District Not Recorded

Dubuis Health System and Southern Crescent Hospital for Specialty Care, Inc. (Southern Crescent) have agreed to pay the United States $8,000,000 to settle allegations that they submitted false claims to Medicare, the Justice Department announced today.  Dubuis Health System manages long-term acute care hospitals in multiple states, including Southern Crescent.  Southern Crescent is a long-term acute care hospital located in Riverdale, GA and is part of the CHRISTUS Health System. 

Long term acute care hospitals are similar to typical acute care hospitals except that they are certified to focus on patients with more complex medical needs who, on average, remain in the hospital more than 25 days.  Long term acute care hospitals receive a higher rate of Medicare reimbursement than do typical acute care hospitals.  This settlement resolves allegations that between 2003 and 2009, Dubuis Health System and Southern Crescent knowingly kept patients hospitalized beyond the time considered to be medically necessary, to increase their Medicare reimbursement and to maintain Southern Crescent’s classification as a long-term acute care facility.

"Billing Medicare for patient care that is not necessary or appropriate contributes to the soaring costs of health care.  This settlement demonstrates the Department of Justice’s commitment to protect public funds and guard against abuse of the Medicare system,” said Stuart F. Delery, the Acting Assistant Attorney General of the Justice Department’s Civil Division.

“Hospitals that violate the public trust by keeping patients hospitalized beyond what is medically necessary will not be tolerated.  Our office will continue to bring cases that enforce our health care laws,” said Kenneth Magidson, United States Attorney for the Southern District of Texas.

This matter was initiated by the filing of a whistleblower complaint under the False Claims Act (FCA).  Under the FCA, private citizens can bring suit for false claims on behalf of the United States and receive a share of the recovery obtained by the Government.  The whistleblower in this matter, Darlene Tucker, was a former administrator at Southern Crescent.  As a result of this settlement, Ms. Tucker will receive $2,160,000 of the United States’ recovery.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover more than $10.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.7 billion.

The case was jointly handled by the U.S. Attorney’s Office for the Southern District of Texas, the Justice Department’s Civil Division, and the Office of the Inspector General of the Department of Health and Human Services.  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

The case is captioned United States ex rel. Tucker v. Christus Health and Dubuis Health System, Inc., et al, No. 09-cv-1819 (S.D. Tex.).

A grand jury in the Southern District of Florida issued an indictment for two individuals on charges of conspiracy, fraud and extortion alleging they operated a series of fraudulent businesses targeting Spanish-speaking consumers, the Justice Department and the U.S. Postal Inspection Service (USPIS) announced today.  The indictment charges Daniel Carrasco, 54, and Federico Martin Gioja, 45, both of Miramar, Fla., with incorporating, owning and operating Florida companies that used telemarketers in a phone room in Argentina to extract money from consumers, using lies and extortion.

Carrasco and Gioja were charged by criminal complaint and arrested on June 26, 2013.  They have remained incarcerated since that time.  Carrasco and Gioja, and a third individual, Romino Tasso, also were named in a civil suit filed by the Justice Department.  In the civil case, the Justice Department requested that the court issue an injunction, and, subsequently, Judge Cecilia Altonaga issued a temporary restraining order barring further lies to consumers and freezing the assets of Carrasco, Gioja, Tasso and companies under their control.

“We will use every tool at our disposal, including asset freezes, injunctive relief and criminal prosecution, against companies that lie to, extort, threaten and defraud consumers,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “Protecting Americans from fraud continues to be a top priority for the Department of Justice.”  

 
According to the civil complaint and the affidavit filed in support of the criminal complaint, the case resulted from a referral by Spanish-language television station, Univision.  Companies belonging to Carrasco and Gioja are alleged to have falsely claimed an affiliation with Univision and purported to sell products such as vitamins, lotions, medical insurance and English-language training products.  However, the companies frequently did not deliver products ordered by consumers.  Since the companies allegedly did not have many of the products they promised to send to consumers, consumers received other products instead.  Then, according to the indictment, after consumers refused delivery of the companies’ shipments, the Argentinian phone room telemarketers called and falsely threatened consumers with arrest, deportation or fines on their gas and electric bills.

 
U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer stated, “These defendants specifically targeted Spanish-speaking victims, pretending to be affiliated with Univision, to sell their products from their phone room in Argentina, when in fact, they had absolutely no connection to Univision, and their companies did not deliver the products consumers ordered.  “We are committed to investigating and prosecuting such fraudsters, both domestic and international, whose schemes defraud consumers.”

According to the criminal and civil complaints, Carrasco and Gioja routinely changed the names of the companies under which they did business to evade consumer complaints, regulators and law enforcement.  Allegedly, a variety of state agencies contacted the businesses regarding their illicit practices.  Those working with Carrasco and Gioja, in emails cited in the affidavit in support of arrest, referred to these companies tainted by complaints as “burnt.”  Rather than changing the “burnt” companies’ practices, Carrasco and Gioja allegedly incorporated new companies and started the same illegal practices again.

The alleged fraud first came to light when the Spanish language network Univision informed the USPIS that they believed a company was involved in a fraud scheme in which it misrepresented its affiliation with the network.  Subsequently, the USPIS investigated the case, submitted the affidavit in support of the criminal complaint and arrested the defendants.

“Postal inspectors will continue to investigate cases involving fraud against consumers and will vigorously pursue those individuals who use the mail to further their criminal schemes,” said Ronald Verrochio, U.S. Postal Inspector in Charge in Miami.

Acting Assistant Attorney General Delery commended the Postal Inspection Service for their investigative efforts and thanked the U.S. Attorney’s Office for the Southern District of Florida for their contributions to the civil case.  The criminal case is being prosecuted by Assistant Director Richard Goldberg with the Department of Justice’s Consumer Protection Branch.  

A former health care clinic director and licensed clinical psychologist at defunct health provider Health Care Solutions Network Inc. (HCSN) was sentenced today in Miami to serve 135 months in prison for her central role in a fraud scheme that resulted in more than $63 million in fraudulent claims to Medicare and Florida Medicaid.

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 Miami office of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG) made the announcement.

Alina Feas, 53, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida.  In addition to her prison term, Feas was sentenced to three years of supervised release and ordered to pay $24.1 million in restitution.

On May 7, 2013, Feas pleaded guilty to one count of conspiracy to commit health care fraud and one substantive health care fraud count. During the course of the conspiracy, Feas was employed as a therapist and clinical director of HCSN’s Partial Hospitalization Program (PHP).  A PHP is a form of intensive treatment for severe mental illness.
        
HCSN of Florida (HCSN-FL) operated community mental health centers at two locations.  In her capacity as clinical director, Feas oversaw the entire clinical program and supervised therapists and other HCSN-FL personnel.  She also conducted group therapy sessions when therapists were absent, and she was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid.  Feas also knew that many of the ALF referral patients were ineligible for PHP services because many patients suffered from mental retardation, dementia and Alzheimer's disease. 

Feas submitted claims to Medicare for individual therapy she purportedly provided to HCSN-FL patients using her personal Medicare provider number, knowing that HCSN-FL was simultaneously billing the same patients for PHP services.  She continued to bill Medicare under her personal provider number while an HCSN community health center in North Carolina (HCSN-NC) simultaneously submitted false and fraudulent PHP claims.

Feas was also aware that HCSN-FL personnel were fabricating patient medical records. Many of these medical records were created weeks or months after the patients were admitted to HCSN-FL for purported PHP treatment and were used to support false and fraudulent billing to government-sponsored health care benefit programs, including Medicare and Florida Medicaid.  During her employment at HCSN-FL, Feas signed fabricated PHP therapy notes and other medical records used to support false claims to government-sponsored health care programs.

At HCSN-NC, Feas was aware that her co-conspirators were fabricating medical records to support the fraudulent claims she was causing to be submitted to Medicare on behalf of HCSN-NC. She knew that a majority of the fabricated notes were created at the HCSN-FL facility for patients admitted into the PHP at HCSN-NC.  In some instances, Feas signed therapy notes and other medical records even though she never provided services in HCSN-NC’s PHP. 

From 2004 through 2011, HCSN billed Medicare and the Medicaid program more than $63 million for purported mental health services.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida.  This case was prosecuted by Trial Attorneys Allan J. Medina, former Special Trial Attorney William Parente and Deputy Chief Benjamin D. Singer of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 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.

Halliburton Energy Services Inc. has agreed to plead guilty to destroying evidence in connection with the Deepwater Horizon disaster, the Department of Justice announced today.  A criminal information charging Halliburton with one count of destruction of evidence was filed today in U.S. District Court in the Eastern District of Louisiana.

Halliburton has signed a cooperation and guilty plea agreement with the government in which Halliburton has agreed to plead guilty and admit its criminal conduct.  As part of the plea agreement, Halliburton has further agreed, subject to the court’s approval, to pay the maximum-available statutory fine, to be subject to three years of probation and to continue its cooperation in the government’s ongoing criminal investigation.  Separately, Halliburton made a voluntary contribution of $55 million to the National Fish and Wildlife Foundation that was not conditioned on the court’s acceptance of its plea agreement.

According to court documents, on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions and fire, which resulted in the deaths of 11 rig workers and the largest oil spill in U.S. history.  Following the blowout, Halliburton conducted its own review of various technical aspects of the well’s design and construction.  On or about May 3, 2010, Halliburton established an internal working group to examine the Macondo well blowout, including whether the number of centralizers used on the final production casing could have contributed to the blowout.  A production casing is a long, heavy metal pipe set across the area of the oil and natural gas reservoir.  Centralizers are protruding metal collars affixed at various intervals on the outside of the casing.  Use of centralizers can help keep the casing centered in the wellbore away from the surrounding walls as it is lowered and placed in the well.  Centralization can be significant to the quality of subsequent cementing around the bottom of the casing.  Prior to the blowout, Halliburton had recommended to BP the use of 21 centralizers in the Macondo well.  BP opted to use six centralizers instead.  

As detailed in the information, in connection with its own internal post-incident examination of the well, in or about May 2010, Halliburton, through its Cementing Technology Director, directed a Senior Program Manager for the Cement Product Line (Program Manager) to run two computer simulations of the Macondo well final cementing job using Halliburton’s Displace 3D simulation program to compare the impact of using six versus 21 centralizers.  Displace 3D was a next-generation simulation program that was being developed to model fluid interfaces and their movement through the wellbore and annulus of a well.  These simulations indicated that there was little difference between using six and 21 centralizers.  Program Manager was directed to, and did, destroy these results.   

In or about June 2010, similar evidence was also destroyed in a later incident.  Halliburton’s Cementing Technology Director asked another, more experienced, employee (“Employee 1”) to run simulations again comparing six versus 21 centralizers.  Employee 1 reached the same conclusion and, like Program Manager before him, was then directed to “get rid of” the simulations.

Efforts to forensically recover the original destroyed Displace 3D computer simulations during ensuing civil litigation and federal criminal investigation by the Deepwater Horizon Task Force were unsuccessful.

In agreeing to plead guilty, Halliburton has accepted criminal responsibility for destroying the aforementioned evidence.

The guilty plea agreement and criminal charge announced today are part of the ongoing criminal investigation by the Deepwater Horizon Task Force into matters related to the April 2010 Gulf oil spill.  The Deepwater Horizon Task Force, based in New Orleans, is supervised by Acting Assistant Attorney General Mythili Raman and led by John D. Buretta, who serves as the director of the task force.  The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice; the U.S. Attorney’s Office for the Eastern District of Louisiana and other U.S. Attorney’s Offices; and investigating agents from:  the FBI; Department of the Interior, Office of Inspector General; Environmental Protection Agency, Criminal Investigation Division; Environmental Protection Agency, Office of Inspector General; National Oceanic and Atmospheric Administration, Office of Law Enforcement; U.S. Coast Guard; U.S. Fish and Wildlife Service; and the Louisiana Department of Environmental Quality.

The case is being prosecuted by Deepwater Horizon Task Force Director John D. Buretta, Deputy Directors Derek A. Cohen and Avi Gesser, and task force prosecutors Richard R. Pickens II, Scott M. Cullen, Colin Black and Rohan Virginkar.

An information is merely a charge and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

The Justice Department announced today that  Tyree Davis Sr. of Flossmoor, Ill., was arrested on an eight-count indictment charging him with obstruction of justice and filing fraudulent multi-billion dollar liens against government employees.  The indictment was returned on July 24, 2013, by a federal grand jury in Chicago. 

According to the indictment, Davis obstructed justice by sending correspondence threatening to arrest two federal judges: the chief judge of the Northern District of Illinois and the judge who presided over the 2010 tax trial of LaShawn Littrice, whom Davis refers to as his wife.  Littrice was convicted by a jury in June 2010 and sentenced to 42 months in prison in December 2010.  Davis also filed false liens, titled Notice of Maritime Liens, against both judges and notified others that he had filed the liens.  In addition to the two judges, Davis filed false liens against the U.S. Attorney and Clerk of Court for the Northern District of Illinois, an Assistant U.S. Attorney and an Internal Revenue Service-Criminal Investigation Special Agent.  All the liens were publicly filed with the Cook County Recorder’s Office and claimed that each individual owed $100 billion.  The liens were re-recorded two and three times in order to add property descriptions to them. 

 An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Davis faces a maximum of 80 years in prison and a maximum fine of $2 million dollars. 

The case is being investigated by the U.S. Treasury Inspector General for Tax Administration (TIGTA) and the FBI, and is being prosecuted by Tax Division Senior Litigation Counsel Jen E. Ihlo and Trial Attorney Matthew J. Kluge.

A federal indictment made public today in New Jersey charges five men with conspiring in a worldwide hacking and data breach scheme that targeted major corporate networks, stole more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses.  It is the largest such scheme ever prosecuted in the United States.

The charges were announced today by U.S. Attorney Paul J. Fishman of the District of New Jersey; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; and Special Agent in Charge James Mottola of the U.S. Secret Service (USSS), Criminal Investigations, Newark, N.J., Division. The USSS led the investigation of the indicted conspiracy.

The defendants allegedly sought corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information they could exploit for profit.  The defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.  It is not alleged that the NASDAQ hack affected its trading platform.

According to the second superseding indictment unsealed today in Newark federal court and other court filings, the five men each served particular roles in the scheme.  Vladimir Drinkman, 32, of Syktyykar and Moscow, Russia, and Alexandr Kalinin, 26, of St. Petersburg, Russia, each allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems.   Roman Kotov, 32, of Moscow, allegedly specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data.  Court documents allege that the defendants hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 26, of Odessa, Ukraine.  Dmitriy Smilianets, 29, of Moscow, allegedly sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

“This type of crime is the cutting edge,” said U.S. Attorney Fishman.  “Those who have the expertise and the inclination to break into our computer networks threaten our economic well-being, our privacy, and our national security.  And this case shows, there is a real practical cost because these types of frauds increase the costs of doing business for every American consumer, every day.  We cannot be too vigilant and we cannot be too careful.”

“The defendants charged today were allegedly responsible for spearheading a worldwide hacking conspiracy that victimized a wide array of consumers and entities, causing hundreds of millions of dollars in losses,” said Acting Assistant Attorney General Raman.  “Despite substantial efforts by the defendants to conceal their alleged crimes, the Department and its law enforcement counterparts have cracked this extensive scheme and are seeking justice for its many victims.  Today’s indictment will no doubt serve as a serious warning to those who would utilize illegal and fraudulent means to steal sensitive information online.”

“As is evident by this indictment, the Secret Service will continue to apply innovative techniques to successfully investigate and arrest transnational cyber criminals,” said USSS Special Agent in Charge Mottola.  “While the global nature of cybercrime continues to have a profound impact on our financial institutions, this case demonstrates the global investigative steps that U.S. Secret Service Special Agents are taking to ensure that criminals will be pursued and prosecuted no matter where they reside.”

Kalinin and Drinkman were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 32, of Miami, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest breach ever reported.  Gonzalez is currently serving 20 years in federal prison for those offenses.  The U.S. Attorney’s Office for the Southern District of New York today announced two additional indictments against Kalinin: one charges him in connection with hacking certain computer servers used by NASDAQ and a second indictment, unsealed today, charged Kalinin and another alleged Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information by hacking U.S.-based financial institutions.  Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.  Kotov and Smilianets have not previously been charged publicly in the United States.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012.  Smilianets was extradited on Sept. 7, 2012, and remains in federal custody.  He will appear in New Jersey federal court to be arraigned on the superseding indictment on a date to be determined.  Kalinin, Kotov and Rytikov remain at large.  All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.

The Attacks

According to court documents, the five defendants allegedly conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals.  They allegedly took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators are alleged to have unlawfully acquired more than 160 million card numbers through hacking.

Court documents allege that the initial entry was often gained using a “SQL injection attack.”  SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network.  Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, on the system.  This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but they were able to regain access through persistent attacks.  

Communications obtained by law enforcement reveal the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway.  The defendants allegedly had malware implanted in multiple companies’ servers for more than a year.

The defendants are alleged to have used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks.  The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators allegedly sold it to resellers around the world.  The buyers then allegedly sold the dumps through online forums or directly to individuals and organizations.  Smilianets was allegedly in charge of sales, vending the data only to trusted identity theft wholesalers.  According to court documents, he charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers.  Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants used a number of methods to conceal the scheme.  Unlike traditional Internet service providers, Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement. 

Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection.  Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.

To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions.  The defendants also worked to evade existing protections by security software.

*          *          *

Court documents allege that as a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses, including more than $300 million in losses reported by just three of the corporate victims and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.

If convicted, the maximum penalties for the charged counts are: five years in prison for conspiracy to gain unauthorized access to computers; 30 years in prison for conspiracy to commit wire fraud; five years in prison for unauthorized access to computers; and 30 years in prison for wire fraud.

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

The case was investigated by the USSS Criminal Investigations Division and the USSS Newark Division.  Significant assistance was provided by the Justice Department’s Office of International Affairs and the public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

The government is represented by Erez Liebermann, Deputy Chief of the New Jersey U.S. Attorney’s Office Criminal Division, Assistant U.S. Attorney Gurbir Grewal of the Computer Hacking and Intellectual Property Section of the office’s Economic Crimes Unit and Trial Attorney James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section.  The U.S. Attorney’s Offices in the District of Kansas and the Northern District of Georgia provided valuable contributions in the development of the prosecution.

Related Materials:

Indictment

Un gran jurado en el Distrito Sur de Florida imputó a dos individuos por cargos de conspiración, fraude y extorsión, alegando que manejaban una serie de empresas fraudulentas con consumidores de habla hispana como objetivo, anunciaron hoy el Departamento de Justicia y el Servicio de Inspección Postal de EE.UU. (USPIS). Fueron imputados Daniel Carrasco, 54, y Federico Martin Gioja, 45, ambos de Miramar, Fla. por crear, poseer y administrar empresas de Florida que utilizaban a televendedores en una sala telefónica en la Argentina para extraerle dinero a consumidores, utilizando mentiras y extorsión.

Carrasco y Gioja fueron acusados penalmente y arrestados el 26 de junio de 2013. Desde entonces, han estado encarcelados. Carrasco y Gioja y una tercera persona, Romino Tasso, también fueron nombrados en una demanda civil entablada por el Departamento de Justicia. En la demanda civil, el Departamento de Justicia solicitó que el tribunal emitiera un interdicto y, consecuentemente, la Jueza Cecilia Altonaga emitió una orden de restricción temporal prohibiendo futuras mentiras a consumidores y congelando los bienes de Carrasco, Gioja, Tasso y compañías bajo su control.

"Utilizaremos todas las herramientas a nuestra disposición, lo que incluye el congelamiento de activos, desagravio judicial y enjuiciamiento penal, contra las empresas que mientan, extorsionen, amenacen y defrauden a consumidores", dijo Stuart F. Delery, Secretario de Justicia Auxiliar Interino de la División Civil del Departamento de Justicia. El proteger a los ciudadanos de los Estados Unidos contra el fraude sigue siendo una de las principales prioridades del Departamento de Justicia".

De acuerdo con la demanda civil y la declaración jurada presentada como respaldo a la demanda penal, el caso fue el resultado de una remisión realizada por una estación de televisión de habla hispana, Univision.  Se alega que compañías pertenecientes a Carrasco y Gioja alegaron falsamente ser afiliadas a Univision y vender productos como vitaminas, lociones, seguro médico y productos de enseñanza del idioma inglés.  Sin embargo, las compañías solían no enviar los productos comprados por los consumidores y los consumidores recibían otros productos en lugar de los comprados.  De acuerdo con la acusación formal, cuando los consumidores se negaban a recibir los envíos de las compañías, los televendedores de la sala telefónica de la Argentina llamaban y amenazaban falsamente a los consumidores con el arresto, la deportación o multas en sus cuentas de gas y electricidad.

El Fiscal Federal para el Distrito Sur de Florida Wifredo A. Ferrer señaló, "Estos demandados tenían como objetivo específico a víctimas de habla hispana, se hicieron pasar por afiliados de Univision para vender sus productos a partir de su sala telefónica en la Argentina cuando, de hecho, no tenían ningún vínculo con Univision y sus compañías no enviaban los productos pedidos por los consumidores. "Nos comprometemos a investigar y enjuiciar a estafadores como estos, tanto nacionales como internacionales, cuyos ardides defraudan a los consumidores".

De acuerdo con las demandas penal y civil, Carrasco y Gioja cambiaban con frecuencia los nombres de las compañías que utilizaban para hacer negocios, para evadir las quejas de los consumidores, las agencias reguladoras y las fuerzas del orden público. Se alega que una serie de dependencias del estado se comunicaron con las empresas acerca de sus prácticas ilícitas. Las personas que trabajaban con Carrasco y Gioja, se referían a estas compañías objeto de quejas como "quemadas" en mensajes de correo electrónico citados en la declaración jurada presentada para respaldar el arresto. En lugar de modificar las prácticas de las compañías "quemadas", se alega que Carrasco y Gioja crearon compañías nuevas dedicadas a las mismas prácticas ilegales.

Se conoció inicialmente el supuesto fraude cuando la red de habla hispana Univision informó al USPIS que creían que una compañía estaba llevando a cabo un ardid fraudulento en el que se hacía pasar como afiliada de la red. Posteriormente, USPIS investigó el caso, presentó una declaración jurada en respaldo a la demanda penal y arrestó a los demandados.

"Los inspectores postales seguirán investigando casos de fraude contra los consumidores y demandarán enérgicamente a quienes utilicen el correo para promover sus ardides delictivos", dijo Rondal Verrochio, Inspector Postal de EE.UU. a Cargo en Miami.

El Secretario de Justicia Auxiliar Interino Delery felicitó al Servicio de Inspección Postal por su labor de investigación y agradeció a la Fiscalía Federal para el Distrito Sur de Florida por sus aportes al caso civil. El caso penal está siendo enjuiciado por el Director Auxiliar Richard Goldberg con la Oficina de Protección al Consumidor [Consumer Protection Branch] del Departamento de Justicia.

Attorney General Eric Holder today welcomed the confirmation by the U.S. Senate of Tony West as the Department of Justice’s Associate Attorney General.

“Tony has served with distinction since he returned to the Justice Department in 2009,” said Attorney General Holder.  “As a key member of the department's senior management team, he has led with integrity, acting always in the best interests of the American people and in accordance with the finest traditions of public service. I applaud his confirmation by the U.S. Senate today, and look forward to continuing to work with him as Associate Attorney General – a role in which he has excelled, in an acting capacity, for more than a year.”

President Barack Obama nominated Tony West to be the Associate Attorney General of the United States, the third-ranking official at the Department of Justice, on Sept. 20, 2012.  Mr. West has served as the Acting Associate Attorney General since March of 2012.  Previously, he was nominated by the President to be the Assistant Attorney General for the Justice Department's Civil Division, a position that he held between April 20, 2009 and March 12, 2012.

Mr. West's primary responsibility as the Associate Attorney General is to advise and assist the Attorney General and the Deputy Attorney General in formulating and implementing departmental policies and programs related to a broad range of issues, including civil litigation, federal and local law enforcement, and public safety.

As Associate Attorney General, Mr. West oversees the department's civil litigating components (Antitrust Division, Civil Division, Civil Rights Division, Environment and Natural Resources Division, and Tax Division), grant-making components (Office of Justice Programs, Office on Violence Against Women, and Office of Community Oriented Policing Services), and related components (Community Relations Service, Executive Office of U.S. Trustees, Office of Information Policy and Foreign Settlement Claims Commission).  Mr. West serves as the Co-Chair of the President's Task Force on Puerto Rico, the Vice Chair of the Steering Committee of the President's Financial Fraud Enforcement Task Force, and the federal government's Chief FOIA Officer.

During his current tenure in Justice Department leadership, Mr. West has taken an active role in coordinating the department's response to the Deepwater Water Horizon oil spill in the Gulf of Mexico; overseeing comprehensive immigration reform; combating financial fraud through enforcement actions such as the department’s lawsuit against Standard & Poor’s Ratings Services; improving public safety by enhancing partnerships between federal, state, local, and tribal law enforcement; championing the voices of crime victims, children, and the elderly; promoting the reauthorization of the Violence Against Women Act; and improving the federal government's relationship with Native American communities.

From April 2009 to March 2012, Mr. West served as the Assistant Attorney General for the Civil Division, which is the largest litigating division in the Department of Justice. In addition to focusing on traditional areas of the Civil Division's work, Mr. West helped the department further its most important priority – protecting national security.  He also bolstered the division's affirmative civil enforcement efforts in areas such as health care fraud, mortgage fraud, and procurement fraud to recover taxpayer money lost to fraud and abuse, resulting in unprecedented monetary recoveries.  Mr. West similarly emphasized the Civil Division's authority to bring civil and criminal actions to enforce the nation's consumer protection laws, and served in various positions on the Financial Fraud Enforcement Task Force.

Mr. West first joined the Department of Justice a year after graduating from law school when he served as a Special Assistant to the Deputy Attorney General from 1993 through 1994.  From 1994 to 1999, he was an Assistant U.S. Attorney in the Northern District of California.  From 1999 to 2001, Mr. West served as a state Special Assistant Attorney General in California.  Prior to returning to the Justice Department, Mr. West was a litigation partner at Morrison & Foerster LLP in San Francisco.  

Mr. West graduated with honors from Harvard College, where he served as publisher of the Harvard Political Review, and received his law degree from Stanford Law School, where he was elected President of the Stanford Law Review.    

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

Billy Frank Weatherred, aka “Billy The Kid,” 28, of Dallas, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity. 

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

By pleading guilty to racketeering charges, Weatherred has admitted to being a member of the ABT criminal enterprise.

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

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

According to the superseding indictment, in order to be considered for ABT membership, a person must be sponsored by another gang member.  Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect while his conduct is observed by the members of the ABT.
 
Judge Lake has set sentencing for Oct. 24, 2013, at which time Weatherred faces a maximum penalty of life in prison.

Weatherred is one of 36 defendants charged with, among other things, conducting racketeering activity through the ABT criminal enterprise.  He is the ninth defendant charged in the indictment to plead guilty. 
 
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement -Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite Texas, Police Department; Montgomery County District Attorney’s Office;  and the Atascosa County District Attorney’s Office.  

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

A captain in the Army National Guard pleaded guilty today to playing a lead role in a bribery and fraud scheme resulting in a loss of at least $210,000 to the U.S. Army National Guard Bureau, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Capt. Fabian Barrera, 46, of Schertz, Texas, was indicted on April 17, 2013, in the U.S. District Court for the Western District of Texas on charges of conspiracy, bribery, wire fraud and aggravated identity theft.  Barrera pleaded guilty to one count of bribery, one count of conspiracy to commit bribery and wire fraud, and one count of aggravated identity theft.

The case against Barrera arises from an investigation into allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses.  To date, the investigation has led to charges against 12 individuals, all of whom have pleaded guilty, including Barrera.

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

Court documents state that, between approximately December 2005 and February 2012, Barrera participated as a recruiting assistant in the G-RAP.  Barrera admitted that he paid Army National Guard recruiters in the form of cash and check payments for the names and Social Security numbers of potential soldiers.  Barrera then used the information to claim that he was responsible for referring these potential soldiers to join the military, when in fact he did not recruit any of them.  As a result, Barrera received a total of at least $181,000 in fraudulent recruiting referral bonuses.  Also, because of Barrera’s fraudulent referrals, the National Guard Bureau paid Docupak a total of at least $31,000 in administrative fees.

The charge of bribery carries a maximum penalty of 15 years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss.  The charge of conspiracy carries a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss.  The charge of aggravated identity theft carries a mandatory penalty of two years in prison, which must be imposed consecutively to any other term of imprisonment, and a maximum fine of $250,000 or twice the pecuniary gain or loss.  Sentencing has not yet been scheduled.
 
The case is being investigated by the San Antonio Fraud Resident Agency of the Army Criminal Investigation Command’s Major Procurement Fraud Unit and the San Antonio Field Office of the Internal Revenue Service Criminal Investigation. The case is being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter, Sean F. Mulryne and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section. 

The United States entered into a settlement agreement with the Arcadia Unified School District in Arcadia, Calif., to resolve an investigation into allegations of discrimination against a transgender student based on the student’s sex.  Under the agreement, approved by the district’s school board unanimously last night, the school district will take a number of steps to ensure that the student, whose gender identity is male and who has consistently and uniformly presented as a boy at school and in all other aspects of his life for several years, will be treated like other male students while attending school in the district.

The agreement, joined by the Department of Education’s Office for Civil Rights, which participated in the investigation, resolves a complaint filed in October 2011.  The complaint alleged that the district had prohibited the student from accessing facilities consistent with his male gender identity, including restrooms and locker rooms at school, as well as sex-specific overnight accommodations at a school-sponsored trip, because he is transgender.  The United States investigated this complaint under Title IX of the Education Amendments of 1972 and Title IV of the Civil Rights Act of 1964.  Both Title IX and Title IV prohibit discrimination against students based on sex. 

Under the settlement agreement, the district will: 

•          work with a consultant to support and assist the district in creating a safe, nondiscriminatory learning environment for students who are transgender or do not conform to gender stereotypes;

•          amend its policies and procedures to reflect that gender-based discrimination, including discrimination based on a student’s gender identity, transgender status, and nonconformity with gender stereotypes, is a form of discrimination based on sex; and

•          train administrators and faculty on preventing gender-based discrimination and creating a nondiscriminatory school environment for transgender students. 

Additionally, the district will take a number of steps to treat the student like all other male students in the education programs and activities offered by the district.  The district-wide provisions of the agreement will be in place until the end of the 2015-2016 school year.  The student-specific provisions of the agreement will be in place as long as the student is enrolled in the district.

“All students, including transgender students, have the right to attend school free from discrimination based on their sex,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “We commend the district for taking affirmative steps to ensure that this student and his peers can continue to learn and thrive in a safe and nondiscriminatory environment.”

“Our commitment to civil rights enforcement runs deep and nowhere is that commitment more meaningful than in our schools,” said André Birotte, Jr., United States Attorney for the Central District of California. “This agreement helps ensure continued advancement towards equal rights under the law for all students.”

In recent years, the Justice Department and the Department of Education resolved a number of cases involving gender-based harassment in public schools.  In 2012, the departments entered into a consent decree addressing harassment against students who do not conform to gender stereotypes in the Anoka-Hennepin School District, Minn.  In 2011, the departments entered into an agreement with the Tehachapi Unified School District, Calif., to resolve a similar complaint of harassment against a gay student who did not conform to gender stereotypes.

Title IV of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972 each prohibit harassment based on sex.  The enforcement of Title IV and Title IX are top priorities of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt .

Three former financial services executives were sentenced today in U.S. District Court for the Southern District of New York for their participation in frauds related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

 
Peter Ghavami, Gary Heinz and Michael Welty, all former UBS AG executives, were convicted on Aug. 31, 2012, after a five-week trial for their roles in the frauds.  They were sentenced today by U.S. District Court Judge Kimba Wood. Ghavami was sentenced to serve 18 months in prison and to pay a $1 million criminal fine; Heinz was sentenced to serve 27 months in prison and to pay a $400,000 criminal fine; and Welty was sentenced to serve 16 months in prison and to pay a $300,000 criminal fine. 

 
“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country for important public works projects,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The division will continue to prosecute those who subvert and corrupt competitive markets for personal profit.”

 
According to evidence presented at trial, while employed at UBS, Ghavami, Heinz and Welty participated in multiple fraud conspiracies and schemes with various financial institutions and with a broker, at various time periods from as early as March 2001 until at least November 2006.  These financial institutions, or providers, offered a type of contract – known as an investment agreement – to state, county and local governments and agencies, and not-for-profit entities, throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

 
At trial, the Department of Justice showed that while acting as providers, Ghavami, Heinz and Welty conspired with other providers and with a broker to corrupt the bidding process for more than a dozen investment agreements in order to increase the number and profitability of the agreements awarded to UBS.  At other times, while acting as brokers, Ghavami, Heinz, Welty and their co-conspirators arranged for UBS to receive kickbacks in exchange for manipulating the bidding process and steering investment agreements to certain providers. Ghavami, Heinz and Welty deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities to refinance outstanding debt and for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country and the U.S. Treasury millions of dolla rs.

During the trial, the government presented specific evidence relating to 26 corrupted bids, including 76 recorded conversations made by the co-conspirator financial institutions. Among the issuers and not-for-profit entities whose agreements or contracts were subject to the defendants’ schemes were the commonwealth of Massachusetts, the New Mexico Educational Assistance Foundation, the Tobacco Settlement Financing Corporation of Rhode Island, the Hospital Authority of Forsyth County, Ga., and the RWJ Health Care Corp. at Hamilton in New Jersey.

“The charges against these individuals outline a deceptive scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said George Venizelos, Acting Director in Charge of the FBI in New York.  “The sentences announced today remind the public that the FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”

“Those who manipulate the competitive bidding system to benefit themselves will be held accountable for their criminal activity,” said Richard Weber, Chief, Internal Revenue Service – Criminal Investigation (IRS-CI). “The defendants conspired with others to corrupt the bidding process for more than a dozen investment agreements in order to increase the profitability of the agreements awarded to UBS. Quite simply, they enriched themselves at the expense of the towns and cities that needed the money for important public works projects such as building and repairing schools, hospitals and roads. IRS-CI is committed to using our financial expertise to uncover this kind of corruption.”

 
Ghavami was found guilty on two counts of conspiracy to commit wire fraud and one count of substantive wire fraud. Heinz was found guilty on three counts of conspiracy to commit wire fraud and two counts of substantive wire fraud. Welty was found guilty on three counts of conspiracy to commit wire fraud.

 
A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation, and 19 have been convicted or pleaded guilty. Another individual awaits trial. Additionally, one company, Rubin/Chambers, Dunhill Insurance Services Inc. has pleaded guilty.

The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Offices, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

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

 
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

A Philadelphia resident pleaded guilty today for his role as a money launderer in a $13 million health care fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch of the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, 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.

Leonid Zalkind, 36, of Philadelphia, pleaded guilty to one count of conspiracy to commit money laundering before U.S. District Judge Nina Gershon of the Eastern District of New York.   At sentencing, scheduled for Dec. 2, 2013, Zalkind faces a maximum penalty of 20 years in prison and a $500,000 fine. 

According to court documents, from 2010 to 2012, Zalkind operated numerous shell companies and bank accounts through which he laundered the proceeds of health care fraud from Brooklyn clinic Cropsey Medical Care PLLC.  Zalkind conspired with others to accept checks from Cropsey Medical, which were made payable to various shell companies Zalkind controlled.   These checks did not represent payment for any legitimate service at, or by, Cropsey Medical, but rather were written to launder Cropsey Medical’s fraudulently obtained health care proceeds.   Zalkind admitted at the plea proceeding that he deposited such checks into bank accounts he controlled, intending these transactions to hide and disguise the fact that these funds were proceeds of a crime.  He admitted that he knew these funds were proceeds of illegal activity.

The proceeds of checks Zalkind negotiated and cashed were given to the owners and operators of Cropsey Medical and were used to pay illegal cash kickbacks to Cropsey Medical’s purported patients.  According to court documents, from approximately November 2009 to October 2012, Cropsey Medical submitted more than $13 million in claims to Medicare and Medicaid, seeking reimbursement for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

Eight individuals await trial, including a doctor, owners and employees of Cropsey Medical clinics and other individuals who paid and received kickbacks to induce the referral and transportation of patients to the clinic, as well as individuals who laundered funds for Cropsey Medical.  Trial has not yet been scheduled.

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

The daughter of a church pastor and owner of a California-based durable medical equipment (DME) supply company was found guilty by a jury of Medicare fraud charges for her role in a Medicare fraud scheme that resulted in over $11 million in fraudulent billings to Medicare.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Obiageli Agbu, 26, of Carson, Calif., was found guilty on July 19, 2013, of one count of conspiracy to commit health care fraud and eight counts of health care fraud following a two-week trial.

The evidence introduced at trial showed that Agbu owned Ibon Inc., a fraudulent DME supply company that she operated from a nondescript office building in Carson.  Agbu’s father and co-defendant, Charles Agbu, a church pastor who pleaded guilty to Medicare fraud and money laundering charges in December 2012, ran a fraudulent DME supply company called Bonfee Inc. from the same office building that housed Ibon.  The trial evidence showed that from Ibon and Bonfee, Agbu, her father and others working with them submitted more than $11 million in fraudulent claims from Ibon and Bonfee to Medicare for expensive, high-end power wheelchairs, hospital beds, braces and other DME that customers either did not need or receive. 

According to evidence at trial, Agbu and her father purchased the power wheelchairs wholesale for approximately $900 per wheelchair, but they billed the wheelchairs to Medicare at $4,000 to $5,000 per power wheelchair.  These power wheelchairs were a type of medical equipment of last resort reserved for people with severe mobility limitations and could cause harm if the wheelchairs were supplied to people who did not have a legitimate medical need for them.

Agbu and her father paid kickbacks to street-level patient recruiters or “marketers” who would find senior citizens with Medicare and Medi-Cal benefits and cajole the seniors into agreeing to accept power wheelchairs and other DME that the seniors did not need.  The seniors were directed to doctors who received cash kickbacks of $200 to $1,000 to write fraudulent prescriptions and other Medicare-specific documents conspirators used at Bonfee and Ibon to submit fraudulent claims to Medicare. 

As a result of this scheme, between July 2005 and February 2011, Agbu, her father and those working with them submitted approximately $11,094,918 million in fraudulent claims to Medicare and received approximately $5,788,725 on those claims.

At sentencing, scheduled for Oct. 17, 2013, Agbu faces a maximum penalty of 10 years in prison for each count of conviction.  Agbu’s father is scheduled for sentencing on Aug. 15, 2013.  Agbu’s other co-defendants – Dr. Juan Van Putten, Dr. Emmanuel Ayodele, Alejandro Maciel and Candalaira Estrada – have each pleaded guilty to Medicare fraud charges and are scheduled for sentencing in September and October 2013.

The case is being investigated by the FBI, HHS-OIG and the California Department of Justice.  The case is being prosecuted by Trial Attorneys Jonathan T. Baum and Alexander Porter of the Criminal Division’s Fraud Section, with assistance from Trial Attorney William Kanellis. 

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

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.

A greater Detroit-area physical therapist assistant – who was also an owner of a home health agency and a patient recruiter – pleaded guilty today for his role in a $22 million home health care 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 Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the Chicago Regional Office of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG) made the announcement.

Syed Shah, 51, of West Bloomfield, Mich., pleaded guilty before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  At sentencing, scheduled for Nov. 19, 2013, Shah faces a maximum penalty of 10 years in prison.

According to information contained in plea documents, Shah, a licensed physical therapist assistant, admitted that beginning in or around October 2008 and continuing through approximately September 2012, he conspired with others to commit health care fraud by billing Medicare for home health care services that were not actually rendered and/or not medically necessary.  Shah admitted that he began working in approximately October 2008 for Prestige Home Health Services, Inc., a home health agency located in Troy, Mich., owned by alleged co-conspirators.  His co-conspirators at Prestige paid him kickbacks in exchange for his obtaining the information of Medicare beneficiaries, which the co-conspirators then used to bill Medicare for services that were not provided and/or were not medically necessary.  Shah and his co-conspirators then created fictitious therapy files appearing to document physical therapy services provided to Medicare beneficiaries, when in fact no such services had been provided and/or were not medically necessary. Shah admitted that his role in creating the fictitious therapy files was to sign documents and progress notes indicating he had provided physical therapy services to particular Medicare beneficiaries, when in fact he had not.  Shah admitted to knowing that the documents he falsified were used to support false claims billed to Medicare by his co-conspirators at Prestige.

In his plea, Shah also acknowledged that in approximately August 2009, he became an owner of Royal Home Health Care, Inc., a home health agency located in Troy, Mich., along with other co-conspirators.  He and his co-conspirators at Royal billed Medicare for home health visits that never occurred and were not medically necessary.  Shah and his co-conspirators paid kickbacks to Shah and other patient recruiters in exchange for Medicare beneficiary information, which was then used to bill Medicare for services that were not provided and/or were not medically necessary.  Shah admitted that he and his co-conspirators created fictitious therapy files, reflecting services that had not been provided and/or were not medically necessary.  He knew the documents he falsified would be used to support false claims by Royal to Medicare for home health services.

Shah submitted or caused the submission of claims to Medicare for services that were not medically necessary and/or not provided, which in turn caused Medicare to pay approximately $5,925,843. According to the indictment, two additional home health agencies were involved in the alleged conspiracy. In total, the four home health agencies at the center of the indictment received more than $22 million from the Medicare program.

This case was investigated by the FBI, HHS-OIG and IRS Criminal Investigation, brought as part of the Medicare Fraud Strike Force, and supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. It is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 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.

A former San Francisco investment banker and his college friend were sentenced yesterday to 16 months in prison for their roles in an insider trading scheme involving two impending corporate mergers, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Melinda Haag of the Northern District of California.

Jauyo Lee, or “Jason Lee,” 29, of Palo Alto, Calif., and Victor Chen, 29, of Sunnyvale, Calif., both pleaded guilty on April 16, 2013, to one count of conspiracy to commit securities fraud and one count of securities fraud. 

According to the plea agreements, Lee, who worked as an investment banker in the San Francisco office of Leerink Swann LLC, disclosed inside information to Chen, a friend from college, about two impending mergers involving Leerink clients.  Between Aug. 26, 2009, and Sept. 5, 2009, Lee disclosed inside information to Chen about the merger of Leerink’s client, Syneron Medical Ltd., and Candela Corporation, a medical device company publicly traded on the NASDAQ stock market.  Chen used the inside information to buy shares of Candela.  After the merger was announced, Candela’s stock price increased more than 40 percent and Chen sold his shares for a gain of approximately $62,589. 

Between June 1 and June 13 of 2010, Lee also provided Chen with inside information about the impending merger of Somanetics Corporation and a subsidiary of Covidien plc.  Leerink was the lead financial advisor to Somanetics, which also was publicly traded on the NASDAQ.  Chen used the inside information to buy shares and options of Somanetics.  Following the merger announcement, the price of Somanetics stock increased more than 30 percent and Chen ultimately realized a profit of approximately $547,510.

Lee and Chen were charged in a criminal information on March 21, 2013.  

The sentence was handed down by U.S. District Judge Richard G. Seeborg of the Northern District of California.  Judge Seeborg also sentenced Lee and Chen each to a two-year period of supervised release and ordered that restitution and forfeiture be considered at a subsequent hearing.  Chen paid $610,099 in forfeiture prior to sentencing. 

This case was investigated by the FBI with substantial assistance from the Chicago Regional Office of the U.S. Securities and Exchange Commission. It is being prosecuted by Assistant U.S. Attorney Robert S. Leach and Trial Attorney Brian R. Young of the Criminal Division's Fraud Section with the assistance of Rayneisha Booth and Mary Mallory.  

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

The Justice Department announced today that a federal district judge in Charleston, S.C. permanently barred Stacy Middleton from preparing federal income tax returns for others.

According to the government’s complaint, Middleton and a second defendant, George Jenkins, prepared federal income tax returns in Charleston through a business named MBM Tax and Accounting Services LLC.  As alleged, Middleton prepared returns for his clients that unlawfully understated his clients’ income tax liabilities and overstated his clients’ refunds through a variety of schemes.  The complaint alleged that Middleton prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits.  The complaint further alleged that Middleton created fraudulent copies of Form 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of his clients.  According to the complaint, the Internal Revenue Service (IRS) examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their client’s tax liability.  According to the complaint, the IRS estimated that the U.S. Treasury lost as much as $55 million in revenue on account of Middleton’s and Jenkins’ misconduct.

Middleton consented to the entry of the injunction.  The government’s claims remain pending against Jenkins and will be addressed in further court proceedings.

In the past 10 years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available at www.justice.gov/tax/taxpress2013.htm.

Related Materials:

United States v. Stacy Middleton, et al.
Permanent Injunction (PDF)
 

Two shipping firms based in Germany and Cyprus were sentenced today in federal court in Newark, N.J., to pay a $10.4 million penalty for felony obstruction of justice charges and violating the Act to Prevent Pollution from Ships related to the deliberate concealment of vessel pollution from four ships that visited ports in New Jersey, Delaware and Northern California, the U.S. Attorney’s Offices in New Jersey and Delaware, the U.S. Department of Justice Environment and Natural Resources Division and the U.S. Coast Guard announced.
      
Columbia Shipmanagement (Deutschland) GmbH (CSM-D), a German corporation, and Columbia Shipmanagement Ltd. (CSM-CY), a Cypriot company, were sentenced to pay a $10.4 million criminal penalty, $2.6 million of which will be directed to the National Fish and Wildlife Foundation to fund community service projects selected to help restore the coastal environment of New Jersey and Delaware hit by Hurricane Sandy.  The remaining $7.8 million is designated as a criminal fine.  In addition, the companies were placed on four years of probation.  During probation, the companies will be subject to the terms of an environmental compliance plan that requires outside audits by an independent company and oversight by a court appointed monitor.  The shipping firms admitted that four of their ships - three oil tankers and one container ship - had intentionally bypassed required pollution prevention equipment and falsified the oil record book, a required log regularly inspected by the U.S. Coast Guard.  The case is the largest vessel pollution settlement in either New Jersey or Delaware. 

The companies previously pleaded guilty before U.S. District Judge Susan D. Wigenton on March 21, 2013, to six counts involving three vessels in New Jersey and four counts involving one ship in Delaware.  The counts consist of violations of the Act to Prevent Pollution from Ships for failing to maintain an accurate oil record book, obstruction of justice and making false statements.

According to documents filed in this case and statements made in court:

The investigation into the M/T King Emerald was launched on May 7, 2012, after several crew members provided cell phone photos and other evidence to Coast Guard officers conducting a routine inspection.  The King Emerald was engaged in various types of illegal discharges of bilge waste dating back to at least 2010.  The defendants admitted that illegal discharges of both sludge and oily bilge waste were discharged at night off the coast of Central America, including a discharge within the Exclusive Economic Zone of Costa Rica where a national park is located.  The ship’s second engineer pleaded guilty previously and was sentenced in Newark on April 3, 2013.

The Delaware investigation began in October 2012 after several crew members of the M/T Nordic Passat provided the Coast Guard with a thumb drive containing photographs and video showing how illegal discharges had been sent overboard through the ship’s sewage system.  They also alleged that sludge had been put into the ship’s cargo tanks and that logs showing sludge had been incinerated onboard had been falsified.  The charges involving the M/V Cape Maas stem from a whistleblower report to the Coast Guard when the ship visited the port in San Francisco.  The whistleblower provided a video showing the operation of the oily water separator pumping overboard without the use of the oil content monitor to detect and prevent oil from being illegally discharged.
  
Violations on a fourth ship, the M/T Cape Taft, which was anchored in New York waters and destined for New Jersey, were uncovered just weeks before the March plea, after the ship disclosed problems to CSM-D.  An internal investigation revealed that the ship’s oily water separator had been used improperly for some time.  Instead of sensing a sample of overboard discharges, it was instead flushed with fresh water by the crew.  The ship’s oil record book was revised by CSM-D to reveal 16 instances where it was false.  The defendants cooperated with the investigation and provided the government with video replays of the oil content monitor showing when the crew had “tricked” the sensor with fresh water.

This prosecution was made possible through the combined efforts of the U.S. Coast Guard Districts 1, 5 and 11; Coast Guard Sectors New York, Delaware Bay, and San Francisco; Coast Guard Investigative Service; Coast Guard Office of Maritime and International Law; and Coast Guard Office of Investigation and Analysis.

The United States is represented by Kathleen P. O’Leary, Assistant U.S. Attorney in New Jersey; Richard Udell, Senior Counsel, and Stephen Da Ponte, Trial Attorney, of the Environmental Crimes Section of the Department of Justice Environment and Natural Resources Division; and Edmond Falgowski, Assistant U.S. Attorney in Delaware.  Assistance was also provided by the U.S. Attorney’s Office for the Northern District of California.

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that the San Antonio Water System (SAWS) has agreed to make significant upgrades to reduce overflows from its sewer system and pay a $2.6 million civil penalty to resolve Clean Water Act (CWA) violations stemming from illegal discharges of raw sewage.  The state of Texas is a co-plaintiff in this case and will receive half of the civil penalty.

When wastewater systems overflow, they can release raw sewage and other pollutants into local waterways, threatening water quality and contributing to beach closures and disease outbreaks. To come into compliance with the CWA, including remedial measures taken during the parties’ negotiations and the comprehensive measures required under the settlement, SAWS is expected to spend $1.1 billion to achieve compliance. 

“This settlement will help protect San Antonio residents from exposure to raw sewage by committing San Antonio to make immediate, badly-needed repairs to its sewers as well as long-term improvements in the operation, management and maintenance of its system,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “These improvements will benefit well over a million people living in Bexar County, with a special focus on reducing sewage overflows in communities who have suffered a historical pollution burden.”
 
“EPA is working with cities across the country to protect the nation’s waters from raw sewage overflows that can threaten public health,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “The improvements and upgrades agreed to in this settlement will protect the people of San Antonio and the surrounding communities by reducing raw sewage in the water.”

The Justice Department, on behalf of EPA, filed a complaint against SAWS alleging that between 2006 and 2012, SAWS had approximately 2,200 illegal overflows from its sanitary sewer system that discharged approximately 23 million gallons of raw sewage into local waterways in violation of its CWA discharge permit. The cause of these overflows stems largely from system capacity problems that result in the sewer system being overwhelmed by rainfall, causing it to discharge untreated sewage combined with storm water into local waterways. EPA confirmed these violations during a 2011 field inspection and record review.

As part of the settlement, SAWS will conduct system-wide assessments, identify and implement remedial measures to address problems that cause or contribute to illegal discharges found during those assessments, and initiate a capacity management, operation and maintenance program to proactively reduce sanitary sewer overflows. The plan must be fully implemented by calendar year 2025. In the early years of the CD, SAWS will take actions that will result in reduction of sanitary sewer overflows.  In addition, SAWS will conduct water quality monitoring to identify potential additional sources of bacterial contamination that could be contributing to impairment of the Upper San Antonio River.

 SAWS wastewater treatment plant serves approximately 1.3 million people in Bexar County, which includes the city of San Antonio. Its wastewater collection and treatment system consists of approximately 5,100 miles of gravity sewer lines, including approximately 100,000 manholes and 170 lift stations.

 Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s national top priorities. EPA’s initiative focuses on reducing sewer overflows, which can present a significant threat to human health and the environment. 
The settlement will be filed in the U.S. District Court for the Western District of Texas, San Antonio Division and is subject to a 30-day public comment period before final court approval of the consent decree. Once the consent decree has been approved and entered, SAWS will have 60 days to pay the civil penalty to the United States and the state of Texas. The proposed consent decree can be viewed online at www.justice.gov/enrd/Consent_Decrees.html.
More information about the settlement: http://www2.epa.gov/enforcement/san-antonio-water-system-saws-settlement

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

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

The Justice Department announced today that it has reached a settlement with Louisiana Tech University and the Board of Supervisors for the University of Louisiana System to remedy alleged violations of the Americans with Disabilities Act (ADA).  The settlement resolves allegations that the University violated the ADA by using a version of an online learning product that was inaccessible to a blind student.  The student’s lack of access to the course materials persisted nearly one month into the University quarter, at which point the student was so far behind in his coursework that he felt compelled to withdraw from the course.  The settlement also resolves allegations that in a subsequent course, the same student was not provided accessible course materials for in-class discussion or exam preparation in a timely manner.

Under the settlement agreement, the university will adopt a number of disability-related policies, including the requirement to deploy learning technology, web pages and course content that is accessible in accordance with the Web Content Accessibility Guidelines (WCAG) 2.0 Level AA standard in the university setting.  The university will also make existing web pages and materials created since 2010 accessible.  The agreement also requires the university to train its instructors and administrators on the requirements of the ADA, and secured a total of $23,543 in damages for the student from the university and the Board.  

“Emerging technologies, including internet-based learning platforms, are changing the way we learn, and we need to ensure that people with disabilities are not excluded or left behind,” said Eve L. Hill, Deputy Assistant Attorney General for the Civil Rights Division.

“This a positive move by Louisiana Tech University and the Board of Supervisors.  Their efforts reflect a commitment to ensuring that all individuals with disabilities have full access to the University,” said Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana.

The ADA protects individuals with disabilities from discrimination in the services, programs or activities of state and local government entities.  Under Title II of the ADA, state and local governments must afford individuals with disabilities an equal opportunity to participate in or benefit from aids, benefits or services provided.  For more information about the ADA, call the Department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov.

The Justice Department announced today that it has asked a federal court to bar Ronald Manis of Carbondale, Ill., from preparing tax returns for others.  The civil injunction suit, filed in the U.S. District Court for the Southern District of Illinois, alleges that Manis routinely prepares federal tax returns for individuals and corporations improperly claiming deductions that result in his customers understating their federal tax liabilities.

The government complaint also alleges that Manis  prepares federal tax returns for his customers, claiming  as business expenses his customers’ non-deductible personal expenses, including the cost of lavish personal vacations.  According to the government complaint, Manis engages in this conduct “in a misguided attempt to mint his reputation as a uniquely skilled and knowledgeable tax return preparer.”

In September 2011, Manis pleaded guilty to willfully failing to file his own federal income tax returns for 2003, 2004, 2005 and 2006, and was initially sentenced to probation.  In May 2012, his probation was revoked and he was sentenced to three months in prison. According to the government complaint, Manis was released from federal prison on July 20, 2013.

The government suit also alleges that Manis falsely represented himself as a fully licensed Certified Public Accountant to customers and the Internal Revenue Service (IRS) and that Manis illegally used an electronic filing number belonging to a friend to electronically file customers’ returns after the IRS denied Manis’s application for an electronic filing number.

 In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters.  Information about these cases is available on the Justice Department's website.

Related Materials:

United States v. Ronald Manis
Complaint for Permanent Injunction and Other Relief (PDF)
 

The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of New York announced today that they, along with plaintiff adult home residents, entered into a comprehensive settlement agreement with the state of New York under the Americans with Disabilities Act (ADA).  The settlement agreement will provide relief to thousands of people with mental illness unnecessarily segregated in 23 adult homes in New York City.  Adult homes are institutional, segregated settings that house large numbers of people with mental illness. 

Under the settlement agreement, New York will offer supported housing to people with mental illness currently residing in adult homes.  Supported housing is apartments scattered throughout  the community for which the state provides rental assistance and housing-related support services.  Supported housing residents have access to community-based services and supports that promote their inclusion, independence, and full participation in community life.  The settlement agreement has been filed with the U.S. District Court for the Eastern District of New York for the court’s approval. 

The Supreme Court made clear in its landmark decision Olmstead v. L.C, that people with disabilities have a civil right under the ADA to receive services in the most integrated setting appropriate to their needs.  The state worked cooperatively with the department and private plaintiffs to negotiate a settlement that resolves the allegations that the New York mental health service system violates the ADA by relying on large, institutional adult homes instead of supported housing units that are scattered throughout the community.  A state is responsible for segregation when it designs and implements a system that unnecessarily relies on institutional facilities, regardless of whether they are privately owned and operated.

“Today’s settlement agreement reaffirms the right of people with disabilities to live independently and participate in all aspects of community life,” said Eve L. Hill, Deputy Assistant Attorney General for the Civil Rights Division.  “This agreement creates opportunities for thousands of New Yorkers with mental illness to participate fully in community life, enriching local communities and ending the stigmatization of institutional life.  Governor Andrew Cuomo played a crucial role in making this agreement a reality, and I commend his leadership.”

Over the next five years, New York will provide scattered-site supported housing to at least 2,000, and potentially more than 4,000, adult home residents.  New York has also committed to providing people moving to supported housing with the community-based services and supports that will allow them to thrive in the community.  The agreement also will ensure that adult home residents have the information they need to make an informed choice about where to live.  If they choose to move to supported housing, they will participate in a person-centered, transition planning process.  An independent reviewer with extensive experience in mental health systems will monitor the state’s compliance with the agreement.

Because of this agreement, people like Ilona Spiegel, one of the named plaintiffs, will get the opportunity to live independently and “become emancipated” after 15 years in an adult home.  Spiegel lived independently in her own apartment until she received psychiatric treatment in a hospital in 1998.  When she left the hospital, her only discharge option was to move into an adult home.  In the adult home, Spiegel shares a small room with a roommate, has scheduled mealtimes and no opportunity to cook for herself, has little privacy as staff have entered her room without permission and finds living in the adult home extremely isolating.  Spiegel has said that she cannot wait to live in her own apartment again and have autonomy over her life, including doing her own cooking, cleaning and shopping, have personal privacy in her home, and be free from intrusion into her personal belongings.

Loretta E. Lynch, U.S. Attorney for the Eastern District of New York stated: “With this agreement, thousands of New Yorkers will be able to leave the shadow of institutional living and instead live in and contribute to their communities.  Because of this cooperative effort, their lives will be immeasurably better and our communities all the richer for their presence.”

The individual plaintiff adult home residents, on behalf of themselves and a class of adult home residents with mental illness, are represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP; Disability Advocates Inc.; Bazelon Center for Mental Health Law; New York Lawyers for the Public Interest; MFY Legal Services Inc.; and Urban Justice Center.

The Civil Rights Division enforces the ADA, which authorizes the attorney general to investigate whether a state is serving individuals with disabilities in the most integrated settings appropriate to their needs. Visit www.justice.gov/crt to learn more about the Olmstead decision, the ADA, and other laws enforced by the Justice Department’s Civil Rights Division.

This agreement is due to the efforts of the following Civil Rights Division and U.S. Attorney’s Office staff: Alison Barkoff, Special Counsel for Olmstead Enforcement; Rebecca B. Bond, Chief of the Disability Rights Section; Sheila Foran, Special Legal Counsel; Amanda Maisels and Nicholas Lee, Trial Attorneys; Lance Simon, Contractor; and Michael J. Goldberger, Chief of Civil Rights in the Civil Division of the U.S. Attorney’s Office for the Eastern District of New York.

The Department of Justice has favorably resolved three actions it filed in Arizona, Pennsylvania and South Carolina, to seize and condemn dietary supplements containing the unsafe food additive 1,3-dimethylamylamine, commonly known as DMAA, an amphetamine-like stimulant that has been linked to at least 86 adverse health events.  According to the U.S. Food and Drug Administration (FDA) and federal law, the sale of DMAA in interstate commerce is illegal, and consumers should not buy or use dietary supplements containing DMAA.

 
“Although DMAA is sometimes found in seemingly ordinary, over-the-counter dietary supplements, it has been linked to serious health problems,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The FDA and the Department of Justice are dedicated to protecting Americans by getting products containing DMAA off the shelves.”

 
In June, in coordination with the FDA, the U.S. Attorney’s Office for the Western District of Pennsylvania, the U.S. Attorney’s Office for the District of South Carolina and the Department of Justice’s Consumer Protection Branch filed actions in Pittsburgh; Anderson, S.C.; and Phoenix, to seize and condemn three caches of DMAA-containing products, located in warehouses owned by General Nutrition Centers Inc. (GNC).  After the seizure actions were filed, GNC voluntarily agreed to destroy all DMAA-containing products remaining at the three warehouses.  Subsequently, FDA personnel witnessed the destruction of DMAA-containing products located in the Pennsylvania and Arizona warehouses, and the FDA has made arrangements to witness the destruction of these products in the South Carolina warehouse.  As a result of these efforts, the government has dismissed all three seizure actions.

 
In a related matter, the manufacturer of the dietary supplements containing DMAA, Dallas-based USPlabs LLC, recently destroyed all DMAA-containing products in its possession.  USPlabs, along with at least 10 other manufacturers of DMAA-containing products, has agreed to stop producing products containing DMAA. 

 
The Department of Defense maintains a list of products containing DMAA that may still be in the marketplace.  The list is available at http://hprc-online.org/dietary-supplements/files/DMAA_List.pdf.

A former senior executive of ArthroCare Corp., a publicly traded medical device company based in Austin, Texas, pleaded guilty for his role in a scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings, announced Acting Assistant Attorney Mythili Raman of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman of the Western District of Texas. The plea was taken under seal on June 24, 2013, and unsealed late yesterday.

John Raffle, 45, of Austin, pleaded guilty before U.S. Magistrate Judge Mark Lane in Austin to conspiracy to commit securities, mail and wire fraud and two false statements violations.  Raffle was the senior vice president of Strategic Business Units at ArthroCare, overseeing all sales and marketing staff at the company.  Raffle admitted that he and other co-conspirators falsely inflated ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving ArthroCare’s distributors and that he and other co-conspirators caused ArthroCare to file a Form 10-K for 2007 and Form 10-Q for the first quarter of 2008 with the U.S. Securities and Exchange Commission that materially misrepresented ArthroCare’s quarterly and annual sales, revenues, expenses and earnings.  As part of his plea, Raffle agreed that his conduct and the conduct of his co-conspirators caused more than $400 million in losses to shareholders.

According to court documents, Raffle and others determined the type and amount of product to be shipped to distributors – notably ArthroCare’s largest distributor, DiscoCare Inc. –  based on ArthroCare’s need to meet sales forecasts, rather than the distributors’ actual orders. Raffle and others then caused ArthroCare to “park” millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter. ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.

According to the superseding information, DiscoCare agreed to accept shipment of approximately $37 million of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to falsely inflate its revenue by tens of millions of dollars.  To conceal the fact that DiscoCare owed ArthroCare a substantial amount of money on the unused inventory, Raffle and others caused ArthroCare to acquire DiscoCare on Dec. 31, 2007.

According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock.  On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share.  The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.

Raffle faces a maximum prison sentence of five years in prison for each charge.  A sentencing date has yet to be scheduled.  Raffle’s co-defendant David Applegate pleaded guilty on May 9, 2013.  ArthroCare’s Chief Executive Officer, Michael Baker, and Chief Financial Officer, Michael Gluk, were indicted as part of the same alleged securities fraud scheme on July 16, 2013.  An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.

This case was investigated by the FBI’s Austin office.  The case is being prosecuted by Deputy Chief Benjamin D. Singer and Trial Attorneys Henry P. Van Dyck and William Chang of the Criminal Division’s Fraud Section.  The Department recognizes the substantial assistance of the U.S. Securities and Exchange Commission.

The Justice Department announced today that it has filed a lawsuit against the state of Florida alleging the state is in violation of the Americans with Disabilities Act (ADA) in its administration of its service system for children with significant medical needs, resulting in nearly 200 children with disabilities being unnecessarily segregated in nursing facilities when they could be served in their family homes or other community-based settings.  The lawsuit, filed in federal district court in Fort Lauderdale, Fla., further alleges that the state’s policies and practices place other children with significant medical needs in the community at serious risk of institutionalization in nursing facilities.  The ADA and the Supreme Court’s decision in Olmstead v. L.C. require states to eliminate unnecessary segregation of persons with disabilities.  The department’s complaint seeks declaratory and injunctive relief, as well as compensatory damages for affected children.

In September of last year, the department issued an extensive findings letter, notifying the state that it is in violation of the ADA.  The letter found that the state’s failure to provide access to necessary community services and supports was leading to children with significant medical needs being unnecessarily institutionalized in, or being placed at serious risk of entering nursing facilities.  The letter identified the numerous ways in which state policies and practices have limited the availability of access to medically necessary in-home services for children with significant medical needs.  Additionally, the state’s screening and transition planning processes have been plagued with deficiencies.  Some children have spent years in a nursing facility before receiving screening required under federal law to determine whether they actually need to be in a nursing facility.

As a result of the state’s actions and inaction, the state has forced some families to face the cruel choice of fearing for their child’s life at home or placing their child in a nursing facility.  In one instance, the state cut one child’s in-home health care in half.  Her family could not safely provide care themselves to make up for this reduction in services, and they felt they had no choice but to place her in a nursing home.  Another child who entered a nursing facility as a young child spent almost six years in a facility before the state completed her federally mandated screening.

“Florida must ensure that children with significant medical needs are not isolated in nursing facilities, away from their families and communities,” said Eve Hill, Deputy Assistant Attorney General for the Civil Rights Division.  “Children have a right to grow up with their families, among their friends and in their own communities.  This is the promise of the ADA’s integration mandate as articulated by the Supreme Court in Olmstead.  The violations the department has identified are serious, systemic and ongoing and require comprehensive relief for these children and their families.” 

Since late 2012, the department has met with Florida officials on numerous occasions in an attempt to resolve the violations identified in the findings letter cooperatively.  While the state has altered some policies that have contributed to the unnecessary institutionalization of children, ongoing violations remain.  Nearly two hundred children remain in nursing facilities.  Deficient transition planning processes, lengthy waiting lists for community-based services and a lack of sufficient community-based alternatives persist.  The department has therefore determined that judicial action is necessary to ensure that the civil rights of Florida’s children are protected.

The ADA prohibits discrimination on the basis of disability by public entities, including state and local governments.    The ADA requires public entities to ensure that individuals with disabilities are provided services in the most integrated setting appropriate to their needs. The department’s Civil Rights Division enforces the ADA, which authorizes the Attorney General to investigate allegations of discrimination based upon disability and to conduct compliance reviews regarding the programs and services offered by public entities. Visit www.justice.gov/crt to learn more about the ADA and other laws enforced by the Civil Rights Division.   For more information on the Civil Rights Division’s Olmstead Enforcement, please visit: www.ada.gov/olmstead/index.htm .

The Department of Justice announced today the filing of a lawsuit against the Puerto Rico Police Department  PRPD) alleging that the PRPD discriminated against Yolanda Carrasquillo on the basis of race, color and religion in violation of Title VII of the Civil Rights Act of 1964, as amended (Title VII).  Title VII is a federal statute that prohibits employment discrimination on the basis of race, color, national origin, sex and religion.

The suit, filed in the U.S. District Court for the District of Puerto Rico, alleges that the PRPD discriminated against Carrasquillo by subjecting her to daily verbal harassment about her race, color and religion over a period of approximately three years beginning in 2007 and ending in 2010.  According to the complaint,. Carrasquillo, a sworn police officer, was subjected to a hostile work environment because of the discriminatory actions of a civilian co-worker who regularly used racial and other offensive slurs directed towards Carrasquillo, and other black or dark-skinned employees, that disparaged her race, color and Christian faith.  The United States has alleged that the co-worker’s discriminatory conduct persisted on a daily basis and over a number of years, often in the presence of Carrasquillo’s other co-workers and numerous supervisory police officers at the PRPD. 

Despite numerous timely complaints about the harassment by Carrasquillo to her supervisors and other PRPD officials, the PRPD failed to take any meaningful steps to stop the harassment or discipline the harasser.  The complaint alleges that the PRPD failed to follow its anti-harassment policy which provides for zero tolerance for harassment and specifically charges supervisors with preventing and immediately correcting acts of discrimination of which they become aware through either a report made to them or personal observation.

Through this lawsuit, the United States is seeking declaratory and injunctive relief requiring the PRPD to develop and implement policies that would prevent its employees from being subjected to harassment based upon race, color or religion as well as monetary damages for Carrasquillo as compensation for the PRPD’s discriminatory actions. 

Carrasquillo originally filed a charge of race, color and religious discrimination with the Equal Employment Opportunity Commission (EEOC), which investigated the matter, determined that there was reasonable cause to believe that discrimination had occurred, and referred the matter to the Department of Justice.

“All workers deserve the freedom to go to work each day without fear of harassment because of their race, color or religion.  Public employers should set an example for others by upholding the law and taking prompt and effective action to stop discriminatory harassment,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division.  “The Department of Justice will vigorously pursue such violations of Title VII.”

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

Detroit-area resident Javed Rehman pleaded guilty today for his role in a $13.8 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Chicago Regional Office for the U.S. Department of Health and Human Service’s Office of Inspector General (HHS-OIG).

Rehman, 50, of Farmington Hills, Mich., pleaded guilty before U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  At sentencing, scheduled for Nov. 7, 2013, Rehman faces a maximum penalty of 10 years in prison.

 
According to information contained in plea documents, 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 Oct. 30, 2013. Ahmad pleaded guilty on Aug. 28, 2012, to one count of conspiracy to commit health care fraud and is scheduled for sentencing on Oct. 29, 2013.

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 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.

A former owner and operator of two Florida-based airline fuel supply service companies made his initial appearance today in the U.S. District Court for the Southern District of Florida in West Palm Beach on charges of participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.

 
Sean E. Wagner was arrested on July 19, 2013, in Weston, Fla., on a one-count criminal complaint to commit wire fraud and honest services fraud relating to a scheme to defraud Ryan, a charter airline company based in Rockford, Ill.  At today’s hearing, the department said that Wagner was arrested after there were indications that he was a flight risk.

The criminal complaint alleges that Wagner participated in a conspiracy to defraud Ryan by making kickback payments to Wayne Kepple, the former vice president of ground operations for Ryan in charge of contracting with providers of goods and services on behalf of the company.  In exchange, Kepple awarded business to Wagner’s fuel supply service companies. According to the criminal complaint, from at least as early as December 2005 through at least August 2009, Wagner, his companies, and others made kickback payments totaling more than $200,000, in the form of checks, wire transfers, gift cards and cash, to Kepple while working at Ryan.

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

 
“The Antitrust Division will take enforcement action against those who subvert the competitive process by trading contracts for kickbacks, especially where the U.S. government is being victimized,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will hold accountable those who seek to defraud the government and U.S. taxpayers.”

Wagner is charged with one count of conspiracy to commit wire fraud and honest services fraud, which carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

As a result of this ongoing investigation, four individuals have pleaded guilty to date. Three of the individuals have been ordered to serve sentences ranging from 16 to 24 months in prison and to pay more than $220,000 in restitution. The fourth individual, Wayne Kepple, pleaded guilty and is awaiting sentencing.

This charge is the result of an investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.  Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.

United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that JUAN MANGLONA AYUYU, Senator for Rota in the Northern Marianas Commonwealth Legislature, pleaded guilty today to federal charges in the U.S. District Court on Saipan.           

In a written plea agreement, AYUYU pleaded guilty to Count One of the indictment in Criminal Case Number 1:12-cr-00036-1 (Conspiracy to Violate the Endangered Species Act)  and Count One of the indictment in Criminal Case Number 1:12-cr-00039 (Conspiracy to Obstruct an Official Proceeding).  In the plea agreement and at the plea hearing, AYUYU admitted that in October 2010 he conspired with his legislative assistant, Ryan James Inos Manglona, to transport eight federally protected Mariana fruit bats, or Fanihi, from Rota to Saipan on board a Freedom Air flight.  AYUYU also admitted that after the bats were discovered by the Transportation Security Administration (TSA), he conspired in November 2010 to obstruct the ensuing federal grand jury investigation by asking Ryan Manglona to lie to the grand jury about their involvement.  (Ryan Manglona previously pleaded guilty to perjury before the grand jury and conspiracy to violate the Endangered Species and Lacey Acts.)   

In AYUYU’s plea agreement, the parties agreed -- subject to the Court’s approval -- that AYUYU will receive a sentence of between thirty-three and forty-one months in prison.  The United States also agreed to dismiss the remaining charges after AYUYU is sentenced.  Chief Judge Ramona V. Manglona set AYUYU’s sentencing for November 8, 2013.  

The case was investigated by agents of the U.S. Fish and Wildlife Service and the CNMI Division of Fish & Wildlife, an agency under the Department of Lands and Natural Resources.  The prosecution is being handled by Assistant U.S. Attorneys Garth R. Backe and Ross K. Naughton.

The government has intervened in a whistleblower lawsuit against A Plus Home Health Care, Inc., a home health care company in Fort Lauderdale, Fla., and its owner, Tracy Nemerofsky, the Justice Department announced today.  The government alleges that A Plus offered referring physicians’ spouses sham marketing positions with the company to induce the physicians to refer Medicare patients for home health care services.

 “Kickback schemes subvert the home health care market place and undermine the integrity of consumer choice,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “We will continue to hold accountable those who abuse our public health care programs at the expense of patients and taxpayers.”  

The government alleges that, beginning in 2006, A Plus Home Health Care engaged in a scheme to increase Medicare referrals in the heavily saturated home health care market of southern Fla.  The company allegedly hired at least seven physicians’ spouses and one physician’s boyfriend to perform marketing duties but required them to perform few, if any, actual job duties.  To cover up the scheme, the  government alleges, Ms. Nemerofsky generated sham personnel files, which included lists of job duties the spouses and boyfriend did not perform and performance reviews of job functions they did not complete, to give the false impression that the spouses and boyfriend were legitimate employees.

The government’s complaint also alleges that the spouses’ and boyfriend’s salaries were an inducement and reward for the physicians’ referrals of Medicare patients to A Plus Home Health Care.  In fact, the government alleges the physicians’ referrals to A Plus Home Health Care spiked dramatically when the spouses and boyfriend began receiving paychecks from
A Plus, allowing A Plus to receive millions of dollars in Medicare reimbursements.  For example, in 2005, before A Plus hired any referring physicians’ spouses, A Plus was allegedly reimbursed $1.1 million from Medicare for home health care services.  Conversely, in 2011, when A Plus was paying salaries to the seven referring physicians’ spouses and one physician’s boyfriend, A Plus’ Medicare reimbursement allegedly reached an all-time high of $6.6 million. 

“We will not relent in our efforts to combat fraudulent kickback schemes, such as the no-show jobs scheme used in this case, and return dollars to the Medicare program,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “These schemes are classic examples of the fraud and abuse that plague and threaten the financial stability of Medicare, which provides much needed services to the sick and elderly.” 
 
According to an August 2012 Department of Health and Human Services’ Office of Inspector General report, home health services are particularly vulnerable to fraud, waste and abuse.  In 2010, Medicare paid a reported $19.5 billion to 11,203 home health care agencies for services provided to 3.4 million beneficiaries. 

The lawsuit was filed by a former A Plus Home Health Care director of development, William Guthrie, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government and receive a share of any recovery.  The act also authorizes the government to intervene in and assume primary responsibility for litigating the lawsuit, as the government has done in this case.  The government previously settled with two of the couples that accepted payments from A Plus Home Health Care. 

The government’s intervention in this lawsuit illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and 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 $14.7 billion through False Claims Act cases, with more than $10.7 billion of that amount recovered in cases involving fraud against federal health care programs.

The A Plus Home Health Care investigation reflects a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Florida, the Department of Health and Human Services’ Office of Inspector General, and the Federal Bureau of Investigation. 

The lawsuit is U.S. ex rel. Guthrie v. A Plus Home Health Care, Inc., 12 CV 60629 (S.D. Fla.).  The claims asserted against the defendants are allegations only, and there has been no determination of liability.

The Justice Department and Internal Revenue Service (IRS) announced that Gurmail Singh, of Richmond Hill, N.Y., was arrested yesterday following his indictment on July 11, 2013, for multiple tax crimes.  The indictment was unsealed yesterday following his arrest.

According to the indictment, Singh owned Fancy and Vicky Construction Co. Inc., a construction company in Richmond Hill. As alleged in the indictment, Singh used check-cashing services to cash more than $2.9 million of checks paid to his construction company for services between 2006 and 2008.  He concealed his check-cashing activities from his tax return preparers, and this income was not included as gross income on the company’s tax returns.  Singh also diverted cash receipts earned by his companies for his own personal use.

The indictment alleges that Singh filed false 2006 and 2007 corporate income tax returns for Fancy and Vicky Construction, failed to file a 2008 corporate income tax return for Fancy and Vicky Construction and failed to file individual income tax returns for 2007 and 2008.  Singh faces a potential maximum sentence of nine years in prison and a potential fine of up to $800,000.

A trial date has not been scheduled. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS–Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Mark Kotila and Jeffrey Bender, who are prosecuting the case.

The Justice Department announced today an agreement with the town of Poestenkill, N.Y., to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA). 

“Access to a town’s government is the most basic of civil rights.  It is the gateway to programs, services and activities that should be afforded to all people in a community, including those with disabilities,” said Eve L. Hill, Deputy Assistant Attorney General for the Civil Rights Division.  “Today the Town of Poestenkill, N.Y., joins the growing list of cities, towns and counties throughout the United States, committing to the inclusion of people with disabilities in their towns.”

The PCA initiative ensures that people with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society.  As part of the PCA initiative, Justice Department staff survey state and local government facilities, services and programs in communities across the country to identify what is needed to comply with the ADA. The agreements address the steps a community must take to improve access.  This agreement is the 207th entered into under the Department’s PCA initiative. 

Under the agreement announced today, the town will remove barriers to accessibility at the town Hall and the Poestenkill Library.  The agreement also requires the town to do the following:

∙           Make physical modifications to its facilities so that parking, routes into the buildings, entrances, public telephones, restrooms, service counters and drinking fountains are accessible to people with disabilities; and assembly areas have the required wheelchair and companion seating.

∙            Post, publish and distribute a notice to inform members of the public of the provisions of Title II and their applicability to the town’s programs, services and activities.

∙           Train staff in using the New York state relay service for telephone communications.

∙           Develop a method for providing emergency management policies and procedures for persons with disabilities, including preparation, notification, response and clean-up.

∙           Develop a method for providing information for interested persons with disabilities concerning the existence and location of the town’s accessible services, activities and programs.

∙           Establish, implement and post online a policy that the town’s web pages be accessible, create a process for implementation and ensure that all new and modified web pages are accessible.

∙           Implement a plan for the accessibility of sidewalks and curb cuts throughout the Town.  

Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments.  The agreement requires the actions to be completed within three years.  The department will actively monitor compliance with the agreement throughout this timeframe. 

This agreement is the first to be posted on the department’s newly redesigned PCA web page and may be viewed at www.ada.gov/civicac.htm.  The web page allows users to identify PCA agreements in two different ways: by geographic location using a clickable map or a state list and by chronological order, when the agreement became effective.   

People interested in finding out more about the ADA, today’s agreement with the town of Poestenkill the Project Civic Access initiative or the ADA Best Practices Tool Kit for State and Local Governments may access the ADA web page at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).

Federal authorities arrested eight people in the cities of Arroyo and Patillas, Puerto Rico, yesterday on felony and misdemeanor charges for the illegal take, possession and sale of endangered sea turtles and their parts for human consumption as well as aiding and abetting violations of the Endangered Species and Lacey Act, announced Robert G. Dreher, the Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division and Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico.

Roberto Guzman Herpin, 34, Madelyne Montes Santiago, 37, Edwin Alamo Silva, 50, Juan Soto Rodriguez, 45, Ricardo Dejesus Alamo, 33, Jose Javier Rodriguez Sanchez, 40, Iris Lebron Montanez, 53, and Miguel Rivera Delgado, 55, all residents of Patillas and Arroyo, were arrested Thursday and made their appearances in federal court. 

The takedown was led by special agents of the U.S. Fish and Wildlife Service (FWS), with assistance from the recently formed Puerto Rico Environmental Crimes Task Force, the U.S. Marshals Service, the Puerto Rico Police Department and the Puerto Rico Department of Natural Resources.  Participating agencies of the task force currently include prosecutors from the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the District of Puerto Rico, FWS, the U.S. Environmental Protection Agency Criminal Investigation Division (EPA-CID), U.S. Immigration and Customs Enforcement- Homeland Security Investigations (ICE-HSI), the National Oceanic and Atmospheric Administration (NOAA) and the FBI.

In 2011, the FWS initiated an undercover operation to investigate the illegal trade in sea turtles for human consumption. During this investigation, it was determined that these illegal sales of sea turtle meat, confirmed through DNA analysis conducted by the FWS Forensic Lab, have resulted in the illegal take of 15 individual endangered hawksbill sea turtles (Eretmochelys imbricate) and 7 endangered green sea turtles (Chelonia mydas).

 “Hawksbill and green sea turtles are protected by Puerto Rican law, nationally under the Endangered Species Act as well as internationally under CITES (Convention on International Trade in Endangered Species of Wild Flora and Fauna),” said U.S. Fish & Wildlife Service, Resident Agent in Charge David Pharo. “The protection from the illegal take and sale of this and of other marine life organisms is a priority of the U.S. Fish and Wildlife Service and is instrumental to the health of marine ecosystems for where they exist. These charges stem from a collaborative effort amongst law enforcement agencies to achieve a common goal of protecting our nation’s sensitive marine environments. It demonstrates our commitment to pursue those who violate fish & wildlife laws for the purpose of personal and or commercial gain as well as those that drive the illegal trade of marine life nationally and internationally.”

The cases are being prosecuted by Assistant U.S. Attorney Carmen Márquez.  If convicted, the defendants face a maximum sentence of five years in prison and a $250,000 fine.  Indictments contain only charges and are not evidence of guilt.  Defendants are presumed to be innocent until and unless proven guilty. 

The waters around Puerto Rico are designated as a critical habitat for the hawksbill and the green sea turtle.  The most significant nesting for the hawksbill within the U.S. occurs in Puerto Rico and the U.S. Virgin Islands.  Each year, about 500-1000 hawksbill nests are laid on Mona Island, Puerto Rico.  The green sea turtle population has declined by 48-65 percent over the past century.  Puerto Rico is also home to nesting sites for the endangered leatherback sea turtle, the largest species of turtle in the world.   The leatherback sea turtle suffered a severe population crash due to human harvesting of its meat and eggs, and the destruction of its nesting habitat by beachfront development.

The Puerto Rico Environmental Crimes Task Force

Also today, representatives of federal criminal investigative agencies, the U.S. Attorney’s Office and the Department of Justice Environment and Natural Resources Division announced the creation of a Puerto Rico Environmental Crimes Task Force to investigate and prosecute environmental crimes on the island. 

The commonwealth of Puerto Rico contains six national wildlife refuges (Cabo Rojo, Culebra, Desecheo, Laguna Cartagena, Navassa Island, Vieques) and is home to 25 endangered and threatened animal species, 21 of which are found nowhere else on earth. For instance, there are only 200 Puerto Rican parrots (Amazona vittata) remaining, with less than 50 left in the wild, making it one of the 10 rarest birds on Earth.  The island is also home to 49 endangered and threatened plant species. There are 37 Resource Conservation and Recovery Act (RCRA) and Superfund cleanup sites on Puerto Rico.

Through the new task force, federal investigative agencies will coordinate their efforts to investigate and prosecute those responsible for committing serious environmental crimes. Federal laws have been enacted to protect the environment, but their enforcement requires the coordinated efforts and involvement of multiple federal law enforcement agencies with the assistance local law enforcement and the citizenry.  The task force has three specific goals:

• Improve investigative coordination among the federal authorities who are responsible for protecting public health and the environment.

• Coordinate the available federal resources and improve the dissemination of information between the federal law enforcement agencies to better protect human health and the environment.

• Improve environmental awareness of the community to recognize violations of federal environmental laws and regulations.

“Through the effective and efficient coordination of federal agencies who will jointly investigate and prosecute environmental crimes on the island, the task force will help preserve the island’s abundant natural resources and wildlife, including endangered sea turtles,” said Robert G. Dreher, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “It is our hope and vision that these efforts will raise greater awareness about environmental crime, bring those who knowingly harm the environment to justice, and help preserve the island’s environment for generations to come.”

“With the creation of this Task Force we aim to protect the environment and the public’s health from exposure to environmental hazards, said Rosa Emilia Rodríguez-Vélez United States Attorney for the District of Puerto Rico.  “We will vigorously investigate and prosecute those who do not comply with the environmental laws of the United States.”

“Puerto Rico’s high asthma rates and its incredible natural resources make pollution prevention together with the rigorous enforcement of environmental laws critical to the people of Puerto Rico,” said EPA Regional Administrator Judith A. Enck. “By pooling EPA resources and those of other agencies, the EPA’s Criminal Investigation Division and EPA’s Caribbean Environmental Protection Division can maximize the ability to ensure that those who willfully violate environmental laws are held accountable.”

“The task force will strengthen already existing enforcement partnerships that help protect Puerto Rico’s wildlife and rich wildlife heritage,” said Special Agent in Charge Luis Santiago, who oversees U.S. Fish and Wildlife Service Office of Law Enforcement operations in southeastern states, Puerto Rico and the U.S. Virgin Islands.

“This enforcement task force will be a great help for us in our mission to conserve, protect, and manage living marine resources in the commonwealth,” said Otha Easley, Acting Special Agent in Charge of NOAA’s Office of Law Enforcement Southeast Division, which covers eight southern states and all U.S. Caribbean territories. “Puerto Rico has a rich and diverse ecosystem, and this partnership is a significant step forward in its protection.”

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

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

John Stuart Dowell, 47, of Santa Cruz, Calif., was sentenced late yesterday in Harrisonburg, Va., to serve 960 months in prison, followed by a lifetime of supervised release, for producing child pornography.

The sentence was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Virginia Timothy J. Heaphy.

Dowell was sentenced by U.S. District Judge Michael Urbanski in the Western District of Virginia. 
 
In October 2012, Dowell pleaded guilty to 12 counts of using a minor to engage in sexually explicit conduct for the purpose of producing visual depictions of that conduct and one count of transportation of child pornography.

According to a statement of facts entered into the record by the government and agreed to by the defendant, Dowell admitted that in late 2010 and early 2011 he was staying at a residence in Frederick County, Va.  While staying at the home, Dowell repeatedly sexually abused a 3-year-old girl and filmed the abuse.  A computer forensic examination further revealed that Dowell, in separate incidents, produced two videos of a 5-year-old female engaging in sexually explicit conduct. According to testimony provided at the sentencing hearing, Dowell also had a collection exceeding 70,000 images and videos of other child pornography and child erotica.

The investigation of the case was conducted by the Northern Virginia-District of Columbia Internet Crimes Against Children Task Force, with assistance from the FBI, the Department of Homeland Security’s Immigration and Customs Enforcement, and the San Jose, Calif., Police Department, as well as Danish law enforcement officers and Interpol.  The High Tech Investigative Unit from the Department of Justice’s Child Exploitation and Obscenity Section (CEOS) conducted the forensic examination.  Assistant U.S. Attorney Nancy S. Healey and CEOS Trial Attorney Darcy Katzin are prosecuting the case for the United States.
 
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The U.S. Environmental Protection Agency and the U.S. Department of Justice announced a settlement with XTO Energy Inc., a subsidiary of Exxon Mobil Corporation, to resolve an alleged violation of the Clean Water Act (CWA) related to the discharge of wastewater from XTO’s Penn Township, Lycoming County, Pa. facility used for the storage of wastewater generated by natural gas exploration, commonly known as fracking, and production. 

The federal settlement requires that XTO pay a penalty of $100,000 to the United States and spend a federal government-estimated $20 million on a comprehensive plan to improve wastewater management practices to recycle, properly dispose of, and prevent spills of wastewater generated from natural gas exploration and production activities in Pennsylvania and West Virginia.  Among other things, XTO must install a continuous, remote monitoring system for all of its permanent production located throughout Pennsylvania and West Virginia with alarms that will be triggered to alert operators immediately in the event of any future spills and implement a program to actively monitor interconnected wastewater storage tanks located throughout Pennsylvania and West Virginia.

The discharge was discovered by the Pennsylvania Department of Environmental Protection (PADEP) during an inspection of the Penn Township facility, where a PADEP inspector observed wastewater spilling from an open valve from a series of interconnected tanks. At the time, XTO stored wastewater generated from energy extraction activities conducted throughout Pennsylvania at its Penn Township facility and, at the time of the release, stored produced fluid from its operations in the area. 
 
Pollutants from the release were found in a tributary of the Susquehanna River basin.  EPA, in consultation with PADEP, conducted an investigation and determined that wastewater stored in the tanks at the Penn Township facility contained the same variety of pollutants, including chlorides, barium, strontium, and total dissolved solids, that were observed in those surface waters.

“Today’s settlement holds XTO accountable for a previous violation of the Clean Water Act and requires operational changes and improved management practices to help ensure the safe and responsible handling of wastewater produced during natural gas exploration and production activities,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The Justice Department is committed to ensuring that our natural resources are developed in an environmentally responsible manner.”

Under the settlement with the United States, the substantial improvements to XTO’s wastewater management are estimated by the federal government to reduce discharges of total dissolved solids by 264 million pounds over the course of the next three years.  These reductions will occur in large part because XTO will increase wastewater recycling and will properly dispose of wastewaters generated by its natural gas activities across the mid-Atlantic region. In addition XTO will implement a region-wide program of operational best management practices which include: secondary containment for tanks used to store wastewater, improved standard operating procedures designed to reduce the risk of a spill, a prohibition on using pits or open-top tanks to store wastewater which will prevent air emissions, remote monitoring of tank volumes to prevent overfilling and spills, and proper signage on all tanks with safety information and a manned, 24-hour emergency phone number.

“The operational improvements required by today’s settlement will help to protect precious surface and drinking water resources in Pennsylvania and West Virginia,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA continues to push for responsible development of domestic sources of energy and to insist that companies play by the rules that protect public health.”  
 
“This consent decree establishes a program of best practices that should be a model for the industry and, if followed, will give a level of assurance to the people of the Commonwealth that their waters will be protected. This settlement is in the long-term best interest of the taxpayers, the industry, and our children,” stated Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania.
Untreated discharges of wastewaters from natural gas exploration and production activities typically contain high levels of total dissolved solids and other pollutants and can adversely impact fresh water aquatic life and drinking water quality. 
The consent decree, lodged in the Middle District of Pennsylvania, is subject to a 30-day public comment period and court approval. The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html 
 
More information about the settlement: http://www2.epa.gov/enforcement/xto-energy-inc-settlement
 
More information about EPA Region III’s activities related to natural gas extraction: http://www.epa.gov/region3/marcellus_shale/

Ammie Brothers, 29, of Columbus, Ga., a sergeant in the U.S. Army, pleaded guilty today to unlawfully obtaining personal information from the U.S. Army’s Army Knowledge Online computer system.

The guilty plea was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; U.S. Attorney for the Middle District of Georgia Michael J. Moore; and Director Daniel T. Andrews of the U.S. Army Criminal Investigation Command’s Computer Crime Investigative Unit.

Brothers pleaded guilty before U. S. District Judge Clay Land in Columbus, Ga., to one count of unauthorized access to information from a U.S. Army computer system.  She was charged on Feb. 14, 2013, in a five-count indictment returned by a federal grand jury in Alexandria, Va.

In a statement of facts filed with the plea agreement, Brothers admitted that between April 24, 2009, and Oct. 5, 2011, she repeatedly and intentionally accessed two victims’ Army Knowledge Online accounts, which contain personnel files for members of the armed services.  Brothers initially gained access by calling the Army Knowledge Online help desk in the Eastern District of Virginia and providing the victims’ Social Security numbers and dates of birth in order to obtain temporary passwords. 

When law enforcement searched Brothers’s home in Columbus, they recovered numerous documents printed from the Army Knowledge Online system that contained victims’ Social Security numbers, bank account numbers and employment history, including the Social Security number of one minor child.  Brothers admitted to law enforcement that, in addition to illegally accessing the victims’ Army Knowledge Online accounts, she regularly harassed the victims by telephone and accessed several credit card accounts belonging to one victim, and in one case authorized charges without the victim’s knowledge or consent.  

At sentencing, scheduled for Oct. 24, 2013, Brothers faces a maximum penalty of five years in prison.

This case was investigated by the Computer Crime Investigative Unit of U.S. Army Criminal Investigation Command.
 
The case is being prosecuted by Trial Attorney Peter V. Roman of the Justice Department’s Computer Crime and Intellectual Property Section, Assistant U.S. Attorney Lindsay Kelly of the Eastern District of Virginia and Assistant U.S. Attorney Crawford L. Seals of the Middle District of Georgia.

Six Colombian nationals were indicted today by a federal grand jury in the Eastern District of Virginia for the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James Terry Watson.

“Special Agent Watson was a brave public servant who dedicated his life to protecting the country he loved.  He was a hero, in every sense of the word, who was taken from us far too suddenly and far too soon," said Attorney General Eric Holder.  “With today's arrests, we take an important step towards ensuring that those allegedly responsible for his senseless murder are brought to justice.  We also send an unmistakable message to all who commit acts of violence against America's law enforcement professionals:  no matter who you are or where you live, we will do everything in our power to hold you accountable to the fullest extent of the law.”

Gerardo Figueroa Sepulveda, 38; Omar Fabian Valdes Gualtero, 27; Edgar Javier Bello Murillo, 26; Hector Leonardo Lopez, 23; Julio Estiven Gracia Ramierez, 30; and Andrés Alvaro Oviedo-Garcia, 21, were each charged with two counts of second degree murder, one count of kidnapping and one count of conspiracy to kidnap.  Oviedo-Garcia was also charged with two counts of assault.

Additionally, the grand jury indicted Wilson Daniel Peralta-Bocachica, 30, also a Colombian national, for his alleged efforts to destroy evidence associated with the murder of Special Agent Watson.

According to the indictment, Figueroa, Valdes, Bello, Lopez, Gracia and Oviedo-Garcia were part of a kidnapping and robbery conspiracy that utilized taxi cabs in Bogota, Colombia, to lure victims into a position where they could be attacked and robbed.  Once an intended victim entered a taxi cab, the driver of the taxi cab would signal other conspirators to commence the robbery and kidnapping operation. 

The indictment alleges that on June 20, 2013, while he was working for the U.S. Mission in Colombia, Special Agent Watson entered a taxi cab operated by one of the defendants.  Special Agent Watson was then allegedly attacked by two other defendants – one who stunned Special Agent Watson with a stun gun and another who stabbed Special Agent Watson with a knife, resulting in his death.

The charges were announced by Attorney General Holder; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office; Special Agent in Charge Derek S. Maltz of the Drug Enforcement Administration’s Special Operations Division; and Director Gregory B. Starr of the Diplomatic Security Service for the U.S. Department of State.

This case is being investigated by the FBI, DEA and Diplomatic Security Service, in close cooperation with Colombian authorities, and with assistance from INTERPOL and the Justice Department’s Office of International Affairs.  Assistant U.S. Attorney Michael P. Ben’Ary from the U.S. Attorney’s Office for the Eastern District of Virginia and Special Counsel Stacey Luck and Trial Attorney Christine Duey from the Criminal Division’s Human Rights and Special Prosecutions Section are prosecuting the case on behalf of the United States.  The Department of Justice gratefully acknowledges the Colombian Attorney General’s Office, Colombian National Police, Colombian Directorate of Criminal Investigation and Interpol (DIJIN), DIJIN Special Investigative Unit, Bogota Metropolitan Police and Colombian Technical Investigation Team for their extraordinary efforts, support and professionalism in responding to this incident.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

Panasonic Corp. and its subsidiary, SANYO Electric Co. Ltd., have agreed to plead guilty and to pay a total of $56.5 million in criminal fines for their roles in separate price-fixing conspiracies involving automotive parts and battery cells, the Department of Justice announced today.  LG Chem Ltd., a leading manufacturer of secondary batteries, has agreed to plead guilty and to pay a $1.056 million criminal fine for price fixing involving battery cells.

Osaka, Japan-based Panasonic agreed to pay a $45.8 million criminal fine for its role in the automotive parts conspiracy. SANYO agreed to pay a $10.731 million criminal fine for its role in the battery cells conspiracy.  The guilty pleas against SANYO and LG Chem are the first in the department’s ongoing investigation into anticompetitive conduct in the cylindrical lithium ion battery cell industry.

The three-count felony charge against Panasonic was filed in U.S. District Court for the Eastern District of Michigan.  Separate one-count felony charges were filed against SANYO and LG Chem in U.S. District Court for the Northern District of California.  As part of the plea agreements, which are subject to court approval, the charged companies have agreed to cooperate in the department’s ongoing antitrust investigations.

Panasonic has agreed to plead guilty for its role in a conspiracy to fix prices of switches, steering angle sensors and automotive high intensity discharge (HID) ballasts installed in cars sold in the United States and elsewhere.  SANYO and LG Chem Ltd. have agreed to plead guilty for their roles in a conspiracy to fix the prices of cylindrical lithium ion battery cells sold worldwide for use in notebook computer battery packs.

“Panasonic is charged with participating in separate price-fixing conspiracies affecting numerous parts used in cars made and sold in the United States while its subsidiary was also fixing prices on battery cells used by consumers of notebook computers,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Pleading guilty and cooperating with the division’s ongoing investigations is a necessary step in changing a corporate culture that turned customers into price-fixing victims.” 

According to the first count of a three-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Panasonic participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of steering wheel switches, turn switches, wiper switches, combination switches and door courtesy switches sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. in the United States and elsewhere. According to the court document, Panasonic and its co-conspirators carried out the conspiracy from at least as early as September 2003 until at least February 2010.

The second count charges that Panasonic, during this same time period, participated in a conspiracy to rig bids for, and to fix, stabilize, and maintain the prices of steering angle sensors sold to Toyota in the United States and elsewhere. The department said that Panasonic and its co-conspirators agreed, during meetings and conversations, to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize, and maintain the prices of steering angle sensors sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. in the United States and elsewhere.

According to the third count of the charge, from at least as early as July 1998 and continuing until at least February 2010, Panasonic and its co-conspirators participated in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing, during meetings and conversations, to rig bids for, and to fix, stabilize, and maintain the prices of automotive HID ballasts sold to Honda Motor Co. Ltd. and American Honda Motor Co. Inc., Mazda Motor Corp. and Mazda Motor of America Inc., and Nissan Motor Co. Ltd. and Nissan North America Inc. in the United States and elsewhere.

I ncluding Panasonic, 11 companies and 15 executives have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $874 million in criminal fines as a result of the auto parts investigation. Additionally, 12 of the individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. The three additional executives have agreed to serve time in prison and are currently awaiting sentencing.

“The FBI remains committed to protecting American consumers and businesses from corporate corruption. The conduct of Panasonic, SANYO, and LG Chem resulted in inflated production costs for notebook computers and cars purchased by U.S. consumers,” said Joseph S. Campbell, FBI Criminal Investigative Division Deputy Assistant Director.  “These investigations illustrate our efforts to ensure market fairness for U.S. businesses by bringing corporations to justice when their commercial activity violates antitrust laws.”

According to the one-count felony charge filed today in the U.S. District Court for the Northern District of California in San Francisco, SANYO and LG Chem engaged in a conspiracy to fix the price of the cylindrical lithium ion battery cells used in notebook computer battery packs from about April 2007 until about September 2008. Cylindrical lithium ion battery cells are rechargeable batteries that are often incorporated in groups into more powerful battery packs commonly used to power electronic devices.

According to the charges, SANYO, LG Chem and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and conversations to price cylindrical lithium ion battery cells for use in notebook computer battery packs to customers at predetermined levels and issuing price quotations to customers in accordance with those agreements. The department also said that SANYO, LG Chem and their co-conspirators collected and exchanged information for the purpose of monitoring and enforcing adherence to the agreed-upon prices and took steps to conceal the conspiracy.

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

 
Today’s charges arose from an ongoing investigation in the cylindrical lithium ion battery cells industry being conducted by the Antitrust Division’s San Francisco Office and the FBI in San Francisco as well as an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s automotive parts charges were brought by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323. Anyone with information concerning illegal or anticompetitive conduct in the battery industry is urged to call the Antitrust Division’s San Francisco Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

The owner of a Los Angeles-area durable medical equipment (DME) supply company has pleaded guilty to conspiring to defraud Medicare and Medi-Cal of more than $650,000.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse, made the announcement.

Kim Ricks, of Moreno Valley, Calif., pleaded guilty on July 17, 2013, before U.S. District Judge Fernando M. Olguin in the Central District of California to one count of conspiracy to commit health care fraud.

In court, Ricks admitted that she owned and operated Kim’s Medical Supplies (“KMS”), a DME company that was located in Moreno Valley.  Ricks enrolled KMS in both Medicare and Medi-Cal, which allowed her to submit claims to both programs.  Ricks admitted that between approximately December 2005 and September 2012, she submitted claims to Medicare and Medi-Cal for power wheelchairs (PWCs) and other DME on behalf of people who did not have a legitimate medical need for the equipment, a practice that, Ricks admitted in court, she knew violated Medicare and Medi-Cal rules and regulations.

Ricks also admitted that she submitted claims to Medicare and Medi-Cal for PWCs and other DME that neither she nor her co-conspirators delivered to KMS’s customers, which Ricks knew violated the rules and regulations of both Medicare and Medi-Cal.  In some cases, Ricks obtained the Medicare billing and personal information of individuals and, without their knowledge, used that information to submit claims to Medicare and Medi-Cal for PWCs and other DME that neither she nor her co-conspirators provided to the individuals.  Ricks admitted that she submitted these types of claims to Medicare and Medi-Cal because she needed the money to keep KMS viable.  Ricks also admitted that she submitted claims to Medicare and Medi-Cal for power wheelchairs and DME that she knew were supported by fraudulent prescriptions forged by her co-conspirators.

Ricks admitted that she was responsible for the claims that KMS submitted to Medicare and Medi-Cal, although, at times, her co-conspirators used her Medicare and Medi-Cal provider numbers to submit false and fraudulent claims to both programs.  As a result of this conspiracy, Ricks admitted that she and her co-conspirators submitted and caused the submission of approximately $643,468 in fraudulent Medicare claims and received approximately $236,882 in ill-gotten reimbursement payments.  Ricks admitted further that she and her co-conspirators submitted and caused the submission of approximately $11,849 in fraudulent Medi-Cal claims and received approximately $8,660 in ill-gotten reimbursement payments. 

At sentencing, scheduled for Oct. 24, 2013, Ricks faces a maximum penalty of 10 years in prison. 

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section.  The case is being investigated by the HHS-OIG and the California Department of Justice.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

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 & Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

The Justice Department and Internal Revenue Service (IRS) announced that Angela Myers, a resident of Baton Rouge, La., was sentenced today in the Middle District of Louisiana to 132 months in federal prison for wire fraud, making false claims, subscribing to false tax returns and aggravated identity theft.

Based on the evidence presented during a four-day trial in March 2013, Myers operated “Angie’s Tax Service,” a tax preparation business located in Baton Rouge Myers electronically filed false claims for tax refunds using the names and Social Security numbers of identity theft victims.  Myers filed the identity theft tax returns using a unique preparer identification number assigned to her daughter.  Many of the victims were nursing home patients who resided at Port Allen Care Center in Port Allen, La., and who did not have the ability to leave the nursing home.

The evidence also revealed that Myers lied on her own 2007 and 2008 federal income tax returns, failing to report hundreds of thousands of dollars of tax preparation fees that she earned at Angie’s Tax Service and used to buy various items, including an RV and a $50,000 investment product.

“This thief victimized vulnerable nursing home patients and stole from all honest taxpayers,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “The severe prison sentence handed down today demonstrates that such crimes will not be tolerated.”

“We are very pleased with the sentencing of Angela Myers, many of whose victims were residents of a nursing home,” said Richard Weber, Chief of IRS-Criminal Investigation. “The IRS aggressively pursues those that use stolen social security numbers to file false tax returns.  This sentence should serve as a reminder that there is a price to pay for scamming innocent people and defrauding the government.  Many taxpayers put their trust in return preparers and when that trust is violated, the taxpayers and the tax system suffer.”

In addition to the prison sentence, the court ordered Myers to pay $202,685 in restitution to the IRS  in addition to $39,030 that was already forfeited in this case.

Assistant Attorney General Keneally commended the efforts of special agents of IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Justin Gelfand and Jason Poole, who prosecuted the case.   

A former U.S. Customs and Border Protection (CBP) officer, his girlfriend, his nephew and two of their associates were sentenced today in federal court for their participation in bribery and alien smuggling activities along the U.S./Mexico border spanning approximately two years, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Former CBP Officer Juan Carlos Guerrero, 39, of Mission, Texas, was sentenced to 108 months in prison and ordered to pay a $30,000 fine by U.S. District Judge Andrew S. Hanen in the Southern District of Texas after pleading guilty last year to one count of substantive bribery, one count of conspiracy to commit bribery and one count of alien smuggling conspiracy.  Guerrero’s girlfriend, Claudia Flores, 34, of Mission, was sentenced to 60 months in prison and also ordered to pay a $30,000 fine; Maribel Rivera, 43, also of Mission, was sentenced to 30 months in prison; and Rodolfo Caballero Rojas, 40, of Oklahoma City, was sentenced to 24 months in prison and ordered to pay a $6,000 fine. Each pleaded guilty last year to separate informations charging each of them with one count of conspiracy to commit bribery and alien smuggling.  Guerrero’s nephew, Jose P. Cantu, 20, of Mission, was sentenced to 52 months in prison after having pleaded guilty to conspiracy to commit bribery and alien smuggling and a separate charge of conspiracy to import marijuana and cocaine.

According to court documents, between approximately October 2008 and approximately May 2011, Guerrero worked the midnight shift at the Hidalgo, Pharr and Anzaldvas Ports of Entry, where he was responsible for, among other things, vehicle inspections of northbound traffic traveling from Mexico to the United States.

According to court documents, between approximately January 2009 and approximately May 2011, Guerrero and Flores organized a bribery and alien smuggling operation, whereby Guerrero, Flores, Rivera, Rojas, Cantu and other co-conspirators arranged for aliens from Mexico to be smuggled into the United States through Guerrero’s inspection lanes in exchange for bribe payments ranging from $500 to $3,000 per alien.  Guerrero admitted that he organized and directed a total of approximately 80 to 150 different smuggling events and that he knowingly permitted approximately 80 to 165 aliens to gain illegal entry into the United States.

According to court documents, Flores admitted that she helped Guerrero organize and direct a total of approximately 50 to 75 of the illegal crossings, in which approximately 50 to 100 aliens from Mexico gained illegal entry into the United States.  Rivera admitted that she assisted Guerrero and Flores by identifying and soliciting aliens, communicating smuggling prices and details of the illegal crossings to the aliens and collecting bribe payments from the aliens on the behalf of Guerrero and Flores.  Rojas admitted, among other things, that he assisted Guerrero by personally driving aliens through Guerrero’s inspection lane at the Anzalduas Point of Entry and that he paid Guerrero a bribe of approximately $1,500 as payment for Guerrero’s decision to permit an alien to pass illegally through his inspection lane.

Court documents further indicate that Cantu admitted to helping Guerrero separately organize and carry out approximately 40 illegal crossings, in which approximately 45 to 60 aliens from Mexico gained illegal entry into the United States.  Additionally, Cantu independently smuggled 168.8 kilograms of marijuana and 3.9 kilograms of cocaine through Guerrero’s inspection lane in exchange for approximately $5,000 from another associate.

Guerrero, who was placed on administrative leave upon his arrest in October of last year, formally resigned his CBP post on Dec. 13, 2012, as part of his plea agreement.
 
The case was prosecuted by Trial Attorneys Edward J. Loya Jr. and J.P. Cooney of the Criminal Division’s Public Integrity Section.  The case was investigated by agents from the FBI’s South Texas Border Corruption Task Force, which includes agents from the FBI, U.S. Immigration and Customs Enforcement Office of Professional Responsibility, CBP Office of Internal Affairs, U.S. Department of Homeland Security Office of Inspector General, CBP U.S. Border Patrol and the Texas Rangers Division.

The Justice Department and the Internal Revenue Service (IRS) announced today that Richard R. Whatley, a former owner of Alliance Staffing Management Inc. (ASM), was sentenced to 51 months in prison today for willfully failing to account for and pay over employment taxes. Whatley was also ordered to pay $541,513.61 in restitution to the IRS. Whatley appeared before U.S. District Judge David Nuffer in Salt Lake City.

In January 2010, a federal grand jury charged Whatley with five counts of willfully failing to account for and pay over employment taxes, relating to three different employee leasing companies that he allegedly operated and controlled between the years 2001 and 2006.  The employee leasing companies included American Employment Group Inc., ASM and Intermountain Consulting Group Inc. The tax loss associated with Whatley’s criminal conduct during these years totaled more than $2.3 million. Whatley pleaded guilty in January 2013 to one of the charged counts.

According to the plea agreement, during the 2002 through 2004 tax years, Whatley held an ownership interest in and had the ability to control the finances of ASM, an employee leasing company. Whatley’s control included determining the amount of employment taxes that had to be paid over to the IRS and the authority to decide which bills would be paid and which bills would not be paid. As charged in the superseding indictment, in the fourth tax quarter of 2003, Whatley caused the collection of employment taxes from ASM’s employees’ wages and then willfully failed to pay over $541,513 for the employees’ portion of employment taxes to the IRS.

The case was investigated by special agents of IRS - Criminal Investigation and was prosecuted by Trial Attorneys Christopher J. Maietta and Stuart A. Wexler of the Justice Department’s Tax Division.

More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .

The Justice Department and Internal Revenue Service (IRS) announced today that Harry Neuhoff, a resident of Brooklyn, N.Y., has pleaded guilty to tax evasion.

According to documents filed with the court, Neuhoff was president and an owner of EVA TEES Inc., formerly of Long Island City, N.Y. and presently located in Piscataway, N.J. From approximately 2006 to 2008, Neuhoff manipulated EVA TEES accounts through an accounting software program to delete cash sales from the general ledger accounts maintained on the computer accounting system. As a result, Neuhoff filed  false corporate tax returns on behalf of EVA-TEES with the IRS that underreported the gross receipts of EVA TEES.  Neuhoff’s conduct also correspondingly resulted in his filing of false personal income tax returns with the IRS for those years.  According to the documents filed with the court, Neuhoff underreported the gross receipts of EVA TEES through computer manipulations by at least $1.5 million. Sentencing is scheduled for Nov. 8, 2013 before U.S. District Court Judge Edward Korman.  

Neuhoff faces a maximum sentence of five years in prison, three years of supervised release, a $250,000 fine and a $100 special assessment. He has agreed to pay restitution to the IRS.

The case was investigated by IRS-Criminal Investigation. Trial Attorneys Mark Kotila and Karen E. Kelly of the Justice Department’s Tax Division prosecuted this case.

An associate of the Aryan Brotherhood of Texas (ABT) gang pleaded guilty today to racketeering charges related to her involvement in the ABT’s criminal enterprise, announced Acting Assistant Attorney Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Samantha Goldman, 29, of Houston, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity. 

According to court documents, Goldman and other ABT gang members and associates agreed to commit multiple acts of murder, robbery, arson, kidnapping and narcotics trafficking on behalf of the ABT gang.  According to court documents, Goldman held the position of ABT “Hub” and was often referred to as a “Featherwood.”  In her capacity with ABT, she facilitated communication of criminal activities among imprisoned gang members regarding gang-related business, collection of dues, commission of disciplinary assaults against fellow gang members and acts of violence against rival gang members, among other things.  

By pleading guilty to racketeering charges, Goldman has admitted to being an associate of the ABT criminal enterprise.

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

Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, arson, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”
 
Judge Lake has set sentencing for Oct. 17, 2013, at which time Goldman faces a maximum penalty of life in prison.

Goldman is one of 35 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges.  She is the eighth defendant charged in the indictment to plead guilty. 
 
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite Texas, Police Department; Montgomery County District Attorney’s Office; and Atascosa County District Attorney’s Office.  

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

Anthony Staino was sentenced today to serve 97 months in prison for his participation in a racketeering conspiracy involving extortion, loan sharking and illegal gambling, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and Edward J. Hanko, Special Agent in Charge of the FBI’s Philadelphia Division.

Staino, 57, of Swedesboro, N.J., was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania.  In addition to his prison term, Staino was sentenced to serve three years of supervised release.

On Apr. 19, 2013, Staino pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity.  Through court documents and statements made in court at the time of the plea, Staino admitted that, as a made member and capo of the Philadelphia LCN Family, he gave a usurious loan to an undercover FBI agent and used threats of violence to collect payments on the loan.  Staino also admitted that he ran an illegal electronic gambling device business for the mob, providing video poker machines and other gambling devices for bars, restaurants, convenience stores, coffee shops and other locations in Philadelphia and its suburbs, and then collected the illegal gambling proceeds.

A total of 12 leaders, members and associates of the Philadelphia LCN Family have pleaded guilty or been convicted by a jury as part of this case.  Eight of the defendants, including Staino, have been sentenced, and four are awaiting sentencing.

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole of the Eastern District of Pennsylvania.  Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

The case is being investigated by the FBI, Internal Revenue Service-Criminal Investigation, Pennsylvania State Police, New Jersey State Police, Philadelphia Police Department, U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and U.S. Department of Labor’s Employee Benefits Security Administration.  Additional assistance was provided by the New Jersey Department of Corrections.

The Justice Department today entered into a sweeping civil rights agreement with the commonwealth of Puerto Rico to modernize and reform the Puerto Rico Police Department (PRPD).  The agreement resolves a civil suit initiated by the department in December 2012 to remedy a pattern and practice of police misconduct by PRPD.  The agreement represents a joint commitment to effective and constitutional policing and is the product of extensive negotiations between the department, PRPD and the administrations of Governor Alejandro García-Padilla and his predecessor Luis Fortuño.  The agreement was filed with the federal court today and will become court-enforceable once it is approved by District Judge Gustavo A. Gelpí.

The agreement is designed not only to promote constitutional policing, but also to enhance public and officer safety and increase community confidence in PRPD.  The far-reaching agreement is among the most extensive agreements ever obtained by the department under the police misconduct provision of the Violent Crime Control and Law Enforcement Act of 1994, and requires corrective action in 11 core areas.   These areas include use of force, searches and seizures, equal protection, policies and procedures, training, supervision, civilian complaints and internal investigations, community engagement and information systems.  The agreement will also provide the public with meaningful opportunities to participate in the reform process through periodic community meetings, public reports, civilian interaction committees, community surveys and the implementation of community policing principles.  The agreement is expected to be fully implemented in ten years, although there is no expiration date.  A technical compliance advisor will assess and report on PRPD’s compliance, as well as provide technical assistance to promote constitutional policing. 

The agreement is also tailored to the unique needs of PRPD and with a recognition of the public safety challenges facing Puerto Rico.  With a diverse mission and a police force of 17,000 officers, PRPD is the second largest police department in the country and serves close to four million residents.  An initial capacity-building period will allow PRPD to modernize its administrative systems and professionalize its police force.  Through the development of action plans, PRPD will have broad flexibility to stage implementation and allocate resources to achieve measurable results within established time frames.  Once the plans are implemented, officers in all police regions will have the policy guidance, training, supervision, equipment and support they need to carry out their duties in a lawful, effective and efficient manner. 

“We commend the administrations of Governor Alejandro García-Padilla and his predecessor Luis Fortuño for taking on the formidable challenge of transforming PRPD into a modern police force that embraces constitutional policing as part of its core mission,” said Attorney General Eric Holder.  “Police departments that respect the rights of the people they serve earn the confidence of the public and become more effective in fighting crime.  Because the agreement we are announcing today will institutionalize a culture of accountability, Puerto Rico will now have access to nearly $10 million in asset forfeiture funds, which it can use to implement the reforms contained in the agreement.”

“Under the leadership of Justice Secretary Luis Sánchez Betances, Superintendent Héctor Pesquera, and their staff, we have been able to craft a historic agreement that will give the hard-working men and women of PRPD the support and tools they need to protect civil rights and effectively engage with the community to address public safety,” said Acting Associate Attorney General Tony West.  “We are also grateful to all of the community leaders, police officers and members of the public who came forward to assist our investigation and who made this day possible.”

The department’s December 2012 civil lawsuit followed a thorough investigation of PRPD’s policies and practices.  The investigation uncovered wide-ranging and long-standing deficiencies that gave rise to a pattern and practice of police misconduct, including use of excessive force, use of unreasonable force designed to suppress protected speech and unconstitutional searches and seizures.  The investigation also uncovered evidence that PRPD has failed to adequately investigate gender-based violence and engaged in discriminatory policing.  PRPD cooperated throughout the investigation and began initiating corrective actions in response to the investigative team’s recommendations and technical assistance.     

The department began negotiating an agreement with the administration of former Governor Luis Fortuño after completing the investigation in September 2011.  The negotiations culminated in a preliminary agreement that was filed concurrently with the department’s complaint in December 2012.  The court granted a joint request to stay the proceedings to provide Governor García-Padilla’s administration the opportunity to review and negotiate a final agreement.  Once the federal court approves the agreement, the parties will select a technical compliance advisor and begin implementation. 

A copy of the complaint, the final agreement, the joint motion seeking approval of the agreement, and the September 2011 letter of findings can be found at www.justice.gov/crt   If individuals have information that is relevant to the case and PRPD, you may contact the Department of Justice at community.prpd@usdoj.gov or at 877-871-9726.

The former chief executive officer and former chief financial officer of ArthroCare Corp., a publicly traded medical device company based in Austin, Texas, were charged for their alleged leading roles in a $400 million scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings by tens of millions of dollars, announced Acting Assistant Attorney Mythili Raman of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman of the Western District of Texas.

A 17-count indictment was unsealed today in the U.S. District Court for the Western District of Texas against Michael Baker, the former chief executive officer and director of ArthroCare, and Michael Gluk, the former chief financial officer of ArthroCare.  Both defendants surrendered to authorities this morning.

The indictment, which was returned on July 16, 2013, charges Baker and Gluk with one count of conspiracy to commit wire and securities fraud, 11 counts of wire fraud, and two counts of securities fraud; it charges Baker alone with three counts of false statements. The indictment also seeks forfeiture of assets held by Baker and Gluk.

“Truthful corporate earnings reports are critical to the soundness of our financial system,” said Acting Assistant Attorney General Raman.  “Today’s indictment alleges that those at the top of ArthroCare deceived investors and regulators by manipulating the company’s reports to inflate its stock, ultimately causing hundreds of millions in losses in shareholder value.  The Criminal Division will continue to aggressively pursue corporate executives who undermine our financial markets for personal gain.”

According to the indictment, from at least December 2005 through December 2008, Baker, Gluk and other senior executives and employees of ArthroCare allegedly falsely inflated ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors.  According to court documents, Baker, Gluk and other ArthroCare employees determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders.  Baker, Gluk and others then allegedly caused ArthroCare to “park” millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter.  ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.

The indictment alleges that ArthroCare’s distributors agreed to accept shipment of millions of dollars of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to falsely inflate its revenue by tens of millions of dollars.

Baker, Gluk and others allegedly used DiscoCare, a privately owned Delaware corporation, as one of the distributors to cover shortfalls in ArthroCare’s revenue.  According to the indictment, at Baker and Gluk’s direction, ArthroCare shipped product to DiscoCare that far exceeded DiscoCare’s needs.

In addition, Baker, Gluk and others allegedly lied to investors and analysts about ArthroCare's relationships with its distributors, including its largest distributor, DiscoCare.  According to the indictment, Baker and Gluk caused ArthroCare to acquire DiscoCare specifically to conceal from the investing public the nature and financial significance of ArthroCare's relationship with DiscoCare. 

The indictment further alleges that when Baker was deposed by the U.S. Securities and Exchange Commission about the DiscoCare relationship in November 2009, he lied again on multiple occasions.

According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock.  On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share.  The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.

If convicted, Baker and Gluk would face a maximum prison sentence of 25 years for the conspiracy charge, 20 years for each count of wire fraud, and 25 years for each securities fraud count. Baker faces five years for each count of false statements.

An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.

This case was investigated by the FBI’s Austin office. The case is being prosecuted by Deputy Chief Benjamin D. Singer and Trial Attorneys Henry P. Van Dyck and William Chang of the Criminal Division’s Fraud Section.  The Department recognizes the substantial assistance of the U.S. Securities and Exchange Commission.

WASHINGTON - Hoy, el Departamento de Justicia realizó un acuerdo amplio de derechos civiles con el Estado Libre Asociado de Puerto Rico para la modernización y la reforma del Departamento de Policía de Puerto Rico [PRPD - Puerto Rico Police Department]. El acuerdo resuelve una demanda civil presentada por el Departamento de Justicia de EE.UU. [U.S. Department of Justicia (DOJ)] en diciembre de 2012 para remediar un patrón y una práctica de conducta policial indebida por parte del PRPD. El acuerdo representa un compromiso conjunto los servicios policiales efectivos y constitucionales y es producto de negociaciones amplias entre el departamento, el PRPD y los gobiernos del Gobernador Alejandro García Padilla y su predecesor Luis Fortuño. El acuerdo fue presentado al tribunal federal hoy y adquirirá fuerza de orden judicial una vez aprobado por el Juez de Distrito Gustavo A. Gelpí.

El acuerdo fue diseñado no solo para promover los servicios policiales constitucionales, sino también para optimizar la seguridad pública y de los agentes e incrementar la confianza de la comunidad en el PRPD. El acuerdo amplio se encuentra entre los acuerdos más exhaustivos ya obtenidos por el departamento bajo la disposición de conducta policial indebida de la Ley de Control de Delitos Violentos y Coacción Legal de 1994, y requiere acción correctiva en once áreas principales. Estas áreas incluyen el uso de fuerza, allanamientos y confiscaciones, protección igualitaria, políticas y procedimientos, capacitación, supervisión, quejas de civiles e investigaciones internas, participación comunitaria y sistemas de información. El acuerdo también brindará al público oportunidades significativas de participar en el proceso de reforma a través de reuniones comunitarias periódicas, informes públicos, comités de interacción civiles, encuestas comunitarias, y la implementación de principios de prestación de servicios policiales comunitarios. Se prevé que el acuerdo será implementado en el plazo de diez años, aunque no existe una fecha de vencimiento. Un asesor en cumplimiento técnico evaluará e informará acerca del cumplimiento del PRPD, y brindará asistencia técnica para promover la prestación de servicios policiales constitucionales.

El acuerdo también fue diseñado de acuerdo con las necesidades singulares del PRPD y con el reconocimiento de los desafíos de seguridad que Puerto Rico enfrenta. Con una misión diversificada y una fuerza policial de 17,000 agentes, el PRPD es el segundo departamento de policía del país en tamaño y atiende a más de cuatro millones de residentes. Un periodo inicial de creación de capacidad le permitirá al PRPD modernizar sus sistemas administrativos y profesionalizar su fuerza policial. A través del desarrollo de planes de acción, el PRPD tendrá amplia flexibilidad para realizar la implementación y asignar recursos para lograr resultados mensurables en los plazos establecidos. Una vez implementados los planes, los agentes de todas las regiones policiales tendrán la orientación sobre la política, la capacitación, la supervisión, los equipos y el apoyo que requieren para llevar a cabo sus tareas de manera legal, eficaz y eficiente.

"Felicitamos a los gobiernos del Gobernador Alejandro García Padilla y su predecesor Luis Fortuño por aceptar el desafío formidable de transformar al PRPD en una fuerza policial moderna que incluye la prestación de servicios policiales constitucionales en su misión esencial", señaló el Secretario de Justicia de EE.UU. Eric Holder, Jr. "Los departamentos de policía que respetan los derechos de las personas que atienden se ganan la confianza del público y pasan a ser más eficaces en la lucha contra la delincuencia. Debido a que este acuerdo que anunciamos hoy institucionalizará la cultura de la rendición de cuentas, Puerto Rico ahora tendrá acceso a casi 10 millones de dólares de fondos de confiscación de bienes, que podrá utilizar para implementar las reformas contenidas en el acuerdo".

"Bajo el liderazgo del Secretario de Justicia Luis Sánchez Betances, el Superintendente Héctor Pesquera y sus equipos, hemos logrado dar forma a un acuerdo histórico que brindará a los hombres y las mujeres trabajadores del PRPD el apoyo y las herramientas que necesitan para proteger los derechos civiles y lograr la participación efectiva de la comunidad en iniciativas de seguridad pública", dijo el Subsecretario de Justicia Interino Tony West. "También agradecemos a todos los líderes comunitarios, agentes de la policía y miembros del público que se ofrecieron para ayudar en nuestra investigación y que hicieron que este día fuera posible".

La demanda civil de diciembre de 2012 del departamento se entabló después de una investigación de las políticas y prácticas del PRPD. La investigación reveló deficiencias amplias y antiguas que provocaron un patrón y una práctica de conducta policial indebida, incluidos el uso de fuerza excesiva, uso de fuerza irrazonable diseñados para suprimir la libertad de expresión protegida, y allanamientos y confiscaciones inconstitucionales. La investigación también reveló pruebas de que el PRPD ha dejado de investigar adecuadamente casos de violencia de género y que ha prestado servicios policiales discriminatorios. El PRPD cooperó a lo largo de la investigación y comenzó a implementar acciones correctivas como respuesta a las recomendaciones del equipo de investigación y la asistencia técnica.

El departamento comenzó a negociar un acuerdo con el gobierno del ex Gobernador Luis Fortuño después de completar la investigación en septiembre de 2011. Las negociaciones culminaron con un acuerdo preliminar presentado junto con la demanda del departamento en diciembre de 2012. La corte federal aceptó el pedido de suspensión conjunto para brindarle al gobierno del Gobernador García Padilla la oportunidad de examinar y negociar un acuerdo definitivo. Una vez que el tribunal federal apruebe el acuerdo, las partes seleccionarán un asesor de cumplimiento técnico y comenzarán la implementación. 

Se encuentran una copia de la demanda, el acuerdo final, una petición conjunta de aprobación del acuerdo y la carta de hallazgos de septiembre de 2011 en www.justice.gov/crt.  Si tiene información relevante al caso y al PRPD, comuníquese con el Departamento de Justicia escribiendo a community.prpd@usdoj.gov o llamando al 877-871-9726.

CALIFORNIA BUSINESSMAN PLEADS GUILTY TO CONCEALING FOREIGN BANK ACCOUNT AT ISRAELI BANK ON HIS TAX RETURN

Saratoga Resident is the Latest in a Series of Defendants Charged With Concealing Bank Accounts at Israeli Banks

Assistant Attorney General for the Tax Division Kathryn Keneally and U.S. Attorney Melinda Haag for the Northern District of California announced that Moshe Handelsman of Saratoga, Calif., pleaded guilty today to filing a false tax return for tax year 2007.

According to the plea agreement, between approximately 1993 and 2000, Handelsman, a U.S. citizen, used three bank accounts held in the names of two different foreign corporations at foreign banks to falsely reduce his taxes. The last of those accounts was held at an Israeli bank located in Tel-Aviv, Israel.  The foreign bank accounts and foreign corporations were set up with the assistance of his tax return preparers.

According to court documents, in approximately 2000, Handelsman traveled to Israel and met with a banker at the Israeli bank who referred him to an Israeli attorney to set up a foreign corporation. The foreign corporation was called Exportus Ltd. and was the named account holder of the account at the Israeli bank.  From 2003 through 2008, Handelsman sent $1,808,075 from a domestic corporation he controlled called Advanced Forecasting Corp. to the Exportus Ltd. bank account. With the assistance of his tax return preparers, the funds transferred offshore were then deducted as false “Information Acquisition” expenses on the Advanced Forecasting Corp.’s tax returns.  The false business expenses on the corporate tax returns resulted in an under-reporting of Handelsman’s income on his individual income tax returns for 2003 through 2008.  Handelsman also failed to disclose the existence of his foreign bank account on his individual income tax returns. According to the plea agreement, in 2009, Handelsman closed his account at the Israeli bank and repatriated the money by transferring the funds into a second Israeli bank account and then to a U.S.-based Charles Schwab account in the name of a relative.  The funds were then transferred from the Charles Schwab account to Handelsman to make it appear that the funds were a non-taxable gift from the relative.  

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.

Handelsman faces a potential maximum prison term of three years and a maximum fine of $250,000. In addition, Handelsman has agreed to pay a civil penalty to the Internal Revenue Service (IRS) in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.  His sentencing is scheduled for Nov. 6, 2013.

Assistant Attorney General Keneally and U.S. Attorney Melinda Haag thanked special agents of IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Ellen M. Quattrucci and Christopher S. Strauss, who prosecuted the case, and Assistant U.S. Attorneys Thomas Moore and Thomas Newman of the U.S. Attorney’s Office for the Northern District of California, who assisted with the prosecution.

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

The Justice Department announced that seven defendants were arrested and arraigned today for their roles in a mortgage fraud conspiracy that operated in Detroit.

A federal grand jury in the Eastern District Court of Michigan indicted Peter Allen, Suhail Hallak, Al Karana, Joey Murad, Jason Najor, Jeffrey Najor and Wasseem Shamoun with conspiracy to commit bank fraud, numerous counts of bank fraud and other fraud charges.

The indictment alleges that from approximately January 2006 to December 2008, the defendants conspired to defraud lending institutions by obtaining mortgage loans using fraudulent information.  According to the indictment, the defendants devised a scheme wherein they purchased property for approximately $5,000 to $40,000 per home, then recruited straw buyers to submit fraudulent loan applications for home mortgages in exchange for a fee. According to the indictment, the scheme caused financial institutions to pay approximately $10 million in fraudulent mortgage loan funds.

In addition to the conspiracy charge, Hallak, Karana, Jason Najor, Jeffrey Najor, and Shamoun are charged with 20 counts of bank fraud, Murad is charged with seven counts of bank fraud and Allen is charged with two counts of bank fraud.  Jeffrey Najor is also charged with two counts of assisting in the filing of false tax returns, in connection with his filings on behalf of J.A. Najor Corporation.  Jeffrey Najor is also charged with one count of bankruptcy fraud. 

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty. If convicted of the conspiracy charge, the defendants face up to 30 years in prison and a $1 million fine.  Each count of bank fraud carries a maximum penalty of 30 years in prison and $1 million fine.   Assisting in the filing of a false return is punishable by up to three years in prison and a fine of $250,000.  The bankruptcy fraud charge has a maximum penalty of five years in prison and a fine of $250,000.

This case was investigated by Internal Revenue Service – Criminal Investigation, the Drug Enforcement Administration and the FBI and is being prosecuted by Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division.