District Not Recorded

The Department of Justice’s Office on Violence Against Women (OVW), in partnership with the National Council of Juvenile and Family Court Judges (NCJFCJ), announces the selection of four courts to participate in the Family Court Enhancement Project (FCEP) to improve custody and visitation decision-making for families who have experienced domestic violence.  The four courts selected are: Circuit Court of Cook County in Chicago, Ill.; Family Court of the State of Delaware; Hennepin County Family Justice Center in Minneapolis, Minn.; and Multnomah County Family Court in Portland, Ore.

“In order to maintain safety for the entire family, it is crucial that judges weigh the dynamics of domestic violence and its impact on both adults and children when making custody and visitation decisions,” said OVW Acting Director Bea Hanson.  “Ensuring the safety of domestic violence victims and their children during and after court proceedings is an essential component of the FCEP.  This project will provide guidance to courts around the country in implementing proven procedures and practices that keep victims and children safe.”

The FCEP, a collaborative project of NCJFCJ, OVW, the Battered Women’s Justice Project, and the National Institute for Justice, is designed to determine what family court procedures, practices and structures related to custody and visitation can help keep victims of domestic violence and their children safe from further violence and trauma.  The four courts chosen for the FCEP applied to an open call for concept papers that was issued by NCJFCJ.  OVW, NCJFCJ and BWJP reviewed the concept papers based on the criteria set forth in the call. 

OVW experts have identified, from a series of roundtable discussions and extensive research, challenges that affect the safety of domestic violence victims and their children involved in custody proceedings.  These challenges include: failure to identify and understand domestic violence in court and in third-party assessments; structural and procedural barriers; limited legal and advocacy resources; and the effects of race, class, and gender biases on outcomes.    

Over the next two years, the FCEP and the selected courts will work closely with national domestic violence and court improvement experts to implement better approaches for keeping domestic violence victims and their children safe through and beyond court proceedings.  Additionally, the U.S. Department of Justice’s National Institute of Justice will lead efforts on data collection and assisting each site in measuring the impacts of their systems change.

According to the CDC, women experience two million injuries from domestic violence each year and approximately one third of all incidents involving female victims take place in homes in which children ages twelve and under reside.  More than 15 million American children are exposed to domestic violence each year.  Many domestic violence victims and their children will come before a family court, and these courts make custody, visitation and other decisions that will have a significant long-term effect on these children and adults. 

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.

The Department of Justice today announced that it is requiring US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. to divest slots and gates at key constrained airports across the country to low cost carrier airlines (LCCs) in order to enhance system-wide competition in the airline industry resulting in more choices and more competitive airfares for consumers.

The department said the proposed settlement will increase the presence of the LCCs at Boston Logan International, Chicago O’Hare International, Dallas Love Field, Los Angeles International, Miami International, New York LaGuardia International and Ronald Reagan Washington National.  Providing the LCCs with the incentive and ability to invest in new capacity and permitting them to compete more extensively nationwide will enhance meaningful competition in the industry and benefit airline travelers. 

“This agreement has the potential to shift the landscape of the airline industry. By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country,” said Attorney General Eric Holder. “The department’s ultimate goal has remained steadfast throughout this process - to ensure vigorous competition in airline travel. This is vital to millions of consumers who will benefit from both more competitive prices and enhanced travel options.”

Six state attorneys general–Arizona, Florida, Pennsylvania, Michigan, Tennessee and Virginia–and the District of Columbia joined in the department’s proposed settlement, which was filed in the U.S. District Court for the District of Columbia.  If approved by the court, the settlement will resolve the department’s competitive concerns and the lawsuit. 

“The extensive slot and gate divestitures at these key airports are groundbreaking and they will dramatically enhance the ability of LCCs to compete system-wide,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “This settlement will disrupt the cozy relationships among the incumbent legacy carriers, increase access to key congested airports and provide consumers with more choices and more competitive airfares on flights all across the country.”

On Aug. 13, 2013, the department, six state attorneys general and the District of Columbia filed an antitrust lawsuit against US Airways and American alleging that US Airway’s $11 billion acquisition of American would have substantially lessened competition for commercial air travel in local markets throughout the United States.  The department alleged that the transaction would result in passengers paying higher airfares and receiving less service.  In addition, the department alleged that the transaction would entrench the merged airline as the dominant carrier at Reagan National, where it would control 69 percent of take-off and landing slots, thus effectively foreclosing entry or expansion by competing airlines.

The settlement requires US Airways and American to divest slots, gates and ground facilities at key airports around the country.  Specifically, the settlement requires the companies to divest or transfer to low cost carrier purchasers approved by the department:

All 104 air carrier slots (i.e. slots not reserved for use only by smaller, commuter planes) at Reagan National and rights and interest in other facilities at the airport necessary to support the use of the slots;

Thirty-four slots at LaGuardia and rights and interest in other facilities at the airport necessary to support the use of the slots; and

Rights and interests to two airport gates and associated ground facilities at each of  Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International.

The Reagan National and LaGuardia slots will be sold under procedures approved by the department.  Under the terms of the settlement, JetBlue at Reagan National and Southwest at LaGuardia will be given the opportunity to acquire the slots they currently lease from American.  The remaining 88 slots at Reagan National and 24 slots at LaGuardia plus any JetBlue or Southwest decline to acquire will be grouped into bundles, taking into account specific slot times to ensure commercially viable and competitive patterns of service for the recipients of the divested slots.  The parties will divest these slot bundles and all rights and interests in any gates and other ground facilities (e.g., ticket counters, baggage handling facilities, office space and loading bridges) as necessary to support the use of the purchased slots. 

The gates at the five airports will be transferred on commercially reasonable terms to the new acquirers.  The acquirers of the slot and gate divestitures also require approval of the department.  Preference will be given to airlines at each airport that do not currently operate a large share of slots or gates.  

The proposed settlement allows the department to appoint a monitoring trustee to oversee the divestitures or transfers of the slots and gates. The settlement also prohibits the merged company from reacquiring an ownership interest in the divested slots or gates during the term of the settlement.  The companies must also provide advance notice of any future slot acquisition at Reagan National regardless of whether or not it is a reportable transaction under the premerger notification law and further provides for waiting periods and opportunities for the department to obtain additional information in order to review the transaction.

AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas.  AMR is the parent company of American Airlines.  Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue.  In November 2011, American filed for bankruptcy reorganization.

US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz.  Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.

United States Attorney Alicia A.G. Limtiaco, announced today that after undergoing a six-week curriculum taught by Gang Resistance Education And Training (G.R.E.A.T.) officers, over 71 fifth grade students at Harry S. Truman Elementary School will be receiving their certificates of completion on Wednesday, November 13, 2013, at 12:30 P.M., in the school's cafeteria.

Parents are invited and highly encouraged to attend and participate alongside our students, in the graduation. The G.R.E.A.T. Program's primary objective is awareness and prevention of delinquency, youth violence, and gang membership. The G.R.E.A.T. lessons, aimed at elementary and middle school students, focus on providing life skills to help students avoid delinquent behavior and violence to solve problems.

Mr. Jon Fernandez, Guam Department of Education Superintendent and Santa Rita Mayor Dale Alvarez have also been invited to attend.

U.S. Attorney Limtiaco stated, AWe praise the hard work, motivation and significant accomplishments of our students in completing the G.R.E.A.T. Program, and the continued commitment and dedication of the G.R.E.A.T. instructors to our youth in taking the G.R.E.A.T. message to our schools in Guam.

Anyone interested in learning more about the program can log on to www.great-online.org.

Keith Johnson, 46, and his wife, Angela Johnson, 44, of Maryville, Tenn., pleaded guilty today to their roles in a $9.7 million procurement fraud scheme.

Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Robert E. Craig, Defense Criminal Investigative Service (DCIS) Special Agent in Charge of Mid-Atlantic Field Office; John Sopko, Special Inspector General for Afghanistan Reconstruction (SIGAR); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), made the announcement after the pleas were accepted by U.S. District Judge Leonie M. Brinkema of the Eastern District of Virginia.

The Johnsons were indicted on July 16, 2013, by a federal grand jury on conspiracy to commit wire fraud and wire fraud charges.  Keith Johnson faces a maximum penalty of 20 years in prison, and Angela Johnson faces a maximum penalty of five years in prison when they are sentenced on Feb. 14, 2014.

In a statement of facts filed with the plea agreement, Keith Johnson admitted to serving as the program manager for a Department of Defense contractor that operated a central maintenance facility (CMF) in Kabul, Afghanistan, and other facilities in that country to maintain and repair vehicles used by the Afghan National Army.  In his position during 2007 to 2008, Keith Johnson was involved in purchasing vehicle parts from vendors.  The Johnsons formed a company in Tennessee, Military Logistics Support (MLS), and listed only the names of relatives as officials in the documents filed.  Angela Johnson operated the company.  When Keith Johnson’s company solicited quotes for different vehicle parts that were needed, Angela Johnson, using her maiden name of “Angela Gregory” to conceal her relationship to Keith Johnson, responded with quotes based on parts that she was able to purchase from other vendors of vehicle parts.  Keith Johnson used his position as program manager to write letters justifying awards of purchase orders for parts to MLS without seeking competitive quotes, and in instances in which there had been competitive quotes, approving recommendations that the awards be made to MLS.

The Johnsons also conspired with John Eisner and Jerry Kieffer, two individuals who worked at the CMF as subcontractors to Keith Johnson’s company, to have Keith Johnson similarly steer purchase orders for other types of vehicle parts to Eisner’s and Kieffer’s separate company, Taurus Holdings.  Eisner submitted the quotes for Taurus using a fake name to conceal his connection to the subcontractor.  Eisner and Kieffer paid kickbacks to the Johnsons and on occasion engaged in collusive bidding with the Johnsons so that MLS could win competitions for certain purchase orders.  Eisner and Kieffer previously pleaded guilty to conspiracy and will be sentenced on Dec. 18, 2013. 

As a result of the scheme, Keith Johnson’s company awarded MLS at least $9.7 million worth of purchase orders for vehicle parts by Keith Johnson’s company.

This case was investigated by DCIS, FBI, SIGAR and Army MPFU.  Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jack Hanly and Ryan Faulconer of the Eastern District of Virginia are prosecuting the case on behalf of the United States.

Five Banks Directed to Produce Records for Accounts at Zurcher Kantonalbank, The Bank of N.T. Butterfield & Son Limited and Affiliates

U.S. District Judge Kimba M. Wood of the Southern District of New York entered an order on Nov. 7, 2013, authorizing the IRS to issue summonses requiring Bank of New York Mellon (Mellon) and Citibank NA (Citibank) to produce information about U.S. taxpayers who may be evading or have evaded federal taxes by holding interests in undisclosed accounts at Zurcher Kantonalbank and its affiliates (collectively, ZKB) in Switzerland; and U.S. District Judge Richard M. Berman of the Southern District of New York entered an order today authorizing the IRS to issue summonses requiring Mellon, Citibank, JPMorgan Chase Bank NA (JPMorgan), HSBC Bank USA NA (HSBC), and Bank of America NA (Bank of America) to produce similar information in connection with undisclosed accounts at The Bank of N.T. Butterfield & Son Limited and its affiliates (collectively, Butterfield) in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom.  U.S. Attorney for the Southern District of New York Preet Bharara, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, and Acting Commissioner of the Internal Revenue Service (IRS) Danny Werfel made the announcement today. 

In these actions, the Court granted the IRS permission to serve what are known as “John Doe” summonses on Mellon, Citibank, JPMorgan, HSBC, and Bank of America.  The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown.  The John Doe summonses approved today direct these five banks to produce records identifying U.S. taxpayers with accounts at ZKB, Butterfield and their affiliates, including other foreign banks that used ZKB and Butterfield’s U.S. correspondent accounts at Mellon, Citibank, JPMorgan, HSBC, and Bank of America to service U.S. clients. 

“These cases once again demonstrate the department’s resolve to uncover and identify taxpayers who tried to hide money overseas as a way to avoid federal taxes,” said Assistant Attorney General Keneally.  “These John Doe summonses will provide information about individuals using financial institutions from Switzerland to the Cayman Islands to Hong Kong to avoid their U.S. tax obligations.  U.S. taxpayers still holding accounts who have not come clean should come forward and do the right thing before it’s too late.”

“Today’s action show that the use of foreign banks for tax evasion remains a high investigative priority of this office and U.S. citizens should understand that loud and clear,” said U.S. Attorney Bharara.  “By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who try to evade their legal responsibility to pay taxes.”

“International issues remain a major focus for the IRS, and we are continuing our efforts to fight tax evaders who use offshore accounts to skirt the law,” said IRS Acting Commissioner Werfel.  “These John Doe summonses for correspondent account records show our determination to pursue evaders using offshore accounts, even if the person hiding money overseas chooses a bank that has no offices on U.S. soil.”

IRS Offshore Voluntary Disclosure programs and initiatives enable U.S. taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution by voluntarily disclosing previously undisclosed foreign accounts and income.  To date, U.S. taxpayers have identified 371 previously undisclosed accounts at ZKB and 81 such accounts at Butterfield.  In addition, a number of U.S. taxpayers with beneficial ownership and control over funds held in accounts at ZKB and Butterfield have admitted failing to report income earned from their offshore accounts on their federal tax returns.  The IRS has reason to believe that other U.S. taxpayers who held or presently hold similar accounts at ZKB, Butterfield, and their affiliates have done the same in violation of federal tax law.  In December 2012, three employees of ZKB were indicted for conspiring with U.S. taxpayers and others to hide at least $423 million from the IRS in secret Swiss bank accounts.

Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide.  U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year.  Willful failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation.

These cases are being handled by the Office’s Tax and Bankruptcy Unit.  Assistant U.S. Attorney Tomoko Onozawa is in charge of the Butterfield case and Assistant U.S. Attorney Christopher B. Harwood is in charge of the ZKB case.

Related Materials:

Five Banks Directed to Produced Records for Accounts
Butterfield and ZKB John Doe Summonses
 

The owner of a Brooklyn medical clinic was sentenced today to serve 15 years in prison for her leading role in a $77 million Medicare fraud scheme.

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

Irina Shelikhova, 50, of Brooklyn, was sentenced by U.S. District Judge Nina Gershon of the Eastern District of New York.  In addition to her prison term, Shelikhova was sentenced to serve three years of supervised release with a concurrent exclusion from Medicare, Medicaid and all Federal health programs, ordered to forfeit $36,241,545 and ordered to pay $50,943,386 in restitution.  Shelikhova has been in custody since her arrest at the John F. Kennedy International Airport on June 15, 2012, after living as a fugitive in Ukraine for nearly two years.  After serving her sentence, Shelikhova faces deportation from the United States.

Shelikhova pleaded guilty on Dec. 18, 2012, to one count of conspiracy to commit money laundering.  Including Shelikhova, 13 individuals have been convicted in this case.

Court documents state that from 2005 to 2010, Shelikhova owned and operated a clinic in Brooklyn that billed Medicare under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (collectively, Bay Medical clinic).  Shelikhova and her employees at the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary or never provided.  The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

According to trial testimony, Shelikhova masterminded the health care fraud at the Bay Medical clinic, which included hiring a medically unlicensed co-defendant to impersonate the clinic’s doctor and render medical care to patients.  Shelikhova also directed employees to create phony medical notes in an attempt to back up the false billing and to forge doctors’ names on prescriptions and charts.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, which showed conspirators paying cash kickbacks to corrupt Medicare beneficiaries.  The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010.  This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, Shelikhova directed the recruitment and operations of a network of external money launderers who cashed checks for the clinic.  Shelikhova wrote clinic checks payable to various shell companies controlled by the money launderers.  These checks did not represent payment for any legitimate service at or for the Bay Medical clinic, but rather were written to launder the clinic’s fraudulently obtained health care proceeds.  The money launderers cashed these checks and provided the cash back to the clinic.  Shelikhova used the cash to pay illegal cash kickbacks to the Bay Medical clinic’s purported patients.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  This case is being prosecuted by Trial Attorney Sarah M. Hall of the Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Attorney General Eric Holder today announced Ronald L. Davis as the director of the Office of Community Oriented Policing Services (COPS).  Davis comes to COPS from the East Palo Alto Police Department, where he served as Chief of Police since 2005.  Davis also worked with the Oakland Police Department for 19 years, where he rose to the rank of Captain and served in assignments including Police Academy Director, Criminal Investigations Commander, Patrol Commander and Inspector General of the Police Department.

“Ronald Davis is an experienced leader, a proven innovator, and an accomplished and highly-respected law enforcement officer.  I am proud to welcome him to the Justice Department as Director of the COPS Office, where he will bring his considerable skills to bear in advancing our efforts to become smarter on crime,” said Attorney General Eric Holder.  “Chief Davis’ leadership has been instrumental in reducing crime in each of the communities he has served.  I look forward to working closely with Director Davis to keep building on the outstanding work of the COPS Office, and to support our law enforcement allies across the country.”

In East Palo Alto, Davis led an organizational reform and community-policing effort that increased public trust and confidence and achieved dramatic crime and violence reductions in a city once dubbed the murder capital of the United States.  Davis also partnered with the California Department of Corrections and Rehabilitation to implement a pilot parole-reentry program that provided programming and enforcement services and a job program with the California Department of Transportation.  The East Palo Alto Police Department was the first police agency in the state to operate a state-funded reentry program.  Return-to-custody rates dropped from more than 60 percent to less than 20 percent during this program.

Davis is the co-author of the Harvard University and National Institute of Justice (NIJ) publication, “Exploring the Role of the Police in Prisoner Reentry,” and the Department of Justice publication, “How to Correctly Collect and Analyze Racial Profiling Data: Your Reputation Depends on It.”  He is a contributing author to the Police Executive Research Forum (PERF) publications, “Chief Concerns: The Use of Force,” and “Early Release of Prisoners and Its Impact on Police Agencies and Communities in California.”

Davis earned a Bachelor of Science degree from Southern Illinois University (SIU) and completed the Senior Executives in State and Local Government Program at Harvard University’s John F. Kennedy School of Government.

The COPS Office is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.

For more information on COPS, please visit: www.cops.usdoj.gov.

A federal grand jury in Albuquerque, N.M., has returned a one-count indictment charging former Belen Police Department Detective John Lytle with unlawfully assaulting a victim, identified in the indictment as R.A., during an investigative stop and arrest on March 15, 2012. 

Lytle is charged with violating R.A.’s right to be free from unreasonable search and seizure by a law enforcement officer, which includes freedom from the use of excessive force.  The indictment alleges that Lytle unlawfully assaulted R.A. by striking R.A. while R.A. was in handcuffs.  The indictment also alleges that Lytle’s actions resulted in bodily injury to R.A.

Lytle faces a statutory maximum penalty of 10 years in prison for the civil rights violation.

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the Albuquerque Division of the Federal Bureau Investigation.  It is being prosecuted by Assistant U.S. Attorney for the District of New Mexico Mark T. Baker and Trial Attorney Julia Gegenheimer of the Civil Rights Division.

A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Chuokee “Joseph” Bo of Pleasanton, Calif.

Bo is the 38th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Bo conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.   Bo was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.  The private auctions often took place at or near the courthouse steps where the public auctions were held.  Bo is charged with participating in the conspiracies beginning as early as August 2009 and continuing until about October 2010.

“Today’s plea agreement is the latest step in the Antitrust Division’s efforts to preserve open competition in local markets,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division remains committed to prosecuting individuals who subvert the competitive process for their own profit.”

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

"This is another example of justice being served in preserving the fairness of public real estate foreclosure auctions as well as the FBI’s commitment in investigating those who take advantage of a competitive marketplace,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “Criminal activity like this takes place in our communities and we continue to rely on the public’s help in seeking those who cheat the system.”

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

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

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

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

Tommy Edward Clack pleaded guilty in federal court in Greensboro, N.C., to one count of willfully filing a false federal income tax return and one count of knowingly making a false statement to a federally-insured bank in order to obtain a mortgage loan, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to filings with the court, for approximately the past 10 years Clack has been an itinerant, self-employed paving contractor doing business in North Carolina, South Carolina, Maryland, and Florida.  Clack operated under several different business names, and he changed the names of his paving business frequently in order to avoid scrutiny by state and federal law enforcement agencies.  As a result of his business practices, over the years Clack was charged with multiple state criminal violations in Maryland, North Carolina, South Carolina and Florida. Since June 2010, Clack has been under an injunction banning him from operating as a driveway paving contractor in North Carolina.  He is also subject to a cease-and-desist order in Maryland banning him from various fraudulent practices.

According to court documents, Clack significantly underreported the income from his paving business on his tax returns.  From 2004 to 2007, Clack earned gross income of over $5.7 million, but reported only a fraction of it to the IRS.  Clack underreported his income by approximately $294,829 in 2004; $1,178,822 in 2005; $1,868,556 in 2006 and $2,428,710 in 2007.  Clack’s returns were prepared by an accountant, but Clack knowingly provided her with false information upon which to base Clack’s returns, and signed his returns knowing that they significantly understated his income.  Altogether, as a result of these false returns Clack underpaid his taxes during this period by approximately $1,350,597.  To conceal his tax fraud, Clack employed a number of strategies: he did not maintain books and records, dealt extensively in cash, paid his employees in cash and structured currency transactions with his bank in amounts designed to evade the bank’s requirement to file Currency Transaction Reports with the IRS.

Court documents state that in 2003, Clack submitted a mortgage loan application in the name of his then-wife to a bank in Greensboro.  The application sought a $640,000 loan to finance the purchase of a $1.2 million home.  As part of the loan application, Clack provided the bank with a 2002 tax return in his wife’s name, which reported adjusted gross income of $372,748 and claimed total tax liability of $127,745.  Clack represented that this tax return had been filed with the IRS, when in fact it had not been.  In fact, Clack and his then-wife had filed a 2002 joint federal income tax return which claimed that the couple had adjusted gross income of $17,656 and total tax liability of $2,685.  Had the bank known of the discrepancy, they would not have issued the loan.  Clack ultimately defaulted on the loan, and the bank suffered a loss after foreclosing the collateral.

For the false tax return charge, Clack faces a maximum of three years in prison, one year of supervised release and a maximum fine of $250,000.  Clack faces a maximum of 30 years in prison, five years of supervised release and a maximum fine of $1,000,000 for the bank fraud count.  Sentencing is scheduled for March 7, 2014.

The case was investigated by special agents of the IRS - Criminal Investigation, with assistance from the North Carolina State Bureau of Investigation.  It is being prosecuted by Trial Attorney Jonathan Marx of the Justice Department’s Tax Division.

Ari B. Goldenberg, 46, of Milton, N.H., was charged today with trafficking in and making a false record for illegally selling a black rhinoceros head mount to an undercover U.S. Fish & Wildlife Service (FWS) special agent.

The indictment is a result of a nationwide effort led by the FWS and the Justice Department to investigate and prosecute those involved in the black market trade of endangered rhinoceros horns.

The indictment alleges that Goldenberg, seeking to profit from the sale of a black rhinoceros head mount he acquired for less than $1,000, illegally sold the mount to an undercover special agent of the FWS Office of Law Enforcement for $35,000.  The indictment also charges Goldenberg with providing the undercover agent with a falsified receipt for the sale of the mount.                         

Rhinoceros are a herbivorous species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under United States and international law, and all black rhinoceros species are endangered.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by more than 175 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.  Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population.  In China, there is a tradition dating back centuries of intricately carved rhinoceros horn cups.  Drinking from such a cup was believed to bring good health, and such carvings are highly prized by collectors.  As a result of this demand, rhino populations have declined by more than 90 percent since 1970.  South Africa, for example, has witnessed a rapid escalation in poaching of live animals, rising from 13 in 2007 to more than 618 in 2012.    

An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

The case was investigated by the FWS Office of Law Enforcement and is being prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

Iraqi Consultants and Construction Bureau (ICCB) has paid the U.S. $2.7 million to resolve allegations that it violated the False Claims Act by bribing a U.S. government official to obtain U.S. government contracts in Iraq, the Department of Justice announced today.  ICCB is a privately owned construction company headquartered in Baghdad, Iraq. 

“Bribery will not be tolerated in government contracting,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will ensure that government contracts are awarded based on merit and pursue allegations of fraudulently procured contracts wherever they occur.” 

The government alleged that, from 2007 to 2008, ICCB paid bribes to Army Corps of Engineers procurement official John Salama Markus, 41, of Nazareth, Pa., to obtain information that gave it an advantage in bidding on several construction contracts with the Department of Defense in Iraq.  The contracts supported reconstruction efforts involving the Iraq war, including infrastructure and security projects and the building of medical facilities and schools.  ICCB then knowingly overcharged the U.S. for services provided under the contracts, according to the government’s allegation.   

“It is offensive that anyone would see projects to promote stability, health and education in a rebuilding country as a way to make illegal cash on the side,” said U.S. Attorney for the District of New Jersey Paul J. Fishman.  “We will not abide companies paying to play in such a system.”

“The Defense Criminal Investigative Service (DCIS) is committed to protecting the integrity of the Defense acquisition process from personal and corporate avarice,” said Special Agent in Charge, DCIS Northeast Field Office Craig Rupert.  “Ensuring the proper use of U.S. taxpayers’ dollars and preventing contract fraud is in our nation’s interest and remains a priority.”

The settlement is part of a larger investigation initiated by the U.S. Attorney’s Office for the District of New Jersey.  As part of that investigation, Markus pleaded guilty on Sept. 7, 2012, to wire fraud, money laundering and failure to report a foreign bank account in connection with more than $50 million in contracts awarded to foreign companies in Gulf Region North, Iraq.  Markus was sentenced to 13 years in prison on March 12, 2013, in Newark, N.J., federal court.

The investigation is being handled by the U.S. Attorney’s Office for the District of New Jersey and the Civil Division’s Commercial Litigation Branch, in cooperation with the Defense Criminal Investigative Service, the Major Procurement Fraud Unit of the Army’s Criminal Investigation Command, the Criminal Investigative Division of the Internal Revenue Service and the Department of Homeland Security.  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Detroit-area resident Javed Rehman was sentenced to serve 60 months in prison today for his role in a $13.8 million Medicare fraud scheme.

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

Rehman, 50, of Farmington Hills, Mich., was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan.  In addition to his prison term, Rehman was sentenced to serve two years of supervised release and was ordered to pay $1,734,801 in restitution, jointly and severally with his co-defendants.  Rehman pleaded guilty on July 12, 2013, before Judge Rosen to one count of conspiracy to commit health care fraud.

According to court records, in or around May 2009, Rehman purchased Quantum Home Care Inc. with co-conspirators Tausif Rahman and Muhammad Ahmad.  Rehman paid kickbacks to recruiters to obtain Medicare beneficiary information used to bill Medicare for home health services – including physical therapy and skilled nursing services – that were never rendered.  Rehman was the administrator of Quantum and was responsible for the submission of false and fraudulent claims to Medicare based on falsified files created by the co-conspirators.

Medicare paid approximately $1.7 million to Quantum for physical therapy and skilled nursing services that Quantum purported to render between approximately June 2009 and September 2011.  According to court documents, between 2008 and 2009, Rehman’s co-conspirators acquired control of three other home health care companies.  The four companies, including Quantum, received approximately $13.8 million from Medicare in the course of the conspiracy.

Rahman pleaded guilty on Jan. 5, 2012, to one count of conspiracy to commit health care fraud and one count of money laundering and is scheduled for sentencing on May 21, 2014.  Ahmad pleaded guilty on Aug. 28, 2012, to one count of conspiracy to commit health care fraud and is scheduled for sentencing on May 14, 2014.

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers. 

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

Judge Finds that Instant Tax Service Franchisor Defrauded Customers, Obstructed the IRS and Violated Court Orders on Lending Practices

A federal court has entered a permanent injunction ordering ITS Financial LLC, the parent company of the Instant Tax Service franchise, to cease operating, the Justice Department announced today.  The injunction order, which was signed yesterday by Judge Timothy S. Black of the U.S. District Court for the Southern District of Ohio, also bars Fesum Ogbazion, the sole owner and CEO of ITS Financial, from operating or being involved with any business relating to tax-return preparation.  The court issued the order following a two-week trial in Cincinnati in June 2013.

Instant Tax Service, which is based in Dayton, Ohio, claimed to be the fourth-largest tax-preparation firm in the nation.  According to the court, ITS Financial had about 150 franchisees that filed over 100,000 tax returns each year in 2011 and 2012.  Two other entities owned by Ogbazion, Tax Tree LLC and TCA Financial LLC, were also defendants in the case and were also ordered to cease operating.

The court found that Ogbazion and his defendant companies had:

·          Filed tax returns for customers without their permission and encouraged franchisees to do the same;

·          Clandestinely trained and encouraged franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income and inevitably resulted in the submission of false federal tax returns;

·          Defrauded customers, who were largely low-income, by marketing false and fraudulent loan products to lure them into the tax-preparation offices;

·          Defrauded customers by requiring franchisees to charge phony and exorbitant fees;

·          Forged customers’ signatures on loan checks and used those forged checks to operate Ogbazion’s businesses;

·          Willfully failed to pay over $1 million of their own employment taxes and lied about assets in connection with the collection of those taxes, while hiding money in a secret bank account and defrauding the United States and third party creditors;

·          Lied on government forms and encouraged franchisees to do the same;

·          Obstructed government agents and materially assisted franchisees in circumventing Internal Revenue Service (IRS) law-enforcement efforts involving the suspension of electronic filing identification numbers; and

·          Told franchisees to lie to government agents in connection with IRS compliance visits.

The court credited an IRS study concluding that the tax harm caused by Instant Tax Service franchisees in five cities in a single tax-filing season was between $10 million and $25 million. 

“Defendants’ harm to the public is extensive and egregious, indeed appalling,” the court stated.  “This is especially so given the nature of Instant Tax Service’s core customer – the working poor – who are particularly vulnerable to [the] Defendants’ fraudulent practices.”

The court further stated:  “Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning.  The court concludes that even today [the] Defendants have not fully recognized their culpability.  Ultimately, the nature, scope and gravity of [the] Defendants’ offenses, and the unrepentant attitude toward their commission, demonstrate the necessity for a complete injunction putting the Defendants permanently out of business.”

The court also concluded that Ogbazion and ITS Financial violated the terms of a preliminary injunction order that the court had entered in October 2012 with their consent.  The court found that, despite their agreement to obey various lending and consumer-protection laws during the 2013 tax filing season, they violated several of those laws by discriminating against active-duty military personnel on loan applications and by failing to obtain a state lending license in a timely manner.  The court determined that they violated the preliminary injunction by causing their franchisees to provide tens of thousands of customers with Truth-in-Lending Act disclosure forms falsely stating that the loans carried no finance charges and an annual percentage rate (APR) of zero.

“We are gratified by the court’s decision, which serves to protect hard-working taxpayers who were targeted by Instant Tax Service, and also safeguards all honest taxpayers from the harm done by fraudulent tax filings,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division.  “As described by the court, this company grew large through abhorrent means – filing returns without customer authorization, forging customer signatures, pushing fraudulent loan products, and much more.  As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.”

“The court's decision sends a clear message to those who might be tempted to abuse the public trust provided to the tax preparer community,” said Acting IRS Commissioner Danny Werfel.  “Those who deceive their customers and defraud the U.S. Treasury will face swift legal action that puts an end to their corrosive conduct."   

Assistant Attorney General Keneally thanked former and current Tax Division trial attorneys Nathan Clukey, Sean Green, Russell Edelstein, Jose Olivera and Gregory Van Hoey, along with paralegal Mahana Karimi, for their efforts on the case.  She also thanked the many IRS attorneys and agents who participated in the investigation.

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

The owner of a Detroit-area home health care agency was sentenced today to serve 65 months in prison for her leading role in a $2.2 million Medicare fraud scheme.

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

Mehran Javidan, 51, was sentenced by U.S. District Judge Denise Page Hood in the Eastern District of Michigan. In addition to her prison term, Javidan was sentenced to serve three years of supervised release and was ordered to pay $2.2 million in restitution, jointly and severally with her co-defendants.

Javidan was convicted by a federal jury on April 2, 2013, of one count of conspiracy to commit health care fraud, three counts of health care fraud, three counts of making false statements related to health care matters and one count of conspiracy to solicit or pay health care kickbacks in exchange for referrals of patients to home health care company Acure Home Care Inc. (Acure).  The jury found Javidan not guilty of one count of making false statements and one count of health care fraud and did not reach a verdict on one additional count of health care fraud.

Javidan was initially charged along with two other defendants in an indictment unsealed on Feb. 17, 2011, as part of a nationwide Medicare fraud takedown.  One co-defendant was also convicted on April 2, 2013, while the other remains a fugitive.

According to evidence presented at trial, Javidan owned and operated Acure, a home health care company in Oak Park, Mich., and later Troy, Mich.  Javidan paid doctors to refer non-homebound patients for physical therapy treatment that was medically unnecessary.  The evidence showed that she also paid patient recruiters to obtain Medicare information and pre-signed physical therapy documents from Medicare beneficiaries.  The recruiters for Acure obtained the Medicare information and pre-signed forms by paying patients in cash and by promising that the referring doctors would prescribe them narcotic prescriptions.

Evidence presented at trial established that Javidan paid physical therapists and physical therapy assistants employed by Acure to create false and fraudulent physical therapy files using the blank, pre-signed forms to make it appear as if physical therapy services were actually rendered, when in fact, the services had not been rendered.

Javidan then directed the submission of Acure’s falsified billing to Medicare.  Acure was paid more than $2.2 million from Medicare between December 2008 and November 2010.

The investigation was led by the FBI and HHS-OIG and was brought by the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorney Niall M. O’Donnell of the Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in Chicago and eight other cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.

Jeffrey Paper of Potomac, Md., pleaded guilty yesterday to willfully filing a false tax return in the U.S. District Court in Greenbelt, Md., the Justice Department and the Internal Revenue Service (IRS) announced today.

According to court documents, Paper owned and operated a dental practice located in Lanham, Md., between 2008 and 2010.  For the 2009 and 2010 tax years, Paper underreported the total gross receipts from his dental practice and overstated his business expenses on his individual income tax returns.  As a result of his conduct, the total tax loss to the government was $215,711. 

Paper faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine.  Sentencing is scheduled for March 10, 2014. 

This case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorney Erin B. Pulice of the Department’s Tax Division is prosecuting the case, with the assistance of Assistant U.S. Attorney Kelly Hayes of the U.S. Attorney’s Office for the District of Maryland.

A federal court has permanently barred Gary J. Stern from promoting tax fraud schemes and from preparing related tax returns, the Justice Department announced today.  The civil injunction order, to which Stern consented without admitting the allegations against him, was entered by Judge Robert Gettleman of the U.S. District Court for the Northern District of Illinois.  The order permanently bars Stern from preparing various types of tax returns for individuals, estates and trusts, partnerships or corporations (IRS Forms 1040, 1041, 1065, and 1120), among others.  The United States alleged that Stern used those returns to facilitate the unlawful schemes identified in the complaint. 

According to the complaint, Stern designed at least three tax-fraud schemes that helped hundreds of customers falsely claim over $16 million in improper tax credits and avoid paying income tax on at least $3.4 million.  Stern allegedly promoted the schemes to customers, colleagues, and business associates.  The complaint alleges that his customers included lawyers, entrepreneurs and professional football players, and some of the latter, including NFL quarterback Kyle Orton, have sued Stern in connection with the tax scheme, alleging fraud, breach of fiduciary duty and professional malpractice. 

Federal law allows an income tax credit with respect to certain sales of fuel from non-conventional sources (FNS), including methane produced from landfills.  According to the complaint, beginning in the early 2000’s Stern created a web of partnerships, companies and other entities to serve as a conduit for sham transactions designed to funnel false FNS credits to his customers.  Stern allegedly funneled over $11.4 million of these bogus FNS credits to customers and used a bogus trust arrangement to fraudulently distribute an additional $5.34 million in FNS credits to his customers.

Finally, according to the complaint, Stern promoted an abusive income-shifting technique to help his wealthiest customers illegally avoid taxes.  Stern and his business associates allegedly kept most of the money that customers contributed to this scheme.  The court has barred Stern from using any entity to assist others in illegally shifting income for the purpose of avoiding tax.   

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 department website .

Related Materials:

United States v. Gary J. Stern
Final Judgment of Permanent Injunction Relief

AT&T has agreed to settle allegations that it violated the False Claims Act in connection with a program administered by the Federal Communications Commission (FCC), the Department of Justice announced today. The settlement resolves a civil lawsuit in which the government alleged that AT&T knowingly overbilled the Telecommunications Relay Services (TRS) Fund, which compensates IP Relay service providers for placing calls on behalf of hearing- or speech-impaired individuals in the U.S.

“The TRS program provides vital communication assistance to hearing- and speech-impaired Americans,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We are committed to protecting the integrity of the program, and the public funds used to support it, to ensure that hearing- and speech-impaired citizens can place emergency and other important phone calls.”

The settlement announced today involves the FCC’s IP Relay Program, which reimburses telecommunications companies that provide phone service for hearing- and speech-impaired individuals. Under this program, the companies employ communications assistants who facilitate calls to and from hearing- and speech-impaired citizens through instant messaging software. The companies are entitled to a per-minute reimbursement for each call that they handle.

The government alleged that, from December 2009 through December 2011, as much as 80 percent of the calls for which AT&T claimed reimbursement were ineligible because the calls did not originate in the U.S. or were not placed by hearing- or speech-impaired individuals. The government further alleged that it was common knowledge among AT&T communication assistants that a large percentage of their callers were from Nigeria or other foreign countries, and that they were using the TRS program to perpetrate credit card and other fraud schemes.

In 2008, the FCC issued two orders that required AT&T and other providers to register all callers and to institute procedures to verify registration information for their callers. Allegedly, AT&T initially used a postcard verification system for its IP Relay users, but the postcard system verified only a fraction of its users. Concerned about a potential drop in its IP Relay call volume, AT&T switched to a more relaxed eRegistration procedure. Upon switching to the eRegistration procedure, AT&T’s registrations increased from approximately two users per day to between 40 and 100 per day. Many of the users registered by AT&T through its eRegistration system provided AT&T with nonsensical or false names, e-mail addresses or street addresses including, for example, names composed of purely random letters such as “nbdk” or “jhgfajhs”. Despite receiving nonsensical and false registration information, AT&T enrolled the users and subsequently billed the government for their calls.

On May 7, 2013, AT&T entered into a consent decree with the FCC that resolved allegations based on conduct related to the subject matter of today’s settlement. Pursuant to that consent decree, AT&T paid a total of $18.25 million. Under the settlement announced today, AT&T has agreed to pay an additional $3.5 million to resolve its remaining liability under the False Claims Act.

 
“We would like to thank the Department of Justice for its assistance in ensuring the integrity of the TRS fund,” said Chief of the FCC’s Enforcement Bureau Michele Ellison. “Combined with our previous enforcement actions, today’s settlement makes it clear that we will not tolerate abuse of this system, which is vital to millions of Americans.”

The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the government and to share in any recovery. The lawsuit was filed in federal district court in Pittsburgh by Constance Lyttle. Lyttle will receive $525,000.

This case was handled by the U.S. Department of Justice Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Western District of Pennsylvania and the FCC Office of the Inspector General and Office of the General Counsel.

The claims resolved by this settlement are allegations only, and there has been no determination of liability. The lawsuit is captioned United States ex rel. Lyttle v. AT&T Corp., Civil Action No. 2:10-cv-01376-NBF-RCM (W.D. Pa.).

A patient broker of a South Florida psychiatric hospital was sentenced today to serve 24 months in prison followed by three years of supervised release for her participation in a $67 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 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.

Gloria Himmons, 54, of Union Springs, Ala., was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida.  In March 2013, Himmons pleaded guilty to one count of conspiracy to receive health care kickbacks and one count of receiving a health care kickback.  In addition to her prison term, Himmons was ordered to pay $14 million in restitution, joint and severally with her co-defendants.           

According to court documents, Himmons was a patient broker at Hollywood Pavilion LLC (HP), a state-licensed psychiatric hospital in South Florida that purported to offer both inpatient and outpatient mental health services.  Himmons would provide Medicare beneficiaries to HP in exchange for bribes and kickbacks, and she knew that the patients she provided to HP were not appropriate for inpatient psychiatric hospitalization or for outpatient mental health treatment.  The patients she provided to HP included those who were not severely mentally ill, as well as substance abusers looking for rehabilitation programs.  The patients did not have legitimate referrals from hospitals or doctors who had been treating acute-phase, severe mental illness. 

From at least 2005 through September 2012, in exchange for bribes and kickbacks, Himmons knowingly and willfully provided to HP Medicare beneficiaries who did not need inpatient or outpatient psychiatric treatment.  As a result of Himmons’s participation in this scheme, HP was improperly paid more than $7 million by Medicare.  From at least 2003 through at least August 2012, HP billed Medicare approximately $67 million for services that were not properly rendered, for patients that did not qualify for the services being billed, and for claims for patients who were procured through bribes and kickbacks.  Medicare reimbursed HP on approximately $40 million of those claims.

On Sept. 10, 2013, co-defendants Karen Kallen-Zury, Daisy Miller and Christian Coloma were sentenced on their June 2013 jury convictions.  Kallen-Zury, the chief executive officer of HP, and Miller and Coloma were convicted on all counts at trial and sentenced to 300 months, 180 months and 144 months, respectively.  Kallen-Zury and Miller were ordered to pay, jointly and severally with their co-defendants, nearly $40 million in restitution.  Coloma was ordered to pay, jointly and severally, more than $20 million in restitution.
          
This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.  This case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Andrew H. Warren and Anne McNamara of the Fraud Section.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A third senior U.S. Navy official has been charged in a complaint unsealed today with accepting prostitutes, luxury travel and $100,000 cash from a foreign defense contractor in exchange for classified and internal U.S. Navy information, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California.

U.S. Navy Commander Jose Luis Sanchez, 41, was arrested in Tampa, Fla., this morning and made his initial appearance in federal court in the Middle District of Florida this afternoon.  Also named in a complaint unsealed today is Leonard Glenn Francis, 49, of Malaysia, the CEO of Glenn Defense Marine Asia (GDMA), who was arrested on Sept. 16, 2013, in San Diego.

 Two other senior Navy officials – Commander Michael Vannak Khem Misiewicz, 46, and Naval Criminal Investigative Service Supervisory Special Agent John Bertrand Beliveau II, 44 – have been charged separately in connection with bribery allegations.  GDMA executive Alex Wisidagama, 40, of Singapore, has also been charged with participating in a related scheme to overbill the Navy for services provided in ports throughout Southeast Asia.

“As described in the corruption charges unsealed today, senior officials with the United States Navy abused their trusted positions as leaders in our armed forces by peddling favorable treatment -- and even classified government information -- for their personal benefit,” said Acting Assistant Attorney General Raman.  “In turn, the GDMA executives who illicitly sought information and favors from those Navy officials boasted about their unlawful access to those officials and then traded on the influence that they illegally bought.  Day by day, this massive Navy fraud and bribery investigation continues to widen, and as the charges announced today show, we will follow the evidence wherever it takes us.”

“According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification,” said U.S. Attorney Laura Duffy.  “While the overwhelming majority of the 400,000 active duty Navy personnel conduct themselves in a manner that is beyond reproach, we and our law enforcement partners at Naval Criminal Investigative Service and Defense Criminal Investigative Service continue to investigate the allegations of fraud and corruption that tarnish the stellar reputation of the U.S. Navy.”

 “The arrest and criminal complaint against Commander Sanchez is the result of an ongoing investigation by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who would abuse their positions of trust within the Department of Defense,” said Special Agent In Charge Chris D. Hendrickson of the Office of the Inspector General, Department of Defense, Defense Criminal Investigative Service Western Field Office.  “Allegations like these against Commander Sanchez can tarnish the reputation of honest and hardworking government personnel and put military personnel defending our nation around the globe at risk.  The mission of DCIS is to ‘Protect America’s Warfighters’ and we will continue to relentlessly identify and investigate those individuals seeking to enrich themselves at the expense of the U.S. taxpayers.”     

According to the complaint, Sanchez received bribes in return for sending sensitive U.S. Navy information to Francis, and making recommendations within the Navy to benefit Francis’s company, GDMA.  GDMA is a multinational corporation and longtime government contractor based in Singapore, which provides hundreds of millions of dollars of “husbanding” services for the U.S. Navy in at least a dozen countries throughout the Pacific.  Husbanding involves supplying food, water, fuel, tugboats and fenders, security, transportation, trash and liquid waste removal, and other goods and services to ships and submarines in foreign ports. 

Like Sanchez, Misiewicz is accused of providing sensitive Navy information to Francis and secretly working on behalf of GDMA in exchange for prostitutes and luxury travel.  GDMA, which has operating locations in Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States, allegedly overcharged the Navy and submitted bogus invoices for millions of dollars in services.  Beliveau, the NCIS agent, is charged in another complaint with illegally supplying Francis with sensitive information, including reports of investigations by NCIS into possible frauds committed by GDMA in billing the U.S. Navy under its contracts.  Wisidagama is charged with conspiracy to defraud the United States related to the overbilling.

According to court records, Sanchez allegedly provided Francis with internal Navy information, such as U.S. Navy ship schedules – some of which were classified – and information about husbanding issues that could affect GDMA, in order to help GDMA win and maintain Navy business.  Court records allege that Sanchez regularly emailed Francis internal Navy discussions about GDMA, including legal opinions, and made recommendations in GDMA’s favor about port visits and Navy personnel assignments.  In return, Francis gave Sanchez over $100,000 in cash, together with travel expenses and prostitutes.  Court records allege that the conspiracy started in January 2009, when Sanchez was the Deputy Logistics Officer for the Commander of the U.S. Navy Seventh Fleet in Yokosuka, Japan, and continued when he was transferred to serve as Director of Operations for Fleet Logistics Command in Singapore, until he transferred to Florida in April 2013.

Sanchez and Francis allegedly communicated regularly via email and Facebook.  Sanchez referred to Francis as “Lion King” and “Boss” in the emails, while Francis called Sanchez “brudda.”

For his part, Francis allegedly hired female escorts for Sanchez and friends on multiple occasions, on one occasion emailing one escort: “Hey Love Jose is in Manila at the DIAMOND Hotel go and see him he needs some love asap.”

According to court records, in an email exchange on Oct. 16, 2009, Sanchez and Francis allegedly discussed a trip Sanchez planned to take to Kuala Lumpur and Singapore with Navy friends he called his “Wolf Pack.”  They discussed the number of rooms the “Wolf Pack” needed, and Sanchez asked Francis for pictures of prostitutes for “motivation.”  Francis replied: “J, got it we will hook up after the FLAG dinner, will arrange a nest for you guys and some birds [women].”  A few days later, on Oct. 19, 2009, Sanchez sent a Facebook message to Francis saying, “Yummy . . . daddy like.”  In an Oct. 23, 2009, Facebook message, Sanchez asked Francis, “Where r we staying in KL [Kuala Lumpur]?  No pictures to get our spirits up?”

Between Aug. 26 and 28, 2011, Francis allegedly communicated through email to the address of an escort whom Francis had previously hired for Sanchez.  Francis wrote: “Hey Love, Jose is in Manila at the Diamond Hotel go and see him he needs some love asap room.”  The escort responded to Francis, “Papi, I'm here jose's fon is not answering. I'm here [h]aving dri[n]ks at the lobby. Call him:: (( maybe his sleeping?”  Later that day, she emailed Francis, “I'm with h[i]m already heehhe.”

Court records alleges that Francis sent an email on Oct. 20, 2011, asking Sanchez to help “swing” business his way regarding a U.S. Navy ship’s need to refuel at a port in Thailand.  The Navy can use “sea cards” to purchase fuel for its ships at a price negotiated by the Defense Logistics Agency for Energy, as opposed to procuring fuel at usually higher prices from the husbanding contractor.  In an email from Sanchez the next day, he told Francis: “Ask and you shall receive...we worked this out this morning…”  According to court records, the USS Mustin did conduct a port visit to Laem Chabang, Thailand, during which it purchased fuel from GDMA, not via “sea cards.”  As a result, the USS Mustin allegedly paid more than $1 million for fuel – more than twice what the fuel would have cost through use of the “sea card.”

The criminal complaint alleges that in an alleged Dec. 2, 2011, email discussion in which Sanchez told Francis about the status of an investigation of GDMA, Francis replied: “I have inside Intel from NCIS and read all the reports. I will show you a copy of a Classified Command File on me from NCIS ha ha.”

This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, and the Drug Enforcement Administration.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter, and the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore also provided law enforcement assistance.  This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, and Catherine Votaw, Director of Procurement Fraud, and Brian Young, Trial Attorney, of the Criminal Division’s Fraud Section.

The details contained in the criminal complaints are allegations.  The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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

Acting U.S. Attorney A. Lee Bentley III and Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division today announced the conviction of Andrew Blane Fields, 62, of Lutz, Fla., in the Middle District of Florida on charges of possession with intent to distribute controlled substances, namely Oxycodone, Dilaudid and Morphine, and sex trafficking by force, fraud and coercion.  Fields faces a mandatory minimum of 15 years in prison and a statutory maximum of life in prison on each of the five sex trafficking convictions.

In a superseding indictment returned Aug. 22, 2013, a federal grand jury charged Fields with engaging in a sex trafficking scheme whereby he controlled his victims by supplying them with highly addictive controlled substances and by using their fear of withdrawal symptoms to force them into prostitution for his profit.  At trial, the government presented evidence that the defendant recruited vulnerable young women who were engaging in prostitution or performing at strip clubs and then rapidly escalated their drug use into full-blown addiction.  Other evidence included the testimony of five victims of the defendant’s scheme, quantities of narcotics seized from the defendant’s possession and images of the defendant surreptitiously distributing narcotics to a hospitalized victim.

During the execution of a federal search warrant, law enforcement officers recovered thousands of prescription pills from Fields' residence.  As a result, Fields was charged by criminal complaint on March 20, 2013 and by indictment on April 18, 2013.

“This defendant preyed on vulnerable members of our society--young women living in the shadows and on the margins, struggling to get by,” said Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division.  “Using false promises to lure them in, he cruelly exploited them for his own profit, destroying them with drugs and selling them for sex, using highly addictive illegal drugs to hold them under his control.  Our Constitution guarantees freedom from involuntary servitude and slavery to all members of our society, and we will continue to enforce our human trafficking laws to restore freedom and dignity to victims of modern day slavery.”

“Today’s verdict provides a measure of justice for the vulnerable victims this defendant systematically forced into prostitution,” said Acting U.S. Attorney A. Lee Bentley III.  “The United States Attorney’s Office and the Civil Rights Division are committed to prosecuting all human trafficking, regardless of the form it takes.” 

“Sex trafficking is one of the most heinous crimes our special agents investigate and HSI is committed to protecting those who cannot protect themselves”, said Susan McCormick special agent in charge of HSI Tampa.  “These cases are extremely difficult to investigate and prosecute and it would not be possible without the hard work and dedication of our special agents and law enforcement partners.”

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

Christopher Eugene Reynolds, 39, a former police officer of the Selmer, Tenn., Police Department (SPD), pleaded guilty today in the U.S. District Court for the Western District of Tennessee to violating the civil rights of an arrestee, the Justice Department announced. 

During his guilty plea before U.S. District Judge J. Daniel Breen, Reynolds admitted that, while using his authority as a SPD officer, he slammed a handcuffed arrestee to the floor of the McNairy Regional Hospital and struck him in the face.  According to information presented in court, Reynolds acknowledged that this assault was unreasonable and did not serve a legitimate law enforcement purpose.  The victim was injured as a result of the assault.

“Mr. Reynolds has admitted that he used unjustified and unlawful force against a handcuffed arrestee,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “The Justice Department will continue to prosecute law enforcement officers who violate the constitutional rights of individuals in their custody.”

Sentencing has been scheduled for Feb. 5, 2014.  Reynolds faces a maximum statutory penalty of 10 years in prison. 

This case was investigated by FBI Special Agent Christopher Miller with the assistance of the Tennessee Bureau of Investigation.  The case is being prosecuted by Civil Rights Division Trial Attorney Ryan J. Murguía and Special Litigation Counsel Gerard V. Hogan, with the assistance of Assistant U.S. Attorney Victor L. Ivy of the Western District of Tennessee.

A former therapist for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to serve 120 months in prison for his participation in a $55 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) Miami office made the announcement.

Jose Rojo, 39, of Miami, was sentenced by U.S. District Judge Marcia G. Cooke in the Southern District of Florida.  Rojo was convicted on Aug. 7, 2013, of one count of conspiring to commit health care fraud following a one-month jury trial.  In addition to the prison term, Rojo was ordered to pay more than $11 million in restitution, jointly and severally with his co-defendants, and to serve three years of supervised release. 

According to the evidence at trial, Rojo and his co-conspirators caused the submission of more than $55 million dollars in fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness.  Instead of providing PHP services, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided.  Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. 

The evidence at trial further showed that, as a therapist at Biscayne Milieu, Rojo conducted sham therapy sessions for patients he knew were ineligible for PHP treatment.  Often Rojo showed up late for these sessions or not at all, but Medicare was still billed as if a full session took place.  Rojo created fraudulent documents to help cover-up Biscayne Milieu’s massive fraud, including bogus treatment plans and phony group therapy notes that were copied from one document to the other.  Deliberately inaccurate group therapy notes for different patients on different days – often years apart – were in many respects identical, including having the same descriptions of patients’ statements in group sessions and even the same misspelled words.  Further, Rojo provided other therapists at the clinic with fake group therapy notes for a fee.  Biscayne Milieu billed Medicare for tens of millions of dollars in PHP treatments for these patients. 

Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with health care fraud, kickback violations, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012.  Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.  Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – were each convicted at trial and were sentenced in April 2013 to 30 years, 25 years and 22 years in prison, respectively.

This case was investigated by the FBI with the assistance of HHS-OIG and was brought by the the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Assistant U.S. Attorneys Marlene Rodriguez and James V. Hayes of the Southern District of Florida; Hayes was formerly a trial attorney of the Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.

Hospice of the Comforter Inc. (HOTCI) has agreed to pay $3 million to resolve allegations that it violated the False Claims Act by submitting false claims to the Medicare program for hospice services provided to patients who were not eligible for the Medicare hospice benefit, the Justice Department announced today.  HOTCI is headquartered in Altamonte Springs, Fla., and provides hospice services to patients residing in Seminole, Osceola and Orange counties in Florida.

“This settlement is a result of the Justice Department’s continuing efforts to prevent the abuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons during the last six months of their lives,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “We will pursue those who seek to misuse this important benefit for their own enrichment.”

The government alleged that between December 2005 and December 2010, HOTCI engaged in practices that resulted in billing Medicare for patients who were not terminally ill.  Specifically, HOTCI allegedly directed its staff to admit all referred patients without regard to whether they were eligible for the Medicare hospice benefit, falsified medical records to make it appear that certain patients were eligible for the benefit when they were not, employed field nurses without hospice training, established procedures to limit physicians’ roles in assessing patients’ terminal status and delayed discharging patients when they became ineligible for the benefit. 

As part of this settlement, HOTCI has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to promptly detect and prevent future conduct similar to that which gave rise to the settlement.  In addition, HOTCI’s former Chief Executive Officer Robert Wilson has agreed to a three-year, voluntary exclusion from Medicare, Medicaid and other federal health care programs.

“This settlement represents a fair and appropriate resolution of this troubling matter,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “Hospice providers in our district should be on notice that our office will do what it takes to protect our citizens from this kind of misconduct.”

“Hospice care is a sacred trust from which no provider should fraudulently profit,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “Claiming tax dollars for people who are not terminally ill ?? and therefore ineligible for hospice care ?? cannot be tolerated.”

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 allegations settled today arose from a lawsuit filed by a former HOTCI employee, Douglas Stone, under the qui tam, or whistleblower, provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  Stone’s share of the recovery has not been determined.

This matter was handled by the Justice Department’s Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Middle District of Florida and the Department of Health and Human Services Office of the Inspector General.

The case is United States ex rel. Stone v. Hospice of the Comforter Inc ., No. 6:11-cv-1498-ORL-22-DAB (M.D. Fla.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

Belair Payroll Services Inc. (Belair), a multi-branch check cashing company in Flushing, N.Y., and its owner, Craig Panzera, 47, pleaded guilty today for failing to follow reporting and anti-money laundering requirements for more than $19 million in transactions, in violation of the Bank Secrecy Act (BSA).   Panzera also pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), and Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

As part of the guilty plea, Belair will forfeit $3,267,252.10, and Panzera will pay restitution in the amount of $946,841.17 to the IRS.  Sentencing for Belair and Panzera will be determined at a later date.

According to court records, from in or about June 2009 through June 2011, certain individuals presented to Belair’s manager and other employees checks to be cashed at Belair.  The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business.  The shell corporations and their corresponding bank accounts on which the checks were written were established in the names of foreign nationals, many of whom were no longer in the United States.

Belair accepted these checks and provided cash in excess of $10,000 to the individuals. Panzera and others at Belair never obtained any identification documents or information from those individuals.  Belair filed currency transaction reports (CTRs) that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair failed to indicate the full amount of cash provided to the individuals.  The individuals cashed more than $19 million through Belair during the course of the scheme.  Panzera and Belair willfully failed to maintain an effective anti-money laundering program by cashing these checks.

The charges in the indictment against Panzera’s and Belair’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

The cases are being investigated by agents from ICE Homeland Security Investigations and IRS-CI.  These cases are being prosecuted by Trial Attorneys Claiborne W. Porter and Kevin G. Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section’s (AFMLS) Money Laundering and Bank Integrity Unit, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit, and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

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

Michael Slattery Jr., 25, an Irish national, pleaded guilty today in federal court in Brooklyn, N.Y., to conspiracy to violate the Lacey Act in relation to illegal rhinoceros horn trafficking, announced Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, and Loretta E. Lynch, U.S. Attorney for the Eastern District of New York.

Slattery pleaded guilty to one count of conspiracy to violate the Lacey Act, which carries a maximum penalty of five years in prison.  Under the terms of the plea agreement, any proceeds from the illegal trafficking that remain in the United States will be forfeited or put toward the criminal fine.  Slattery is scheduled to be sentenced by U.S. District Judge John Gleeson in the Eastern District of New York on Jan. 10, 2014.

In the plea agreement, Slattery admitted that he, along with others, traveled throughout the United States to illegally purchase and sell endangered rhinoceros horns.  Slattery was arrested in September as part of “Operation Crash,” a nationwide, multi-agency crackdown on those involved in the black market trade of endangered rhinoceros horn. 
           
“Slattery and his co-conspirators traveled to the United States to profit from the illegal trade in black rhinoceros horns,” said Acting Assistant Attorney General Dreher.  “The black rhino is a species that, without our protection, could be headed for extinction in our own time. Rhino horn trafficking is a violation of the laws enacted by Congress to protect endangered species from extinction and the Justice Department will aggressively prosecute those who engage in this egregious market.”

“Today’s guilty plea highlights our commitment to protect endangered species, like the black rhinoceros, by prosecuting those who would profit from the rhinos’ extinction,” said U.S. Attorney Lynch.  “Michael Slattery traveled the world in pursuit of illicit profit from the sale of blank rhino horns.  But instead of gaining a windfall by contributing to the demise of an age-old species, Slattery now faces up to five years in prison for his illegal conduct.” 

“The involvement of an alleged member of an organized criminal group in rhino horn trafficking speaks to the scope, scale, and lawlessness of this problem,” said U.S. Fish and Wildlife Service Director Dan Ashe. “We will continue to work closely with the Department of Justice to crack down on profiteers whose crimes are pushing rhinos to the brink of extinction.”
“The black rhinoceros has been driven to the brink of extinction by this illicit trade,” said Special Agent in Charge James T. Hayes of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in New York. “HSI, along with our partners at the U.S. Fish and Wildlife Service and the Department of Justice, stand ready to protect these beautiful creatures from the villains who would trade the rhino’s continued existence on this planet for a quick buck.”

Rhinoceros are a herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under United States and international law, and all black rhinoceros species are endangered. 

Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.  Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population. 

Operation Crash is a continuing investigation being conducted by the Department of the Interior’s U.S. Fish and Wildlife Service in coordination with other federal and local law enforcement agencies including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  A “crash” is the term for a herd of rhinoceros.  Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.  The investigation is being led by the Special Investigations Unit of the FWS Office of Law Enforcement and involves a nationwide task force of agents focused on rhino trafficking. 
 
According to the information, plea agreement and statements made during court proceedings:  Beginning in May 2010 and continuing until April 2011, Slattery, along with others, traveled within the United States to purchase rhinoceros horns, which he, along with others, then resold to private individuals or consigned to auction houses in the United States.  The profits from the sale of the rhinoceros horns were distributed via cashier’s checks made out to Slattery and others.  Slattery used a fictitious “Endangered Species Bill of Sale” in connection with the purchase and sale of rhinoceros horns.

In September 2010, Slattery, along with others, traveled from London to Houston, where they attempted to purchase a taxidermied black rhinoceros mount with two horns from a business in Austin, Texas.  The manager of the business refused to sell the mount to the defendant because Slattery and the others did not have proof that they resided in the State of Texas.  Within days of being refused, Slattery returned to the establishment in Austin, where, with the assistance of a “straw buyer” that Slattery and his co-conspirators hired, the group purchased the mount for $18,000.  At the time of the sale, the purchasers were given an “Endangered Species Bill of Sale” that stated “[s]eller expressly states that the described taxidermy is an endangered species and that interstate or foreign sales, barter and trade are strictly prohibited …. [p]ursuant to [the Endangered Species Act].  Buyer has expressly stated that he/she is a current resident of the State of Texas and has no intention of participating in any form of interstate commerce involving the described taxidermy.”  

Following the purchase of the mount, Slattery and his co-conspirators traveled to Flushing, N.Y., where they sold the horns from the mount and other horns they had acquired to an individual for $50,000.  At the time of the sale, Slattery and his co-conspirators provided the purchaser with a false and fictitious “Endangered Species Bill of Sale.”  The “Endangered Species Bill of Sale” stated that the two pair of black rhinoceros horns were purchased in August 2010.  The falsified document also included a false and fictitious FWS emblem, which it did not have at the time of purchase from the establishment in Texas.  Pursuant to instructions from Slattery and his co-conspirators, the purchaser paid for the horns with cashier’s checks.  One check in the amount of $12,500 was made payable to Michael Slattery Jr.

U.S. Attorney Lynch and Acting Assistant Attorney General Dreher commended FWS and ICE-HSI for their outstanding work in this investigation.

The case is being handled by the U.S. Attorney’s Office for the Eastern District of New York and the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division.  Assistant U.S. Attorney Julia Nestor and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section are in charge of the prosecution.

Mary Young and Christian Young each pleaded guilty yesterday to one count of conspiracy to defraud the United States and one count of aggravated identity theft for their role in a stolen identity refund fraud (SIRF) 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.

According to court documents, between January 2010 and June 2012, Mary Young, Christian Young, Octavious Reeves and others obtained stolen identities from individuals and used those stolen identities to file false tax returns.  The false tax returns were filed from the Youngs’ residence and the conspirators directed the false tax refunds to prepaid debit cards in the names of the identity theft victims.  The Youngs and others used the prepaid debit cards to withdraw the fraudulent proceeds, which allegedly totaled over $400,000. 

Sentencing has not yet been scheduled.  The Youngs each face a minimum sentence of two years imprisonment with a maximum of twelve years, as well as three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.  Reeves previously pleaded guilty and will be sentenced on Feb. 19, 2013.

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

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

Two individuals charged in connection with the operation of a fraudulent lottery scheme were arrested today in south Florida following their indictment by a federal grand jury in Miami on Oct. 31, 2013, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Marshals Service announced.  Althea Angela Peart and Charmaine Anne King were arrested on charges that they and their co-conspirators, some of whom operated from outside of the U.S., participated in a fraudulent lottery scheme.  As alleged in the indictment, co-conspirators induced elderly victims in the U.S. to send thousands of dollars to Peart and King to cover fees for lottery winnings that victims had not won.  The indictment, unsealed with Peart’s and King’s arrests, is part of the government’s crackdown on fraudulent international lottery schemes.

“Operators of foreign lottery schemes often cannot succeed without the assistance of co-conspirators in the United States,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “These schemes can cause devastating financial harm to their victims, and the Department of Justice is committed to prosecuting those who engage in this criminal activity.”

From March 2012, Peart’s and King’s co-conspirators are alleged to have contacted victims in the U.S. and falsely informed them that they had won more than a million dollars in a lottery.  According to the indictment, the co-conspirators sent letters to the victims from a purported sweepstakes company in the U.S. and included false and fraudulent cashier’s checks made out to the victims for thousands of dollars.  As alleged in the indictment, these letters told victims to call “claims agents” who were actually co-conspirators, and when the victims called the purported claims agents, the agents informed the victims that they had to pay several thousand dollars in order to collect their purported lottery winnings.  The claims agents allegedly told the victims to deposit the cashier’s checks in the victims’ bank accounts in order to purportedly cover the money they had to pay.  The co-conspirators allegedly instructed the victims on how to send and wire this money to Peart and King. 

 
The indictment charges that Peart and King each kept a percentage of the money they received from victims and sent the rest of the money to their co-conspirators.  According to the indictment, because the cashier’s checks were false and fraudulent and had no value, any payments the victims sent to Peart and King were funded by their own money, and victims never received any lottery winnings.

“As fraudsters from outside of the United States seek to take advantage of some of the most vulnerable in our community, they rely on co-conspirators in the United States for help,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer.  “As I have previously stated, we will continue to vigorously pursue and prosecute those responsible for these illegal schemes.”

Peart is charged with conspiracy, eight counts of mail fraud and three counts of wire fraud and with committing these offenses via telemarketing.  King is charged with conspiracy, four counts of mail fraud and three counts of wire fraud and with committing these offenses via telemarketing. 

“The U.S. Postal Inspection Service is committed to investigating fraudulent lottery schemes designed to defraud innocent victims,” said U.S. Postal Inspector in Charge in Miami Ronald Verrochio.  “Combating international lottery fraud is a priority of the Postal Inspection Service given that a significant amount of the money in these frauds is sent through the U.S. mail.  We are actively taking steps to educate Americans about the dangers of lottery frauds.” 

“These arrests show that HSI is committed to stopping individuals who prey on our senior citizens,” said Special Agent in Charge of HSI Miami Alysa D. Erichs.  “We will continue to work with our international partners and other law enforcement agencies to put an end to these criminal organizations.”

“The U.S. Marshals Service is proud to be part of the team bringing scam artists such as these to justice,” said Acting U.S. Marshal Neil DeSousa.  “These international lottery scams that prey on our elderly cannot be allowed to continue.  The arrests of these two perpetrators are a testament to federal law enforcement’s dedication to protecting our citizens against all types of crimes.”

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

An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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

Kuo Hsuan “Chuck” Chang, of San Francisco, entered his guilty plea in U.S. District Court for the Northern District of California in San Francisco.  Felony charges were filed against Chang on Oct. 9, 2013.

Chang is the 37th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Chang conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco County, Calif.   Chang was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert co-conspirators’ money that would have otherwise gone to mortgage holders and others.  Chang is charged with participating in these conspiracies beginning as early as October 2009 and continuing until about November 2010.

“The Antitrust Division will continue to vigorously prosecute anticompetitive schemes that compromise local markets and cause financial harm to consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Collusion at foreclosure auctions harmed both lenders and distressed homeowners in an already struggling real estate market, and the conspirators must be held accountable.”

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

“We urge anyone with information regarding fraudulent anticompetitive practices at foreclosure auctions to contact the FBI or our partners at the Antitrust Division,” said FBI San Francisco Special Agent in Charge David J. Johnson.  “The FBI will continue to work with our law enforcement partners and the community to root out and bring to justice those individuals who undermine the real estate market and victimize legitimate consumers.” 

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

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

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

**The fraud charge(s) referenced in this press release were

subsequently dismissed on the government’s motion.**

Nine members of a violent, armed, outlaw motorcycle gang were indicted and arrested today, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.

The nine individuals are members of the Phantom Outlaw Motorcycle Club, which is headquartered in northwest Detroit and has chapters throughout Michigan, Ohio, and Kentucky.  According to court records, the club and its members are allegedly involved in a range of criminal activity including murder and attempted murder, robbery, narcotics trafficking, the possession and sale of stolen motor vehicles and motorcycles, and witness intimidation. 

The indictment charged the following individuals:

• Antonio Johnson, 39, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, use and carry of firearms during and in relation to a crime of violence, and felon in possession of firearms.

• Marvin Nicholson, 45, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, use and carry of firearms during and in relation to a crime of violence, assault of federal officers, and felon in possession of firearms.

• Raynard Brown, 37, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence.

• Christopher Odum, 28, of Detroit, charged with conspiracy to commit murder in aid of racketeering.

• Roger Valdez, 28, of Pontiac, Mich., charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence.

• Brian Sorrell, 27, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence. 

• Brian Jackson, 46, of Detroit, charged with conspiracy to commit murder in aid of racketeering.

Two additional individuals, known at this time only by their club nicknames, have been charged with conspiracy to commit murder in aid of racketeering.

The details contained in the indictment are allegations.  The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The arrests were made as part of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the CVRP (Comprehensive Violence Reduction Partnership) Task Force, which consists of representatives of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Detroit Police Department; Michigan State Police; Michigan Department of Corrections; and the FBI.  By working collaboratively, local, state, and federal law enforcement is striving to maximize its ability to identify and arrest the persons and groups initiating the violence in Detroit.  This indictment is a tangible and significant result of this joint effort.

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

Defendant is Latest in a Series of Defendants Charged with Failing to Report Income from Undeclared Accounts in Israel

David Raminfard of Los Angeles pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced. 

According to court documents, Raminfard, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel, identified in court documents as Bank A.  The accounts were held in the names of nominees in order to keep them secret from the U.S. government.  One of the accounts was held in the name of Westrose Limited, a nominee entity formed in the Turks and Caicos Islands.  To further ensure that his undeclared accounts remained secret, Raminfard placed a mail hold on his accounts.  Rather than having his account statements mailed to him, Raminfard would receive them from an international accounts manager with Bank A in Israel, who brought the statements to Los Angeles and reviewed them with Raminfard during meetings at a hotel.

In or about 2000, Raminfard began secretly using the funds in his undeclared accounts as collateral for back-to-back loans obtained from the Los Angeles branch of Bank A.  Raminfard used one of the loans to purchase commercial real estate in Los Angeles.  By using back-to-back loans, Raminfard was able to access his funds in Israel without the U.S. Government finding out about his undeclared accounts.  These loans also enabled Raminfard to claim the interest paid on the loans as a business expense on his companies’ business tax returns, while not reporting the interest earned in Israel as income on his individual income tax returns filed with the IRS.  For tax years 2005 through 2010, Raminfard failed to report approximately $521,000 in income.  The highest balance in Raminfard’s undeclared accounts was approximately $3 million.

Raminfard is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.

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

Raminfard faces a potential maximum prison term of five years and a maximum fine of $250,000.  In addition, Raminfard has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.   

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

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

The Justice Department announced today that it will monitor elections on Nov. 5, 2013, in Detroit and Hamtramck, Mich.; Orange County, N.Y.; and Cuyahoga and Lorain Counties, Ohio.  The monitoring is designed to ensure compliance with the Voting Rights Act, which prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. 

In Cuyahoga, Lorain and Orange Counties, the Department will assign federal observers from the U.S. Office of Personnel Management (OPM) to monitor polling place activities based on court orders.  The observers will watch and record activities during voting hours at polling locations in these jurisdictions and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.

In addition, Justice Department personnel will monitor polling place activities in Detroit and Hamtramck.  Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.

Each year, the department deploys federal observers from OPM, as well as departmental staff, to monitor elections across the country.  To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the department’s Civil Rights Division at 1-800-253-3931.

Visit www.justice.gov/crt/about/vot/ for more information about the Voting Rights Act and other federal voting rights laws.

WASHINGTON - Global health care giant Johnson & Johnson (J&J) and its subsidiaries will pay more than $2.2 billion to resolve criminal and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and Natrecor, including promotion for uses not approved as safe and effective by the Food and Drug Administration (FDA) and payment of kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.  The global resolution is one of the largest health care fraud settlements in U.S. history, including criminal fines and forfeiture totaling $485 million and civil settlements with the federal government and states totaling $1.72 billion.

“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” said Attorney General Eric Holder.  “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud.  And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”

The resolution includes criminal fines and forfeiture for violations of the law and civil settlements based on the False Claims Act arising out of multiple investigations of the company and its subsidiaries. 

“When companies put profit over patients’ health and misuse taxpayer dollars, we demand accountability,” said Associate Attorney General Tony West.  “In addition to significant monetary sanctions, we will ensure that non-monetary measures are in place to facilitate change in corporate behavior and help ensure the playing field is level for all market participants.”

In addition to imposing substantial monetary sanctions, the resolution will subject J&J to stringent requirements under a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  This agreement is designed to increase accountability and transparency and prevent future fraud and abuse.

“As patients and consumers, we have a right to rely upon the claims drug companies make about their products,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “And, as taxpayers, we have a right to ensure that federal health care dollars are spent appropriately.  That is why this Administration has continued to pursue aggressively – with all of our available law enforcement tools -- those companies that corrupt our health care system.”

J&J Subsidiary Janssen Pleads Guilty to Misbranding Antipsychotic Drug

In a criminal information filed today in the Eastern District of Pennsylvania, the government charged that, from March 3, 2002, through Dec. 31, 2003, Janssen Pharmaceuticals Inc., a J&J subsidiary, introduced the antipsychotic drug Risperdal into interstate commerce for an unapproved use, rendering the product misbranded.  For most of this time period, Risperdal was approved only to treat schizophrenia.  The information alleges that Janssen’s sales representatives promoted Risperdal to physicians and other prescribers who treated elderly dementia patients by urging the prescribers to use Risperdal to treat symptoms such as anxiety, agitation, depression, hostility and confusion.  The information alleges that the company created written sales aids for use by Janssen’s ElderCare sales force that emphasized symptoms and minimized any mention of the FDA-approved use, treatment of schizophrenia.  The company also provided incentives for off-label promotion and intended use by basing sales representatives’ bonuses on total sales of Risperdal in their sales areas, not just sales for FDA-approved uses.  

 
In a plea agreement resolving these charges, Janssen admitted that it promoted Risperdal to health care providers for treatment of psychotic symptoms and associated behavioral disturbances exhibited by elderly, non-schizophrenic dementia patients.  Under the terms of the plea agreement, Janssen will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million.  Janssen’s guilty plea will not be final until accepted by the U.S. District Court.

The Federal Food, Drug, and Cosmetic Act (FDCA) protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bear true, complete and accurate information.  Under the FDCA, a pharmaceutical company must specify the intended uses of a drug in its new drug application to the FDA.  Before approval, the FDA must determine that the drug is safe and effective for those specified uses.  Once the drug is approved, if the company intends a different use and then introduces the drug into interstate commerce for that new, unapproved use, the drug becomes misbranded.  The unapproved use is also known as an “off-label” use because it is not included in the drug’s FDA-approved labeling.

“When pharmaceutical companies interfere with the FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” said Director of the FDA’s Office of Criminal Investigations John Roth.  “Today’s settlement demonstrates the government’s continued focus on pharmaceutical companies that put profits ahead of the public’s health.  The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the drug approval process and recklessly promote drugs for uses that have not been proven to be safe and effective.”

J&J and Janssen Settle Civil Allegations of Targeting Vulnerable Patients  with the Drugs Risperdal and Invega for Off-Label Uses

In a related civil complaint filed today in the Eastern District of Pennsylvania, the United States alleges that Janssen marketed Risperdal to control the behaviors and conduct of the nation’s most vulnerable patients: elderly nursing home residents, children and individuals with mental disabilities.  The government alleges that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting Risperdal for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal.

“J&J’s promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society – children, the elderly and those with developmental disabilities,” said U.S. Attorney for the Eastern District of Pennsylvania Zane Memeger.  “This historic settlement sends the message that drug manufacturers who place profits over patient care will face severe criminal and civil penalties.”

In its complaint, the government alleges that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be “misleading.”  The FDA cautioned Janssen that behavioral disturbances in elderly dementia patients were not necessarily manifestations of psychotic disorders and might even be “appropriate responses to the deplorable conditions under which some demented patients are housed, thus raising an ethical question regarding the use of an antipsychotic medication for inappropriate behavioral control.”

The complaint further alleges that J&J and Janssen were aware that Risperdal posed serious health risks for the elderly, including an increased risk of strokes, but that the companies downplayed these risks.  For example, when a J&J study of Risperdal showed a significant risk of strokes and other adverse events in elderly dementia patients, the complaint alleges that Janssen combined the study data with other studies to make it appear that there was a lower overall risk of adverse events.  A year after J&J had received the results of a second study confirming the increased safety risk for elderly patients taking Risperdal, but had not published the data, one physician who worked on the study cautioned Janssen that “[a]t this point, so long after [the study] has been completed … we must be concerned that this gives the strong appearance that Janssen is purposely withholding the findings.”

The complaint also alleges that Janssen knew that patients taking Risperdal had an increased risk of developing diabetes, but nonetheless promoted Risperdal as “uncompromised by safety concerns (does not cause diabetes).”  When Janssen received the initial results of studies indicating that Risperdal posed the same diabetes risk as other antipsychotics, the complaint alleges that the company retained outside consultants to re-analyze the study results and ultimately published articles stating that Risperdal was actually associated with a lower risk of developing diabetes.

The complaint alleges that, despite the FDA warnings and increased health risks, from 1999 through 2005, Janssen aggressively marketed Risperdal to control behavioral disturbances in dementia patients through an “ElderCare sales force” designed to target nursing homes and doctors who treated the elderly.  In business plans, Janssen’s goal was to “[m]aximize and grow RISPERDAL’s market leadership in geriatrics and long term care.”  The company touted Risperdal as having “proven efficacy” and “an excellent safety and tolerability profile” in geriatric patients.

In addition to promoting Risperdal for elderly dementia patients, from 1999 through 2005, Janssen allegedly promoted the antipsychotic drug for use in children and individuals with mental disabilities.  The complaint alleges that J&J and Janssen knew that Risperdal posed certain health risks to children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production.  Nonetheless, one of Janssen’s Key Base Business Goals was to grow and protect the drug’s market share with child/adolescent patients.  Janssen instructed its sales representatives to call on child psychiatrists, as well as mental health facilities that primarily treated children, and to market Risperdal as safe and effective for symptoms of various childhood disorders, such as attention deficit hyperactivity disorder, oppositional defiant disorder, obsessive-compulsive disorder and autism.  Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for use in children.

The government’s complaint also contains allegations that Janssen paid speaker fees to doctors to influence them to write prescriptions for Risperdal.  Sales representatives allegedly told these doctors that if they wanted to receive payments for speaking, they needed to increase their Risperdal prescriptions.

In addition to allegations relating to Risperdal, today’s settlement also resolves allegations relating to Invega, a newer antipsychotic drug also sold by Janssen.  Although Invega was approved only for the treatment of schizophrenia and schizoaffective disorder, the government alleges that, from 2006 through 2009, J&J and Janssen marketed the drug for off-label indications and made false and misleading statements about its safety and efficacy.

As part of the global resolution, J&J and Janssen have agreed to pay a total of $1.391 billion to resolve the false claims allegedly resulting from their off-label marketing and kickbacks for Risperdal and Invega.  This total includes $1.273 billion to be paid as part of the resolution announced today, as well as $118 million that J&J and Janssen paid to the state of Texas in March 2012 to resolve similar allegations relating to Risperdal.  Because Medicaid is a joint federal-state program, J&J’s conduct caused losses to both the federal and state governments.  The additional payment made by J&J as part of today’s settlement will be shared between the federal and state governments, with the federal government recovering $749 million, and the states recovering $524 million.  The federal government and Texas each received $59 million from the Texas settlement.

Kickbacks to Nursing Home Pharmacies

The civil settlement also resolves allegations that, in furtherance of their efforts to target elderly dementia patients in nursing homes, J&J and Janssen paid kickbacks to Omnicare Inc., the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients.  In a complaint filed in the District of Massachusetts in January 2010, the United States alleged that J&J paid millions of dollars in kickbacks to Omnicare under the guise of market share rebate payments, data-purchase agreements, “grants” and “educational funding.”  These kickbacks were intended to induce Omnicare and its hundreds of consultant pharmacists to engage in “active intervention programs” to promote the use of Risperdal and other J&J drugs in nursing homes.  Omnicare’s consultant pharmacists regularly reviewed nursing home patients’ medical charts and made recommendations to physicians on what drugs should be prescribed for those patients.  Although consultant pharmacists purported to provide “independent” recommendations based on their clinical judgment, J&J viewed the pharmacists as an “extension of [J&J’s] sales force.”

J&J and Janssen have agreed to pay $149 million to resolve the government’s contention that these kickbacks caused Omnicare to submit false claims to federal health care programs.  The federal share of this settlement is $132 million, and the five participating states’ total share is $17 million.  In 2009, Omnicare paid $98 million to resolve its civil liability for claims that it accepted kickbacks from J&J and Janssen, along with certain other conduct.

“Consultant pharmacists can play an important role in protecting nursing home residents from the use of antipsychotic drugs as chemical restraints,” said U.S. Attorney for the District of Massachusetts Carmen Ortiz.  “This settlement is a reminder that the recommendations of consultant pharmacists should be based on their independent clinical judgment and should not be the product of money paid by drug companies.”

Off-Label Promotion of the Heart Failure Drug Natrecor

The civil settlement announced today also resolves allegations that J&J and another of its subsidiaries, Scios Inc., caused false and fraudulent claims to be submitted to federal health care programs for the heart failure drug Natrecor.  In August 2001, the FDA approved Natrecor to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity.  This approval was based on a study involving hospitalized patients experiencing severe heart failure who received infusions of Natrecor over an average 36-hour period.

In a civil complaint filed in 2009 in the Northern District of California, the government alleged that, shortly after Natrecor was approved, Scios launched an aggressive campaign to market the drug for scheduled, serial outpatient infusions for patients with less severe heart failure – a use not included in the FDA-approved label and not covered by federal health care programs.  These infusions generally involved visits to an outpatient clinic or doctor’s office for four- to six-hour infusions one or two times per week for several weeks or months.

The government’s complaint alleged that Scios had no sound scientific evidence supporting the medical necessity of these outpatient infusions and misleadingly used a small pilot study to encourage the serial outpatient use of the drug.  Among other things, Scios sponsored an extensive speaker program through which doctors were paid to tout the purported benefits of serial outpatient use of Natrecor.  Scios also urged doctors and hospitals to set up outpatient clinics specifically to administer the serial outpatient infusions, in some cases providing funds to defray the costs of setting up the clinics, and supplied providers with extensive resources and support for billing Medicare for the outpatient infusions.

As part of today’s resolution, J&J and Scios have agreed to pay the federal government $184 million to resolve their civil liability for the alleged false claims to federal health care programs resulting from their off-label marketing of Natrecor.  In October 2011, Scios pleaded guilty to a misdemeanor FDCA violation and paid a criminal fine of $85 million for introducing Natrecor into interstate commerce for an off-label use.

“This case is an example of a drug company encouraging doctors to use a drug in a way that was unsupported by valid scientific evidence,” said First Assistant U.S. Attorney for the Northern District of California Brian Stretch.  “We are committed to ensuring that federal health care programs do not pay for such inappropriate uses, and that pharmaceutical companies market their drugs only for uses that have been proven safe and effective.”

Non-Monetary Provisions of the Global Resolution and Corporate Integrity Agreement

In addition to the criminal and civil resolutions, J&J has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The CIA includes provisions requiring J&J to implement major changes to the way its pharmaceutical affiliates do business.  Among other things, the CIA requires J&J to change its executive compensation program to permit the company to recoup annual bonuses and other long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct.  J&J may recoup monies from executives who are current employees and from those who have left the company.  The CIA also requires J&J’s pharmaceutical businesses to implement and maintain transparency regarding their research practices, publication policies and payments to physicians.  On an annual basis, management employees, including senior executives and certain members of J&J’s independent board of directors, must certify compliance with provisions of the CIA.  J&J must submit detailed annual reports to HHS-OIG about its compliance program and its business operations.

“OIG will work aggressively with our law enforcement partners to hold companies accountable for marketing and promotion that violate laws intended to protect the public,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  "Our compliance agreement with Johnson & Johnson increases individual accountability for board members, sales representatives, company executives and management.  The agreement also contains strong monitoring and reporting provisions to help ensure that the public is protected from future unlawful and potentially harmful off-label marketing."

Coordinated Investigative Effort Spans Federal and State Law Enforcement

This resolution marks the culmination of an extensive, coordinated investigation by federal and state law enforcement partners that is the hallmark of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaborations to fight fraud.  Announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius, the HEAT initiative has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

The criminal cases against Janssen and Scios were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Northern District of California and the Civil Division’s Consumer Protection Branch.  The civil settlements were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania, the Northern District of California and the District of Massachusetts and the Civil Division’s Commercial Litigation Branch.  Assistance was provided by the HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, the FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

This matter was investigated by HHS-OIG, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Office of Personnel Management’s Office of Inspector General, the Department of Veterans Affairs, the Department of Labor, TRICARE Program Integrity, the U.S. Postal Inspection Service’s Office of the Inspector General and the FBI.

One of the most powerful tools in the fight against Medicare and Medicaid financial fraud 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 department enforces the FDCA by prosecuting those who illegally distribute unapproved, misbranded and adulterated drugs and medical devices in violation of the Act.  Since 2009, fines, penalties and forfeitures that have been imposed in connection with such FDCA violations have totaled more than $6 billion.

The civil settlements described above resolve multiple lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery.  From the federal government’s share of the civil settlements announced today, the whistleblowers in the Eastern District of Pennsylvania will receive $112 million, the whistleblowers in the District of Massachusetts will receive $27.7 million and the whistleblower in the Northern District of California will receive $28 million.  Except to the extent that J&J subsidiaries have pleaded guilty or agreed to plead guilty to the criminal charges discussed above, the claims settled by the civil settlements are allegations only, and there has been no determination of liability.
Court documents related to today’s settlement can be viewed online at www.justice.gov/opa/jj-pc-docs.html.

The Justice Department announced today that U.S. District Court Judge Myron H. Thompson sentenced four former corrections officers of the Alabama Department of Corrections – Michael Smith, Matthew Davidson, Joseph Sanders and Scottie Glenn – in connection with the beating death of former inmate Rocrast Mack.  Smith, 39, who was convicted by a federal jury on June 25, 2013, of seven counts of civil rights violations and obstruction of justice, was sentenced to 30 years imprisonment.  Davidson, 45, who pled guilty to two civil rights violations and an obstruction of justice violation, was sentenced to seven years.  Sanders, 32, who pled guilty to an obstruction of justice violation, was sentenced to five years.  Glenn, 30, who pled guilty to a civil rights violation and a conspiracy violation, was sentenced to five years. 

The incident occurred at Ventress Correctional Facility in Clayton, Ala., on Aug. 4, 2010, and at the time of the incident Smith was a lieutenant with supervisory authority over other officers on his shift.  According to the evidence presented at trial, Smith assaulted Mack in an office in the prison, repeatedly striking him with a baton, stomping on him and kicking him.  The evidence also showed that Smith assaulted Mack again several minutes later in the medical unit by repeatedly stomping on Mack’s head.  Mack died the following morning in a Montgomery, Ala., hospital.    

“These defendants each played a role in the vicious and fatal beating of Mr. Mack, and then they lied to authorities to conceal their culpability,” said Acting Assistant Attorney General for the Department’s Civil Rights Division Jocelyn Samuels.  “Their actions run completely counter to the responsibilities and trust given to law enforcement officers.  The Justice Department will continue to vigorously prosecute those officers who commit such heinous criminal acts, and I hope that these sentencings help bring some measure of closure to the Mack family.”

“The majority of our corrections officers are dedicated to protecting and serving the public,” said U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  “These correctional officers were not so dedicated.  These correctional officers savagely beat, stomped, and tortured a restrained man and then lied to protect themselves.  There is no excuse for such behavior.  Correctional officers walk a tough line, but they cannot cross that line into the criminal element.  I hope that these sentences bring some sense of justice to the victim’s family and reinforce the notion that no one is above the law.”

This case was investigated by the Mobile, Ala., Division of the FBI in partnership with the Alabama Bureau of Investigation, and was prosecuted by Trial Attorney Patricia Sumner of the department’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.

Quentin Collick of Montgomery, Ala., and Deatrice Williams of Duluth, Ga., were sentenced Nov. 1, 2013, to serve 85 and 51 months in prison, respectively, 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.  Collick and Williams were previously found guilty by a jury in the Middle District of Alabama of conspiring to file false claims, wire fraud, and aggravated identity theft.  Collick was also convicted of three counts of theft of public funds.  Corey Thompson, a co-conspirator, previously pleaded guilty and was sentenced to serve 30 months in jail.

Based on evidence introduced at trial and court filings, Williams worked for a debt collection company located in Norcross, Ga.  As an employee, Williams had access to a database that stored names, social security numbers and dates of birth of individuals who owed medical debts.  Williams stole the identities of a number of these individuals and provided the stolen information to Collick, her son-in-law.

Collick and Thompson used stolen identities to file false tax returns and fraudulently claim tax refunds.  In 2011 and 2012, Thompson worked as an independent contractor for a cable company installing cable and internet access for customers.  To conceal the filing of the false tax returns, Thompson used his specialized knowledge and equipment to shut down and hijack his customers’ internet service, and along with Collick, filed false tax returns using the customers’ internet access, making it appear as if the false tax returns were being filed by the customers.  Thompson and Collick then directed the tax refunds to be placed on pre-paid debit cards, which were mailed to Montgomery, Ala.  However, those cards were intercepted by the U.S. Postal Service.  Several tax refund checks were also mailed by the IRS, based upon the fraudulent returns, which Collick retrieved and cashed. 

This case was investigated by special agents of IRS - Criminal Investigation and prosecuted by Tax Division Trial Attorneys Michael Boteler, Jason H. Poole and Alexander Effendi

The owner of a Louisiana medical equipment supply company and a marketer who worked for the company have been indicted for allegedly engaging in a $3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Mike Fields of the Dallas Region of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), and Special Agent in Charge Michael Anderson of the FBI’s New Orleans Division made the announcement.

Tracy Brown, 43, of New Orleans, and Sandra Parkman Thompson, 62, who is currently incarcerated in Texas, were charged in the Eastern District of Louisiana in an 18-count indictment including charges of health care fraud, conspiracy to commit health care fraud, conspiracy to pay and receive health care fraud kickbacks, and illegal remuneration.  If convicted, the defendants face 10 years in prison for each health care fraud conspiracy and health care fraud count, and five years in prison for each remaining count.

According to the indictment, Brown owned Psalms 23-DME and is alleged to have billed Medicare more than $3 million for power wheelchairs, wheelchair accessories and orthotic equipment for Medicare beneficiaries who neither wanted nor needed the equipment.  Brown also allegedly paid illegal kickbacks to Thompson and other “marketers” to locate doctors who were willing to prescribe the equipment to Medicare beneficiaries who did not want or need these items.  Thompson and other marketers were paid for each prescription they obtained for Psalms 23-DME, regardless of whether the items prescribed were wanted or needed.

Thompson and other marketers allegedly obtained falsified prescriptions for medically unnecessary equipment from Drs. Anthony Jase and Michael Hunter.  A third physician allegedly provided falsified prescriptions directly to Brown.  In exchange, Brown paid this physician approximately $250 per prescription.

The indictment alleges that in some cases, the equipment Psalms 23-DME billed to Medicare was never provided to a Medicare beneficiary.  In other cases, Brown would bill for the most expensive types of durable medical equipment allowed by Medicare but would provide Medicare beneficiaries with much less expensive versions of the equipment, which would not have been reimbursed by Medicare.

According to the indictment, Brown allegedly paid Thompson and other marketers approximately $500 for each wheelchair referral submitted and between approximately $200 and $250 for a so-called “arthritis kit” referral, a term used by Psalms 23-DME for a number of braces and other orthotic items that were billed for Medicare beneficiaries regardless of medical need or physician request. 

Jase and Hunter pleaded guilty to health care fraud charges on Oct. 31, 2013, and Sept. 26, 2012, respectively, and are awaiting sentencing.

An indictment is merely an accusation and defendants are presumed innocent until and unless they are proven guilty. 

The case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section.  This case is being prosecuted by Trial Attorney Arunabha Bhoumik of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Patrice Sullivan of the Eastern District of Louisiana.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The United States filed a complaint today asking a federal court in the Statesboro Division of the Southern District of Georgia, to enjoin Lakesia Michelle Mills, who does business as Willis Tax Service, from preparing federal income tax returns for others, the Justice Department announced.

The complaint alleges that since January 2011, Mills, who resides in and operates her business in Adrian, Ga., has prepared over 455 amended federal income tax returns.  According to the complaint, Mills understated her customers’ tax liabilities and overstated their refunds by preparing amended tax returns that improperly claimed the maximum First-Time Homebuyer Credit of $8,000.  Along with preparing the amended return, Mills provided customers a false settlement statement and proof of insurance to support the credit.  Mills prepared the amended returns without signing the returns or including her tax preparer identification number as is required.  Altogether, the government’s complaint alleges that the bogus credits claimed on the amended returns exceeded $3.6 million.

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

Related Materials:

United States v. Lakesia Michelle Mills, etc.
Complaint for Injunctive Relief
 

The Justice Department announced that on Nov. 1, 2013, it asked a federal court to bar Sergio Fernando Sosa and his company, Sergio Centro Latino, from preparing tax returns for others.  The civil injunction suit, filed in the U.S. District Court for the District of Utah, alleges that Sosa, who has been preparing returns in Orem, Utah since at least 1994, routinely prepares federal tax returns for individuals and corporations that improperly claim deductions and result in understated federal tax liabilities for his customers.

The complaint also alleges that Sosa prepares federal tax returns for his customers that falsely claim unqualified individuals as dependents, and that include false claims or inflated claims related to the Earned Income Tax Credit, false claims or inflated claims related to the Additional Child Tax Credit, false inclusion of expenses and deductions related to fictitious business entities, underreported income and inflated expenses of legitimate business entities, and failure to calculate or incorrect calculation of self-employment tax liabilities.  According to the complaint, Sosa has continued to engage in this conduct despite the fact that numerous penalties have been assessed against him for similar violations of the tax code.

The complaint alleges that Sosa’s actions have resulted in an estimated loss of as much as $416 million to the United States for tax returns prepared since 2008. 

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

Related Materials:

United States v. Sergio Fernando Sosa, et al.
Complaint for Permanent Injunction and Other Relief

Oneike Mickhale Barnett pleaded guilty today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale to one count of conspiracy to commit wire fraud, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Marshals Service announced.  Barnett, a Jamaican citizen, was charged in connection with a lottery scheme based in Jamaica that fraudulently induced elderly victims in the U.S. to send Barnett and his co-conspirators thousands of dollars to cover fees for lottery winnings that victims had not won.

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

 
“All too often, what appears to be an unexpected lottery win is in fact a pernicious lottery scam, and one that cheats unsuspecting Americans out of their hard-earned savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Department of Justice will continue our crackdown on those responsible for lottery schemes, particularly schemes that target the elderly.”

 
“As is evident by the prevalence of international lottery scams, fraudsters have no bounds,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “While we will continue to combat fraud vigorously, and pursue and prosecute fraudsters using all legal means available to us, now more than ever, the public needs to be mindful of these schemes to avoid falling prey to them.  As I have previously stated, so long as fraudsters continue to line their pockets with the hard earned money of our most vulnerable citizens, we will be there to prosecute them and bring them to justice.”

 
Barnett was arrested in Orlando, Fla., in August 2013 following his indictment by a federal grand jury in Ft. Lauderdale on Aug. 9, 2012.  As part of his guilty plea, Barnett acknowledged that, had the case gone to trial, the U.S. would have proved beyond a reasonable doubt that, from 2008 through 2012, Barnett was a member of a conspiracy in which elderly victims were informed that they had won a large amount of money in a lottery and were induced to pay bogus fees in advance of receiving their purported lottery winnings.  Barnett also acknowledged that the government would have proved that he knew the claims of lottery winnings were completely fabricated and that he, along with his co-conspirators, kept the victims’ money for their own benefit without paying any lottery winnings.  Barnett also acknowledged that the government would have proved that, in an effort to convince the victims that the lottery winnings were real, the conspirators sent them written and electronic communications discussing their purported lottery winnings, which claimed to be from a genuine sweepstakes company and from federal agencies including the Internal Revenue Service and the Federal Reserve.  In fact, these communications were not from a genuine sweepstakes company or from agencies of the United States.        

“The United States Postal Inspection Service is dedicated to investigating and uncovering lottery fraud from Jamaica and combating such fraud,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. 

“Lottery fraud from Jamaica against American citizens is a very challenging problem, but as this case demonstrates, law enforcement in the U.S. working with our partners in Jamaica will continue to aggressively pursue such scammers even if they base their operations outside of the U.S.,” said Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs.

“Working with our law enforcement partners at the Postal Inspection Service and Homeland Security Investigations, the Marshals Service was pleased to be able to help catch this defendant and bring him to justice,” said Acting U.S. Marshal Neil DeSousa.  

Assistant Attorney General Delery and U.S. Attorney Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica’s Major Organized Crime and Anti-Corruption Task Force.  The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division Assistant Director Jeffrey Steger and trial attorney Kathryn Drenning.

The U.S. Bankruptcy Court for the District of Delaware approved a settlement agreement today between the United States and the APCO Liquidating Trust (a successor in interest to APCO Oil Corporation).  The settlement follows seven years of litigation concerning the APCO Liquidating Trust’s liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or “Superfund”) for costs incurred by the U.S. Environmental Protection Agency (EPA) for the ongoing cleanup of the Oklahoma Refining Company (ORC) Superfund Site located in Cyril, Okla.

In February 2006, EPA filed a proof of claim in the Trust’s bankruptcy proceeding seeking the recovery of past and estimated future cleanup costs incurred in connection with the site.

Under the settlement agreement, the APCO Liquidating Trust and the APCO Missing Stockholder Trust have agreed to pay $14 million to the United States in order to resolve the U.S. action and related litigation. 

“We are very pleased that as a result of vigorous enforcement in the bankruptcy court, the United States was able to achieve a substantial recovery,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division.  “The settlement payments will be used to fund expected future cleanup at the ORC Superfund Site.  This is good news for U.S. taxpayers and the environment.”

The ORC Site was operated by Anderson-Prichard Oil Corporation and APCO Oil Corporation as an oil refinery from 1920 until about 1978, and then in a limited capacity by Oklahoma Refining Company until 1987.  In 1990, EPA placed the site on the National Priorities List.  EPA’s previous response actions addressed contamination of surface water, soil, and sediments on the southern portion of the site and the demolition and removal of refinery structures, tanks, and chemicals from the northern portion of the site. 

On June 17, 2013, EPA Region 6 and the Oklahoma Department of Environmental Quality issued a record of decision for Operable Unit 2.  This decision selected the remedy for the remaining contaminated soil, sediment, and light non-aqueous phase liquid on the north side of the site.  Work is expected to begin on this remedy in 2014.  When the necessary studies are completed, EPA and ODEQ will select a remedy for site ground water in a third and final record of decision. 

The Justice Department announced a settlement today with the Warren County, N.C. Board of Education that resolves a lawsuit the department filed on behalf of Army Reserve soldier Dwayne Coffer under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

The settlement, which was filed as a consent agreement in the U.S. District Court for the Eastern District of North Carolina, resolves allegations that the Warren County Board of Education willfully violated USERRA by not renewing Coffer’s employment contract in 2008 because of his military service obligations.  Coffer, a Sergeant First Class in the U.S. Army Reserve, worked at Warren County High School as an assistant principal.  During his employment with the county, Coffer took periodic leave from work to fulfill his military obligations, including service in Kuwait and Afghanistan from February 2004 to February 2005.  According to the department’s complaint, the board did not renew Coffer’s contract as an assistant principal in 2008 because staff members expressed frustration at accommodating his military service during the school year.

USERRA prohibits employers from discriminating against servicemembers with respect to employment opportunities based on their past, current or future uniformed service obligations.  USERRA also requires employers to promptly reemploy service members following their return from military leave.  Under the terms of the consent agreement, the Warren County Board of Education will, among other stipulations, reemploy Coffer under a two-year contract as a Lead Teacher/Site Supervisor at the salary he would have received had he remained continuously  employed by the county, pay back-pay to Coffer in the amount of $10,000 and contribute lost retirement payments to Coffer’s retirement account in the amount of $13,702.63.

“USERRA affords military members who leave their civilian careers behind for significant periods of time to serve our country certain protections against unjust terminations,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “It is important that veterans have the opportunity to serve their country free from worry about termination without cause.”

“I am pleased we were able to resolve this matter,” said U.S. Attorney Thomas G. Walker.  “Improper job terminations over military service cannot be tolerated.” 

The department initiated the lawsuit after Coffer filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter and determined that the complaint had merit.  This case was handled by the Employment Litigation Section of the Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of North Carolina.

Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm .

A federal jury in Houston has convicted Gwendolyn Climmons-Johnson, 53, of multiple counts of health care fraud for submitting false and fraudulent claims to Medicare for ambulance services.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

After a three-day trial, the jury convicted Climmons-Johnson on Oct. 30, 2013, of one count of conspiracy to commit health care fraud and four counts of health care fraud.  She faces a maximum penalty of 10 years in prison for each count when she is sentenced on Feb. 7, 2014.

According to evidence presented at trial, Climmons-Johnson was the owner and operator of Urgent Response EMS (Urgent Response), a Texas-based entity that purportedly provided non-emergency ambulance services to Medicare beneficiaries in the Houston area.  The evidence showed that from January 2010 through December 2011, Climmons-Johnson and others conspired to unlawfully enrich themselves by submitting false and fraudulent claims to Medicare for ambulance services that were medically unnecessary and/or not provided.  Climmons-Johnson, who controlled the day-to-day operations of Urgent Response, submitted, and caused to be submitted, approximately $2.4 million in fraudulent ambulance service claims to Medicare. 

At trial, the evidence showed that patient records had been falsified and the Medicare beneficiaries for whom Climmons-Johnson had billed ambulance services did not need ambulance services and were not in the condition stated in the records. 

The case was investigated by the FBI, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and the Texas Attorney General Medicaid Fraud Control Unit.  The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.

The case was tried by Assistant Chief Laura M.K. Cordova and Trial Attorney Christopher Cestaro of the Criminal Division’s Fraud Section, with assistance from former Special Assistant U.S. Attorney James S. Seaman. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.

McAllen Area Man Allegedly Prepares Tax Returns Claiming False Deductions and Credits

The United States has filed a lawsuit asking a federal district court in McAllen, Texas, to permanently bar Hector Rangel Jr. from preparing federal tax returns for others, the Justice Department announced today.

According to the complaint, Rangel, who resides near and does business in McAllen, has been preparing federal tax returns for customers since 2003 that contain false, improper, or inflated itemized deductions or business-expense deductions.  The complaint also alleges that Rangel prepares returns that claim improper tax credits such as the earned income tax credit (EITC), fails to create or retain accurate “due diligence” documentation for EITC claims, and does not sign and provide his identification number on all returns he prepares.  Most of Rangel’s customers allegedly reside in southern Texas.

In one instance described in the complaint, Rangel allegedly claimed farming-expense deductions on three tax returns for a married couple who did not own a farming business and never provided any farm-expense documentation to Rangel.  The lawsuit also alleges that Rangel claimed improper tax credits on his own income tax returns for 2008 through 2010 and that the Internal Revenue Service (IRS) assessed accuracy-related penalties against him with respect to those returns.

The complaint further alleges that 96 percent of the returns examined by the IRS, which Rangel had prepared from the 2003 through 2012 tax-filing seasons, were found to have understated the tax liabilities of Rangel’s customers.  According to the complaint, the IRS estimates that the total tax harm from Rangel’s unlawful tax-preparation activities during that period could be over $15 million.

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

Related Materials:

United States v. Hector Rangel Jr., etc.
Complaint for Permanent Injunction

Vernon Harrison, of Montgomery, Ala., was sentenced to serve 111 months in prison and three years supervised release, along with an order to pay $82,791 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.  Harrison was convicted on July 3, 2013, following a jury trial in the Middle District of Alabama.  He was found guilty of conspiracy to file false claims, as well as numerous counts of mail fraud, aggravated identity theft, and embezzlement from the mail. 

According to the evidence presented at the trial, Harrison was a corrupt U.S. Postal Service mail carrier who was recruited to join a stolen identity refund fraud conspiracy.  Members of the conspiracy used stolen identities to file false tax returns, which claimed fraudulent tax refunds.  The returns were filed from various locations, including houses and hotels around Montgomery and Birmingham, Ala.  The tax refunds were placed on debit cards that were mailed to addresses along Harrison’s postal route in Montgomery.  Harrison stole the debit cards from the mail and provided them to a co-conspirator in exchange for cash.  During this period Harrison stole over 100 debit cards from the mail for his co-conspirators. 

At trial, federal agents showed that they had uncovered substantial evidence of the conspiracy during the execution of search warrants at locations in Montgomery and near Birmingham.  This evidence included over 100 envelopes for debit cards that had been mailed to addresses on Harrison’s postal route, as well as agents’ observation that Harrison failed to deliver Turbo Tax debit cards.

Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of the Internal Revenue Service - Criminal Investigation and the U.S. Postal Service, Office of the Inspector General, who investigated the case, and Tax Division Trial Attorneys Jason Poole and Michael Boteler, who prosecuted the case.  Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax .

Vladimir Kats, 41, of Brooklyn, N.Y., pleaded guilty today in federal court before U.S. District Judge Denise L. Cote to money laundering and operating an unlicensed money transmitting business.  The charges stem from his role in running Liberty Reserve, a company that operated one of the world’s most widely used digital currency services and allegedly laundered more than $6 billion in suspected proceeds of crimes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement. 

“Vladimir Kats, by his own admission, helped to create and operate an anonymous digital currency system that provided cybercriminals and others with the means to launder criminal proceeds on an unprecedented scale,” said Acting Assistant Attorney General Mythili Raman. “His conviction reinforces what we said when Liberty Reserve was first brought down: banking systems that allow criminals to conduct illegal transactions anonymously will not be allowed to stand, and professional money launderers will be brought to justice.”

“As a co-founder and operator of Liberty Reserve, Vladimir Kats served as a global banker for criminals, giving them an anonymous, online forum to hide the proceeds of their illegal and dangerous activities,” said U.S. Attorney Preet Bharara. “With his guilty plea today, we take a significant step toward punishing those responsible for creating and running this international den of cybercrime.”

According to court records, Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.”  Liberty Reserve allegedly was created and structured, and operated, to help users conduct illegal transactions anonymously and launder the proceeds of their crimes, and it emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity.  Liberty Reserve allegedly was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals to conduct anonymous and untraceable financial transactions. 

According to the indictment, before being shut down by the government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system and allegedly laundered more than $6 billion in suspected proceeds of crimes, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.  Kats co-founded Liberty Reserve and helped operate the company until in or about 2009.

Kats was arrested in Brooklyn in May 2013 and pleaded guilty today to one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison; one count of conspiring to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of receiving child pornography, which carries a maximum sentence of 40 years in prison and a mandatory minimum sentence of 15 years in prison; and one count of marriage fraud, which carries a maximum sentence of five years in prison.  A sentencing date has not yet been scheduled.

This case is being investigated by the Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance from the Secret Service’s New York Electronic Crimes Task Force.  The Judicial Investigation Organization in Costa Rica; the National High Tech Crime Unit in the Netherlands, the Financial and Economic Crime Unit of the Spanish National Police; the Cyber Crime Unit at the Swedish National Bureau of Investigation; and the Swiss Federal Prosecutor’s Office also provided assistance. 

This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds Unit and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.

Trial Attorney Kevin Mosely of AFMLS and Assistant U.S. Attorneys Serrin Turner and Andrew Goldstein of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.

The charges in the indictment against Kats’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

Assistant Attorney General for the Tax Division Kathryn Keneally and U.S. Attorney Melinda Haag for the Northern District of California announced that Noemi Rubio Baez, of Salinas, Calif., pleaded guilty to conspiracy to file false claims for tax refunds with the Internal Revenue Service (IRS) and to aggravated identity theft.

According to the plea agreement, beginning around Feb. 28, 2008 and continuing through April 16, 2012, Baez and a co-conspirator participated in a scheme to obtain and to help others obtain false claims from the IRS by electronically filing in her own name, and in the names of others, false federal income tax returns.  Baez and her co-conspirator created false income information in the names and Social Security numbers of multiple individuals, and filed materially false tax returns with the IRS claiming refunds derived from tax credits including the Earned Income Tax Credit, the Additional Child Tax Credit, and the Making Work Pay Credit.

According to court documents, in some instances, the taxpayers requested the returns be prepared, but in others the taxpayers did not provide Baez or her co-conspirator with their personal identification information and were unaware that the returns had been filed in their names.  Baez and her co-conspirator filed more than 150 false and fraudulent claims unlawfully seeking more than $400,000 in tax refunds.

At the time of her sentencing, scheduled for Jan. 23, 2014, before U.S. District Judge D. Lowell Jensen, Baez faces a maximum penalty of 12 years in prison, three years of supervised release and a fine of $500,000.

Assistant Attorney General Kathryn Keneally and U.S. Attorney Melinda Haag thanked special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Charles O’Reilly, Erin S. Mellen and Sonia M. Owens, who are prosecuting the case.

The Department of Justice announced today that a federal grand jury sitting in Salt Lake City returned a superseding indictment charging Macon Openshaw, 21, of Salt Lake City, on gun possession charges and a federal hate crime charge relating to a bias-motivated attack at a local synagogue.

The indictment alleges that between Jan. 1, 2012 and April 30, 2012, Openshaw intentionally defaced and damaged the Congregation Kol Ami synagogue in Salt Lake City by firing several rounds from a Walther .22 caliber handgun at the building, breaking windows and damaging the window frame of the building.  Openshaw allegedly performed these actions because of the religious character of the synagogue.  This charge carries a statutory maximum sentence of 20 years imprisonment.

The superseding indictment charges Openshaw with one count of using and carrying a firearm in relation to a crime of violence, possession of a firearm with a removed, obliterated or altered serial number and possession of a firearm while subject to a protective order.  An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

The matter is being investigated by the Salt Lake City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Carlos Esqueda of the U.S. Attorney’s Office for the District of Utah, Central Division, and Trial Attorney  Nicholas Durham of the U.S. Department of Justice’s Civil Rights Division.

The government has intervened in a lawsuit filed under the False Claims Act against United States Investigations Services LLC (USIS) in the U.S. District Court for the Middle District of Alabama, the Department of Justice announced today.  The lawsuit alleges that USIS, located in Falls Church, Va., failed to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management (OPM). 

 
The lawsuit was filed by a former employee of USIS, Blake Percival, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties, known as relators, to sue on behalf of the government when they believe false claims for government funds have been submitted.  The private party is entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act also permits the government to investigate the allegations made in the relator’s complaint and to decide whether to intervene in the lawsuit, and to recover three times its damages plus civil penalties.  The government is intervening now based on the results of its investigation of the relator’s allegations and has requested that the court give it until Jan. 22, 2014, to file its own complaint. 

“We will not tolerate shortcuts taken by companies that we have entrusted with vetting individuals to be given access to our country’s sensitive and secret information,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Justice Department will take action against those who charge the taxpayers for services they failed to provide, especially when their non-performance could place our country’s security at risk.”

Since 1996, USIS has contracted with OPM to perform background investigations on individuals seeking employment with various federal agencies.  Executed in 2006, the contract at issue in the lawsuit required USIS to conduct the investigatory fieldwork on each prospective applicant.  It also required that a trained USIS Reviewer perform a full review of each background investigation to ensure it conformed to OPM standards before sending the file back to OPM for processing. 

According to the relator’s complaint, starting in 2008, USIS engaged in a practice known at USIS as “dumping.”  Specifically, USIS used a proprietary computer software program to automatically release to OPM background investigations that had not gone through the full review process and thus were not complete.  USIS allegedly would dump cases to meet revenue targets and maximize its profits.  The lawsuit alleges that USIS concealed this practice from OPM and improperly billed OPM for background investigations it knew were not performed in accordance with the contract. 

“Thorough, appropriate and accurate background checks are essential in the employment of government personnel,” said George L. Beck Jr., U.S. Attorney for the Middle District of Alabama.  “The increase in foreign and domestic terrorism places an increased responsibility on our government to ensure that unsuitable individuals are prohibited from government employment.”

“This is a clarion call for accountability,” said Patrick E. McFarland, Inspector General of OPM.   “As recent events have shown, it is vital for the safety and security of Americans to have these background investigations performed in a thorough and accurate manner.  We can accept no less.  Those responsible for any malfeasance that compromises the integrity of the background investigations process must be held accountable.”

“OPM does not tolerate fraud or falsification,” said Elaine Kaplan, Acting Director of OPM.  “We work hard to prevent and detect both through a variety of means including a robust integrity assurance program, multiple levels of review and workforce education and training.  We also work hand in hand with our Inspector General and the Department of Justice when we discover fraud so that bad actors are held accountable to the fullest extent of the law.”

This matter was handled by the Commercial Litigation Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Middle District of Alabama in conjunction with OPM’s Office of Inspector General and Federal Investigative Service.

The claims asserted against USIS are allegations only, and there has been no determination of liability.

The Justice Department announced today that Anthony Williams, a resident of Baton Rouge, La., pleaded guilty today to one count of threatening to retaliate against a witness in a federal criminal tax trial.

According to court documents, Williams threatened to cause bodily injury to a witness who testified in the federal trial of United States v. Angela Myers.  In his plea agreement, Williams, who is Myers’ son, admitted to sending a threat via Instagram with the intent to retaliate against the witness for his testimony.  In March 2013, Myers was convicted by a jury for her role in a stolen identity tax refund fraud scheme, and was subsequently sentenced to serve 11 years in federal prison. 

Williams faces a potential maximum sentence of 20 years in federal prison and a $250,000 fine.  As part of his plea agreement, Williams also agreed to a condition of release prohibiting him from initiating any contact whatsoever with the witness he threatened.

This case was investigated by Special Agents of the Internal Revenue Service (IRS)- Criminal Investigation and the Treasury Inspector General for Tax Administration.  Trial Attorneys Justin Gelfand and Jason Poole of the Department’s Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office for the Middle District of Louisiana.

Dr. Mikhail L. Presman, a licensed psychiatrist employed by the Department of Veterans Affairs (VA), pleaded guilty today to health care fraud for falsely billing Medicare for home medical treatment to Medicare beneficiaries and agreed to forfeit more than $1.2 million in illegal profits. 

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

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

 
Presman is scheduled to be sentenced by U.S. District Judge I. Leo Glasser of the Eastern District of New York on Feb. 13, 2014, and faces a maximum sentence of 10 years in prison.

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

 
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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