing their low quality to investors - contributed to the wreckage of the financial crisis.  By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”

Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS.  Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613 million to settle claims by the State of New York. 

JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.  If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. 

The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.

“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group.  “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”

“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner.  “The impacts were staggering.  JPMorgan sold securities knowing that many of the loans backing those certificates were toxic.  Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result.  In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry.  We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
                               
“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis.  It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”

This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual.  The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.   

“The settlement announced today will provide a significant recovery for six FDIC receiverships.  It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg.  “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”

“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz.  “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”

“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens.  “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects.  Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed  acts of fraud and deceit.  We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”

The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.

“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group.  “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do.  We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”

“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”

“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden.  “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan.  “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”

“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley.  “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov. 

Related Materials:

JPMorgan Settlement Agreement
Annex 1: Statement of Facts
Annex 2: Consumer Relief
Annex 3: List of RMBS covered by the settlement
Exhibit A: Claims resolved by the State of New York
Exhibit B: Claims resolved by the Federal Housing Finance Agency
Exhibit C: Claims resolved by the National Credit Union Administration
Exhibit D: Claims resolved by the Federal Deposit Insurance Corporation

The Justice Department announced today that FreshPoint Inc., a Houston, Texas-based food distribution company and wholly owned subsidiary of Sysco Corp., has agreed to pay $4.2 million to resolve allegations that it overcharged the Department of Defense for fresh fruit and vegetables purchased under 15 separate contracts.  The contracts were awarded to East Coast Fruit Company and subsequently performed by FreshPoint following FreshPoint’s acquisition of East Coast Fruit Company in 2007. 

“The Department of Justice is committed to ensuring the integrity of federal contracts and will pursue contractors that knowingly overcharge the government for goods or services,” said Assistant Attorney General for the Department of Justice’s Civil Division Stuart F. Delery.  “Contractors that do business with the government must do so honestly and fairly or suffer the consequences of their misconduct.” 

“This settlement demonstrates one of the many types of fraud inflicted upon the American taxpayers,” said U.S. Attorney for the Southern District of Georgia Edward Tarver.  “The U.S. Attorney’s Office will honor our commitment to vigorously enforce the False Claims Act in order to protect the financial soundness of our nation and its military.”

The settlement resolves allegations that from Dec. 17, 2007, through Sept. 11, 2009, FreshPoint overcharged the government on hundreds of sales of fresh fruit and vegetables by improperly inflating its prices to the government to reflect FreshPoint’s view of the prevailing market price of the goods at the time of sale.  The government alleged that this practice violated FreshPoint’s contracts with the government that required FreshPoint to provide the produce at cost, plus a pre-established mark-up for profit, and did not allow FreshPoint to make additional price adjustments based upon perceived changes in market prices.

The allegations arose from a lawsuit filed under the whistleblower provisions of the False Claims Act, which allow private individuals to sue on behalf of the government and to share in the proceeds of any settlement or judgment.  The whistleblower in this case, former FreshPoint employee Charles Hall, will receive $798,000. 

 

This settlement was the result of a coordinated effort by the Justice Department’s Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of Georgia; the Defense Criminal Investigative Service; the Defense Contract Audit Agency and the Defense Logistics Agency Office of General Counsel.  The claims settled by this agreement are allegations only, and there has been no determination of liability.  The case is captioned U.S. ex rel. Hall v. SYSCO Corp., et al., Case No:  4:11-CV-57 (S.D. Ga.). 

Boston-based Cabot Corporation, the second largest carbon black manufacturer in the United States, has agreed to pay a $975,000 civil penalty and spend an estimated $84 million on state of the art technology to control harmful air pollution, resolving alleged violations of the New Source Review (NSR) provisions of the Clean Air Act (CAA) at its three facilities in the towns of Franklin and Ville Platte, La., and Pampa, Texas, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. This agreement is the first to result from a national enforcement initiative aimed at bringing carbon black manufacturers into compliance with the CAA’s NSR provisions.

The state of Louisiana Department of Environmental Quality is a co-plaintiff in the case and will receive $292,500 of the penalty.

“By agreeing to pay an appropriate penalty and install state of the art technology to control harmful air pollution, Cabot Corp. is taking a positive step forward to address these alleged violations of the Clean Air Act,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division.  “This agreement will serve as a model for how the industry can come into compliance with the Clean Air Act by installing controls that prevent harmful pollution and improve air quality for surrounding communities.” 

“With today’s commitment to invest in pollution controls, Cabot has raised the industry standard for environmental protection,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance. “These upgrades will have lasting, tangible impacts on improved respiratory health for local communities. We expect others in the industry to take notice and realize their obligation to protect the communities in which they operate.”

“This is a huge win for the citizens of our district,” said U.S. Attorney Stephanie A. Finley.  “These harmful pollutants can cause serious, long term respiratory harm.  The United States Attorney’s Office is committed to the enforcement of the environmental laws and protection of the community.  This settlement promotes a healthier environment and an opportunity to allow the residents of the district to breathe cleaner air.”

At all three facilities, the settlement requires that Cabot optimize existing controls for particulate matter or soot, operate an “early warning” detection system that will alert facility operators to any particulate matter releases, and comply with a plan to control “fugitive emissions” which result from leaks or unintended releases of gases. To address nitrogen oxide (NOx) pollution, Cabot must install selective catalytic reduction technology to significantly reduce emissions, install continuous monitoring, and comply with stringent limits. At the two larger facilities in Louisiana, Cabot must address sulfur dioxide (SO2) pollution by installing wet gas scrubbers to control emissions, install continuous monitoring, and comply with stringent emissions limits. In addition, the Texas facility is required to comply with a limit on the amount of sulfur in feedstock that is the lowest for any carbon black plant in the United States.

These measures are expected to reduce NOx emissions by approximately 1,975 tons per year, SO2 emissions by approximately 12,380 tons per year, and significantly improve existing particulate matter controls. Exposure to NOx emissions can cause severe respiratory problems and contribute to childhood asthma. SO2 and NOx can be converted to fine particulate matter once released in the air. Fine particulates can be breathed in and lodged deep in the lungs, leading to a variety of health problems and even premature death. The harmful health and environmental impacts from these pollutants can occur near the facilities as well as in communities far downwind from the plants.

In the complaint filed by DOJ on behalf of EPA, the government alleged that, between 2003 and 2009, Cabot made major modifications at its carbon black facilities without obtaining pre-construction permits and without installing and operating required pollution technology. The complaint further alleges that these actions resulted in increased emissions of NOx and SO2, violating CAA requirements stating that companies must obtain the necessary permits prior to making modifications at a facility and must install and operate required pollution control equipment if those modifications will result in increases of certain pollutants.

Today’s action also requires that Cabot spend $450,000 on energy saving and pollution reduction projects that will benefit the communities surrounding the facilities in Franklin and Ville Platte, La., and in Pampa, Texas, such as upgrading air handling units at municipal buildings in the three communities to more efficient technology.

Carbon black is a fine carbonaceous powder used as a structural support medium in tires and as a pigment in a variety of products such as plastic, rubber, inkjet toner and cosmetics. It is produced by burning oil in a low oxygen environment; the oil is transformed into soot (carbon black), which is collected in a baghouse. Because the oil used in the process is low value high sulfur oil, the manufacturing process creates significant amounts of SO2 and NOx, as well as particulate matter.

This settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions. Since 2010, EPA has been focusing enforcement efforts on reducing emissions at carbon manufacturing plants in the United States. Currently, none of the 15 carbon black manufacturing plants located in the United States have controls on emissions of SO2 and NOx or have continuous emissions monitors.

Cabot Corporation manufactures global specialty chemicals and performance materials, which include rubber additives for tires and brake pads, activated carbon for air purifiers, chemicals used in the manufacture of lithium-ion batteries, and inkjet colorants. 

The proposed consent decree will be lodged with the U.S. District Court for the Western District Court for Louisiana and will be subject to a 45-day public comment period. The company is required to pay the penalty within 30 days after the court approves the settlement. The proposed consent decree can be viewed online at www.justice.gov/enrd/Consent_Decrees.html

More information about the settlement:

www2.epa.gov/enforcement/cabot-corporation-clean-air-act-settlement

More information about EPA’s national enforcement initiative: www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html

U.S. Attorney’s Office for the District of Guam and the Northern Mariana Islands Co-sponsors Human Trafficking Training in Palau

Alicia A.G. Limtiaco, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, announced that her office co-sponsored the 2nd Pacific Regional Response to Combat Human Trafficking International Conference held in the Republic of Palau on July 22-26, 2013.   U.S. Attorney Limtiaco, Assistant U.S. Attorney (AUSA) Rosetta San Nicolas and AUSA Rami Badawy, conducted training and presentations on topics including, “Pacific Regional Response to Combat Human Trafficking - Collaboration in the Western Pacific”; “Investigation and Prosecution of Sexually Oriented Businesses and Civil Code Enforcement”;  and “Child Sexual Exploitation, Child Pornography and Human Trafficking of Minors.”  U.S. Attorney Limtiaco, AUSA San Nicolas and AUSA Badawy were also instructors of the Human Trafficking Trial Advocacy Course, held at the Conference.

The U.S. Attorney’s Office (“USAO”) for the Districts of Guam and the Northern Mariana Islands (“NMI”) has been and continues to work collaboratively with the National District Attorney’s Association (NDAA); U.S. Department of Interior, Office of Insular Affairs, Federal Ombudsman Office; and U.S. Department of State, Monitoring of Trafficking in Persons Office, on a Pacific Regional Response to Combat Human Trafficking initiative. This response is a critical component of the USAO’s human trafficking strategic plan given increased concerns in the Pacific region regarding sex and labor trafficking, violence against women, and child abuse and sexual exploitation. Also of significance are the source countries within the Asia Pacific region from which victims are recruited and trafficked, and their close proximity to Guam, the NMI, Republic of Palau, Republic of the Marshall Islands, and Federated States of Micronesia (“FSM”); and the trafficking of victims in the islands themselves.

The Pacific Regional Response to Combat Human Trafficking initiative employs a multidisciplinary model, including participation, coordination, and collaboration among law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders. The response calls for the establishment and provision of victim services, investigation and prosecution of human trafficking, training opportunities, community outreach/ public awareness and prevention programs, and creation of human trafficking task forces and coalitions in the Pacific region island communities.

Providing fundamental training in human trafficking, including victimization, investigation and prosecution, prevention efforts, and other related topics, to law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders, in our Pacific region island communities, is critical to effective prevention and enforcement efforts in the region.

The conference provided a forum for governmental and non-governmental organizations to engage in dialogue and discuss issues, concerns, problems, plans, strategies and solutions relating to human trafficking in their respective Pacific island communities, in the Pacific region, and globally.  The conference also provided an opportunity for the participants to establish professional relationships and partnerships, and to engage in cooperative and collaborative domestic and international efforts to prevent and fight against human trafficking, establish victim services, and prosecute and hold traffickers accountable for these heinous crimes.

The “2nd Pacific Regional Response to Combat Human Trafficking International Conference” was attended by approximately 100 leaders and members of the Pacific regional community.

Photos of the conference are attached.

Conference attendees from Guam and Saipan, left to right, Assistant U.S. Attorney Rami Badawy, Cynthia Kinto, UOG Student, Mary Kate Donnell, UOG Student, U.S. Attorney Alicia Limtiaco. Lauri Ogumoro, Director, Guma Esperanza, Saipan Attorney General Joey San Nicolas and Assistant U.S. Attorney Rosetta San Nicolas.

U.S. Attorney Alicia Limtiaco addressing conference participants.

WASHINGTON – William K. Harrington, the U.S. Trustee for Massachusetts, New Hampshire, Maine and Rhode Island (Region 1), has been designated by Attorney General Eric Holder also to serve as the U.S. Trustee for New York, Connecticut and Vermont (Region 2), effective on November 27, 2013, the Executive Office for U.S. Trustees announced today. Mr. Harrington replaces Tracy Hope Davis, who has been appointed U.S. Trustee for Northern and Eastern California and Nevada (Region 17).

“The U.S. Trustee Program is tremendously fortunate to have Bill Harrington able to step in to serve as U.S. Trustee for this extremely significant region,” stated Clifford J. White III, Director of the Executive Office for U.S. Trustees. “Bill has many years of experience in the oversight of complex chapter 11 reorganizations, including as head of our office in Wilmington, Delaware, and he was a leader in the development of the updated chapter 11 attorneys’ fee guidelines that we issued in June.”

Mr. Harrington has served as U.S. Trustee for Region 1 since October 2010. Prior to that appointment, he served for two years as the Assistant U.S. Trustee in Wilmington, Del., after joining the U.S. Trustee Program (USTP) in March 2004 as a Trial Attorney. Previously, Mr. Harrington practiced law in a large regional law firm concentrating on bankruptcy, corporate and commercial litigation matters. Before attending law school, he worked as a senior accountant for an investment management firm in Boston.

Mr. Harrington received a law degree from Villanova University School of Law in Villanova, Pa., and a Bachelor of Science (Economics) degree from the Wharton School, University of Pennsylvania, in Philadelphia.

The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 2 is headquartered in New York City with additional offices in Albany, Brooklyn, Buffalo, Central Islip, Rochester and Utica, N.Y., and New Haven, Conn.

Contact:

Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411

Alicia A.G. Limtiaco, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that her office, together with the FBI, conducted training in the Republic of Palau; Pohnpei State, Federated States of Micronesia (FSM), and Chuuk State, FSM.  The training was held in Palau in December 6-7, 2012, in Ponape on January 7- 8, 2013, and in Chuuk on January 9-10, 2013.  U.S. Attorney Limtiaco, AUSA Rosetta San Nicolas, and AUSA Rami Badawy conducted presentations on topics including, “Pacific Regional Response to Combat Human Trafficking - Collaboration in the Western Pacific;” “Introduction to Human Trafficking Investigation and Prosecution;” and “Nuts and Bolts: Investigation and Prosecution of Human Trafficking Cases;” and “Bullying and Cyberbullying.”  FBI Special Agent Jason Todd provided training on “Active Listening; Suspect Interviews;” “Crime Scene Investigation;” and “Introduction to Cyber Crime.”  

          The U.S. Attorney’s Office (“USAO”) for the Districts of Guam and the NMI has been and continues to work collaboratively with the National District Attorney’s Association; U.S. Department of Interior, Office of Insular Affairs, Federal Ombudsman Office; and U.S. Department of State, Monitoring of Trafficking in Persons Office, on a Pacific Regional Response to Combat Human Trafficking.  The Pacific Regional Response to Combat Human Trafficking initiative employs a multidisciplinary model, including participation, coordination, and collaboration among law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders.  The response calls for the establishment and provision of victim services, investigation and prosecution of human trafficking, training opportunities, community outreach/ public awareness and prevention programs, and creation of human trafficking task forces and coalitions in the Pacific region island communities.  Providing fundamental training in human trafficking, including victimization, investigation and prosecution, prevention efforts, and other related topics, to law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders, in our Pacific region island communities, is critical to effective prevention and enforcement efforts in the region.

          Participants also learned about human trafficking, including sex trafficking and labor trafficking, the seriousness of the problem, and how to identify, communicate with, and respond to the needs of victims.  Also discussed was a review of the Trafficking Victims Protection Act and other related federal laws.

          The second day brought to the participants an overview of technology, what cybercrime is and related issues such as terrorism.  Participants were also given an overview of bullying and cyberbullying; the seriousness of the problem; the impact on the community including youth suicide; enforcement efforts including civil rights lawsuits and consent decrees issued against school districts; and prevention efforts including public awareness outreaches to schools and parent groups, training of school districts, and other related activities.

           Participants were provided information about child sexual and physical abuse.  Also discussed were issues relating to children with special needs, and the relationship between child abuse and human trafficking of children.

“Strategies for Justice – Collaboration in the Western Pacific”

Alicia A.G. Limtiaco, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that her office, together with the FBI, conducted training in the Republic of Palau; Pohnpei State, Federated States of Micronesia (FSM), and Chuuk State, FSM.  The training was held in Palau in December 6-7, 2012, in Ponape on January 7- 8, 2013, and in Chuuk on January 9-10, 2013.  U.S. Attorney Limtiaco, AUSA Rosetta San Nicolas, and AUSA Rami Badawy conducted presentations on topics including, “Pacific Regional Response to Combat Human Trafficking - Collaboration in the Western Pacific;” “Introduction to Human Trafficking Investigation and Prosecution;” and “Nuts and Bolts: Investigation and Prosecution of Human Trafficking Cases;” and “Bullying and Cyberbullying.”  FBI Special Agent Jason Todd provided training on “Active Listening; Suspect Interviews;” “Crime Scene Investigation;” and “Introduction to Cyber Crime.”

The U.S. Attorney’s Office (“USAO”) for the Districts of Guam and the NMI has been and continues to work collaboratively with the National District Attorney’s Association; U.S. Department of Interior, Office of Insular Affairs, Federal Ombudsman Office; and U.S. Department of State, Monitoring of Trafficking in Persons Office, on a Pacific Regional Response to Combat Human Trafficking.  The Pacific Regional Response to Combat Human Trafficking initiative employs a multidisciplinary model, including participation, coordination, and collaboration among law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders.  The response calls for the establishment and provision of victim services, investigation and prosecution of human trafficking, training opportunities, community outreach/ public awareness and prevention programs, and creation of human trafficking task forces and coalitions in the Pacific region island communities.  Providing fundamental training in human trafficking, including victimization, investigation and prosecution, prevention efforts, and other related topics, to law enforcement; prosecution; victim service providers; social services; medical, mental and public health professionals; faith based organizations; educational institutions; Consulates; and other community stakeholders, in our Pacific region island communities, is critical to effective prevention and enforcement efforts in the region.

Participants also learned about human trafficking, including sex trafficking and labor trafficking, the seriousness of the problem, and how to identify, communicate with, and respond to the needs of victims.  Also discussed was a review of the Trafficking Victims Protection Act and other related federal laws.

The second day brought to the participants an overview of technology, what cybercrime is and related issues such as terrorism.  Participants were also given an overview of bullying and cyberbullying; the seriousness of the problem; the impact on the community including youth suicide; enforcement efforts including civil rights lawsuits and consent decrees issued against school districts; and prevention efforts including public awareness outreaches to schools and parent groups, training of school districts, and other related activities.

Participants were provided information about child sexual and physical abuse.  Also discussed were issues relating to children with special needs, and the relationship between child abuse and human trafficking of children.

A photo of some of the speakers at the training is attached   

From left to right, U.S. Attorney Alicia Limtiaco, Dr. Sharon Cooper, Suzanna Tiapula, NDAA Executive Director, and Dr. Kimberly Chang.

WASHINGTON–Tracy Hope Davis has been appointed by Attorney General Eric Holder as U.S. Trustee for Northern and Eastern California and Nevada (Region 17), effective on November 27, 2013, the Executive Office for U.S. Trustees announced today. She replaces August B. Landis, who has been appointed to the U.S. Bankruptcy Court for the District of Nevada.

“I am delighted to announce the appointment of Tracy Hope Davis as U.S. Trustee for Northern and Eastern California and Nevada,” stated Clifford J. White III, Director of the Executive Office for U.S. Trustees. “Tracy has done an outstanding job as U.S. Trustee in New York, Connecticut and Vermont, and is nationally recognized for her superb oversight of complex chapter 11 cases in the Southern District of New York. We are fortunate to have her bring her expertise to another vital region of the country and to continue to rely on her leadership in developing national policies and initiatives.”

Ms. Davis was appointed as U.S. Trustee in New York, Connecticut and Vermont (Region 2) in August 2010. She joined the U.S. Trustee Program (USTP) in 1997 as a Trial Attorney before being named as the Assistant U.S. Trustee in the Southern District of New York. She has also served as the Acting Assistant U.S. Trustee in the Eastern District of New York (Brooklyn) and the Acting U.S. Trustee for Region 2. Previously, she practiced bankruptcy law in New York City and served as law clerk to the Honorable Cornelius Blackshear, U.S. Bankruptcy Court, Southern District of New York (retired).

Ms. Davis received a law degree from Rutgers Law School in Newark, N.J., and a Bachelor of Arts degree from Wells College in Aurora, N.Y. She has served in various capacities as a Wells College alumna, including as a member of the Wells College Board of Trustees and as a vice president on the Alumnae Board of Wells College.

The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 17 is headquartered in San Francisco, with additional offices in Fresno, Oakland, Sacramento and San Jose, Calif., and Las Vegas and Reno, Nev.

Contact:

Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411

Chairman Carper, Ranking Member Coburn, and distinguished Members of the Committee: Thank you for the opportunity to appear before the Committee today to discuss the Department of Justice’s work regarding virtual currencies. I am honored to represent the Department at this hearing and to describe for you our approach to virtual currencies, our recent successes in prosecuting criminals who use virtual currencies for illicit purposes, and some of the challenges we face as virtual currency systems continue to evolve.

The Department of Justice recognizes that many virtual currency systems offer legitimate financial services and have the potential to promote more efficient global commerce. We have also seen, however, that certain aspects of virtual currencies appeal to criminals and present a host of new challenges to law enforcement.

The concept of virtual currencies is not new to the Department and, indeed, the Department has investigated and prosecuted the illicit use of virtual currencies since the late 1990s, when criminals first began using systems such as WebMoney and e-Gold to conduct their business. Over the last 15 years, however, virtual currencies have evolved and diversified significantly, challenging the Department to adapt our capabilities to deal with new systems and threats.

As with all emerging technologies, the Department has aggressively used our existing tools and capabilities to combat illegal activities involving virtual currencies. The Department has two primary law enforcement interests in virtual currency: (1) deterring and prosecuting criminals using virtual currency systems to move or hide money that is used to facilitate, or is derived from, criminal or terrorist acts, i.e., money laundering; and (2) investigating and prosecuting those virtual currency services that themselves violate laws aimed at illegal money transmission and money laundering. As I will describe in my testimony, the Department is committed to using all the tools at our disposal to ensure that those law enforcement interests are met, even as virtual currency systems evolve.

“Virtual currency” is a medium of exchange circulated over a network, typically the Internet, which is not backed by a government. These systems can be both centralized and decentralized.

Early centralized models, where the currency is controlled by a single private entity, have expanded and now encompass a wide range of business concepts. Some centralized virtual currencies take the form of digital precious metals, such as e-Gold and Pecunix, where users exchange digital currency units ostensibly backed by gold bullion or other precious metals. Others exist within popular online games or virtual worlds, such as Farmville, Second Life, or World of Warcraft. Still others are online payment systems such as WebMoney and Liberty Reserve, which are available generally outside of specific online communities and denominate users’ accounts in virtual currency rather than U.S. Dollars, Euros, or some other national currency. Decentralized systems such as Bitcoin, which have no centralized administrating authority and instead operate as peer-to-peer transaction networks, entered the scene relatively recently but are growing rapidly. A network of sites and services, including exchangers who buy and sell virtual currencies in exchange for national currencies or other mediums of value, have developed around virtual currency systems, as well.

Criminals are nearly always early adopters of new technologies and financial systems, and virtual currency is no exception. As virtual currency has grown, it has attracted illicit users along with legitimate ones. Our experience has shown that some criminals have exploited virtual currency systems because of the ability of those systems to conduct transfers quickly, securely, and often with a perceived higher level of anonymity than that afforded by traditional financial services. The irreversibility of many virtual currency transactions additionally appeals to a variety of individuals seeking to engage in illicit activity, as does their ability to send funds cross-border.

Cyber criminals were among the first illicit groups to take widespread advantage of virtual currency. We have seen that many players in the cyber underground rely on virtual currency to conduct financial transactions. Early users of virtual currency also included criminals involved in the trafficking of child pornography, credit card fraud, identity theft, and high-yield investment schemes. As virtual currency became more widespread and criminals became increasingly computer savvy, other criminal groups moved to capitalize on virtual currency, as well. There are now public examples of virtual currency being used by nearly every type of criminal imaginable.

It is not surprising that criminals are drawn to services that allow users to conduct financial transactions while remaining largely anonymous. And, indeed, some of the criminal activity occurs through online black markets, many of which operate as Tor hidden services. Tor hidden services are sites accessible only through Tor, an anonymizing network that masks users’ Internet traffic by routing it through a series of volunteer servers, called “nodes,” across the globe. Online black markets capitalize on Tor’s anonymizing features to offer a wide selection of illicit goods and services, ranging from pornographic images of children to dangerous narcotics to stolen credit card information.

At the same time, we have seen that though virtual currency systems are growing rapidly, few systems currently exist that could easily accommodate the hundreds of millions of dollars often moved in a single large-scale money laundering scheme. Transaction size is limited by the carrying capacity of the virtual currency systems and the exchangers. When taken in the aggregate, however, the relatively small dollar values associated with most illicit virtual currency transactions quickly add up. At their prime, e-Gold and Liberty Reserve, two virtual currency systems prosecuted by the Department, each moved the equivalent of over $1 billion in illegal proceeds annually. As virtual currencies grow, the capacity for larger single transactions grows, as well.

The Department has prosecuted several of these systems, such as e-Gold, based on evidence that they can be, and often are, intentionally designed to facilitate illegal activity. These services typically do not conduct any meaningful customer due diligence and do not screen for transactions related to money laundering or terrorist financing. At the same time, these complicit and illicit businesses allow users to conceal their identities and maintain high levels of anonymity during transactions.

To be clear, virtual currency is not necessarily synonymous with anonymity. A convertible virtual currency with appropriate anti-money laundering and know-your-customer controls, as required by U.S. law, can safeguard its system from exploitation by criminals and terrorists in the same way any other money services business could. As virtual currency systems develop, it is imperative to law enforcement interests that those systems comply with applicable anti-money laundering and know-your-customer controls.

Exploitation by malicious actors is a problem faced by all types of financial services and is not unique to virtual currency systems. Although malicious actors have utilized emerging technologies to further their criminal schemes, the Department has thus far been able to apply existing tools to ensure vigorous prosecution of these schemes.

The Department relies on money services business, money transmission, and anti-money laundering statutes to curtail this sort of unlawful activity. Many virtual currency systems, exchangers, and related services operate as money transmitters, which are part of a larger class of institutions called money services businesses. Money transmitters are required under 31 U.S.C. § 5330 to register with the Financial Crimes Enforcement Network (FinCEN). Most states also require money transmitters to obtain a state license in order to conduct business in the state. Any money transmitter that fails to register with FinCEN or to obtain the requisite state licensing may be subject to criminal prosecution under 18 U.S.C. § 1960. Additionally, the general money laundering and spending statutes, 18 U.S.C. §§ 1956 and 1957, cover financial transactions involving virtual currencies. Finally, where virtual currencies are used in furtherance of underlying criminal activity, the Department can rely on traditional criminal statutes proscribing that activity, such as narcotics, cybercrime, child exploitation, and firearms laws.

Some of the major prosecutions in recent years involving virtual currency services are as follows.

The Department first took major action against an illicit virtual currency service in 2007, when it indicted e-Gold and its three principal owners on charges related to money laundering and operating an unlicensed money transmitting business. E-Gold offered digital accounts purportedly backed by physical gold bullion. A valid e-mail address was the only information required to set up an account, allowing users to conduct highly anonymous international transactions over the Internet. As a result, e-Gold became a popular payment method for sellers of child pornography, operators of investment scams, and perpetrators of credit card and identity fraud. At its peak, e-Gold reportedly moved over $6 million each day for more than 2.5 million accounts. In 2008, e-Gold and the three individuals pleaded guilty.

Following the e-Gold indictment, several similar but smaller systems and exchangers were indicted or closed themselves down to evade law enforcement detection. According to publicly filed charging documents, an executive of one of those businesses, Arthur Budovsky, then set out to create Liberty Reserve, an improved centralized virtual currency variation allegedly designed to evade U.S. law enforcement. Among other things, Liberty Reserve operated offshore –it was based in Costa Rica--and purportedly recommended that its customers use money exchangers located in countries without significant governmental money-laundering oversight or regulation. Moreover, Budovsky, the principal founder of Liberty Reserve, was so committed to avoiding the reach of U.S. law that, according to the indictment, in 2011, he formally renounced his U.S. citizenship and became a Costa Rican citizen in order to avoid facing justice in the United States .

Despite Budovsky’s alleged efforts, earlier this year, the Department indicted Liberty Reserve and its executives, including Budovsky, for running a $6 billion money laundering operation. In a coordinated action, the Department of the Treasury identified Liberty Reserve as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act, effectively cutting it off from the U.S. financial system.

According to the indictment, Liberty Reserve allowed users to send and receive funds with a high level of anonymity by not requiring users to validate their identities and allowing users to make untraceable fund transfers in exchange for a privacy fee. Many of the transactions were sent to or from users in the United States, but Liberty Reserve never registered with the appropriate U.S. authorities. As revealed in the Department’s filings, Liberty Reserve became a system of choice for cyber criminals and was used in a wide array of illegal activity, including credit card fraud, identity theft, investment fraud, computer hacking, and child pornography. As a result of the Department’s action, the site was shuttered and effectively put out of business, and five defendants were arrested. One is in custody in the United States, one has entered a guilty plea, and three others, including the lead defendant Budovsky, are pending extradition. The case exemplifies the Department’s resolve to pursue purported major money laundering facilitators, even those who hide offshore. 

Just last month, the Department took action against one of the most popular online black markets, Silk Road. Allegedly operated by a U.S. citizen living in California at the time of his arrest, Silk Road accepted bitcoins exclusively as a payment mechanism on its site. The Department’s complaint alleges that, in less than three years, Silk Road served as a venue for over 100,000 buyers to purchase hundreds of kilograms of illegal drugs and other illicit goods from several thousand drug dealers and other criminal vendors. The site also purportedly laundered the proceeds of these transactions, amounting to hundreds of millions of dollars in bitcoins. In addition to arresting the site’s operator and shutting down the service, the Department to date has seized over 170 thousand bitcoins, valued as of Friday, November 15, 2013, at over $70 million.

A separate indictment charges Silk Road’s operator with drug distribution conspiracy, attempted witness murder, and using interstate commerce facilities in the commission of murder-for-hire. With regard to the murder-related charges, the indictment alleges that the Silk Road operator paid an undercover federal agent to murder one of the operator’s employees.

The cases I just described illustrate not only Department successes in combating illicit use of virtual currency, but also many of the challenges investigators face when they encounter these systems, some of which may ultimately require additional legal or regulatory tools.

Virtual currency allows users to send money across the globe without dealing with a traditional financial institution. While this feature provides several benefits for legitimate customers, it can significantly complicate law enforcement efforts to follow the money.

Virtual currency systems have a global reach and clientele. Virtual currency businesses can cater to U.S. clientele while operating on the other side of the world. Investigations into illicit virtual currency businesses therefore often require considerable cooperation from international partners. The Liberty Reserve investigation and takedown, for example, involved coordinated law enforcement action in 17 countries.

The international nature of the transactions poses an additional challenge where the overseas regulatory regime treats virtual currency differently or, as is true in some cases, fails to cover it at all. While this challenge may diminish with the Financial Action Task Force’s recent guidance addressing the need for all countries to develop a risk-based approach to new payment products and services, incongruent regulatory regimes will likely remain a challenge when dealing with virtual currency services overseas.

Among the most significant challenges the Department faces in dealing with virtual currency is the difficulty in obtaining customer records. Because decentralized systems lack any sort of administering authority to collect user information or receive legal process, investigators must rely on information collected by other sources, such as exchangers. Even if the target used a centralized system or exchanger, however, accurate customer records may still be difficult to obtain, or may not exist at all. Illicit users are typically attracted to systems with lax anti-money laundering and know-your-customer controls. These services often attempt to evade U.S. action by operating out of countries that have poor regulatory oversight and are less willing to cooperate with U.S. law enforcement. Even if the system at issue operates in a country with effective regulation and a cooperative relationship with the United States, the legal process for obtaining foreign records is relatively slow when compared to the near-instantaneous speed at which the virtual currency user can send the funds to another jurisdiction.

A final challenge arises from the link between virtual currency and encryption. Decentralized virtual currencies typically rely on an encryption algorithm, rather than a central authority, to administer the currency. These encryption-based currencies, also known as cryptocurrencies, lack a central administering authority that might otherwise possess valuable evidence. In addition, users of these currencies often encrypt their digital wallets, complicating our efforts to seize and forfeit criminal proceeds.

The Department recognizes that virtual currency’s ability to facilitate the global movement of funds by a wide array of illicit actors necessitates a comprehensive and collaborative approach with our domestic and international partners. To promote such coordination, the Department is an active participant in the Virtual Currency Emerging Threats Working Group (VCET). VCET was founded by the Federal Bureau of Investigation (FBI) in early 2012 to mitigate the cross-programmatic threats arising from illicit actors’ use of virtual currency systems. The group leverages the collective subject matter expertise of its members to address issues arising from illicit actors’ use of virtual currency, and deconflicts and shares information and concerns. VCET members represent an array of U.S. Government agencies, including, within the Department, the FBI, the Drug Enforcement Administration, multiple U.S. Attorney’s Offices, and the Criminal Division’s Asset Forfeiture and Money Laundering Section and Computer Crime and Intellectual Property Section.

The Department contributes to several additional interagency groups concerning virtual currencies and emerging payment systems, including the New Payment Methods Ad Hoc Working Group, a subgroup of the Terrorist Finance Working Group, led by the State Department. The FBI specifically has issued numerous intelligence products related to virtual currency, many of which were coauthored with other members of the U.S. Intelligence Community.

The Department is committed to working with our regulatory partners to ensure appropriate coordination on regulatory issues related to virtual currency. The Department participated in meetings and discussions with FinCEN regarding the July 2011 Final Rule on Money Services Businesses and its applicability to virtual currencies, as well as the related March 18, 2013, FinCEN guidance. The Department regards FinCEN’s regulation of many virtual currency services as money transmitters, as well as the resulting applicability of anti-money laundering and know-your-customer requirements under the Bank Secrecy Act, as crucial tools in preventing malicious actors from exploiting virtual currency systems in furtherance of illicit activity.

The Department works closely with FinCEN and the Department of Treasury to coordinate enforcement actions when appropriate. This relationship allowed the Department to unseal the Liberty Reserve indictment in coordination with Treasury’s announcement naming the company as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. Such coordinated actions are integral tools in combating illicit finance. 

The Department anticipates that virtual currency will continue to evolve and grow in popularity. That growth inevitably will be accompanied by an increase in illicit transactions, which makes it critical that virtual currency services understand their legal obligations and requirements. The Department is encouraged by the increasing prominence of legitimate virtual currency services that are attempting to comply with U.S. law. While a number of services have registered at the federal level, many are still struggling with implementing appropriate anti-money laundering, know-your-customer, and customer due diligence programs, as well as complying with state-level regulations and licensing requirements. As members of the U.S. financial community, virtual currency services can and must safeguard themselves from exploitation by criminals and terrorists by implementing legally required anti-money laundering and know-your-customer controls.

As the Administration’s Strategy to Combat Transnational Organized Crime recognizes, transnational organized crime networks are increasingly involved in cybercrime, and can imperil consumers’ faith in emerging digital systems. We must also pay close attention to the critical role of facilitators who cross both the licit and illicit worlds and provide services to legitimate customers and criminals alike.

The Department recognizes that malicious actors are often resourceful, and even legitimate virtual currency services can become unwitting conduits for illicit transactions when these actors are able to defeat or circumvent anti-money laundering controls. Outreach to these systems, much as the Department conducts with the formal financial sector, is an important tool in combating the exploitation of the systems for criminal and terrorist purposes. Because centralized payment systems and exchangers often interact with the traditional financial sector and hold bank accounts at major financial institutions, the range of such Department outreach extends to the financial services community at large, complementing the outreach and training efforts of FinCEN, the primary BSA regulator, and the Department of the Treasury. Department of Justice personnel routinely provide trainings to the private sector, as well as to domestic and international law enforcement and intelligence personnel, and specifically address virtual currency.

Law enforcement, Congress, and regulators must remain vigilant to ensure that the U.S. legal and regulatory structure is sufficiently robust to cover decentralized virtual currencies. The Department looks forward to working with Congress to ensure that law enforcement continues to have the tools necessary to combat the use of virtual currency for illicit purposes. 

Chairman Carper and Ranking Member Coburn, I thank you for this opportunity to discuss the Department’s work on virtual currency.

I look forward to any questions that you may have.

SAN JUAN, Puerto Rico – Manuel Garcia-Figueroa, a resident of Playa Añasco, Puerto Rico, pleaded guilty to a bill of information charging him with a felony violation of the Lacey Act for the illegal sale of sea turtle meat, the Justice Department announced today.

 
According to the information filed in the U.S. District Court in Puerto Rico, Garcia-Figueroa knowingly sold more than $350 of meat and carapaces from endangered hawksbill sea turtles (Eretmochelys imbricata) and meat from a threatened green sea turtle (Chelonia mydas), while knowing that the sea turtles had been taken in violation of the Endangered Species Act (ESA). The illegal sales took place on or about Dec.11, 2009, to on or about Jan. 4, 2010, in and around Playa Añasco. The case resulted from a joint-undercover operation by the National Oceanic and Atmospheric Administration Office of Law Enforcement (NOAA-OLE) and the FBI.

 
All species of sea turtles found in the Gulf of Mexico, Atlantic Ocean, Caribbean Sea and waters adjacent to the United States are protected by the ESA. Sea turtles are long-lived and slow to reach maturity. Pressures from habitat loss, fishing operations, pollution, illegal harvesting of eggs, and poaching of adults exacerbate the extinction risk faced by these animals. In Puerto Rico, the green sea turtle (Chelonia mydas) is listed as “threatened” under the ESA; the hawksbill sea turtle (Eretmochelys imbricata) is listed as “endangered.”

 
The Lacey Act is the principal U.S. statute designed to reduce the role that wildlife poaching, selling, and smuggling plays in depleting protected species. Once an ESA-listed wildlife species is taken or possessed illegally, it is unlawful to “import, export, transport, sell, receive, acquire, or purchase” that species. A person commits a criminal violation of the Lacey Act if the illegal conduct involves the sale or purchase of wildlife with a market value in excess of $350, while knowing that the wildlife was taken in violation of or in a manner unlawful under, any underlying law, treaty, or regulation.

 
The waters around Puerto Rico are designated as a critical habitat for the hawksbill and the green sea turtle. The most significant nesting for the hawksbill within the U.S. occurs in Puerto Rico and the U.S. Virgin Islands. Each year, about 500-1,000 hawksbill nests are laid on Mona Island, Puerto Rico. The green sea turtle population has declined by 48-65 percent over the past century. Puerto Rico is also home to nesting sites for the endangered leatherback sea turtle, the largest species of turtle in the world.

 
The commonwealth of Puerto Rico contains six national wildlife refuges (Cabo Rojo, Culebra, Desecheo, Laguna Cartagena, Navassa Island and Vieques) and is home to 25 endangered and threatened animal species, 21 of which are found nowhere else on earth

 
In 2013, the Justice Department’s Environment and Natural Resources Division and the U.S. Attorney’s Office in Puerto Rico announced the formation of the Puerto Rico Environmental Crimes Task Force to investigate and prosecute environmental crimes on the island. Under the new task force, federal investigative agencies are coordinating their efforts to investigate and prosecute those responsible for committing serious environmental crimes.

 

The cases are being prosecuted by Trial Attorney Christopher Hale of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division and Assistant U.S. Attorneys Carmen Márquez and Hector Ramirez of the District of Puerto Rico. If convicted, the defendant faces a maximum sentence of five years in prison and a $250,000 fine.

 

Sentencing is scheduled for Feb. 18, 2014.

 
For more information of environmental crime laws: www.justice.gov/enrd/ENRD_ecs.html

 

For more information on marine turtles: www.nmfs.noaa.gov/pr/species/turtles/

 

 

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Attorney General Eric Holder and Acting Department of Homeland Security (DHS) Secretary Rand Beers today hosted an EU/U.S. Justice and Home Affairs Ministerial with their counterparts in the European Union: Lithuanian Minister of Justice Juozas Bernatonis and Lithuanian Vice Minister of Interior Elvinas Jankevicius representing the Lithuanian Presidency of the Council of the EU; Greek Minister of Justice, Transparency and Human Rights Charalampos Athanasiou representing the incoming Greek Presidency of the EU; and European Commission Vice President Viviane Reding and Commissioner Cecilia Malmström representing the EU Commission.

The U.S. and EU together released the following statement on the meeting:

“Our meeting was constructive and productive.  We discussed a broad array of issues critical to the European Union and the United States, including: addressing the problem of sexual abuse of children online; coordinating work on counter-terrorism and security issues; countering violent extremism; expanding cooperation in criminal matters; joint efforts in the areas of cybercrime and cybersecurity; and mobility, migration and border issues.  In addition, we discussed the rights of victims of crime, the rights of persons with disabilities and the prosecution of hate crimes.

Of special note, we discussed the threat posed by foreign fighters going to third countries, in particular Syria, and the possible response to address it.  We intend to promote close information sharing between our respective agencies, as well as coordinated initiatives in third countries.  We also discussed efforts of the U.S. and the EU in countering violent extremism, and agreed to intensify our cooperation.

Our meeting also addressed data protection, and issues related to alleged activities of U.S. intelligence agencies.  We together recognize that this has led to regrettable tensions in the transatlantic relationship, which we seek to lessen.  In order to protect all our citizens, it is of the utmost importance to address these issues by restoring trust and reinforcing our cooperation on justice and home affairs issues.

The EU and the U.S. are allies.  Since 9/11 and subsequent terrorist attacks in Europe, the EU and U.S. have stepped up cooperation, including in the areas of police and criminal justice.  Sharing relevant information, including personal data, while ensuring a high level of protection, is an essential element of this cooperation, and it must continue.

We are therefore, as a matter of urgency, committed to advancing rapidly in the negotiations for a meaningful and comprehensive data protection umbrella agreement in the field of law enforcement.  The agreement would act as a basis to facilitate transfers of data in the context of police and judicial cooperation in criminal matters, by ensuring a high level of personal data protection for U.S. and EU citizens. We are committed to working to resolve the remaining issues raised by both sides, including judicial redress (a critical issue for the EU).  Our aim is to complete the negotiations on the agreement ahead of summer 2014.

We also underline the value of the EU-U.S. Mutual Legal Assistance Agreement.  We reiterate our commitment to ensure that it is used broadly and effectively for evidence purposes in criminal proceedings.  There were also discussions on the need to clarify that personal data held by private entities in the territory of the other party will not be accessed by law enforcement agencies outside of legally authorized channels.  We also agree to review the functioning of the Mutual Legal Assistance Agreement, as contemplated in the Agreement, and to consult each other whenever needed.

We take stock of the work done by the joint EU-U.S. ad hoc Working Group.  We underline the importance of the ongoing reviews in the U.S. of U.S. Intelligence collection activities, including the review of activities by the Privacy and Civil Liberties Oversight Board (PCLOB) and the President’s Review Group on Intelligence and Communications Technology (Review Group).  The access that has been given to the EU side of the ad hoc Working Group to officials in the U.S. intelligence community, the PCLOB, the Review Group, and U.S. congressional intelligence committees will help restore trust.  This included constructive discussions about oversight practices in the U.S.  The EU welcomes that the U.S. is considering adopting additional safeguards in the intelligence context that also would benefit EU citizens.

As these ongoing processes continue, they contribute to restoring trust, and to ensuring that we continue our vital law enforcement cooperation in order to protect EU and U.S. citizens.”

 

A senior official in Venezuela’s state economic development bank has pleaded guilty in New York federal court to accepting bribes from agents and employees of a New York-based broker-dealer (Broker-Dealer) in exchange for directing her bank’s security-trading business to the Broker-Dealer.

 
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York, and Assistant Director in Charge George Venizelos of the New York Office of the FBI made the announcement.

 
Maria De Los Angeles Gonzalez De Hernandez, 55, pleaded guilty today before U.S. District Judge Paul A. Engelmayer in the Southern District of New York to conspiring to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses.  Sentencing for Gonzalez is scheduled for Aug. 15, 2014, before Judge Engelmayer.

       
At all times relevant to the charges, Banco de Desarrollo Económico y Social de Venezuela (BANDES) was a state-run economic development bank in Venezuela.  The Venezuelan government had a majority ownership interest in BANDES and provided it with substantial funding. 

 
According to court records, Gonzalez was an official at BANDES and oversaw the development bank’s overseas trading activity.  At her direction, BANDES conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales.

 
From early 2009 through 2012, Gonzalez participated in a bribery scheme in which she directed trading business she controlled at BANDES to the Broker-Dealer and, in return, agents and employees of the Broker-Dealer shared the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES.  Agents and employees of the Broker-Dealer devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.  Emails, account records, and other documents collected from the Broker-Dealer and other sources reveal that Gonzalez received a substantial share of the revenue generated by the Broker-Dealer for BANDES-related trades.  Specifically, Gonzalez received millions in bribe payments from Broker-Dealer agents and employees.

 
Additionally, Gonzalez paid a portion of the bribe payments she received to another BANDES employee who was also involved in the scheme.  

To further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that Gonzalez and others held in Switzerland, among other places. 

 
Previously, three former employees of the Broker-Dealer – Ernesto Lujan, Jose Alejandro Hurtado, and Tomas Alberto Clarke Bethancourt – each pleaded guilty in New York federal court to conspiring to violate the Foreign Corrupt Practices Act (FCPA), to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, relating, among other things, to the scheme involving bribe payments to Gonzalez.  Sentencing for Lujan and Clarke is scheduled for Feb. 11, 2014, before U.S. District Judge Paul G. Gardephe.  Hurtado is scheduled for sentencing before U.S. District Judge Harold Baer Jr. on March 6, 2014.

 
This ongoing investigation is being conducted by the FBI, with assistance from the SEC and the Justice Department’s Office of International Affairs. Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.  Assistant United States Attorney Carolina Fornos is also responsible for the forfeiture aspects of the case.

 
Additional information about the Justice Department’s FCPA enforcement efforts can be

found at www.justice.gov/criminal/fraud/fcpa

       

 

Two former police officers with the Police of Puerto Rico were sentenced to serve 63 and 60 months in prison for attempting to extort a defendant and soliciting bribe payments of $50,000.

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

 
Abimael Arroyo-Cruz, 30, of Rio Grande, Puerto Rico, was convicted by a jury on May 29, 2013, of conspiracy to commit federal programs bribery, bribery, conspiracy to commit extortion and attempted extortion.  Josue Becerril-Ramos, 36, of Carolina, Puerto Rico, pleaded guilty to all four counts on May 17, 2013, midway through his trial.  Arroyo was sentenced to serve 63 months in prison, and Becerril was sentenced to serve 60 months in prison. 

 
Arroyo and Becerril arrested eight individuals for possessing unregistered firearms and marijuana on Aug. 2, 2012.  The officers then solicited from one defendant a bribe payment of $50,000 to have his case dismissed.  Beginning on Sep. 11, 2012, both officers spoke with the defendant multiple times over the telephone, discussing payment details and strategies for dismissing the defendant’s case.

 
Arroyo and Becerril collected approximately $35,000 of the $50,000 demanded from the defendant in two different payment installments.  Unbeknownst to the officers, however, the individuals who dropped off the payments were cooperating with federal law enforcement. 

 

In exchange for the bribes, Arroyo and Becerril devised a plan whereby the officers would misidentify a co-defendant in court, leading to the dismissal of the defendant’s case.  When asked under oath at the preliminary hearing to identify the defendant, Arroyo instead identified a co-defendant.  Arroyo confirmed to the defendant following the hearing that he deliberately misidentified the co-defendant as part of the plan to have the defendant’s case dismissed.

The case was investigated by the FBI’s San Juan field office.  The case was prosecuted by Trial Attorneys Menaka Kalaskar and Marquest J. Meeks of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Timothy Henwood of the District of Puerto Rico. 

The Justice Department announced today that it has opened a pattern or practice investigation of the Family Court of St. Louis.  The investigation will focus on whether the court provides constitutionally required due process to all children appearing for delinquency proceedings and whether the court’s administration of juvenile justice provides equal protection to all children regardless of race. 

 

This investigation will include a comprehensive review of policies, procedures, court documents and statistical data.  As part of this investigation, the department will reach out to juvenile justice stakeholders, including community members and groups with knowledge of the Family Court’s processes.

 

“Protecting the constitutional rights of all children appearing in court is critical to achieving our goals of improving juvenile courts, increasing the public’s confidence in the juvenile justice system and maintaining public safety,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “During the course of this investigation, we will consider all relevant information, particularly any efforts the court has undertaken to ensure compliance with the Constitution and federal law.” 

 

The department will conduct the investigation using its authority under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994, which prohibits a pattern or practice of deprivation of civil rights for juveniles in the administration of juvenile justice, and Title VI of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color or national origin by recipients of federal financial assistance.  The department has conducted similar investigations in other jurisdictions, and most recently obtained important reforms in its investigation of the Juvenile Court of Memphis and Shelby County, Tennessee.

 

The Special Litigation Section of the Civil Rights Division is conducting this investigation.  Individuals with relevant information are encouraged to contact the department via email at Community.StLouis@usdoj.gov or by phone at 855-228-2151.

 

Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt . 

United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, was invited to speak at the Commonwealth of the Northern Mariana Islands (CNMI) Women’s Summit held in Susupe, Saipan, on August 1-2, 2013.  The CNMI Women’s Summit was sponsored by the CNMI Women’s Association.

U.S. Attorney Limtiaco provided an overview of “Human Trafficking”, including how to identify victims, and ways in which the community can assist and provide for the needs of victims.  U.S. Attorney Limtiaco also discussed issues relating to “Drug Abuse”, including public awareness and prevention efforts addressing drug abuse among youth and the elderly, such as the Red Ribbon Campaign and National Prescription Drug Take Back initiative.

Approximately one hundred participants attended the CNMI Women’s Summit which also included workshops on various topics, such as Leadership and Women; Education & Training; Effective Communication; Women in the Labor Force; Business Opportunities; Writing Business Plans; and Language & Culture.

U.S. Attorney Limtiaco was also invited and conducted outreach on human trafficking issues in an interview by Glenn Manglona, host of the Marianas Agupa Chamorro Radio talk show.

Attached are photos taken at the CNMI Women’s Summit.

A federal jury today found Robroy MacInnes, 54, of Inverness, Fla., and Robert Keszey, 47, of Bushnell, Fla., guilty of conspiracy to traffic in state and federally protected reptiles.  MacInnes also was convicted of trafficking in protected timber rattlesnakes in violation of the Lacey Act.  

Between 2007 and 2008, the defendants, who own the reptile wholesaler Glades Herp Farm Inc., collected protected snakes from the wild in Pennsylvania and New Jersey, purchased protected eastern timber rattlesnakes that had been illegally collected from the wild in violation of New York law, and transported federally threatened eastern indigo snakes from Florida to Pennsylvania.  MacInnes also violated the Lacey Act by purchasing illegal eastern timber rattlesnakes and having the snakes transported from Pennsylvania to Florida.  The evidence at trial showed that the protected species were destined for sale at reptile shows in Europe, where a single timber rattlesnake can sell for up to $800.  Snakes that were not sold in Europe were sold through the defendants’ business in the United States.

“These defendants broke numerous wildlife laws seeking to profit from an illegal trade in threatened species,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division.  “The Justice Department is committed to enforcing wildlife laws like the Endangered Species Act and the Lacey Act that protect our environment and these threatened species from a destructive and dangerous black market trade.”

The eastern timber rattlesnake is a species of venomous pit viper native to the eastern United States, and is listed as threatened in New York.  It is also illegal to possess an eastern timber rattlesnake without a permit in Pennsylvania.  The eastern indigo snake, the longest native North American snake species, is listed as threatened by both Florida and federal law. 

The Lacey Act, one of the oldest statutes in the United States, prohibits interstate trafficking in wildlife known to be illegally obtained.  The maximum penalty for conspiring to commit offenses and for violations of the Lacey Act is up to five years in prison and a $250,000 fine for each violation.

This case was investigated by the U.S. Fish and Wildlife Service, Office of Law Enforcement, with assistance from the New York Department of Environmental Conservation.  The case was prosecuted by Trial Attorney Patrick M. Duggan and paralegal Ashleigh Nye of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division and Assistant U.S. Attorney Mary Kay Costello of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

Michael Carlow, a resident of Pittsburgh, Pa., was sentenced today to serve 35 months in prison for corruptly endeavoring to obstruct the Internal Revenue Service (IRS), the Justice Department and IRS announced.  The sentence was imposed by U.S. District Judge David Cercone for the Western District of Pennsylvania.

 

Carlow pleaded guilty to tax obstruction on Jan. 4, 2013.  In an earlier case, Carlow pleaded guilty in 1996 to bank fraud and tax fraud in federal court and was sentenced to eight years in prison.  After his release in 2002, Carlow resided with his girlfriend, Elizabeth Jones, in Pittsburgh.

 

According to documents filed in the case, the IRS assessed more than $6 million in overdue taxes, interest and penalties against Carlow for the years 1992 through 1996.  However, from 2000 through 2011, in order to thwart efforts by the IRS to collect what he owed, Carlow concealed his assets and income through Jones and numerous nominee corporations.  According to documents filed in the case, Carlow maintained a secret interest in various corporations and had fees and royalties paid to Jones rather than to himself.  He also failed to report his ownership and control of corporate assets to the U.S. Probation Office and the IRS.  Carlow filed false U.S. individual income tax returns for 2003-2006 and failed to file U.S. individual income tax returns from 2008 through 2011.  In August 2011, Jones pleaded guilty to her conduct related to acting as a nominee for Carlow.  Sentencing for Jones is scheduled for Dec. 18, 2013.

 

Kathryn Keneally, Assistant Attorney General for the department’s Tax Division, commended the investigative efforts of IRS - Criminal Investigation Special Agents, who investigated the case, and Tax Division Trial Attorneys Kenneth Vert and Jeffrey McLellan, who are prosecuting the case.

Robert Eldon Robertson and his wife Esther Lynne Robertson of Manteca, Calif., were indicted on charges of filing two false claims for federal tax refunds, filing liens against the former Internal Revenue Service (IRS) commissioner and impeding the administration of federal tax laws, the Justice Department and IRS announced today.  The indictment was unsealed yesterday in the Eastern District of California.

 

According to the indictment, the Robertsons filed two false federal income tax returns claiming large refunds based on fictitious Form 1099-OID withholdings: one for tax year 2005 claiming a $90,538 refund and one for 2007 claiming a $313,248 refund.  The indictment also charges each of the Robertsons with filing a false lien against the property of the IRS commissioner for “a sum certain amount determined as triple the stated amount of any purported determination of tax liability.”  According to the indictment, the Robertsons also sent a bogus “international promissory note” with a request that the IRS apply the purported $800,000 face value of the note towards their outstanding tax liabilities.  The IRS also received a letter containing credit card bills belonging to the Robertsons asking the IRS to pay nearly $20,000 worth of their credit card debt.

 

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.  If convicted, the Robertsons face a maximum of five years in prison for each false claim count, three years for the obstruction count and 10 years for the count of filing false liens.

 

The case was investigated by both IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration.  It is being prosecuted by Trial Attorney Ignacio Perez de la Cruz of the department’s Tax Division and Assistant U.S. Attorney Matthew Segal in the Eastern District of California.

The Justice Department today reached an agreement with Kim Hoang Coffee and Fast Food, a restaurant in San Francisco, resolving claims that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA).

 

In a charge filed with the department, a work-authorized immigrant alleged, and the department found, that Kim Hoang Coffee and Fast Food improperly rejected valid work-authorization documents when re-verifying her authorization for employment, which caused the immigrant to believe she had been terminated.  The investigation also revealed that the employer believed she could ask non-U.S. citizens to produce specific documents to establish work authorization upon initial hire, but did not need to make similar demands of U.S. citizens.  The INA’s anti-discrimination provision prohibits employers from discriminating against non-U.S. citizens in the employment eligibility verification process by demanding different documentation than U.S. citizens are required to present.

 

In response to the department’s investigation, Kim Hoang Coffee and Fast Food offered to rehire the charging party and provide back pay for the charging party’s month of lost wages.  Under the terms of the agreement, Kim Hoang Coffee and Fast Food must pay $485 in civil penalties to the United States, undergo department training on the anti-discrimination provision of the INA and be subject to monitoring of its employment eligibility verification practices for a period of three years.  The employer also agreed to post the Office of Special Counsel for Immigration-Related Unfair Employment Practices’ (OSC) “Right to Work” poster, which highlights the anti-discrimination provision of the INA.  The case settled prior to the department filing a complaint in this matter.

 

“Imposing different documentary requirements on individuals based on their citizenship status during the employment eligibility verification process is discrimination prohibited by the INA,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “The Department of Justice is committed to protecting U.S. citizens and all work-authorized immigrants from document abuse.”

 

The OSC is responsible for enforcing the anti-discrimination provision of the INA.  For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php, email osccrt@usdoj.gov or visit the website at www.justice.gov/crt/about/osc .

A former Florida-licensed real estate associate and mortgage broker was sentenced to serve 135 months in prison for his role in a $2.4 million mortgage fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division made the announcement.

Jose Armando Alvarado, 64, of Miami, was found guilty on Sept. 9, 2013, of eight counts of wire fraud and six counts of bank fraud and was sentenced on Nov. 14, 2013, by U.S. District Judge William J. Zloch of the Southern District of Florida.  In addition to his prison term, Alvarado was ordered to serve three years of supervised release.

Two of Alvarado’s co-conspirators previously convicted at the same trial of various counts of wire and bank fraud were also sentenced on Nov. 14, 2013.  Alberto Morejon, 27, of Miami, a former loan closer and title agent, was sentenced to serve 36 months in prison.  Alvarado’s sister, Reyna Orts, 58, of Miami, a former mortgage broker and the mother of Morejon, was sentenced to serve 50 months in prison. 

According to court documents and evidence presented at trial, Alvarado, along with his co-conspirators, operated a mortgage fraud scheme by controlling and operating three real estate entities in the Miami area: South Florida Realty; American Mortgage Lending, a mortgage broker; and Royal Atlantic Title, a title insurance agency.  From February 2004 through November 2009, Alvarado and his co-conspirators used their control over these three companies to falsify and misrepresent important facts provided to financial institutions in order to fraudulently secure loans totaling more than $2.4 million.  The loans were often obtained through submitting falsified supporting documentation, such as false tax returns, W2 forms, bank statements and employment verifications. 

Evidence at trial showed that Alvarado and his co-conspirators subsequently enriched themselves by diverting loan proceeds, collecting brokerage fees and inflating real-estate commissions generated by the sales of the properties.  Alvarado and his co-conspirators obtained control of multiple properties during the real estate market boom with the intent to flip and sell them for a profit or control them as rental properties.  The defendants used their knowledge and experience in the real estate industry to conceal the scheme by executing quit-claim deeds and failing to record, and falsely recording, mortgage deeds and other documentation with the State of Florida.

The case was investigated by the FBI’s Miami Field Office and the Miami-Dade Police Department.  The case was prosecuted by Trial Attorney Nathan Dimock of the Criminal Division’s Fraud Section. 

SAIPAN — Alicia A.G. Limtiaco, United States Attorney for the District of Guam and the Northern Marina Island, announced the filing on October 22, 2013, of federal criminal charges against MARIANO K. PANGELINAN, ROSABELLA P. CRUZ, and HELEN N. APARENTE, stemming from their involvement with a corporation called ARCH INTERNATIONAL (hereinafter called ARCH).

The federal criminal indictment is attached. It alleges that the three individuals held ARCH out as a recruiting agency that could help aliens obtain jobs and employment-based CW-1 permits for certain fees, but, after taking various fees from the aliens, did not find them jobs but instead submitted CW-1 petitions to federal immigration authorities in which they falsely stated that ARCH itself employed the aliens.
The indictment charges Conspiracy to Commit Visa Fraud and to Defraud the United States, in violation of Title 18, United States Code, § 371; Visa Fraud, in violation of Title 18, United States Code, § 1546(a); and False Statement, in violation of Title 18, United States Code, § 1001(a)(2). The Conspiracy and False Statement charges carry maximum potential sentences of five years in federal prison and a $250,000 fine. The Visa Fraud charges carry a maximum potential sentence of ten years in federal prison and a $250,000 fine.

Defendants PANGELINAN and CRUZ made their initial appearances before U.S. Magistrate Judge Heather L. Kennedy on October 25, 2013, and were arraigned before U.S. District Court Judge Ramona V. Manglona on November 4, 2013. Trial is scheduled for December 30, 2013, at 10:00 AM. Defendant APARENTE is still at large.

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty. The investigation was conducted by Homeland Security Investigations. The case is being prosecuted by Assistant United States Attorney Ross K. Naughton.

Indictment

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that DAVID JAMES HART, was sentenced November 5, 2013, in the District Court of Guam to 21months incarceration, and five years of supervised release.

Defendant HART pled guilty on December 19, 2012, to one count of Failure to Register as Sex Offender, in violation of Title 18 U.S.C. Section 2250(a). Defendant HART traveled to Guam from Pennsylvania. Upon his arrival on Guam, defendant HART failed to maintain information with the Guam Sex Offender Registry.

U.S. Attorney Limtiaco states “The purpose of the Guam Sex Offender Registry is to provide important notice to island residents that sex offenders are living, working and attending schools in our community. The Sex Offender Registry is a nationwide network that exists to increase public safety and community awareness. Defendants who have committed sexually violent offenses, criminal sex conduct offenses, or criminal offenses involving minor victims must all register and maintain their registrations with the Guam Sex Offender Registry. Defendants who refuse to register or update their information will face federal punishment. The United States Attorney’s Office is committed to the aggressive prosecution of non-compliant sex offenders.” Guam’s Sex Offender Registry can be found online at www.guamcourts.org.”

U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood (PSC) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in the sexual victimization of children and adults, possess or receive child pornography, and sex offenders who fail to register with the jurisdiction’s Sex Offender Registry.

The investigation was conducted by the United States Marshals Service. The case was handled by Assistant U.S. Attorney R. San Nicolas.

The Department of Justice announced today that Ohio-based Basco Manufacturing Co. (Basco) has agreed to pay $1.1 million to resolve allegations that it violated the False Claims Act by making false customs declarations to avoid paying duties on products imported from a Chinese manufacturer, and that it has filed a complaint against four other companies and two individuals based on similar allegations. The defendants named in the lawsuit are California-based C.R. Laurence Co.; Florida-based Southeastern Aluminum Products Inc.; Texas-based Waterfall Group LLC; New York-based Northeastern Aluminum Corp.; Northeastern’s owner, William Ma; and Robert Wingfield, the U.S. representative of Chinese exporter Tai Shan Golden Gain Aluminum Products Ltd. (Tai Shan).

 

“Companies that import products made abroad must comply with the law, including paying the import duties that protect domestic manufacturers and producers from unfair competition,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice is committed to enforcing the law against those who fail to pay the government money it is owed, just as it will enforce the law against those who falsely claim government funds.” 

The government’s settlement and complaint involve allegations that Basco and the companies named in the lawsuit made false declarations to the U.S. Department of Homeland Security Customs and Border Protection to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan in the People’s Republic of China (PRC). Allegedly, these companies misrepresented that the aluminum extrusions, which are used in the manufacture of shower enclosures and other products, were imported from Malaysia.

 

The Department of Commerce assesses, and Customs and Border Protection collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. Imports of PRC-made aluminum extrusions have been subject to antidumping and countervailing duties since 2010. No such duties are due on imports of such items made in Malaysia.

 

“Circumvention of our country’s import laws causes substantive harm to U.S. businesses and our economy,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “These laws must be strictly enforced so that our companies can remain competitive in markets throughout the world.”

 

Basco and the defendants named in the government’s lawsuit allegedly engaged in a scheme to avoid duties by shipping the aluminum extrusions manufactured by Tai Shan in the PRC through Malaysia – a practice called transshipping. The U.S. government alleges that Basco and the defendants knew that the aluminum extrusions were merely repackaged in Malaysia and did not undergo a substantial transformation that may have justified changing the product’s country of origin from the PRC to Malaysia.

 

“Antidumping and countervailing duties enforcement is a priority for Customs and Border Protection due to the significant role that it plays in the economic security of the United States,” said Director of Field Operations for Customs and Border Protection Vernon Foret. “Customs and Border Protection is responsible for facilitating the legitimate flow of trade, while enforcing the laws against the evasion of duties intended to protect against unfair trade practices.”  

 

The allegations against Basco and asserted in the government’s complaint were brought by whistleblower James F. Valenti Jr. in the U.S. District Court for the Middle District of Florida under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private parties to sue companies and individuals on behalf of the government who have falsely claimed federal funds or, as in this case, made false statements to avoid paying funds owed to the government. The Act also allows the government to intervene in and take over a lawsuit, as it has done in this case, and entitles the whistleblower to receive a share of any funds recovered through the lawsuit. Valenti’s share of the Basco settlement has not yet been determined.

 

The investigation was handled by the Department of Justice Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Middle District of Florida; the Department of Homeland Security U.S. Customs and Border Protection and Immigration and Customs Enforcement; and the Department of Commerce International Trade Administration.

The lawsuit is captioned United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products Ltd., et al., Case No. 11-cv-368 (M.D. Fla.). The government’s claims against Basco, and against the defendants named in the government’s complaint, are allegations only; there has been no determination of liability.  

The Justice Department has awarded more than $62 million in grants to strengthen efforts to help people returning from prison rejoin their communities and become productive, law-abiding citizens.  This grant announcement was made by Attorney General Eric Holder today while in St. Louis, where he visited Project EARN, a Drug Reentry Court program.  Attorney General Holder delivered remarks to the program’s graduates and emphasized that successful reentry is a top priority at the Justice Department and a central part of his new “Smart on Crime” initiative.

“Over the course of my career, I’ve seen just how important – and powerful – reentry programs can be,” said Attorney General Eric Holder.  “I learned how this cycle weakens communities, tears families apart and destroys individual lives.  If more communities adopt reentry programs like the one I witnessed today in St. Louis, it will reduce criminal justice spending, ensure the fairest possible outcomes, and forge the stronger, safer communities that all of our citizens deserve.”

Later today, Attorney General Holder will travel to Peoria, Ill., to attend a pre-court meeting with judges and pretrial service officers.  He will also deliver remarks at an alternative to detention court hearing.

The Office of Justice Programs (OJP) made these 112 competitive and supplemental Second Chance Act (SCA) awards to state, tribal and local governments, and non-profit organizations to reduce recidivism, provide reentry services, conduct research and evaluate the impact of reentry programs.  The SCA programs, administered through the Bureau of Justice Assistance (BJA) and the Office of Juvenile Justice and Delinquency Prevention (OJJDP), are designed to help communities develop and implement comprehensive strategies to reduce recidivism and address the challenges faced by incarcerated adults and youth when they return to their communities following release from confinement.

“Effective reentry services are critical to helping formerly incarcerated individuals remain crime-free and become productive, law-abiding citizens,” said Assistant Attorney General of the Office of Justice Programs Karol V. Mason.  “The awards continue this Administration’s commitment to achieving sustainable reductions in recidivism and improving the safety of our communities.”

 “We must continue to draw on the science of recidivism reduction and what works to ensure that the right people get the right integrated interventions at the right times,” said BJA Director Denise E. O’Donnell.

Of the over $62 million in funding provided, more than $57 million (91 BJA awards and 19 OJJDP awards) supports smart probation projects, treatment of returning adult and juveniles with co-occurring substance abuse and mental health disorders; adult and juvenile reentry demonstration projects; adult mentoring programs; technology career training projects for incarcerated adults and juveniles; and demonstration field experiments to test a parole reentry model.  The remaining $5.4 million supports two awards for evaluation activities and training and technical assistance for Second Chance Act grantees and the reentry field in general.

OJJDP awarded more than $9.7 million in Second Chance Act Juvenile Reentry Program grant awards to reduce recidivism and assist youth in successfully returning to their communities after secure confinement.  This includes $176,000 to assist four jurisdictions in planning a juvenile reentry program, and $6,573,177 for ten jurisdictions to implement evidence-based reentry programs that provide a comprehensive range of services for juveniles up to 18 years of age.  This also includes $2,977,252 for five community programs to reduce long-term alcohol and other substance abuse among youth in secure confinement facilities and to increase drug treatment and mental health services for these youth.

“Too many young people caught up in the juvenile justice system fail to return to school, find a job, or live healthy, drug-free lives after being confined,” said OJJDP Administrator Robert L. Listenbee.  “These grants will help them find a path out of crime and delinquency and begin to make positive contributions to their communities.”

OJP will also continue to provide reentry resources to the field through the National Reentry Resource Center (NRRC), through a cooperative agreement with the Council of State Governments (CSG) Justice Center, administered by BJA.  The NRRC offers training and technical assistance for SCA grantees, provides distance learning and other reentry resources to the field, and administers the “What Works in Reentry Clearinghouse.”  NRRC collaborates with other federal agencies focused on reentry activities and with the Attorney General’s Federal Interagency Reentry Council and its staff working group.

For a list of all OJP grant awards, please visit: www.ojp.gov/funding/funding.htm.

For more information on the NRRC, please visit: www.nationalreentryresourcecenter.org. 

For more information on the Federal Reentry Council, please visit: csgjusticecenter.org/nrrc/projects/firc/.

The Office of Justice Programs, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims.  OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking.

A Department of Defense (DOD) employee has pleaded guilty to filing a false claim with the DOD while stationed in the Republic of Korea (ROK) to fraudulently obtain $64,000 in housing allowance, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

Patrick Y. Kim, 56, of Reno, Nev., pleaded guilty today before U.S. District Judge Howard D. McKibben in the District of Nevada in Reno to one count of making a false claim.  Kim faces a maximum penalty of five years in prison when he is sentenced on Feb. 12, 2014.  As part of his plea agreement, Kim has agreed to pay full restitution to the DOD in the amount of $64,000. 

The former chief of the Furniture Branch at the United States Army Garrison in Daegu, ROK, Kim admitted that he submitted a fraudulent lease to the housing office to obtain a living quarters allowance (LQA) that he was not entitled to receive.  Kim began working at Daegu Garrison in or about October 2002, and, as a DOD civilian employee working in the ROK, he was entitled to receive certain housing allowances, including LQA under certain circumstances.  To receive LQA, Kim was required to submit a copy of a housing lease in support of his application and acknowledge that the LQA payments were exclusively for the payment of rent and not for the payment of refundable security deposits or “key money” leases.  Key money leases – sums of money paid to a lessor in lieu of rent, which are returned to the lessee at the end of the lease – are common in the ROK; however, they are prohibited by State Department regulations. 

Kim admitted that in September 2008, he was looking for a new apartment as the lease for his current apartment was about to expire.  He and his wife located a residence at an apartment complex; however, the owners of the apartments did not offer traditional rental leases – only key money leases and purchases.  On or about Sept. 8, 2008, Kim’s wife entered into a key money lease for one of the apartments.  Kim admitted that he knew that State Department regulations prohibited him from receiving LQA to pay for the key money lease signed by his wife.  On or about Sept. 9, 2008, Kim created a fake rental lease for the subject property and submitted it to the housing office at Daegu Garrison in support of his request for LQA.  The fake lease for the apartment purported to be a two-year lease with a total cost of $64,000.  Kim admitted receiving $64,000 in LQA, which is non-taxable, and also admitted that he used the money to pay for a portion of the key money lease entered into by his wife.  

Kim also admitted that he created a fake receipt for the purported $64,000 rental payment and submitted it to the housing office at Daegu Garrison to justify his receipt of the LQA.  He received the $64,000 back at the end of the key money lease in 2010, and he used it for the purchase of a new residence in the ROK.   

The case is being investigated by the U.S. Army Criminal Investigation Division and the FBI.  The case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Sue P. Fahami of the District of Nevada. 

WASHINGTON – Attorney General Eric Holder today endorsed the reauthorization of the Second Chance Act, bipartisan legislation introduced by Senators Patrick Leahy and Rob Portman and its companion legislation by Representatives Danny Davis and F. James Sensenbrenner, Jr. that provides resources and support to people reintegrating into their communities after being incarcerated.  The Attorney General’s endorsement came while visiting a graduation ceremony for participants of Project EARN, a federal reentry court in St. Louis.  The visit highlighted the department’s “Smart on Crime” initiative that seeks to reform the criminal justice system, improve reentry programs, and pursue alternatives to incarceration for low-level, non-violent offenses.

During Fiscal Year 2013 under the Second Chance Act, the Justice Department’s Bureau of Justice Assistance and the Office of Juvenile Justice funded over 100 grants, totaling more than $62 million, to support improved probation, parole, and reentry programs throughout America.  The grants include mental health and substance abuse treatment initiatives, technology career training programs, juvenile reentry efforts, and smart probation projects.  If Congress fails to reauthorize the Second Chance Act, countless neighborhoods will no longer have the critical support that has helped make profound and positive differences.

Please see below for the Attorney General’s prepared remarks in St. Louis.

REMARKS AS PREPARED FOR DELIVERY BY ATTORNEY GENERAL ERIC HOLDER AT PROJECT EARN GRADUATION CEREMONY

Thank you, Your Honor – and good morning, everyone.  It is a pleasure to be here in St. Louis, and a privilege to stand with each of the participants – and, especially, the graduates – of this remarkable program.

I appreciate the opportunity to share this moment with you.  And I am honored to join all of the proud family members and friends who are with us today in celebrating your achievements, reflecting on the progress you’ve made, and reaffirming your individual commitments to yourselves, your communities – and your futures.

First, to our graduates: I know the journey that has led you to this moment has not been easy.  I know you’ve had to work hard and overcome tremendous adversity.

At times, it’s been an uphill battle.  But the fact that you stand before this Court as Project EARN graduates is not only inspiring – it is proof of the strength, and the sheer determination, that defines you.  And it’s emblematic of the courage that defines everyone who has the resolve to enter treatment and keep moving down the long and difficult – but ultimately rewarding – road to recovery.

For our graduates – and for those who aspire to join them – I know this program has presented both an opportunity and a challenge.  It has required you to be honest with yourselves, and with your families and friends.  It has demanded that you confront your weaknesses and acknowledge past mistakes.  And it has given you the chance not only to reclaim your future, but to build a new one.

We can all be proud of the positive strides that our four distinguished graduates have made in this regard.

After a great deal of hard work, Kenneth Johnson is expected to earn his degree in HVAC next month.  And he’s already giving back to those around him by helping others stay on the right path and maintain a sober lifestyle.

Roger Jenkins is a full-time college student who’s only three credits away from earning his degree.  He’s keeping busy – running his own carpet cleaning business, which I’m glad to hear is thriving, and placing a renewed focus on his wonderful family.

Donald Westrich has turned his back on decades of drug use.  He’s been sober for more than a year.  And, in addition to maintaining full-time employment, he’s become active in his community through a local church.

Last but not least, Michael Stephens has undergone a remarkable transformation.  After a difficult start in this program, he has been free of cocaine use for more than a year.  He’s served as a source of inspiration to many of those around him.  And I’m told that he always has a smile on his face.

Each of these graduates is here as a result of months of hard work, dedication, and willpower.  Today, they stand among the ranks of well over a million people who have graduated from drug courts like this one across the country.

I hope those of you who are still making your way through this program will be encouraged by what they’ve accomplished.

As you keep moving forward, I want you to know that you have my support, and the support of my colleagues at every level of the Department of Justice – as well as President Obama and others throughout the Administration.

All of us are committed to the same goals that have driven leading criminal justice professionals to come together – here in St. Louis – to create this innovative program.  And we’re determined to keep building on the successes you’re making possible – not only in this community, but across the country.

In fact, I am pleased to announce today that, during Fiscal Year 2013, the Justice Department funded over 100 grants totaling more than $62 million under the landmark Second Chance Act.  These important funds support improved probation, parole, and reentry programs throughout America.  And they have the potential to make a real difference in countless neighborhoods.

That’s why it’s imperative that we keep up the good work.  I want to take this opportunity to call on Congress to pass legislation, introduced yesterday by U.S. Senators [Patrick] Leahy and [Rob] Portman, which would reauthorize and strengthen the Second Chance Act.  This law enjoys broad, bipartisan support.  And its timely reauthorization would enable us to institutionalize our commitments to programs like this one – and continue providing the resources necessary to make good on our nation’s promise of equality, opportunity, and justice under law.

We must support these programs because we recognize that – as our graduates here have shown – better treatment, and expanded access to the resources you need, can result in better outcomes and brighter futures for many who come into contact with the criminal justice system.

This is something I’ve seen firsthand.  During my time as a judge on the Superior Court in Washington, D.C. – and later as United States Attorney for the District of Columbia – I learned how drug abuse, crime, and incarceration can trap people in a destructive cycle.  A cycle that weakens communities, tears families apart, and destroys individual lives.

Day after day, I watched lines of young people – most often young men of color – stream through my courtroom.  Too many of the faces I saw became familiar – because too many of the people I sentenced served their time, were released from prison, and sooner or later returned to the same behavior that had led them to my courtroom in the first place.

That’s one reason why I’m passionate about programs like this one – programs that can help strong, committed individuals like you to break that cycle and gain the tools you need to reenter your communities and lead productive and fulfilling lives.

But I’m also here today because I understand that our country has a broader obligation to stand with you, and to support you – because we’re not fundamentally different.

I grew up in a neighborhood – in Queens – where people like you would have been my friends.  We would have gone to school, and partied, and played basketball together.

So I can’t help but feel mindful of the fact that, although I’m here in my capacity as Attorney General of the United States, a few of the people I grew up with – good people, like you –ended up taking very different paths.  Some of them didn’t catch the same breaks.  Some had to deal with drug issues.  And some became involved with the criminal justice system – because of bad luck, or bad choices, or both.

I’ve seen how tough it can be for people in your shoes to turn your lives around, to deal with unfairness, and to overcome adversity.  I know that everyone makes mistakes – everyone.  Including me.  And that’s why I wanted to be here today: to tell you in person how proud I am that each of you has decided not to let your mistakes define you – and not to make excuses – but to make the most of the opportunities that you’ve been given.

You’re here today because you’re smart.  You have the skills and the determination not just to make positive contributions, but to become role models for those around you – especially the young people who will learn from your examples.

Never forget that you have a responsibility to these kids – to talk to them, to serve as mentors, to help them learn from your mistakes, and to ensure that their lives aren’t interrupted or cut short.

For those of you who are graduating today – Kenneth, Roger, Donald, and Michael – I congratulate you on this extraordinary achievement.  For those who are just starting Project EARN, or who are well on your way – I am proud of every one of you.

I am confident in your ability to keep moving forward, to become leaders and role models in your neighborhoods, and to make the difference that our fellow citizens – and especially our young people – need and deserve.

Congratulations, once again – and keep up the great work.  I expect to hear great things about all that you’ll do and achieve from this moment forward.

For more information about the department’s “Smart on Crime” initiative, please visit http://www.justice.gov/ag/smart-on-crime.pdf.

 

Kevin Jackson of Montgomery, Ala., was sentenced to serve 102 months in federal prison and three years of supervised release, along with an order to pay $150,840.49 in restitution, for his role in a stolen identity refund fraud scheme, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  Jackson had previously pled guilty to access device fraud and to aggravated identity theft.

 

According to court documents, Jackson possessed a storage locker in which law enforcement authorities found a computer, three cellular telephones, at least 500 names and Social Security numbers of identity theft victims and at least 70 prepaid debit cards, all tied to a scheme to obtain fraudulent federal tax refunds by causing federal tax returns to be filed in the names of stolen identities. 

 

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation and the U.S. Secret Service, along with assistance from the Montgomery Police Department.  Trial Attorneys Justin Gelfand and Jason Poole of the department’s Tax Division prosecuted the case.

 

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .

The Department of Justice, the FBI, and the National Center for Disaster Fraud (NCDF) remind the public that there is a potential for disaster fraud in the aftermath of a natural disaster.  Suspected fraudulent activity pertaining to relief efforts associated with Typhoon Haiyan should be reported to the toll-free NCDF hotline at 866-720-5721.  The hotline is staffed by a live operator 24 hours a day, seven days a week, for the purpose of reporting suspected scams being perpetrated by criminals in the aftermath of disasters.

NCDF was originally established in 2005 by the Department of Justice to investigate, prosecute and deter fraud associated with federal disaster relief programs following Hurricanes Katrina, Rita and Wilma.  Its mission has expanded to include suspected fraud related to any natural or man-made disaster.  More than 20 federal agencies – including the Justice Department’s Criminal Division, U.S. Attorney’s Offices, Department of Homeland Security Office of Inspector General, FBI, U.S. Postal Inspection Service and the U.S. Secret Service – participate in the NCDF, allowing the center to act as a centralized clearinghouse of information related to disaster relief fraud.

In the wake of natural disasters, many individuals feel moved to contribute to victim assistance programs and organizations across the country.  The Department of Justice and the FBI remind the public to apply a critical eye and conduct due diligence before giving to anyone soliciting donations on behalf of hurricane victims.  Solicitations can originate as emails, websites, door-to-door collections, mailings, telephone calls and similar methods.

Before making a donation of any kind, consumers should adhere to certain guidelines, including the following:

• Do not respond to any unsolicited (spam) incoming emails, including by clicking links contained within those messages, because they may contain computer viruses.
• Be cautious of individuals representing themselves as victims or officials asking for donations via email or social networking sites.
• Beware of organizations with copycat names similar to but not exactly the same as those of reputable charities.
• Rather than following a purported link to a website, verify the existence and legitimacy of non-profit organizations by using Internet-based resources.
• Be cautious of emails that claim to show pictures of the disaster areas in attached files, because those files may contain viruses.  Only open attachments from known senders.
• To ensure that contributions are received and used for intended purposes, make donations directly to known organizations rather than relying on others to make the donation on your behalf.
• Do not be pressured into making contributions; reputable charities do not use coercive tactics.
• Do not give your personal or financial information to anyone who solicits contributions.  Providing such information may compromise your identity and make you vulnerable to identity theft.
• Avoid cash donations if possible.  Pay by debit or credit card, or write a check directly to the charity. Do not make checks payable to individuals.
• Legitimate charities do not normally solicit donations via money transfer services. • Most legitimate charities maintain websites ending in .org rather than .com.
If you believe that you have been a victim of fraud by a person or organization soliciting relief funds on behalf of disaster victims, contact the NCDF by phone at (866) 720-5721, fax at (225) 334-4707 or email at disaster@leo.gov.

You can also report suspicious e-mail solicitations or fraudulent websites to the FBI’s Internet Crime Complaint Center at www.ic3.gov. 

Pamela B. Reid pleaded guilty last night to one count of filing a false individual income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced.  Reid was charged in the District of Minnesota by an information filed on Sept. 27, 2013.

 

According to the plea agreement, Reid worked as a website affiliate for an internet pharmacy organization from 2006 through 2012.  As a website affiliate, Reid maintained websites based on templates provided from the internet pharmacy organization.  These websites allowed U.S. customers to purchase prescription drugs from their personal computer.  Reid was paid a percentage of the profit on each prescription sold through one of her websites and received her compensation by international wire from non-U.S. bank accounts under the control of the internet pharmacy organization.

 

Reid pleaded guilty to filing a false individual income tax return that failed to report any business income for the year 2006.  According to the plea agreement, Reid admitted that in 2006 she had unreported gross receipts of at least $306,081.88 and additional federal income tax due and owing of at least $100,908.  As part of her guilty plea, Reid also admitted that she failed to report business income from her internet pharmacy organization affiliated websites on her individual income tax returns from 2007 through 2010.  The total federal income tax Reid did not report or pay for 2006 through 2010 was $270,397.

 

“In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe,” said Kelly R. Jackson, IRS - Criminal Investigation Special Agent in Charge of the St. Paul Field Office.  “Those Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don’t.  The IRS Criminal Investigation Division, together with the Department of Justice, will investigate and prosecute those who violate our tax system.”

 

Reid faces a potential maximum penalty of three years in prison and a potential maximum fine of $250,000 or twice the gross gain of the offense.  Reid has also agreed to pay restitution to the IRS in the amount of $376,438.87.  Sentencing will be scheduled at a later date.

 

Kathryn Keneally, Assistant Attorney General for the Department’s Tax Division, thanked Special Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Dennis R. Kihm, who prosecuted the case.

The city of Shreveport, La., has agreed to make significant upgrades to reduce overflows from its sanitary sewer system and pay a $650,000 civil penalty to resolve Clean Water Act (CWA) violations stemming from illegal discharges of raw sewage, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.  The state of Louisiana, a co-plaintiff in this case, will receive half of the civil penalty.

When wastewater systems overflow, they can release raw sewage and other pollutants, threatening water quality and potentially contributing to disease outbreaks.  To come into compliance with the CWA, the city estimates it will spend approximately $342 million over the next 12 years in order to improve the sewer system’s condition.  While the city upgrades the system, it will also implement a program for capacity management, operation, and maintenance to help reduce sanitary sewer overflows.

“The key provisions of this settlement will eliminate overflows of raw sewage in neighborhoods that have for too long been subject to these contaminated overflows,” said Acting Assistant Attorney General Robert G. Dreher.  “These provisions are critical to protecting the public health of all citizens of Shreveport.”  

“The United States Attorney’s Office is committed to assisting our federal partners and the state in protecting the environment and public health,” said U.S. Attorney Stephanie Finley.  “Sewer overflows are a public health hazard.  The citizens of Shreveport are the beneficiaries of this settlement, which will eliminate these overflows.”

 “Keeping these discharges out of our waterways is a priority for the EPA and the state of Louisiana,” said EPA Regional Administrator Ron Curry.  “The residents of Shreveport deserve clean water and reliable infrastructure, and this agreement will help achieve that.”

The Justice Department, on behalf of the EPA, filed a complaint against the city alleging that, since 2005, the city has had untreated sewage overflows from its sanitary sewer system in violation of the CWA and state-issued discharge permits.  The cause of these illegal overflows stems largely from the city’s failure to properly operate and maintain the condition of the sewer system, resulting in discharges of untreated sewage into local waterways and the community.

Shreveport’s wastewater collection and treatment system, including the Lucas and North Regional waste water treatment plants, serves approximately 220,000 people in an environmental justice area. 

Keeping raw sewage out of the community and the waters of the United States is a national priority for EPA, as sewage overflows can present a significant threat to human health and the environment.  These discharges can degrade water quality, spread bacteria and viruses, and cause diseases ranging from gastroenteritis to life-threatening conditions such as cholera and dysentery.  

The settlement, which will be lodged in the U.S. District Court for the Western District of Louisiana, is subject to a 30-day public comment period before the court can give final approval and enter the consent decree as final judgment, at which time it will become effective.  The proposed consent decree can be viewed online at www.justice.gov/enrd/Consent_Decrees.html.

More information about the settlement:  www2.epa.gov/enforcement/city-shreveport-settlement

More information about EPA’s national enforcement initiative: www.epa.gov/compliance/data/planning/initiatives/2011sewagestormwater.html

More information about Integrated Municipal Stormwater and Wastewater Plans: cfpub.epa.gov/npdes/integratedplans.cfm

Attorney General Eric Holder today announced the first public hearing of a new task force to examine the impact of exposure to violence on American Indian and Alaska Native children.  Joining President Obama and other officials at the Department of the Interior for the White House Tribal Nations Conference, Attorney General Holder shared the announcement with leaders from the 566 federally recognized tribes and emphasized the Justice Department’s long-standing collaboration with leaders in American Indian and Alaska Native communities to improve public safety.

“We must not accept the shameful reality that American Indians and Alaska Natives are disproportionately likely to be exposed to crime and violence – and that many who suffer exposure are children,” said Attorney General Holder.  “By bringing together federal officials, tribal leaders, and local partners to focus on the unique challenges that Indian children face, this task force will enhance public safety.  And these leaders will strengthen our communities by ensuring that every child can have the opportunity to learn, to grow, and to thrive – free from violence and fear.”

This task force is anchored by both a federal working group that includes U.S. Attorneys and officials from the Departments of the Interior and Justice and an advisory committee of experts appointed to examine the scope and impact of violence facing American Indian and Alaska Native children and make policy recommendations to Attorney General Holder on ways to address it.

The advisory committee will convene four public hearings across the country beginning in Bismarck, N.D., Dec. 9, focusing on violence in children’s homes, schools and communities in Indian country.  Associate Attorney General Tony West will join the task force at the first hearing in Bismarck.  The other hearings will be held in Phoenix, Ariz., Fort Lauderdale, Fla. and Anchorage, Alaska early in 2014.

The advisory committee will be co-chaired by former U.S. Senator Byron Dorgan and Iroquois composer and singer Joanne Shenandoah.  They will be aided by tribal members and national experts on American Indian studies, child health and trauma, and child welfare and law.  There are currently 12 advisory committee members:

• Dolores Subia Bigfoot, Caddo Nation of Oklahoma, Director, Indian Child Trauma Center, University of Oklahoma
• Rear Admiral Eric Broderick,  former Deputy Administrator, Substance Abuse and Mental Health Services Administration
• Eddie Brown, Pasqua Yaqui Tribe and Tohono O’odham Nation, Executive Director of the American Indian Policy Institute and Professor of American Indian Studies, Arizona State University
• Valerie Davidson, Orutsararmiut Native Council Member and Senior Director, Legal and Intergovernmental Affairs, Alaska Native Tribal Health Consortium
• The Hon. Byron Dorgan, Chairman, Board of Advisors, Center for Native American Youth; former U.S. Senator and chair of the Senate Committee on Indian Affairs
• Anita Fineday, White Earth Band of Ojibwe, Director, Indian Child Welfare, Casey Family Programs
• Matthew Fletcher, Grand Traverse Band of Ottawa and Chippewa Indians, Director, Indigenous Law and Policy Center, Michigan State University
• Alicia Lieberman, Director, Child Trauma Research Program, University of California at San Francisco
• Joanne Shenandoah, Iroquois, composer and musical artist
• Chaske Spencer, Lakota, actor
• Ron Whitener, Squaxin Island Tribe, Executive Director, Native American Law Center, University of Washington School of Law
• Marilyn J. Bruguier Zimmerman, Assiniboine-Sioux/Fort Peck Reservation, Director, National Native Children’s Trauma Center, University of Montana

This new task force is a key part of Attorney General Holder’s Defending Childhood initiative to prevent and reduce children’s trauma from experiencing violence as victims or witnesses.  The task force was created in response to a recommendation in the Attorney General’s National Task Force on Children Exposed to Violence December 2012 final report.  The report noted that American Indian and Alaska Native children have an exceptional degree of unmet needs for services and support to prevent and respond to the extreme levels of violence they experience.

For more information about the Defending Childhood initiative, please visit www.justice.gov/defendingchildhood.

To submit oral or written testimony to the committee, please contact the Tribal Law and Policy Institute, the Office of Juvenile Justice and Delinquency Prevention’s technical assistance provider to the committee, at kelly@tlpi.org; or 323-650-5467.

The alleged leader of a Mexican narcotics trafficking organization responsible for trafficking multi-ton quantities of cocaine, Juan Juarez Orosco, aka “El Abuelo,” was extradited to the United States from Panama on Nov. 8, 2013, and arraigned on Nov. 10, 2013, before U.S. Magistrate Judge Lois Bloom in the Eastern District of New York.

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, Special Agent in Charge James T. Hayes Jr. of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) and Special Agent in Charge Brian R. Crowell of the Drug Enforcement Administration’s (DEA) New York Division made the announcement.

According to court documents, from the early 1990s until his arrest by Panamanian law enforcement in March 2012, Juarez allegedly led a large-scale maritime and land transportation operation that was responsible for trafficking multi-ton quantities of cocaine from Central America via ship to the coast of Mexico.  Once the cocaine arrived in Mexico, Juarez and his co-conspirators would transport the cocaine from the coast to Mexico City, where it was then destined for the United States.  Throughout the 2000s, Juarez allegedly worked with major narcotics traffickers based in Colombia and Mexico, including the Norte Valle Cartel, the Beltran-Leyva Cartel and the Sinaloa Cartel.  Through the mid-2000s, Juarez’s organization allegedly transported at least 35,000 kilograms of cocaine for the Beltran-Leyva organization alone.  At the height of its activity, Juarez’s organization allegedly transported approximately eight tons a month in conjunction with the Sinaloa Cartel.

“As alleged in the indictment, Juarez’s trafficking organization was responsible for the importation of massive quantities of cocaine, across oceans and continents, into the United States,” said Acting Assistant Attorney General Raman.  “Juarez’s arrest and extradition are a testament to the tenacity of law enforcement officers across the world, and show what we can accomplish when we work together with our partners around the globe to capture major drug traffickers and bring them to justice.”

“There is no escape from the reach of the law, no matter where drug kingpins operate their poisonous trade,” said U.S. Attorney Lynch.  “Juan Juarez Orosco may have operated an international drug trafficking network that stretched across the Western Hemisphere, but today he faces justice in a courtroom in Brooklyn.  Thanks to our law enforcement partners in Panama, today’s extradition also shows that there is no safe haven for drug traffickers on the run.”  
 
Juarez was indicted on March 15, 2012, and charged with international narcotics importation and distribution conspiracy.  If convicted, the defendant faces a mandatory minimum sentence of 10 years and a maximum penalty of life in prison.

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

This case is being investigated by ICE HSI and DEA.  This case is being prosecuted by Trial Attorney Adrian Rosales of the Criminal Division’s Narcotic and Dangerous Drugs Section and Assistant U.S. Attorneys Gina M. Parlovecchio and Tiana Demas of the Eastern District of New York, with the assistance of the Criminal Division’s Office of International Affairs.

Comprehensive Agreement Will Preserve Affordable Housing for City Residents for Next 20 Years

 

The Justice Department, the Department of Housing and Urban Development (HUD) and the City of Joliet, Ill., have settled housing discrimination litigation that will preserve affordable housing for low-income residents in the southwest Chicago suburb for at least the next 20 years, the U.S. Attorney’s Office for the Northern District of Illinois and the Civil Rights Division announced today. 

 

The agreement, which was approved today by the U.S. District Court for the Northern District of Illinois, resolves the claims of the United States in two lawsuits in which the government contended that the city had discriminated against African Americans in violation of the Fair Housing Act when it attempted to condemn a federally subsidized affordable housing development.  The development, known as Evergreen Terrace, contains 356 units of affordable housing that are currently operated by a private owner pursuant to a 20-year contract with HUD.  The agreement ensures that, if  the city acquires the property through condemnation or otherwise, any displaced resident will be able to remain in affordable housing in Joliet, and at least 115 low-income housing units will continue to be available for families at the property or, subject to HUD approval, elsewhere in Joliet. 

 

“The United States is committed to ensuring that individuals and families, regardless of their race or income, have an opportunity to live in the community of their choosing,” said Jocelyn Samuels, Acting Assistant Attorney General for Civil Rights.  “This settlement ensures that, if the city prevails in its eminent domain action, Evergreen Terrace residents will not be forced to leave the city and low-income housing opportunities will be preserved in the city.

 

“This settlement guarantees that the United States will attain its major goal in this litigation, namely to preserve the affordable housing rights of low-income residents in Joliet and those at Evergreen Terrace in particular,” said U.S. Attorney for the Northern District of Illinois Zachary T. Fardon.  “Local governments that try to reduce affordable housing opportunities without providing meaningful alternatives risk running afoul of anti-discrimination laws.  As a result of this settlement, the low-income residents of Evergreen Terrace will be able to either stay at Evergreen Terrace or move to suitable alternative housing in Joliet.”

 

“This settlement protects the housing rights of minority families living in Joliet and preserves affordable housing options for many years to come,” said HUD General Counsel Helen Kanovsky.  “Government at every level should make certain they cultivate affordable housing and avoid creating obstacles that close doors on families who deserve a place to call home.”

Under today’s settlement, if the city acquires the property, consisting of eight buildings on North Broadway Street and North Bluff Street, it will still be bound by certain restrictions designed to protect residents and preserve affordable housing within the city of Joliet.  Among other things, the agreement:

 

·          Ensures that tenants who wish to remain in Joliet will not be displaced unless and until Joliet finds suitable housing in the city that will also accept the residents’ federal housing subsidies.  The city will also provide relocation counseling to displaced residents through a HUD-approved organization and will provide all assistance required by the Uniform Relocation Act;

·          Requires the city to preserve at least 115 of the low-income housing units for the next 20 years. The housing units would remain at the property initially, but the city could seek to transfer the subsidy to another development in Joliet pursuant to HUD’s program requirements for such transfers.  No such transfer could be carried out until the replacement housing is ready for occupancy, and current and former Evergreen Terrace residents would have first priority for residency;

·          Provides that to the extent any other housing is developed at the property, it would include the minimum number of affordable units required by the Low-Income Housing Tax Credit Program;

·          Requires the city to construct and maintain a community center to provide services to current and former Evergreen Terrace residents and other low- and moderate-income residents of the city;

·          Maintains most of the Evergreen Terrace site for use as a public purpose for at least twenty years;

·          Restores to the city HUD funding under HUD’s Community Development Block Grant and HOME Investment Trust Funds program that HUD had previously withheld because of its conclusion that the city was not complying with the Fair Housing Act and other applicable civil rights laws; and 

·          Ends HUD’s participation in the ongoing trial in the condemnation lawsuit.

The current property owners of Evergreen Terrace and four current tenants had also challenged the city’s condemnation action, and today’s agreement does not resolve their claims.

 

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

Return Preparer in La Place, La., Allegedly Overstated Refunds through Inflated Expenses, Deductions, Credits, and Fabricated Businesses

The United States has asked a federal court in New Orleans to permanently bar Shawanda Nevers (aka Shawanda Bryant, aka Shawanda Hawkins, aka Shawanda Johnson) of La Place, La., from preparing federal income tax returns for others, the Justice Department announced today.  According to the complaint, Nevers has prepared federal income tax returns in Louisiana through a business named 3LJ’s Industrial Service Solutions LLC.  The complaint alleges that she has prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

According to the complaint, Nevers prepared returns that claimed losses by fabricating expenses for fictitious businesses or overstating expenses incurred by legitimate enterprises.  The deductions for these fictitious or overstated expenses were claimed on a Form Schedule C – Profit or Loss From Business, which Nevers often included in her clients’ returns without their knowledge.  The returns Nevers prepared directed the Internal Revenue Service (IRS) to deposit the resulting refunds into her account, from which she deducted a fee before remitting the balance to her clients.  The complaint states that the IRS has examined a sample of tax returns that Nevers prepared for her clients for the tax years 2009 through 2011 and almost all of the returns examined had Schedule C losses that audits proved were either overstated or falsified.  Altogether, the complaint alleges that Nevers’ activities may have resulted in as much as $6 million of loss to the United States.

Return preparer fraud is one of the IRS’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 Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.

Related Materials:

United States v.Shawanda Nevers, etc.
Complaint for Permanent Injunction and Other Relief