District Not Recorded

The Justice Department announced today that Happy Asker, franchise owner of multiple “Happy’s Pizza” franchises, was indicted by a federal grand jury in Detroit along with Maher Bashi, Tom Yaldo, Arkan Summa and Tagrid Bashi for multiple tax offenses arising from a conspiracy to underreport taxable income and payroll taxes of nine Happy’s Pizza franchises.  All defendants with the exception of Happy Asker were arrested.

A multiple count indictment was unsealed in the Eastern District of Michigan charging Happy Asker, Maher Bashi and Tom Yaldo with conspiracy to defraud the United States by keeping fraudulent accounting records and falsely reporting income taxes and payroll taxes due and owing.

The indictment alleges that from approximately June 2004 through April 2011, the defendants conspired with each other to divert business receipts, underreport wages and understate the true income and expenses of specified Happy’s Pizza franchises. According to the indictment, the scheme resulted in the specified franchises paying more than $2.1 million in unreported wages to employees and shareholders

Additional charges in the indictment include three counts of filing a false individual income tax return as to Happy Asker; 21 counts of aiding in the filing of false payroll tax returns as to Happy Asker and Maher Bashi; 23 counts of aiding in the filing of false payroll tax returns as to Tom Yaldo on behalf of specified Happy’s Pizza franchises; and 11 counts as to Happy Asker and Maher Bashi for aiding in filing false corporate tax returns on behalf of specified Happy’s Pizza franchises.

Finally, the indictment also charges Happy Asker and Maher Bashi with one count of obstructing the due administration of the internal revenue laws.  Arkan Summa and Tagrid Bashi are also charged together in a count of obstructing the due administration of the internal revenue laws and Tom Yaldo is also charged with one count of obstructing the due administration of the internal revenue laws.

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 5 years in prison and a $250,000 fine.  The charges of filing a false income tax return and aiding or assisting in filing a false return carry a maximum penalty of three years in prison and a fine of $250,000 for each count.  The obstruction charge carries a maximum penalty of three years in prison and a fine of $250,000 for each count.

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.

Related Materials:

United States v. Happy Asker, et al.
Indictment ((PDF)

Damion Canalichio was sentenced today to serve 137 months in prison for his participation in a racketeering conspiracy involving 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.

Canalichio, 43, of Turnersville, N.J., was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania.  In addition to his prison term, Canalichio was sentenced to serve three years of supervised release.

On Feb. 5, 2013, after a four-month trial, a jury convicted Canalichio of conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity.  The evidence at trial proved that, in furtherance of the racketeering conspiracy, Canalichio, as a “made” member, engaged in loan sharking and illegal sports bookmaking activities on behalf of the mob.  Canalichio exploited the violent reputation of the Philadelphia LCN Family in extending usurious loans and collecting payments on the loans, leaving the borrowers in fear of physical harm if they did not pay promptly.  Canalichio also directed and supervised the participation of associates in his crew to carry out these racketeering crimes.

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. Seven of the defendants, including Canalichio, have been sentenced, and five 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.

Emerson Winfield Begolly, 24, of New Bethlehem, Penn., was sentenced today in Pittsburgh to 102 months in prison for soliciting others to engage in acts of terrorism within the United States and for using a firearm during and in relation to an assault on FBI agents. 

 In addition, he was sentenced to serve five years supervised release.  Begolly pleaded guilty on Aug. 9, 2011, to charges filed in the Eastern District of Virginia and the Western District of Pennsylvania. 

 The sentence was announced by David J. Hickton, U.S. Attorney for the Western District of Pennsylvania; Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; John P. Carlin, Acting Assistant Attorney General for National Security; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; and Gary Perdue, Special Agent in Charge of the FBI’s Pittsburgh Division.

“Emerson Begolly used the Internet to solicit likeminded radical jihadists to commit atrocities and murder,” stated U.S. Attorney Hickton. “Through effective use of court-sanctioned investigative tools, mass tragedy was averted.” 

“We now find ourselves in an era where one of the greatest innovations of the modern era – the Internet—is being utilized by radical jihadists who seek to use that medium to endanger American lives,” said U.S. Attorney MacBride.  “Those, like Mr. Begolly, who solicit others to engage in acts of terrorism will be brought to justice and prosecuted to the fullest extent of law.”

“This case highlights the need for continued vigilance against homegrown extremism and use of the Internet to incite violence,” said Acting Assistant Attorney General Carlin.  “I want to thank the agents, analysts and prosecutors whose work resulted in today’s sentence.”

“Today’s sentence is the result of the effective coordination and enduring resolve of law enforcement to protect our citizens,” said Assistant Director Parlave.  “Together with our partners, we will continue to work to combat the threat of violent homegrown extremism and keep our country safe.” 

“The case against Mr. Begolly is an important reminder that online-inspired terrorism can occur anywhere, including Western Pennsylvania. Our efforts to detect and disrupt this threat are enduring,” said Special Agent in Charge Perdue.  “The FBI, along with our law enforcement partners in the FBI Joint Terrorism Task Force, will continue to proactively employ all necessary resources in order to predict and prevent terrorist attacks from occurring and to ensure the ongoing safety of our communities.”

 According to information presented by the government in court, Begolly was an active administrator on the Ansar al-Mujahideen English Forum (AMEF), which is an internationally used Islamic extremist Internet forum.  Using the pseudonym of Abu Nancy, Begolly systematically solicited jihadists to use firearms, explosives and propane tanks against targets such as police stations, post offices, Jewish schools and daycare centers, military facilities, train lines, bridges, cell phone towers and water plants.

 In the summer of 2010, Begolly urged jihadists on the AMEF to “write their legacy in blood.” Begolly promised a special place in the afterlife for violent action in the name of Allah. Following the reported shootings in Northern Virginia at the Pentagon and the Marine Corps Museum in October 2010, Begolly posted a comment online that praised the shootings and hoped the shooter had followed his previous postings encouraging similar acts of violence.  On Dec. 28, 2010, Begolly further solicited his AMEF audience to violence by posting a manual on how to manufacture a bomb.

 Days later, on Jan. 4, 2011, FBI agents were assaulted by Begolly as they attempted to prevent him from reaching a loaded 9 mm semi-automatic handgun, which he had concealed on his body. While violently struggling with the agents, Begolly bit the agents on their fingers in an attempt to free himself to reach his firearm. His actions are consistent with a posting in which he urged his audience not to be taken alive by law enforcement, to always carry a loaded firearm, and to aggressively resist any law enforcement encounter including biting fingers if necessary.

 These cases were investigated by the FBI Washington Field Office and the FBI Pittsburgh Field Office.  Assistant U.S. Attorney Neil Hammerstrom of the U.S. Attorney’s Office for the Eastern District of Virginia’s National Security and International Crime Unit, Assistant U.S. Attorney James Kitchen of the U.S. Attorney’s Office for the Western District of Pennsylvania’s National Security and Cybercrime Section, and Trial Attorney Stephen Ponticiello of the Counterterrorism Section in the Justice Department’s National Security Division are prosecuting the cases.

After a four-week trial, a federal jury has convicted Miguel Alvarado-Linares, Ernesto Escobar, Dimas Alfaro-Granados and Jairo Reyna-Ozuna for committing multiple murders, attempted murders, armed robberies and firearms offenses in Gwinnett and DeKalb Counties.

The convictions were announced today by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Northern District of Georgia Sally Quillian Yates; Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement (ICE) – Homeland Security Investigations (HSI) in Atlanta; and Mark F. Giuliano, Special Agent in Charge of the FBI Atlanta Field Office.

Miguel Alvarado-Linares, aka “Joker,” 24, of Norcross, Ga.; Ernesto Escobar, aka “Pink Panther,” 30, of Norcross; Dimas Alfaro-Granados, aka “Toro,” 30, of Duluth, Ga.; and Jairo Reyna-Ozuna, aka “Flaco,” 28, of Norcross, were convicted late yesterday in U.S. District Court in the Northern District of Georgia.

“These four MS-13 members committed a host of brutal crimes that devastated countless lives in Northern Georgia,” said Acting Assistant Attorney General Raman.  “As a result of the tireless work by the prosecutors and investigators who tackled this case, the defendants will be removed from the streets they have terrorized.”
 
“These defendants were the leaders of MS-13, an international gang known for its gratuitous murders,” said U.S. Attorney Yates.  “They spread fear throughout the community by killing suspected rival gang members and others who cross their path.  We will continue to work with our law enforcement partners to protect our streets from turning into battlegrounds.” 

“The defendants in this case indiscriminately brought murderous violence against rival gang members and innocent civilians alike,” said Brock D. Nicholson, Special Agent in Charge of HSI Atlanta. “HSI is proud to continue to partner with the FBI and the U.S. Attorney’s Office to target violent transnational gang members who threaten the safety of Atlanta communities.”

“Removing these violent gang members from the streets of metro Atlanta not only makes for a safer community but further weakens the Southeastern U.S. roots of this international criminal enterprise known as MS-13,” said Special Agent in Charge Mark F. Giuliano of the FBI Atlanta Field Office.  “The FBI will continue to work with its various law enforcement partners in targeting this group, and others like them, in a unified and effective manner.”

According to the charges and other information presented in court, MS-13 is an international gang that has operated in the Atlanta area since at least 2005.  During the course of this investigation, which ended in 2010, more than 75 MS-13 members were arrested, charged and/or deported.  MS-13 members were organized into “cliques,” or groups, but they operated under the larger umbrella of MS-13.  Each clique had a leader, usually referred to as “the first word,” who conducted weekly meetings, where members discussed their crimes against rival gang members and their plans to retaliate against their rivals.  The clique leader collected dues from the gang members and used the money to buy guns and post bail for jailed members.  Some of the money was sent back to the MS-13 leaders in El Salvador and Honduras.  Clique leaders communicated with MS-13 leaders in their home countries to update them on gang activities in the Atlanta area.  The gang members staked out Gwinnett and DeKalb Counties as their home territory, where they committed murders, attempted murders and armed robberies.  They also sold cocaine as part of their gang activity. 

The evidence presented at trial showed that the defendants committed the following crimes:

• Alvarado-Linares and Alfaro-Granados, along with another gang member, killed Lal Ko in October 2006.  Ko was a fellow MS-13 member, but Alvarado-Linares, one of the gang leaders, thought that Ko was cooperating with police and ordered his murder.

• In December 2006, when another MS-13 gang member wanted to quit the gang, Alvarado-Linares and Alfaro-Granados ordered him to kill a rival gang member as a condition of leaving MS-13.  On Christmas Eve 2006, that gang member, following orders, shot at a car on Highway 316 that he believed contained rival gang members.  The passenger, Angel Gonzalez, was murdered.  He was 20 years old.

• On New Year’s Eve 2006, Alvarado-Linares was at an apartment complex where he exchanged gang hand signs and insults with two members of the rival gang SUR-13.  Alvarado-Linares then pulled out a gun and shot the men.

• In August 2007, Escobar got into a scuffle with two teenagers at a Shell gas station in Gwinnett County.  Escobar reported the incident to Reyna-Ozuna, who was the gang leader at the time.  Reyna-Ozuna gave Escobar a .45 caliber semi-automatic handgun to retaliate.  Escobar went back to the Shell station and shot and killed one of the teenagers as he was painting lines in the parking lot.  The victim was only 16 years old.

• In October 2007, Alvarado-Linares was in Gwinnett County and came across a suspected member of the 18th Street gang.  Alvarado fired a shotgun and killed the victim, who was 15 years old.

Alvarado-Linares, Escobar and Alfaro-Granados were convicted of RICO conspiracy involving murder, which carries a maximum penalty of life in prison.  Reyna-Ozuna was convicted of RICO conspiracy, which carries a maximum penalty of 20 years in prison.  Alvarado-Linares, Escobar and Alfaro-Granados were also convicted of committing violent crimes in aid of racketeering, which carries a mandatory sentence of life in prison.  All of the defendants were convicted of firearms offenses, which carry a sentence of up to and including life in prison.  There is no parole in the federal system.

The sentencing for the four defendants will be scheduled at a later date before U.S. District Judge Richard W. Story in the Northern District of Georgia.

This case is being investigated by Special Agents from U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Federal Bureau of Investigation, with assistance from the U.S. Marshals Service, Gwinnett County Police Department, DeKalb County Police Department, Norcross Police Department, Chamblee Police Department and Gwinnett County Sheriff’s Office.

Assistant U.S. Attorneys Paul R. Jones and Kim S. Dammers of the Northern District of Georgia and Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section are prosecuting the case.

The former medical director at defunct health provider Health Care Solutions Network (HCSN) and six therapists were arrested today, accused of conspiring to fraudulently bill Medicare and Florida Medicaid more than $63 million.

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

The former HCSN medical director, Roger Rousseau, 71, of Miami, was indicted on July 11, 2013, and charged with conspiracy to commit health care fraud and two counts of health care fraud. In addition, six therapists from Miami – Doris Crabtree, 61; Angela Salafia, 65; Liliana Marks, 46; Ruben Busquets, 49; Alina Fonts, 47; and Blanca Ruiz, 59 – were also charged in the same indictment with conspiracy to commit health care fraud. Fonts was also charged with two counts of health care fraud, and Crabtree, Salafia, Marks and Busquets were each charged with two counts of making false statements related to health care matters. The indictment also seeks forfeiture of proceeds from the alleged healthcare fraud offenses.

According to the indictment, HCSN purported to provide intensive mental health treatment to Medicare and Medicaid beneficiaries in Miami and Hendersonville, N.C., from approximately 2004 through 2011 for purported mental health services that were not medically necessary and often never provided.  The indictment also alleges that in Miami, HCSN paid kickbacks to assisted living facility owners and operators who, in exchange, referred beneficiaries to HCSN.  In total, HCSN is alleged to have fraudulently billed Medicare and Medicaid approximately $63.7 million, from which HCSN allegedly received payments totaling approximately $28 million.

Rousseau served as the medical director for HCSN in Florida, and the indictment alleges that he routinely signed what he knew to be fabricated and altered medical records without ever reviewing the materials, and, in most instances, without ever meeting with the patient.  The indictment also alleges that Crabtree, Salafia, Marks, Busquets, Fonts and Ruiz fabricated HCSN medical records to support false and fraudulent claims for partial hospitalization program services that were not medically necessary and were not provided. 

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

The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida. The case is being prosecuted by Fraud Section Trial Attorney Allan J. Medina.
 
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.

Osaka, Japan-based Diamond Electric Mfg. Co. Ltd. has agreed to plead guilty and to pay a $19 million criminal fine for its role in a conspiracy to fix prices of ignition coils installed in cars sold in the United States and elsewhere, the Department of Justice announced today. This is the first case in the department’s antitrust investigation involving parts sold directly to an automobile company headquartered in the United States – Ford Motor Co. The department also announced that an Autoliv Inc. executive has agreed to plead guilty for his role in a conspiracy to fix the prices of certain seatbelts sold to Toyota Motor Corp. for installation in cars manufactured and sold in the United States and elsewhere.

 
Diamond Electric has agreed to cooperate with the department’s ongoing investigation. Takayoshi Matsunaga, a current employee of Autoliv and former vice president of the Toyota Global Business Unit at Autoliv Japan, agreed to serve one year and one day in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. The plea agreements for both Diamond Electric and Matsunaga are subject to court approval.

According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Diamond Electric engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of ignition coils it sold to Ford Motor Co., Toyota Motor Corp., Fuji Heavy Industries Ltd. and certain of their subsidiaries, in the United States and elsewhere, on a model-by-model basis. According to the charge, Diamond Electric and its co-conspirators carried out the conspiracy from at least as early as July 2003 until at least February 2010.

“Today’s prosecutions brings the total to 10 companies and 15 executives held accountable for fixing prices on parts used to manufacture cars in the United States,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The Antitrust Division and its law enforcement partners will protect American businesses and consumers from harmful price-fixing cartels and bring those responsible to justice.”

Diamond Electric manufactures and sells ignition coils.  Ignition coils are part of the fuel ignition system. They are responsible for quickly releasing electricity to the spark plugs for ignition.

According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Matsunaga, a Japanese national, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of certain seatbelts sold to Toyota in the United States and elsewhere. According to the charge, Matsunaga’s involvement in the conspiracy lasted from on or about May 2008 until at least February 2011.

 
“Those who engage in price fixing, bid rigging and other fraudulent schemes harm the automotive industry by driving up costs for vehicle makers and buyers,” said Robert D. Foley III, Special Agent in Charge, FBI Detroit Division.  “The FBI is committed to pursuing and prosecuting these individuals for their crimes.”

 
According to the charge, Matsunaga and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate bids submitted to Toyota. Matsunaga is the 15th individual to agree to plead guilty in the department’s ongoing antitrust investigation into price fixing and bid rigging in the auto parts industry.

Stockholm-based Autoliv Inc. is a manufacturer of automotive occupant safety systems, including certain seatbelts.  In June 2012, Autoliv agreed to plead guilty and to pay a $14.5 million criminal fine for its role in a conspiracy to fix the prices of certain seatbelts, airbags and steering wheels installed in U.S. cars.

Including Diamond Electric and Matsunaga, 10 companies and 15 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of $828 million in criminal fines. DENSO, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc. and TRW Deutschland Holding GmbH have already pleaded guilty.  Additionally, 12 individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Two additional executives have agreed to serve time in prison and are currently awaiting sentencing.

 
Diamond Electric and Matsunaga are charged with price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations and 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s 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.

A five-count indictment was filed charging three people from Ashland, Ohio, with engaging in a labor trafficking conspiracy and related crimes for holding a woman with cognitive disabilities and her child against their will and forcing the woman to perform manual labor for them, law enforcement officials said today.

According to the indictment, Jordie L. Callahan, 26, Jessica L. Hunt, 31, and Dezerah L. Silsby, 21, used a combination of violence, threats, sexual assaults, humiliation and monitoring to establish and continue a pattern of domination and control over their victims, identified only as S.E. and her child B.E.  A fourth person, Daniel K. Brown, 33, of Ashland, was charged in a criminal information filed today with one count of conspiracy.

The conspiracy between Callahan, Hunt, Silsby and Brown took place between August 2010 and October 2012.  The object of the conspiracy included holding S.E. in a condition of forced labor and involuntary servitude; obtaining S.E.’s and B.E.’s public assistance benefits; and intentionally causing painful injuries to S.E. so they could use the narcotic pain medications she was prescribed.

According to court documents, the defendants’ tactics included beating S.E., threats of beatings to S.E. and B.E., taunting and threatening the victims with pit bulls and snakes, causing the victims to sleep in unsafe and unsanitary conditions, restricting S.E. and B.E.’s access to the bathroom, preventing them from eating regular and suitable meals and forcing S.E. to eat dog food and crawl on the floor while wearing a dog collar. 

Callahan and Hunt recruited S.E. and B.E. to live with them in their two-bedroom apartment in Ashland, knowing that S.E. has a cognitive disability and that S.E. and B.E. received monthly public assistance payments.

According to the indictment, in or around September 2010, Callahan and Hunt forced S.E. to have her and B.E.’s public assistance benefits issued on a debit card rather than paper check.  They then took control of the card, forced S.E. to give them the PIN and used the card for their own benefit and the benefit of their family and friends.

On multiple occasions between August 2010 and October 2012, Callahan and Hunt threatened S.E. and B.E. with serious physical harm, including death, if S.E. did not clean up the apartment, care for their numerous pit bull dogs, snakes and other reptiles, purchase items at the store and perform other labor and services.  On one occasion, Callahan pointed a firearm at S.E.’s head and threatened to kill her if she did not perform the labor and services he and other conspirators commanded.  Callahan also forced S.E. on multiple occasions to engage in sex acts with him and threatened that he and Hunt would kill S.E. if she told anyone about the forced sexual acts .

In August 2011, Silsby, at the direction of Callahan and Hunt, smashed S.E.’s hand with a rock with such force that S.E. needed to go to the hospital emergency room.  In December 2011, Callahan and Hunt injured S.E.’s back with such force that she needed medical treatment.  In March 2012, Callahan kicked S.E. in the hip with such force that she needed medical treatment.  After each incident, Callahan and Hunt forced S.E. to give them the narcotic pain pills and prescriptions for the medication as stated in  the indictment.

Callahan and Hunt used a video camera to monitor S.E. and B.E.’s activities and conversations in the apartment.  They often forced S.E. to walk to the store to buy groceries, cigarettes, dog food and other items for Callahan, Hunt and Hunt’s four sons and to pay for these purchases with her public assistance card.  They allotted S.E. only a brief time period to complete the shopping and warned her that she was not allowed to speak with anyone while she was out.  They frequently required B.E. to remain with them at the apartment while S.E. was out and threatened physical harm to B.E. and S.E. if S.E. broke any of their rules.

The indictment also states that  Callahan and Hunt threatened to contact Ashland County Job and Family Services and have B.E. taken away if S.E. purchased any items at the store other than those they ordered or if she told anyone about their unlawful conduct.

In June 2011, after S.E. and B.E. had attempted to flee the apartment, Callahan and Hunt ordered Brown and Silsby to find S.E. and B.E. and bring them back to the apartment.  Brown and Silsby lured S.E. and B.E. into their vehicle by promising to take them to Dairy Queen, only to drive them afterwards back to the apartment.

On multiple occasions, Callahan and Brown locked S.E. and B.E. in a room with a window that was nailed shut and a door that had been locked from the outside according to court documents.

As stated in the indictment, in October 2011, Callahan and Hunt forced S.E. to hit her child while they recorded a video, and threatened to inflict much greater physical harm on both S.E. and B.E. if S.E. did not comply.  One month later, Callahan and Hunt again forced S.E. to strike B.E. while they captured a video recording of the staged incident on Callahan’s cell phone.  Callahan and Hunt repeatedly threatened have B.E. taken away by showing the videos to authorities in order to secure S.E.’s compliance to the conspirators’ commands.

Callahan, Hunt and Silsby face one count each of the following: conspiracy; forced labor; theft of government benefits; and acquiring a controlled substance by deception.  Callahan and Hunt face an additional charge of tampering with a witness.

The case is being prosecuted by Assistant U.S. Attorneys Chelsea Rice and Thomas E. Getz and Trial Attorney Victor Boutros of the Civil Rights Division’s Human Trafficking Prosecution Unit, following an investigation by the FBI and Ashland Police Department, with  assistance from the Ashland County Prosecutor’s Office.

An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Nationwide Agreement Requires Citigroup to Protect Personal Information of Nearly 150,000 Consumers

WASHINGTON — The U.S. Trustee Program (USTP) today announced the unsealing of a settlement with Citigroup Inc. (Citi) that protects the personal information of nearly 150,000 consumers in 85 jurisdictions around the country. Citi agreed to redact proofs of claim filed in bankruptcy cases nationwide in which the personal information of consumer debtors and third parties, including Social Security numbers and birthdates, had not been properly redacted as required by the bankruptcy rules. Citi also agreed to notify all affected consumers and offer them one year of free credit monitoring. An independent auditor appointed under the settlement is reviewing the accuracy of the correction process.

The settlement, approved by the U.S. Bankruptcy Court for the Southern District of New York on March 13, 2012, had been sealed to prevent potential wrongdoers from learning of the breach and seeking to victimize the affected consumers. On July 11, 2013, the bankruptcy court granted the parties’ motion to unseal the proceedings.

“Under this unprecedented settlement, nearly 150,000 consumers whose personal information was placed at risk through no fault of their own have received notice of the improper disclosure and can further protect their information through free credit monitoring,” stated Clifford J. White III, Director of the Executive Office for U.S. Trustees. “Creditors in bankruptcy cases have a legal duty to protect certain personal information of their customers. This settlement should remind all major financial institutions and other creditors that violations cannot be tolerated.”

The settlement resolved the objection of the U.S. Trustee for Region 2, Tracy Hope Davis, to a motion Citi filed under seal in September 2011. Citi’s motion disclosed that between 2007 and 2011 its subsidiaries, including CitiMortgage Inc., Citibank N.A. and CitiFinancial Inc., filed proofs of claim in thousands of consumer bankruptcy cases seeking payment of amounts alleged to be owed by debtors. In April 2011, Citi discovered that certain personal information that should have been redacted under bankruptcy court rules, including consumers’ Social Security numbers and birth dates, had not been properly redacted.

The U.S. Trustee agreed that the information should be redacted, but objected to Citi’s motion because it did not disclose the nationwide scope of the breach. In addition, Citi did not propose a verifiable solution to correct the problem or provide assurance that the matter would be made public and the seal lifted once the information was redacted and affected consumers received notice.

On March 13, 2012, the bankruptcy court approved the settlement calling for the redaction and electronic filing of replacement claims at Citi’s expense. The settlement also included specific consumer protections, including: assurance that the original claims would not be overwritten or altered in the replacement process; notification to the affected debtors and third parties that their personal information was not properly redacted and of its correction; and an offer of one year of free credit monitoring.

Under the settlement, the court also appointed an independent auditor to review and file certifications with the court confirming that Citi’s investigation to determine the scope of the breach was adequate, that Citi filed properly redacted claims and did not overwrite or replace the original claims in the process, and that Citi’s policies and procedures for future filings are reasonably calculated to prevent recurrence of the redaction error.

On July 19, 2012, Citi certified to the bankruptcy court the successful redaction and replacement of the filings in the Southern District of New York. During that process, Citi discovered additional redaction issues and, in accordance with the settlement, filed a plan of corrective action expanding the scope of the settlement to include the redaction of approximately 50,000 additional bankruptcy filings.

Courts in 60 other jurisdictions served by the USTP have entered the settlement under seal and accepted the redacted replacement filings. Courts in the remaining jurisdictions handled the correction of the filings according to their local rules and orders, and Citi is otherwise following the terms of the settlement in those jurisdictions.

On June 4, 2013, the independent auditor certified to the U.S. Bankruptcy Court for the Southern District of New York and the 60 other participating courts that Citi had mailed letters notifying affected consumers of the privacy breach, its correction and the availability of one year of free credit monitoring at Citi’s expense. The independent auditor is reviewing Citi’s redaction and replacement process and is expected to issue its certification on that process by the end of the year.

Consumer debtors who believe they were affected may contact Citigroup Customer Service at 1-866-613-5636.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

The settlement is filed in In re Matter of Citi Replacement Filings, No. 11-00405 (Bankr. S.D.N.Y.).

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

Settlement Agreement (Stipulation and Order) [PDF - 1.07 MB]

The Justice Department announced today that the Gallup Organization has agreed to pay $10.5 million to settle allegations that it violated the False Claims Act and the Procurement Integrity Act for conduct involving several of its federal government contracts and subcontracts.  Gallup is a polling and market research firm headquartered in Washington, D.C. 

The settlement announced today resolves allegations in a complaint filed by the United States in November 2012.  The United States’ complaint alleged that Gallup knowingly overstated its true estimated labor hours in proposals to the U.S. Mint and State Department for contracts and task orders that were to be awarded without competition.  Because of Gallup’s conduct, the complaint alleged, the two federal agencies awarded Gallup contracts and task orders at falsely inflated prices.  The settlement also resolves allegations that Gallup engaged in improper employment negotiations with a then Federal Emergency Management Agency (FEMA) official, Timothy Cannon, in order to obtain a FEMA subcontract at an inflated price and additional FEMA funding after the subcontract had been awarded. 

“Contractors must be honest and straightforward in their contract proposals to the government,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “We will pursue contractors that seek to take advantage of the government by providing estimates that do not reflect their best judgment, or by offering employment to federal officials who have a conflict of interest.  This type of misconduct results in inflated contract prices and undermines the integrity of the government’s contracting process.” 

Separately, in April 2013, Cannon agreed to pay $40,000 to the United States to resolve allegations that he violated the Procurement Integrity Act by improperly negotiating for and accepting an offer of employment from Gallup while being personally and substantially involved in Gallup’s subcontract with FEMA.  In related criminal proceedings, on January 15, 2013, Cannon pled guilty to a violation of 18 U.S.C. § 208, a federal conflict of interest statute, and was subsequently sentenced to probation. 

 “This case exposed a cozy arrangement between a contractor and a government employee where nobody was looking out for the American taxpayer,” said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. “With this settlement, we have held the contractor accountable for overbilling the government and returned $10.5 million to the federal treasury.  This significant corporate settlement and the related criminal prosecution should send a clear message that contractors and government officials alike must operate with honor and integrity.”  

The False Claims Act allegations against Gallup were originally brought in a lawsuit filed under the whistleblower provisions of the Act by Michael Lindley, Gallup’s former Director of Client Services.  The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The United States may elect to intervene and take over the case, as it did here.  As a result of the settlement with Gallup, Lindley will receive $1,929,363 as his share of the government’s recovery.

The settlement announced today is part of a global civil, criminal, and administrative resolution involving the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, and the United States Department of Homeland Security (DHS).  After the United States’ civil complaint was filed, DHS, the parent organization of FEMA, suspended Gallup from government contracting.  In contemplation of resolving the criminal and civil investigations, Gallup recently entered into an Administrative Agreement with DHS, under which Gallup agreed to enhance its corporate compliance and ethics programs.  As a result, DHS lifted the suspension of Gallup.  Contemporaneous with the civil settlement, Gallup has entered into a Non-Prosecution Agreement with the U.S. Attorney’s Office for the District of Columbia related to the FEMA conflict of interest allegations, in which Gallup has further agreed to strengthen its corporate compliance and ethics programs and to pay a penalty of $50,000.   

The criminal investigation was conducted by the FBI and the Inspectors General for DHS and the General Services Administration (GSA).

The Deputy Inspector General for the Department of State, Harold W. Geisel, said, “We are very pleased with the successful resolution of this case, and I commend the dedication of our OIG investigators in these complicated investigations.  Our efforts should reinforce our commitment to American taxpayers to recover funds from contractors who have unlawfully claimed them.”

P. Brian Crane, Assistant Inspector General for Investigations, Treasury Office of Inspector General, would like to thank the U.S. Department of Justice and all agents involved in this case, and states that his office is committed to investigating contract fraud within Treasury’s bureaus, and is pleased with the outcome of this investigation.

"We are vigilant to protect taxpayers from contractors who overcharge the government," said GSA Inspector General Brian D. Miller.

The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.  The case is United States ex rel. Lindley v. The Gallup Organization, No-09-cv-01985 (D.D.C.). 

Related Materials:

Complaint
Settlement Agreement

Benjamin Franklin Pass, 60, and P&W Waste Oil Services Inc. of Wilmington, N.C., pleaded guilty today in federal court in the Eastern District of North Carolina for violations of the Toxic Substances Control Act, as well as for making false statements and failing to pay several years of taxes, announced the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of North Carolina.  The defendants admitted to, among other things, the unlawful handling of a toxic substance that resulted in widespread contamination.

The P&W facility in Leland, N.C., included a tank farm consisting of multiple tanks ranging from 20,000 gallons to 500,000 gallons.  The facility is located approximately 500 feet to the east of the Cape Fear River and a federally recognized wetland.

As part of its business operations, P&W transported, processed and marketed used oil contaminated with polychlorinated biphenyls (PCBs).  P&W received the used oil from small and large companies, such as automotive service stations, transformer repair companies and marinas.  P&W also conducted tank cleaning and waste removal.

According to the charges filed in federal court in Raleigh, N.C., and information stated in open court, the defendants knowingly failed to comply with regulations covering PCB-contaminated used oil by unlawfully transporting, storing and disposing of used oil contaminated with PCBs.  Specifically, in July 2009, an employee transported waste oil containing fluid from five PCB transformers from a site in Wallace, S.C., to the P&W facility.  The investigation revealed that the waste oil was contaminated with PCB concentrations in excess of 500 parts per million.

“Enforcing our environmental laws is essential to protecting the health of North Carolina’s residents and their natural resources,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “PCBs are well known to pose substantial risks to human health and the environment and must be handled responsibly and lawfully.  We will continue to vigorously prosecute those who ignore the laws Congress enacted in order to protect the people and the environment from coming into contact with this toxic substance.”
 
“This disregard of environmental protections resulted in significant contamination,” said U.S. Attorney for the Eastern District of North Carolina Thomas G. Walker.  “The defendant’s conduct placed an economic burden on the United States and an unreasonable risk to the health and safety of the citizens of North Carolina.”

Despite knowledge of the investigation into the defendants’ illegal handling of PCB-contaminated used oil, Pass and an employee of P&W (at Pass’ direction) continued to unlawfully dilute the contaminated used oil.  The mishandling of the PCB-contaminated used oil resulted in the wide-spread contamination at the site and other sites, resulting in millions of dollars in cleanup costs. 

PCBs pose such an unreasonable risk of injury to human health and the environment that effective Jan. 1, 1978, Congress banned the production of PCBs and mandated that no person may distribute in commerce, or use any PCBs other than in a totally enclosed manner, and directed the U.S. Environmental Protection Agency (EPA) to promulgate rules phasing out the manufacture of PCBs and regulating their disposal.

As part of the plea agreements, Pass agreed to pay $538,587, plus interest, in restitution to the Internal Revenue Service.  P&W agreed to pay restitution in the amount of $19 million as compensation to Colonial Oil and International Paper for the costs associated with the storage and proper disposal of PCB-contaminated used oil as well as any monetary losses associated with the illegal handling, storage and transportation of toxic substances.  P&W also agreed to a five-year term of probation and to take remedial action to address the environmental contamination at its facility in eastern North Carolina and other leased property in eastern North Carolina, including but not limited to, the proper treatment and/or disposal of PCB-contaminated waste oil.

Currently, efforts are underway to clean up the contamination at P&W’s facility in Leland, N.C., which has been designated a Superfund site by the EPA.  Superfund is the name given to the federal environmental program established to clean up the nation’s uncontrolled hazardous waste sites.

“The license to run a business is not a license to avoid paying taxes,” said Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation. “IRS Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners.  As today’s announcement shows, our skills support a wide range of investigations.  Pass’ plea demonstrates the strength of our collective efforts to enforce the law and ensure public trust.”

“The defendant's failure to notify EPA of the presence and intentional dilution of PCB-contaminated fuel oil not only posed a risk to public health and the environment, but also demonstrated the level of disregard for the laws that were designed to protect us.” said Maureen O'Mara, Special Agent in Charge of Environmental Protection Agency’s (EPA) criminal enforcement office in Atlanta.  “Today’s guilty plea sends a clear message that the government will prosecute those who recklessly endanger the health of our communities and environment by ignoring the law.”

The defendants entered their plea before U.S. District Judge James C. Dever III of the Eastern District of North Carolina. 

U.S. Attorney Walker and Acting Assistant Attorney General Dreher praised the efforts of the EPA’s Criminal Investigation Division and the IRS’s Office of Criminal Investigations and the U.S. Coast Guard’s Criminal Investigative Services for their diligent work in the investigation of this matter.  Assistant U.S. Attorney Banumathi Rangarajan of the Eastern District of North Carolina and Trial Attorney Shennie Patel of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division are the prosecutors in charge of the case.

Today marked the establishment of a memorandum of understanding (MOU) between the Navajo Nation Human Rights Commission and the Civil Rights Division’s Indian Working Group (IWG).  The MOU will establish a communication process that will ensure that civil rights violations are brought to the IWG when the civil rights of a member of the Navajo Nation is violated.

The commission was established as an entity of the Navajo Nation government to operate as a clearinghouse entity to address discriminatory actions against citizens of the Navajo Nation.  The commission works to ensure that Navajo citizens are free from discrimination and are free to enjoy basic human rights and fundamental freedoms.  The commission is authorized to receive reports of discriminatory and racially motivated acts perpetrated against citizens of the Navajo Nation and refer such incidents to the proper authorities. 

The IWG is a part of the Justice Department’s Civil Rights Division and is comprised of members from throughout the Civil Rights Division.  The mission and purpose of the IWG is to assist the Civil Rights Division in its law enforcement duties and responsibilities toward Native Americans.  The IWG works to identify issues that affect Native Americans and to refer, coordinate, support and monitor enforcement and outreach activities involving Native Americans. 

The MOU evolved from discussions on May 25, 2012 between the commission, Albert Sanchez, Program Analyst for the  New Mexico Equal Employment Opportunity Commission (NMEEOC), and Albert Baltazar, Special Counsel of the Civil Rights Division regarding civil rights violations in border towns surrounding the Navajo Nation.

The MOU promotes and encourages enforcement of federal civil rights laws by increasing communication between the Commission and IWG.  The MOU outlines procedures and provides guidance to the Commission and IWG in sharing information about civil rights issues affecting citizens of the Navajo Nation.

“This MOU will assist the Commission by streamlining and expediting information between agencies to resolve civil rights violations that are not afforded the same investigative measures that non-indigenous victims receive.  This MOU will be that stepping stone toward resolving issues that this Commission has had difficulty with pursuing in the border towns surrounding the Navajo Nation” said Commissioner Darden, chairperson of the Commission.

“This MOU between the Navajo Nation Human Rights Commission and the Indian Working Group establishes a strong mechanism to assist the Civil Rights Division to address civil rights issues involving citizens of the Navajo Nation, “ said Eve Hill, Senior Counselor to the Assistant Attorney General for Civil Rights.  “For far too long Native Americans have experienced discrimination and injustice, and the federal government can and must stop such discrimination.”

“With the MOU approved by both the Navajo Nation and U.S. civil rights office, the Navajo Human Rights Office now looks forward to working on common strategy to address race discrimination against Navajo citizens,” said Leonard Gorman, Executive Director of the Office of Navajo Nation Human Rights Commission.

A copy of the signed MOU may be viewed at http://www.justice.gov/crt/publications/mouiwg.pdf

Peter Picone, 40, of Methuen, Mass., has been charged with importing counterfeit semiconductors from China for sale in the United States.

The charges were announced today by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Acting U.S. Attorney for the District of Connecticut Deirdre M. Daly; Special Agent in Charge Bruce Foucart of U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI) in Boston; Acting Special Agent in Charge of Defense Criminal Investigative Service (DCIS) Northeast Field Office Craig W. Rupert; and Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Northeast Field Office Cheryl A. DiPrizio.  

The eight-count indictment charges Picone with conspiring to traffic in counterfeit goods, conspiring to traffic in counterfeit military goods, trafficking in counterfeit goods, conspiring to commit wire fraud, wire fraud and conspiring to commit money laundering.  The indictment was returned by a federal grand jury in New Haven on June 25, 2013, and was unsealed today.

The indictment charges that from February 2007 through April 2012, Picone, through two companies he owned and operated, Tytronix Inc. and Epic International Electronics, purchased counterfeit semiconductors from sources in Hong Kong and China.  According to the indictment, Picone made false representations about the semiconductors and sold them to customers throughout the United States, including companies believed by Picone to be defense contractors in Connecticut and Florida.  Certain semiconductors sold by Picone were intended for use on nuclear submarines.

“By allegedly purchasing and reselling counterfeit semiconductors for military applications, Peter Picone put personal gain above the safety and well-being of dedicated U.S. servicemen and women,” said Acting Assistant Attorney General Raman.  “As charged in the indictment, Picone went to great lengths to conceal the true origin of counterfeit semiconductors in order to sell the devices as seemingly legitimate and reliable components for use in nuclear submarines and other complex machinery.  The charges unsealed today demonstrate our steadfast commitment to working with our law enforcement partners to prosecute counterfeiters and others who risk the security of the men and women of the U.S. military.”

“Counterfeit semiconductors pose a serious health and safety risk to consumers and end-users, and an even greater threat to the safety of the men and women of our armed services when they are sold for use in the military,” said Acting U.S. Attorney Daly.  “We will prosecute these types of cases to the fullest extent of the law.”

“Today’s charges demonstrate the continued commitment of the Defense Criminal Investigative Service and our peer agencies to protect the Department of Defense’s supply chain from being infiltrated and compromised with inferior components,” said DCIS Northeast Field Office Acting Special Agent in Charge Rupert.  “Safeguarding our warfighters and ensuring their equipment functions at the absolute highest levels is vital to our nation’s defense and readiness.  Detecting and dismantling the operations of suppliers who choose to make a profit by supplying counterfeit or inferior products is a DCIS priority.  I applaud the agents and prosecutors who worked tirelessly to bring about this result.”

“Trafficking in counterfeit sensitive technologies is an extremely dangerous practice on several fronts. Not only are there significant risks associated with the transportation of this faulty equipment, but our own American servicemembers are also put in harm’s way when they encounter substandard equipment,” said ICE-HSI Special Agent in Charge Foucart.  “One of HSI's top enforcement priorities is protecting the integrity of U.S. military products and other sensitive technology.” 

“Counterfeit semiconductors represent a serious threat to the safety of our military service members and raise national security concerns,” said NCIS Special Agent in Charge DiPrizio.  “The introduction of defective equipment into the military supply chain can result in product failure, property damage and even serious bodily injury, including death.  Some of these counterfeit devices can also be preprogrammed with malicious code and enable computer network intrusion.  NCIS has worked closely with our law enforcement partners at DCIS and ICE-HSI in identifying unscrupulous suppliers and bringing them to justice.”

Picone was arraigned before U.S. Magistrate Judge Donna F. Martinez of the District of Connecticut in Hartford, Conn., and was released on bond.  Trial is scheduled for Sept. 9, 2013, before U.S. District Judge Alvin W. Thompson in Hartford.

If convicted of conspiracy to traffic in counterfeit goods, Picone faces a maximum penalty of five years in prison.  If convicted of conspiracy to traffic in counterfeit military goods, Picone faces a maximum term of 20 years in prison.  If convicted of trafficking in counterfeit goods, Picone faces a maximum term of 10 years in prison.  If convicted of conspiracy to commit wire fraud, or wire fraud, Picone faces a maximum penalty of 20 years in prison.  If convicted of conspiracy to commit money laundering, Picone faces a maximum term of 20 years in prison. 

The indictment also seeks forfeiture of proceeds from illicit trafficking in counterfeit goods and wire fraud as well as the seizure of the goods and any property involved in the money laundering conspiracy.

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

The case was jointly investigated by HSI, DCIS and NCIS.  The case is being prosecuted by Assistant U.S. Attorney Edward Chang of the District of Connecticut and Trial Attorneys Kendra Ervin and Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section.  Trial Attorney Kristen M. Warden of the Criminal Division’s Asset Forfeiture and Money Laundering Section is assisting with the forfeiture aspects of the case.

The enforcement action announced today is one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation, and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state, and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce/.

"As the Department first acknowledged last year, we have an open investigation into the death of Trayvon Martin. The Department of Justice's Criminal Section of the Civil Rights Division, the United States Attorney's Office for the Middle District of Florida, and the Federal Bureau of Investigation continue to evaluate the evidence generated during the federal investigation, as well as the evidence and testimony from the state trial. Experienced federal prosecutors will determine whether the evidence reveals a prosecutable violation of any of the limited federal criminal civil rights statutes within our jurisdiction, and whether federal prosecution is appropriate in accordance with the Department's policy governing successive federal prosecution following a state trial.”

After conducting a rigorous review of internal Justice Department guidelines governing investigations and other law enforcement matters that involve journalists, Attorney General Eric Holder today released a report outlining several key reforms to the department’s protocols, as well as the following statement:   “The Department of Justice is firmly committed to ensuring our nation’s security, and protecting the American people, while at the same time safeguarding the freedom of the press.  These revised guidelines will help ensure the proper balance is struck when pursuing investigations into unauthorized disclosures.  While these reforms will make a meaningful difference, there are additional protections that only Congress can provide.  For that reason, we continue to support the passage of media shield legislation.  I look forward to working with leaders from both parties to achieve this goal, and am grateful to all of the journalists, free speech advocates, experts, and Administration leaders who have come together in recent weeks – in good faith, and with mutual respect – to guide and inform the changes we announce today.”

During the review, Attorney General Holder personally held seven meetings with approximately 30 news media organizations as well as with First Amendment groups, media industry associations and academic experts.

A copy of the full Justice Department report is attached.

Related Materials:

Report on Review of News Media Policies

Gary Battaglini was sentenced today to serve 96 months in prison for his participation in a racketeering conspiracy involving 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.

Battaglini, 52, of Sewell, N.J., was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania.  In addition to his prison term, Battaglini was sentenced to serve three years of supervised release.

 On Feb. 5, 2013, after a four-month trial, a jury convicted Battaglini of conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity.  The evidence at trial proved that, in furtherance of the racketeering conspiracy, Battaglini, as an LCN Family “associate,” engaged in loan sharking and illegal sports bookmaking activities on behalf of the mob.  Battaglini exploited the violent reputation of the Philadelphia LCN Family in extending usurious loans and collecting payments on the loans, leaving the borrowers in fear of physical harm if they did not pay promptly. 
 
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.

 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. Six of the defendants, including Battaglini, have been sentenced, and six are awaiting sentencing.

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.

Today, the U.S. District Court for the Western District of Tennessee approved a comprehensive consent order in McFerren v. County Board of Education of Fayette County, which the Department of Justice negotiated with the Board of Education of Fayette County, Tenn., and the NAACP Legal Defense & Educational Fund to desegregate the Fayette County public schools.  

The consent order requires the district to take the following steps:

·          Close four of its seven elementary schools, including a racially identifiable white school and two racially identifiable black schools. 

·          Construct a new elementary school to be opened by the start of the 2014-15 school year.

·          Revise its attendance zone lines.

·          Implement a controlled choice program between two of its schools. 

·          Explore and possibly create a magnet program at the elementary school with the highest projected African-American enrollment.

·          Continue intra-district student transfers that further desegregation among its schools. 

Today’s consent order replaces a previous consent order approved in 2012, as part of a collective effort by the parties to ensure even greater desegregation of the schools while achieving  financial savings for the district.  Before it can be declared unitary, the district must comply in good faith with its desegregation obligations for a minimum of three years, until the end of the 2016-17 school year, and eliminate the vestiges of segregation in its schools.  

“The parties’ diligence and creativity resulted in meaningful progress towards desegregation of the schools,” said Jocelyn Samuels, Principal Assistant Attorney General for the Civil Rights Division.  “Their efforts demonstrate that a district can desegregate its schools in a fiscally responsible manner that ensures educational opportunities for all students.”

The enforcement of Title IV of the Civil Rights Act of 1964 in school districts is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Contrack International Inc., a global design and construction company headquartered in McLean, Va., has agreed to pay $3.5 million to settle allegations that it submitted false claims in connection with U. S. Agency for International Development (USAID) contracts, the Justice Department announced today. 

“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Justice Department will take action where contractors misrepresent their qualifications for government contracts and programs.”

The settlement concerns USAID-funded contracts for the construction of water and wastewater infrastructure projects in the Arab Republic of Egypt in the 1990s.  The bidders for these contracts were required to receive prequalification and, in some cases, establish that they were U. S. companies.  However, the contracts were ultimately performed by a joint venture partnership among Contrack; Washington Group International, Inc., a subsidiary of URS Corporation; and Misr Sons Development S.A.E. (Hassan Allam Sons), an Egyptian company.  The government filed suit under the False Claims Act and the Foreign Assistance Act alleging that the joint venture partners evaded the prequalification requirement by concealing the identity of the joint venture partners, which prevented USAID from accurately evaluating their qualifications.  As a result, the government alleged that Contrack and its partners received USAID-funded contracts for which they were ineligible.
“Proper public contracting, government efficiency and government accountability rely on complete information from contractors,” said Wendy J. Olson, U.S. Attorney for the District of Idaho.  “Along with our partners at USAID and the Department of Justice’s Commercial Litigation Branch, we will aggressively seek to recover improperly awarded taxpayer dollars.”

This settlement – which resolves only Contrack’s liability – was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Idaho; and the USAID Office of Inspector General.  The government is continuing to pursue its claims against the other two defendants in the suit.

The case is United States v. Washington Group International Inc. f/k/a/ Morrison Knudsen, Corporation; Contrack International, Inc.; and Misr Sons Development S.A.E. a/k/a Hassan Allam Sons, No. 04-555 (N.D. Idaho).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Joseph Massimino was sentenced today to serve 188 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.

Massimino, 63, of Philadelphia, was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania.  In addition to his prison term, Massimino was sentenced to serve three years of supervised release.
 
On Feb. 5, 2013, after a four-month trial, a jury convicted Massimino of conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra Family through a pattern of racketeering activity.  The evidence at trial proved that, in furtherance of the racketeering conspiracy, Massimino, as a “made” member and underboss, extorted “street tax” payments from a bookmaker, used threats of violence against debtors to collect loan sharking payments and forced the owners of a vending company to sell the portion of their business related to the operation of illegal video poker machines.  In addition, Massimino 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.  In one of these locations, Massimino also operated an illegal sports bookmaking business. 
 
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 the U.S. Department of Labor’s Employee Benefits Security Administration.  Additional assistance was provided by the New Jersey Department of Corrections.

A Las Vegas mortgage agent has been convicted for his role in a “cash back at closing” mortgage fraud scheme that netted $1.43 million in fraudulent mortgage loans, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Acting Special Agent in Charge William C. Woerner of the FBI’s Las Vegas Field Office.

After a three-day trial before U.S. District Judge Larry Hicks in the District of Nevada, a federal jury convicted Jawad “Joe” Quassani, 42, on July 10, 2013, of one count of conspiracy to commit wire fraud and mail fraud, two counts of wire fraud, and two counts of mail fraud.

According to court documents and evidence presented at trial, Quassani participated in a scheme in which the prices of two homes were falsely inflated, mortgage loans were obtained through the submission of loan applications containing false and fraudulent information about the buyer’s income and intent to occupy the homes as primary residences, a portion of the loan proceeds was diverted at the close of escrow to the defendant’s co-conspirators, and commissions on the fraudulent loans were paid to Quassani and his co-conspirator.  Evidence at trial established that Quassani, a licensed mortgage agent at Rapid Funding Group, conceived the scheme together with two of his co-conspirators, prepared one of the loan applications and arranged for the preparation of the other, and shared in the commissions generated by transactions that had no purpose other than to generate profits for the co-conspirators.

Co-conspirators Anita Mathur and Shirjil “Sean” Qureshi previously pleaded guilty in related cases in Las Vegas to one count of conspiracy to commit bank fraud, wire fraud and mail fraud.  Both are awaiting sentencing.

This case was investigated by the FBI.  Trial Attorneys Stephen J. Spiegelhalter and Gary A. Winters of the Criminal Division’s Fraud Section are prosecuting the case.

Today’s conviction 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 the launch of a new educational video to assist employers in avoiding charges of discrimination in the employment eligibility verification form I-9 process and in the use of E-Verify. The video also helps educate employees about their legal rights.  The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) within the department’s Civil Rights Division enforces the anti-discrimination provision of the Immigration and Nationality Act (INA), which prohibits employers from discriminating against work-authorized individuals in hiring, firing, recruitment or referral for a fee, regardless of their citizenship status or national origin.  The law also prohibits discrimination during the form I-9 and E-Verify processes.

OSC developed its latest video to address issues that frequently arise from calls to its hotline and charges filed. Employers sometimes incorrectly believe that they need to request more documents than are necessary for the employment eligibility verification form I-9.  Additionally, employers using E-Verify may improperly request specific documents due to misunderstanding of E-Verify requirements.  OSC’s new video highlights some practices that are not permissible and may lead to claims under the anti-discrimination provision.

“We believe this video will help both employers and employees across the country understand employment eligibility verification rules,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division.  “Federal law prohibits discrimination in the employment eligibility verification process, and the Justice Department is committed to enforcing the law.” 

The video may be viewed at http://youtu.be/VNHFDusJqRg

The latest OSC video is part of OSC’s educational video series that can be found here: http://go.usa.gov/2P6m . OSC also operates a hotline for employers and workers, frequently providing guidance to employers on how to avoid discrimination and educating employees on rights protected by the anti-discrimination provision. OSC offers live webinars for both employers and employees to educate employers on avoiding workplace discrimination and to educate employees about their rights.  For more information about protections against employment discrimination under the immigration law, call OSC’s worker hotline at: 1-800-255-7688 (1-202-616-5525, TTY for the hearing impaired); call OSC’s employer hotline at: 1-800-255-8155 (1-202-616-5525, TTY for the hearing impaired); send an e-mail to: osccrt@usdoj.gov ; or visit OSC’s website http://www.justice.gov/crt/about/osc .

The Department of Justice announced today the filing of a lawsuit, against the California Department of Corrections and Rehabilitation (CDCR), alleging that CDCR discriminated against Joe B. Cummings on the basis of his sex in violation of Title VII of the Civil Rights Act of 1964, as amended.  Title VII is a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion. 

The lawsuit filed in the U.S. District Court for the Central District of California, alleges that Cummings’s former co-worker at CDCR sexually harassed him for more than a year until she was placed on administrative leave, for unrelated reasons, in October 2009.   According to the complaint, Cummings, a male cook with CDCR, was subjected to frequent unwanted and unwelcomed sexual advances made towards him by a female co-worker, including frequent profane and suggestive comments and inappropriate touching of his person.  The complaint alleges that the female co-worker’s misconduct escalated in August 2008, when she forced her hand down Cummings’s pants and struck him in the head.   

The United States alleges that Cummings made numerous complaints to his supervisors about the sexual harassment and that CDCR failed to take timely steps to end the harassment or to discipline the harasser.  The complaint alleges that the CDCR failed to follow its own anti-discrimination policy, which charges CDCR’s supervisors with preventing and correcting allegations of sexual harassment of which they become aware through either a report made to them or by personal observation.  Through this lawsuit, the United States seeks declaratory and injunctive relief requiring the CDCR to develop and implement policies that would prevent CDCR employees from being subjected to sexual harassment.  The United States also seeks monetary relief for Cummings to compensate him for the damages he sustained as a result of the alleged discrimination.

Cummings originally filed a charge of sex discrimination with the California Department of Fair Employment and Housing, which referred the charge to the U.S. Equal Employment Opportunity Commission (EEOC).  The EEOC’s Los Angeles District Office investigated the matter, determined that there was reasonable cause to believe that discrimination had occurred, and referred the matter to the Department of Justice.

“Employees, regardless of their sex, have the right to work in an environment that is free from sexual harassment,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division.   "The Civil Rights Division will continue to vigorously enforce that right."

The 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.

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Shell Oil and affiliated partnerships (Shell) have agreed to resolve alleged violations of the Clean Air Act at a large refinery and chemical plant in Deer Park, Texas, by spending at least $115 million to control harmful air pollution from industrial flares and other processes, and by paying a $2.6 million civil penalty. Shell has agreed to spend $1 million on a state-of-the-art system to monitor benzene levels at the fenceline of the refinery and chemical plant near a residential neighborhood and school and to make the data available to the public through a website.

 Shell will spend $100 million on innovative technology to reduce harmful air pollution from industrial flares, which are devices used to burn waste gases. Shell is required to take the following actions to improve flaring operations: minimize flaring by recovering and recycling waste gases (which may then be reused by Shell as a fuel or product); comply with limitations on how much waste gas can be burned in a flare (flare caps); and install and operate instruments and monitoring systems to ensure that gases that are sent to flares are burned with 98% efficiency. Shell’s agreement to recover and recycle waste gases (flare gas recovery) at its chemical plant is a first of its kind. 
Once fully implemented, the pollution controls required by the settlement will reduce harmful air emissions of sulfur dioxide, volatile organic compounds (VOCs) including benzene, and other hazardous air pollutants by an estimated 4,550 tons or more per year. These controls will also reduce emissions of greenhouse gases by approximately 260,000 tons per year. 

“This settlement will result in substantial reductions in toxic air pollution through state of the art technology and increased efficiencies at the Deer Park plant,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division. “This agreement will bring Shell Oil’s refinery and chemical plant in Deer Park into compliance with the nation’s Clean Air Act and result in cleaner, healthier air for residents in the local communities for many years to come.” 

“The innovative emission controls required by today’s settlement will cut harmful air pollution in communities near Houston,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance.  “This case is part of EPA’s nationwide enforcement effort to protect fenceline neighborhoods by significantly reducing toxic pollution from flares and making information about pollution quickly available to affected communities.”

 The settlement was filed at the same time the Justice Department filed a complaint on behalf of EPA alleging, among other things, that the company improperly operated its 12 steam-assisted flaring devices in such a way that excess VOCs, including benzene and other hazardous air pollutants, were emitted. 

In addition to reducing pollution from flares, Shell will significantly modify its wastewater treatment plant; replace and repair tanks as necessary; inspect tanks biweekly with an infrared camera to better identify potential integrity problems that may lead to leaks; and implement enhanced monitoring and repair practices at the benzene production unit. When fully implemented, these specific projects are estimated to cost between $15 and $60 million.

Also, in a second project to benefit the community, Shell has agreed to spend $200,000 on retrofit technology to reduce diesel emissions from government-owned vehicles which operate in the vicinity of the Deer Park complex. 

These actions will cut emissions of pollutants that can cause significant harm to public health. Exposure to high concentrations of sulfur dioxide can affect breathing and aggravate existing respiratory and cardiovascular disease. VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis. Chronic exposure to benzene, which EPA classifies as a carcinogen, can cause numerous health impacts, including leukemia and adverse reproductive effects in women. 

 Today’s settlement is part of EPA’s national effort to reduce emissions toxic air pollutants, with a particular focus on industrial flares. These requirements focus on reducing the amount of waste gas sent to flares and on improving flare operations, both of which work to reduce toxic emissions. Improper operation of an industrial flare can send hundreds of tons of hazardous air pollutants into the air. The more waste gas a company sends to a flare, the more pollution occurs. The less efficient a flare is in burning waste gas, the more pollution occurs. EPA wants companies to flare less, and when they do flare, to fully burn the harmful chemicals found in the waste gas. 
Shell, which is headquartered in Houston, processes approximately 330,000 barrels per day of crude oil at its Deer Park facility, making it the 11th largest refinery in the United States. In addition, the Deer Park chemical plant produces approximately 8,000 tons per day of products that include ethylene, benzene, toluene, xylene, phenol, and acetone. Both the chemical plant and the refinery operate 24 hours a day, 365 days a year.

The consent decree, lodged in federal court in the Southern District of Texas, is subject to a 30-day public comment period and court approval. The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.

More information about the settlement:  www.epa.gov/enforcement/air/cases/sdp.html

More information about EPA’s Air Toxics National Enforcement Initiative: www.epa.gov/compliance/data/planning/initiatives/2011airtoxics.html

Prior enforcement settlements related to industrial flaring:

BP North America: www.epa.gov/compliance/resources/cases/civil/caa/bp-whiting.html

Marathon Petroleum Company: yosemite.epa.gov/opa/admpress.nsf/2467feca60368729852573590040443d/e841a5bbc6dd1082852579d7005b6347!OpenDocument&Highlight=2,Marathon

CountryMark Refining and Logistics: yosemite.epa.gov/opa/admpress.nsf/2467feca60368729852573590040443d/b511e565ba2af7f985257b20005cb737!OpenDocument&Highlight=2,CountryMark

Enforcement Alert: EPA Enforcement Targets Flaring Efficiency Violations (August 2012): www.epa.gov/enforcement/air/documents/newsletters/flaringviolations.pdf

The Justice Department today announced it filed a lawsuit in the U.S. District Court for the Western District of New York against Erie County, N.Y., alleging that the county discriminated against an employee with a disability.  The department simultaneously filed a consent decree to resolve the claims.  In its lawsuit, the department alleges that the county violated the Americans with Disabilities Act (ADA) by refusing to promote a maintenance worker with monocular vision because he did not have a commercial driver’s license.  The Justice Department found that the employee was qualified for the promotion and that he could perform all the important job duties associated with the promotion.  The department also found that there were other employees who did not have a commercial driver’s license who had been promoted to the position. 

“The result of the county’s action was to deny a promotion to someone who should have received it,” said Eve L. Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division.  “The Justice Department is committed to removing these types of discriminatory barriers, and to ensuring equal employment opportunities for people with disabilities.”

The consent decree, which must be approved by the court, requires the county to pay the employee $22,486 in back pay and interest, offer him a promotion with remedial seniority, provide training on the ADA and file periodic reports with the Justice Department.

Title I of the ADA prohibits employers, such as Erie County, from discriminating against people on the basis of disability in various aspects of employment.  These prohibitions include using qualification standards that screen out individuals with disabilities and that are not job-related and consistent with business necessity.  The ADA also requires employers to provide reasonable accommodations to otherwise qualified individuals with disabilities, where such an accommodation does not pose an undue hardship.

Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.

Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division made the following statement today after the U.S. District Court for the Southern District of New York found that Apple Inc. violated Section 1 of the Sherman Act by conspiring to raise e-book prices and end e-book retailers’ freedom to compete on price:

“This result is a victory for millions of consumers who choose to read books electronically.  After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices.  Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books.

“As the department’s litigation team established at trial, Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books.  The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 percent as a result of the collusive effort led by Apple.

 
“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions. 

 
“I am proud of the outstanding work done by the trial team.  The Antitrust Division will continue to vigorously protect competition and enforce the antitrust laws in this important business, and in other industries that affect the everyday lives of consumers.”

Background

           
On April 11, 2012, the department filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against Apple, Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC, which does business as Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc., for conspiring to end e-book retailers' freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for e-books.

 
At the same time that it filed the lawsuit, the department reached settlements with three of the publishers – Hachette, HarperCollins and Simon & Schuster. Those settlements were approved by the court in September 2012.  The department settled with Penguin on Dec. 18, 2012, and with Macmillan on Feb. 8, 2013.  The Penguin settlement was approved by the court in May 2013.  Final approval of the Macmillan settlement is pending before the court.  Under the settlements, each publisher was required to terminate agreements that prevented e-book retailers from lowering the prices at which they sell e-books to consumers and to allow for retail price competition in renegotiated e-book distribution agreements.

 
The department’s trial against Apple, which was overseen by Judge Denise Cote, began on June 3, 2013. The trial lasted for three weeks, with closing arguments taking place on June 20, 2013.  The court has not yet scheduled a hearing to address the parties’ proposed remedies. 

A former U.S. Army Reserve captain pleaded guilty today to accepting more than $90,000 in bribes from contractors while he was deployed to Iraq, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

Edward William Knotts III, 51, of Gibbon, Neb., pleaded guilty before U.S. District Judge James Mahan in the District of Nevada to a criminal information charging him with one count of bribery. He faces a maximum penalty of 15 years in prison when he is sentenced on Oct. 8, 2013.

According to court documents, from December 2005 until December 2007, Knotts was stationed at Camp Buehring, Kuwait, as a contracting officer’s representative for contracts between the U.S. Army and local contractors to provide services to support the operations at Camp Buehring and another U.S. camp in Kuwait. 

In November 2006, Knotts entered into an agreement with a Kuwait-based corporation to receive a monthly fee from the corporation in return for providing confidential bidding information about U.S. Army contracts.  Between November 2006 and November 2007, the corporation paid him approximately $31,500 in cash.  In June 2007, a representative of the corporation paid Knotts $40,000 at a hotel room in Las Vegas in return for his promise to provide confidential bid information and in anticipation of the corporation hiring him.  Knotts received another similar cash payment of $20,000 in August 2008 in a different Las Vegas hotel. 

This case was investigated by the Special Inspector General for Iraq Reconstruction, Defense Criminal Investigative Service and U.S. Army Criminal Investigation Command. The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section. 

The Justice Department and the Internal Revenue Service (IRS) announced that Susan C. Valentine, a resident of Fairfax County, Va., pleaded guilty today to tax evasion.

According to documents filed with the court, Valentine was the former director at the Epiphany Weekday School (EWS) in Alexandria, Va. From 2008 through 2010, Valentine received a salary and also took additional funds from EWS for herself and members of her family. Despite earning this income, Valentine did not file income tax returns or pay income taxes for 2008 through 2010.  Moreover, as director, Valentine caused false payroll tax forms to be filed on behalf of ESW with the IRS. 

Sentencing was scheduled by U.S. District Court Judge James Cacheris for Oct. 18, 2013.  Valentine faces a maximum sentence of five years in prison, three years of supervised release, a $250,000 fine and a $100 special assessment.  She has agreed to pay restitution to the IRS.

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 Melissa Siskind and Karen E. Kelly, who are prosecuting the case.

Following a comprehensive investigation, the Justice Department today released its letter of findings determining that the city of Miami Police Department (MPD) has engaged in a pattern or practice of excessive use of force through officer-involved shootings in violation of the Fourth Amendment of the Constitution.  Between 2008 and 2011, officers intentionally shot at individuals on 33 separate occasions, three of which MPD itself found unjustified.  The department found that a number of MPD practices, including deficient tactics, improper actions by specialized units, as well as egregious delays and substantive deficiencies in deadly force investigations, contributed to the pattern or practice of excessive force.

The department's findings noted that MPD did not provide close supervision or hold individuals accountable for their actions by failing to complete thorough, objective and timely investigations of officer-involved shootings.  For a significant number of the shootings, including one that occurred in  2008, MPD has not reached a conclusion internally as to whether or not the officer’s firearm discharge was lawful and within policy.  The Justice Department found that MPD’s failure to complete timely and thorough investigations of officer-involved shootings undermined accountability and exposed MPD officers and the community to unreasonable risks that might have been addressed through prompt corrective action, noting that several investigations remained open for more than three years.  Significantly, a small number of officers were involved in a disproportionate number of shootings, while the investigations into their shootings continued to be egregiously delayed.  The findings released today mark the conclusion of the department’s second investigation of MPD in recent years.  The department noted that similar deficiencies were found in its previous investigation that began in 2002.

“Although MPD appeared to correct course after our first investigation, many of the systemic problems that we previously identified returned to root deeply in MPD’s practices.  Our findings should serve as a catalyst to help MPD and the city of Miami restore the community’s confidence in fair, effective and accountable law enforcement,” said Roy L. Austin Jr, Deputy Assistant Attorney General for the Civil Rights Division.  “We look forward to collaborating with Chief Orosa, Mayor Regalado and the people of Miami to create and implement a comprehensive, court-enforceable plan to ensure sustainable reform.”

Wifredo Ferrer, U.S. Attorney for the Southern District of Florida stated, “In November 2011, the Civil Rights Division of the Department of Justicebegan a formal investigation to determine whether the city of Miami Police Department had engaged in a pattern or practice of excessive use of deadly force by firearms.  After a careful and thorough review of the facts and circumstances surrounding a series of police-involved shootings, the Civil Rights Division found that the police department in fact engaged in such prohibited conduct.  Today, we are releasing the detailed findings of the investigation, with the dual goal of shining a light on past wrongs and – more importantly – setting a clear course for the future that will assure the residents of the city of Miami that this type of behavior will not be repeated in our city.  We commend Chief Orosa for recognizing some of the problems the Civil Rights Division found and for pursuing initiatives to address them.  We are confident that the findings and recommendations will be heeded, and will result in institutional long-term reform that will make our city and police force better than ever.”

The department’s investigation involved an in-depth review of thousands of documents, including written policies and procedures, training materials, and internal reports, photographs, video and audio recordings and investigative files.  The review benefited from productive dialogue with MPD supervisors and officers, city of Miami officials, the Office of the State Attorney, the Civilian Investigative Panel, and members of the Miami community.  The Justice Department provided feedback to MPD during the investigation and commends Chief Manuel Orosa for taking steps to address some of the deficiencies identified since the investigation began. 

The investigation was conducted by the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Florida, with the assistance of an experienced law enforcement expert, pursuant to the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994.  The findings letter will be available on the department’s website at http://www.justice.gov/crt/about/spl/ .  The department welcomes comments or concerns from the community via email at community.miamipd@usdoj.gov .

A business manager for an Iraqi company pleaded guilty today to giving thousands of dollars in illegal gratuities to a U.S. pay agent from contractors while the business manager was in Iraq, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

 Mario G. Khalil, 50, of Houston, pleaded guilty before U.S. District Judge David Hittner in the Southern District of Texas to a criminal information charging him with one count of giving a gratuity to a public official.  At sentencing, scheduled for Oct. 3, 2013, he faces a maximum sentence of two years in prison.

 According to court documents, from 2007 through 2009, Khalil worked at Camp Liberty in Iraq as a business manager for an Iraqi contracting company, holding various contracts with the U. S. Army, Air Force and Department of Defense to provide logistical services and supplies.

Khalil told Richard Gilliland – a U.S. Army staff sergeant serving as a pay agent for civil investment projects in Iraq from October 2007 through November 2008 – that Khalil’s company was interested in obtaining contracts and acquiring used and non-working generators from the Defense Reutilization and Marketing Office (DRMO) and was seeking Gilliland’s assistance as an Army official.  Khalil gave and offered Gilliland approximately $10,000 in cash and a laptop computer in return for his influence in obtaining generators and future contracts.

Gilliland pleaded guilty in February 2013 to an information stemming from the same scheme and is awaiting an August 2013 sentencing.

The case was investigated by the Special Inspector General for Iraq Reconstruction.  The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw and Trial Attorney Mark Grider of the Criminal Division’s Fraud Section and Assistant U.S. Attorney James Buchanan of the Southern District of Texas. 

WASHINGTON - Después de una exhaustiva investigación, el Departamento de Justicia (el departamento) reveló hoy la carta sobre los hallazgos que determinan que el Departamento de Policía de la ciudad de Miami (Miami Police Department, MPD) ha seguido un patrón o práctica de uso excesivo de la fuerza mediante disparos que involucran  a la policía, violando así la Cuarta Enmienda de la Constitución. Entre 2008 y 2011, los agentes dispararon intencionalmente a individuos en 33 ocasiones distintas, tres de las cuales fueron consideradas injustificadas por el mismo MPD. El departamento encontró una serie de prácticas del MPD que contribuyeron al patrón o práctica de fuerza excesiva, tales como tácticas deficientes, acciones inadecuadas por parte de unidades especializadas y retrasos indignantes y deficiencias importantes en las investigaciones de fuerza letal.

Los descubrimientos del departamento demostraron que el MPD no supo brindar supervisión o responsabilizar a los individuos por sus acciones ya que no completaron en su totalidad y en tiempo y forma las investigaciones de disparos que involucran agentes. Para una gran cantidad de disparos, incluyendo el ocurrido en 2008, el MPD no ha llegado a una conclusión interna respecto de si el disparo del oficial fue legal y acorde a las políticas. El Departamento de Justicia determinó que la ineficiencia del MPD para completar en tiempo y forma las investigaciones de disparos que involucran agentes socavó la rendición de cuentas y expuso a los agentes del MPD y a la comunidad a riesgos irracionales que podrían haberse evitado mediante la acción correctiva inmediata. Se demostró también que varias investigaciones permanecieron abiertas por más de tres años. Considerablemente, un pequeño grupo de agentes estuvieron involucrados en una cantidad desproporcionada de disparos, mientras que las investigaciones sobre sus disparos permanecen retrasadas de manera indignante. Los descubrimientos revelados hoy exponen la conclusión de la segunda investigación del departamento sobre el MPD en los últimos años. El Departamento notó que se encontraron deficiencias similares en investigaciones previas que comenzaron en 2002.

“Aunque parecía que el MPD había corregido su curso luego de nuestra primera investigación, muchos de los problemas sistémicos que identificamos previamente se han vuelto a enraizar profundamente en las prácticas del MPD. Nuestros descubrimientos deben ser un catalizador para ayudar al MPD y a la ciudad de Miami a restaurar la confianza de la comunidad en un orden público justo, efectivo y lógico,” dijo Roy L. Austin Jr., Asistente Suplente del Fiscal General de la División de Derechos Civiles. “Esperamos poder colaborar con el Prefecto Orosa, el Alcalde Regalado y la gente de Miami para diseñar e implementar un plan exhaustivo, supervisado por la corte, que asegure una reforma sostenible.”

El Fiscal de los Estados Unidos Wifredo Ferrer declaró: “En noviembre de 2011, la División de Derechos Civiles del Departamento de Justicia comenzó una investigación formal para determinar si el Departamento de Policía de la ciudad de Miami había seguido un patrón o práctica de uso excesivo de la fuerza letal por arma de fuego. Después de un análisis cuidadoso y profundo de los hechos y circunstancias que rodearon a la serie de disparos que involucran a la policía, la División de Derechos Civiles determinó que el Departamento de Policía sí mantuvo tal conducta prohibida. Hoy revelamos los descubrimientos detallados de la investigación, con la meta doble de arrojar luz sobre errores pasados y,  aun es más importante, de marcar un curso claro para el futuro que garantice a los residentes de la ciudad de Miami que este tipo de conducta no se repetirá en nuestra ciudad. Agradecemos al Prefecto Orosa por reconocer algunos de los problemas que encontró la División de Derechos Civiles y por implementar iniciativas para solucionarlos. Confiamos en que los descubrimientos y recomendaciones serán oídos y conllevarán a una reforma institucional a largo plazo que mejorará más que nunca nuestra ciudad y policía.”

La investigación del departamento implicó un análisis profundo de miles de documentos, entre los que se incluyeron procedimientos y políticas escritas, material de entrenamiento, informes internos, fotografías, videos y audios grabados y expedientes de investigación. El análisis se nutrió del diálogo productivo con los agentes y supervisores del MPD, agentes de la ciudad de Miami, el Fiscal del Estado, el Panel de Investigación Civil y miembros de la comunidad de Miami. El Departamento de Justicia brindó devoluciones al MPD durante la investigación y agradece al Prefecto Manuel Orosa por dar pasos hacia la solución de algunas de las deficiencias identificadas desde que la investigación comenzó.

La investigación fue llevada a cabo por la Sección de Litigación Especial de la División de Derechos Civiles del Departamento de Justicia y la Fiscalía de los Estados Unidos para el Distrito Sur de Florida, con la ayuda de un experto en aplicación de la ley, conforme a la disposición en relación al patrón o práctica del Acta de 1994 sobre Control de Crímenes Violentos y Aplicación de la Ley. La carta sobre los descubrimientos estará disponible en la página Web del Departamento en: http://www.justice.gov/crt/about/spl/. El Departamento recibe comentarios o dudas de la comunidad en el siguiente correo electrónico: community.miamipd@usdoj.gov.

The government has intervened in a False Claims Act lawsuit against Infirmary Health System Inc. and its related entities:  IMC-Diagnostic and Medical Clinic P.C., Diagnostic Physicians Group P.C. and Infirmary Medical Clinics P.C., the Department of Justice announced today.  The lawsuit alleges that IMC-Diagnostic and Medical Clinic, in Mobile, Ala., billed Medicare for services referred by Diagnostic Physicians Group physicians, in violation of the Stark Law and Anti-Kickback Statute.  IMC-Diagnostic and Medical Clinic is owned by Infirmary Medical Clinics, a subsidiary of Infirmary Health System, also based in Mobile.

 
“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to preventing illegal financial relationships that corrupt the integrity of our public health programs.”

Enforcement of the Stark Law and the Anti-Kickback Statute is intended to ensure that physicians’ medical judgment is not compromised by improper financial incentives.  The Stark Law forbids a clinic or hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of services or items covered by federal health care programs, including Medicare.  The lawsuit alleges that the IMC-Diagnostic and Medical Clinic improperly paid Diagnostic Physicians Group physicians compensation that included a percentage of the money collected from Medicare for tests and procedures the doctors referred to the clinic.  These improper payments, and resulting submission of false claims to the Medicare program, violated the Stark Law and Anti-Kickback Statute. 

 
“The Stark Law and Anti-Kickback Statute were enacted to prevent financial ties from influencing the level of care provided to patients,” said Kenyen Brown, U.S. Attorney for the Southern District of Alabama. “By bringing cases such as this one against Infirmary Health System, we hope to ensure that precious health care resources are not wasted due to improper financial relationships among health care providers.”

           
The lawsuit was filed in July 2011 by former Diagnostic Physicians Group physician, Dr. Christian Heesch, under the qui tam, or whistleblower, provisions of the False Claims Act, which authorize private parties to sue on behalf of the U.S. and receive a portion of any recovery.  The act also permits the government to intervene and take over a lawsuit, as it has done in this case. 

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 government’s investigation has been a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of Alabama; the Department of Health and Human Services Office of Inspector General; and the FBI.  The government has 30 days to file and serve a superseding complaint in this matter.

 
The case is captioned U.S. ex rel. Heesch v. Diagnostic Physicians Group, P.C. et al., Civil Action No. 11-0364-KD-B (S.D. Ala.).  The claims in the complaint are allegations only; there has been no determination of liability.   

A former supervisor at defunct health provider Health Care Solutions Network Inc. (HCSN) was sentenced today in Miami to serve 10 years 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.

The sentence was announced by 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; Michael B. Steinbach, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

Wondera Eason, 51, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida.  In addition to her prison term, Eason was sentenced to serve three years of supervised release and ordered to pay $14,985,876 in restitution.

On April 25, 2013, a federal jury found Eason guilty of conspiracy to commit health care fraud.

Eason was employed as the director of medical records at HCSN’s partial hospitalization program (PHP).  A PHP is a form of intensive treatment for severe mental illness. In Florida, HCSN operated community mental health centers at two locations. After stealing millions from Medicare and Medicaid in Florida, HCSN’s owner, Armando Gonzalez, expanded the scheme to North Carolina, opening a third HCSN location in Hendersonville, N.C.

Evidence at trial showed that at all three locations, Eason, a certified medical records technician, oversaw the alteration, fabrication and forgery of thousands of documents that purported to support the fraudulent claims HCSN submitted to Medicare and Medicaid.  Many of these medical records were created weeks or months after the patients were admitted to HCSN facilities in Florida for purported PHP treatment and were utilized to support false and fraudulent billing to government-sponsored health care benefit programs, including Medicare and Medicaid. Eason directed therapists to fabricate documents, and she also forged the signatures of therapists and others on documents that she was in charge of maintaining.  Eason interacted with Medicare and Medicaid auditors, providing them with false and fraudulent documents, while certifying the documents were accurate.

The “therapy” at HCSN oftentimes consisted of nothing more than patients watching Disney movies, playing bingo and having barbeques. Eason directed therapists to remove any references to these recreational activities in the medical records.

According to evidence at trial, Eason was aware that HCSN in Florida 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.  Eason 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.

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

Fifteen defendants have been charged and have pleaded guilty or been convicted by a jury for their roles in the HCSN health care fraud scheme.

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 Attorney 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.

The Justice Department and the Internal Revenue Service (IRS) announced that Anthony Chaudhuri and Margaret Chaudhuri, of Naples, Fla., pleaded guilty today to one count each of conspiracy to defraud the United States.

According to court documents, the Chaudhuris owned and operated a hospital inventory control software company under the name Ariel Computing and various other nominee names, including ADI.   Ariel Computing was operated from various addresses in Ann Arbor, Mich.  Court documents indicate that between 1996 and 2008, the Chaudhuris withheld approximately $888,353 in employment taxes from Ariel Computing employees, but failed to pay over to the IRS approximately $704,488 of these withheld taxes, instead diverting those funds for their own personal use.

At sentencing, the Chaudhuris face a maximum of five years in prison and a $250,000 fine for the conspiracy charge. A sentencing date has not yet been set.

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

"This morning the Department of Justice hosted the initial meeting in the U.S.-E.U./E.U. Member State dialogue on intelligence practices, as first suggested by Attorney General Holder during a ministerial gathering with E.U. officials in Dublin last month.
 
 “Officials from the Justice Department, Office of the Director of National Intelligence and the State Department represented the United States government.  Officials from the E.U. included representatives of the Lithuanian Presidency of the EU, the European Council, the European Commission, the External Action Service of the EU, and EU Member States.
 
 “This meeting focused on next steps for discussion of these issues, including the possibility of a follow-on meeting in the coming weeks.  This open and constructive dialogue illustrates the extent and depth of the relationship between the U.S. and our European partners as we strive to protect both the safety and individual liberties of citizens on both sides of the Atlantic.  

 “We look forward to this continued dialogue and cooperation with the EU and EU Member States.” 

The Justice Department announced today that it has asked a federal court in Indianapolis, to bar Cynthia Hawk, who operates Gain Tax Services, from preparing tax returns. The civil injunction suit alleges that Hawk fails to comply with due diligence requirements imposed by federal law on tax preparers who claim the earned income tax credit (EITC) on customers’ income tax returns. According to the complaint, Hawk also falsified customers’ incomes in order to claim the maximum EITC for them.

The EITC is a refundable federal income tax credit available to certain low to moderate income working individuals and families. As a refundable credit, the EITC may entitle a taxpayer to a refund from the U.S. Treasury. The amount of the EITC depends on the taxpayer’s income, filing status and claimed number of dependents. The maximum credit in 2010 was $5,666.  The range of earned income generating a maximum EITC is sometimes called the “sweet spot.” According to the complaint, Hawk fabricated businesses and reported fake business income on her customers’ tax returns to reach the EITC sweet spot.

The complaint alleges that the Internal Revenue Service (IRS) determined that Hawk failed to comply with due-diligence requirements when claiming the EITC for her customers.  The IRS penalized Hawk in 2011 for her failures. When the IRS performed a follow-up investigation in 2012, as it routinely does, the complaint alleges that it again found ongoing failures and fraudulent claims by Hawk.  According to the complaint, Hawk, who previously prepared tax returns in Atlanta, prepared at least 1,501 returns from 2009 through 2012, with unusually high refund rates ranging from 96 to 99 percent these years.
           
The complaint also alleges that Hawk claimed education credits on her customers’ tax returns, when the customers did not actually have any qualifying education expenses.
           
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 Tax Division website www.justice.gov/tax.

Related Materials:

United States v. Cynthia E. Hawk, etc.
Complaint for Permanent Injunction and Other Equitable Relief (PDF)

The Justice Department announced today that the Civil Rights Division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) has entered into a Memorandum of Understanding (MOU) with the National Labor Relations Board, formalizing a collaborative relationship that allows both agencies to share information, refer matters to each other and coordinate investigations as appropriate.  OSC is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act, which prohibits citizenship status and national origin discrimination in hiring, firing and recruitment or referral for a fee, as well as discriminatory Form I-9 and E-Verify practices.  The National Labor Relations Board (NLRB) is an independent agency that enforces the National Labor Relations Act, which protects the rights of most private-sector employees to join together, with or without a union, to improve their wages and working conditions. 

The MOU will allow the NLRB to make referrals to OSC, with the express authority of the NLRB charging party, when a matter before the NLRB suggests a possible violation of the anti-discrimination provision, such as verification of employment authorization, in the I-9 or E-Verify process, that appears to be discriminatory based on citizenship status or national origin.  Similarly, the department will refer matters to the NLRB that appear to fall within that agency’s authority, such as infringement on the right to form, join, decertify or assist a labor organization, and to bargain collectively through representatives of their own choosing or to refrain from such activities.  The MOU also provides for cross-training and technical assistance to ensure that staff within each agency can identify appropriate referrals.  OSC has more than 50 partnership agreements with federal, state and local agencies, including U.S. Citizenship and Immigration Services and the Equal Employment Opportunity Commission. 

“Employers cannot avoid liability under the law just because an employee has turned to the wrong agency or is unaware of additional protections available under a different law.  Employees deserve to benefit from the efficiency of government cooperation, and employers will continue to benefit from agency guidance on how to comply with the anti-discrimination provision and the National Labor Relations Act,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division.

For more information about protections against employment discrimination under the immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired), sign up for a free one-hour webinar at www.justice.gov/crt/about/osc/webinars.php, email OSC at osccrt@usdoj.gov, or visit OSC’s website at www.justice.gov/crt/about/osc.

The Justice Department announced today that Joseph Sanders, 32, a former corrections officer of the Alabama Department of Corrections, pleaded guilty to obstructing justice in an investigation into the beating death of former inmate Rocrast Mack. 

On Aug. 4, 2010, 24-year-old Rocrast Mack was beaten by several corrections officers at Ventress Correctional Facility in Clayton, Ala.  He was repeatedly struck by a baton in an office in the prison, and several minutes later he was assaulted again in the medical unit of the prison when an officer stomped on Mack’s head several times.  Mack died the following day in a Montgomery, Ala., hospital.  Following Mack’s death, Sanders lied to investigators from the Department of Corrections to cover up the fact that Mack was unjustly and brutally beaten. 

Two weeks ago, on June 25, a federal jury convicted Michael Smith, a former lieutenant at Ventress, of civil rights and obstruction of justice violations regarding this incident.  Scottie Glenn, another former corrections officer at Ventress, pleaded guilty on Nov.18, 2011, to one count of violating the civil rights of Mack for his role in the incident and to one count of conspiring with other corrections officers to cover up the beatings.  Matthew Davidson, another former corrections officer, pleaded guilty on Jan. 15, 2013, to two civil rights violations and one count of conspiring with other officers to cover up the beatings. 

Sentencing for all of the defendants is scheduled for Sept. 23, 2013.  Sanders faces a statutory maximum potential penalty of 20 years in prison.

“Mr. Sanders, by his statements, attempted to conceal that Rocrast Mack’s brutal death was unjustly caused by the corrections officers to whose care he had been entrusted,” said Deputy Assistant Attorney General for the Civil Rights Division Roy L. Austin Jr. “Such actions have no place in our corrections system and the Department of Justice will continue to vigorously prosecute those who commit and cover up such crimes.”

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

On July 3, 2013, a jury found Vernon Harrison, of Montgomery, Ala., guilty of one count of conspiring to file false claims, eight counts of mail fraud, eight counts of aggravated identity theft and six counts of embezzlement from the U.S. mail, the Justice Department, the Internal Revenue Service (IRS) and the U.S. Postal Service, Office of the Inspector General (OIG), announced today.

According to the evidence presented at the trial, Harrison was a U.S. Postal Service mail carrier who was part of a stolen identity refund fraud conspiracy.  Members of the conspiracy used stolen identities to file false tax returns from various locations, including houses and hotels around Birmingham, Ala. and Montgomery.  They then had the fraudulently obtained tax refunds generated by those returns sent to debit cards which were subsequently mailed to addresses on Harrison’s postal route in Montgomery.  In exchange for cash, Harrison stole the debit cards from the mail and provided them to a co-conspirator.  Harrison stole, at a minimum, over 100 debit cards from the mail for his co-conspirators. 

As was shown at trial, federal agents uncovered substantial evidence of the conspiracy during the execution of search warrants at locations in Montgomery and near Birmingham, including over a hundred envelopes for debit cards that had been mailed to addresses on Harrison’s postal route.  Soon after, agents also conducted surveillance on Harrison and observed him failing to deliver Turbo Tax cards that were in the mail.    

Harrison faces up to 10 years in prison for the conspiracy count, 20 years for each mail fraud count, five years for each mail embezzlement count, and a mandatory two-year sentence for the aggravated identity theft counts.  In total, Harrison could be sentenced to up to 216 years in prison.  Harrison also could be subject to fines, forfeiture, and mandatory restitution.   

 
Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS - Criminal Investigation and the U.S. Postal Service, OIG, who investigated the case, and Tax Division Trial Attorneys Jason Poole and Michael Boteler, who prosecuted the case.

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

WASHINGTON – On July 3, 2013, a jury found Vernon Harrison, of Montgomery, Ala., guilty of one count of conspiring to file false claims, eight counts of mail fraud, eight counts of aggravated identity theft and six counts of embezzlement from the U.S. mail, the Justice Department, the Internal Revenue Service (IRS) and the U.S. Postal Service, Office of the Inspector General (OIG), announced today.

According to the evidence presented at the trial, Harrison was a U.S. Postal Service mail carrier who was part of a stolen identity refund fraud conspiracy. Members of the conspiracy used stolen identities to file false tax returns from various locations, including houses and hotels around Birmingham, Ala. and Montgomery. They then had the fraudulently obtained tax refunds generated by those returns sent to debit cards which were subsequently mailed to addresses on Harrison's postal route in Montgomery. In exchange for cash, Harrison stole the debit cards from the mail and provided them to a co-conspirator. Harrison stole, at a minimum, over 100 debit cards from the mail for his co-conspirators.

As was shown at trial, federal agents uncovered substantial evidence of the conspiracy during the execution of search warrants at locations in Montgomery and near Birmingham, including over a hundred envelopes for debit cards that had been mailed to addresses on Harrison's postal route. Soon after, agents also conducted surveillance on Harrison and observed him failing to deliver Turbo Tax cards that were in the mail.

Harrison faces up to 10 years in prison for the conspiracy count, 20 years for each mail fraud count, five years for each mail embezzlement count, and a mandatory two-year sentence for the aggravated identity theft counts. In total, Harrison could be sentenced to up to 216 years in prison. Harrison also could be subject to fines, forfeiture, and mandatory restitution.

Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS - Criminal Investigation and the U.S. Postal Service, OIG, who investigated the case, and Tax Division Trial Attorneys Jason Poole and Michael Boteler, who prosecuted the case.

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

WASHINGTON - A Salvadoran national, who was previously removed from the United States and who is wanted in his native country for homicide, aggravated kidnapping and robbery, was turned over to authorities in El Salvador Friday by U.S. Immigration and Customs Enforcement's (ICE) Enforcement and Removal Operations (ERO).

Melvin Noe Lazo-Sanchez aka Melvin Noe Sanchez-Izaguirre, 34, a citizen of El Salvador and Honduras, was flown to El Salvador July 5 onboard a charter flight coordinated by ICE's Air Operations (IAO) Unit. Upon arrival, the suspect was turned over to officials from the El Salvadoran Civilian National Police (PNC).

“Mr. Lazo has been deported to El Salvador where he will now face a criminal court to answer to his charges, thanks to a dedicated group of deportation officers and ICE attorneys who serve to protect our communities here in Virginia,” said M. Yvonne Evans, field office director for ERO Washington. “Because of our far reaching impact, our officers maintain a global vision and are proud when justice is served, no matter where in the world.”

Lazo-Sanchez was arrested March 15 outside his residence in Manassas, Va., by officers of ERO Washington's fugitive operations team. An ERO officer assigned to INTERPOL Washington notified the team of an active Red Notice on Sanchez by law enforcement in San Salvador.

Sanchez illegally re-entered the United States after ICE removed him to Honduras in June 2012. He evaded extradition from Honduras to El Salvador when he was removed in 2012 because the last name he used on his Honduran identity differed from his El Salvadorian identity. Sanchez was ordered removed from the United States to Honduras or El Salvador by an immigration judge May 2.

The deportation of fugitive Melvin Lazo-Sanchez is another example of expanded bi-national cooperation to identify, arrest and repatriate Salvadoran criminal suspects who have fled to the United States to avoid prosecution. ICE officers are working closely with the PNC, the Salvadoran National INTERPOL Office and Salvadoran Immigration as part of this effort. In the first nine months of fiscal year 2013, the PNC executed more than 101 criminal arrest warrants with fugitives being returned to El Salvador aboard IAO removal flights. Many of those arrests involved homicide-related charges or other violent crimes.

Since Oct. 1, 2009, ERO has removed more than 640 foreign fugitives from the United States who were being sought in their native countries for serious crimes, including kidnapping, rape and murder. ERO works with the Office of International Affairs for ICE's Homeland Security Investigations' (HSI) foreign consular offices in the United States and INTERPOL to identify foreign fugitives illegally present in the country.

This removal was coordinated with HSI El Salvador, ICE's Office of Chief Counsel in Arlington, the Consulate of El Salvador and INTERPOL Washington.

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

Glen Ray Millican, aka “Fly,” 39, and Justin Christopher Northrup, aka “Ruthless,” 28, both of Houston, each 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, Millican, Northrup 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.  Millican, Northrup 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, Millican and Northrup admitted to being members of the ABT criminal enterprise and agreeing to commit multiple acts of violence and/or narcotics trafficking on behalf of the ABT.

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

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

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

At sentencing, scheduled for Sept. 26, 2013, Millican and Northrup each face a maximum penalty of life in prison.

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

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

Sound Inpatient Physicians Inc. will pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs, the Justice Department announced today.  Sound Physicians is a Tacoma, Wash.-based provider of hospitalists and other physicians to hospitals and other medical facilities.  It employs more than 700 hospitalists and post-acute physicians, who provide services at 70 hospitals and a growing network of post-acute facilities in 22 states.

 
“Physicians who participate in Medicare and other federal health care programs must document and bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to ensuring that Medicare and other federal funds are expended appropriately.”

 
Today’s settlement addresses allegations that, between 2004 and 2012, Sound Physicians knowingly submitted to federal health benefits programs inflated claims on behalf of its hospitalist employees for higher and more expensive levels of service than were documented by hospitalists in patient medical records.  Hospitalists are physicians, typically trained in internal medicine, who provide care exclusively to hospital inpatients and have no office or outpatient practice.

 
“Fraudulently inflated billing of government health care programs puts those programs at risk, and impacts the system’s ability to care for the neediest in our communities,” said Jenny A. Durkan, U.S. Attorney for the Western District of Washington.  “During this time of tight government budgets, we will do all we can to make sure everyone plays by the rules and does not run up the taxpayers’ tab.”

 
Allegations that Sound Physicians had improperly billed a variety of federal health care programs were brought to the government’s attention through a lawsuit filed by a former Sound Physicians employee, Craig Thomas, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act allows private citizens to bring civil actions on behalf of the government and share in any recovery.  Thomas will receive $2.7 million of the $14.5 million settlement for exposing Sound Physicians’ inflated claims. 

 
This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered 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 Sound Physicians settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Western District of Washington; the Department of Health and Human Services Office of Inspector General; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; the Office of Personnel Management Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; and the TRICARE Management Activity Office of General Counsel.

The lawsuit is United States of America ex rel. Craig Thomas v. Sound Inpatient Physicians, Inc. and Robert A. Bessler, Civil Action No. C09-5301RBL (W.D. Wash.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The Justice Department announced today that Science Applications International Corporation (SAIC) has agreed to pay $5.75 million to settle allegations that it violated the False Claims Act by submitting claims under a contract with the General Services Administration (GSA) that it knew had been awarded in violation of federal procurement regulations.  SAIC provides scientific, engineering and technical services to commercial and government customers and is headquartered in Northern Virginia.

 
In 2006, GSA awarded a blanket purchase agreement (BPA) to SAIC for the provision of professional engineering and consulting services.  Those services related to the study and evaluation of new products and emerging technologies.  The United States contended that SAIC personnel provided false information to GSA contracting officials to induce them to award the BPA to SAIC.  In particular, the United States alleged that SAIC caused another individual to falsely represent himself as an employee of the Senior Executive Staff of the Department of Defense and the Director of another federal agency.  SAIC performed a substantial number of the task orders it received under the BPA for the U.S. Central Command at MacDill Air Force Base in Tampa, Florida.  

 
“Federal contracts must be awarded based on full disclosure and fair dealing,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “It is completely unacceptable for taxpayer dollars to be paid under circumstances where the integrity of the contracting process has been undermined.” 

“This recovery illustrates the emphasis and resources we place on detection and recovery of fraud, waste and abuse in government procurement contracts – particularly those involving defense contractors and others who supply goods and services to the Department of Defense, the branches of our military, and their bases,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida.

"SAIC received a contract, awarded by GSA, based on fictitious information," said GSA Inspector General Brian D. Miller. "This deceptive scheme shows that we must be on the lookout for all forms of contract fraud."  

 
The lawsuit against SAIC was originally filed under the whistleblower provisions of the False Claims Act by Timothy Ferner, a retired Lt. Colonel in the U.S. Air Force, in the U.S. District court for the Middle District of Florida.  The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The United States may elect to intervene and take over the case, as it did here.  Mr. Ferner’s share of the settlement has been determined to be $977,500. 

 
The claims resolved by this settlement are allegations only and there has been no determination of liability.  The case is United States ex rel. Ferner v. SAIC, No. 8:10-cv-741-T-33-AEP (M.D. Fla.)

Medical device manufacturer TranS1 Inc., now known as Baxano Surgical Inc., has agreed to pay the United States $6 million to resolve allegations under the False Claims Act that the company caused health care providers to submit false claims to Medicare and other federal health care programs for minimally-invasive spine surgeries, the Justice Department announced today. 

 
“The Justice Department is committed to ensuring that medical device manufacturers follow the law when providing devices to beneficiaries of federal health care programs,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “It is critical that health care providers bill federal health care programs accurately and honestly for the work they perform, and it is imperative that they base their selection of medical devices on the best interests of their patients.” 

 
The United States alleged that TranS1 knowingly caused health care providers to submit claims with incorrect diagnosis or procedure codes for minimally-invasive spine fusion surgeries using Trans1’s AxiaLIF System.  That device was developed as alternative to invasive spine fusion surgeries.  The United States alleges that TranS1 improperly counseled physicians and hospitals to bill for the AxiaLIF System by using incorrect and inaccurate codes intended for more invasive spine fusion surgeries.  The United States alleged that, as a result, health care providers received greater reimbursement than they were entitled to for performing the minimally-invasive AxiaLIF procedures.   

 
The United States further alleged that TranS1 knowingly paid illegal remuneration to certain physicians for participating in speaker programs and consultant meetings intended to induce them to use TranS1 products, in violation of the Federal Anti-Kickback Statute, 42 U.S.C.  § 1320a-7b(b), and thereby caused false claims to be submitted to federal health care programs.  The Anti-Kickback Statute prohibits offering or paying remuneration to induce referrals of items or services covered by federally-funded programs and is intended to ensure that a physician’s medical judgments are not compromised by improper financial incentives and are based solely on the best interests of the patient. 

 
In addition, the United States alleged that TranS1 promoted the sale and use of its AxiaLIF System for uses that were not approved or cleared by the U.S. Food and Drug Administration, including use in certain procedures to treat complex spine deformity, and which were thus not covered by federal health care programs.     

            
“A medical device manufacturer violates the law when it advises physicians and hospitals to report the wrong codes to federal health insurance programs in order to increase reimbursement rates,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.  “Health care providers are required to bill federal health care programs truthfully for the work they perform.” 

 
As part of the settlement, TranS1 has agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.  That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.           

  
“Using kickbacks to encourage health providers to make false payment claims will not be tolerated,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “TranS1’s agreement to now comply with government health laws is an important step.” 

 
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the District of Maryland and is captioned United States ex rel. Kevin Ryan v. TranS1, Inc.  As part of today’s resolution, Mr. Ryan will receive $1,020,000 from the settlement. 

 
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 settlement with TranS1 was the result of a coordinated effort among the U.S. Attorney’s Office for the District of Maryland; the Commercial Litigation Branch of the Justice Department’s Civil Division; the Department of Health and Human Services’ Office of Inspector General; the Department of Defense, Office of the Inspector General; and the Office of Personnel Management, Office of Inspector General. 

The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

The Justice Department today reached an agreement with Stellar Staffing LLC, based in Birmingham, Ala., resolving claims that the employment agency violated the anti-discrimination provision of the Immigration and Nationality Act (INA).

The  department’s independent investigation was initiated based on evidence uncovered during the investigation of a related retaliation charge filed against Stellar Staffing.  The department’s investigation concluded that since at least July 2008, the company required specific documents issued by the Department of Homeland Security from non-U.S. citizens during the employment eligibility verification process, but accepted a variety of identity and work authorization documentation from U.S. citizens.

Under the terms of the settlement agreement, Stellar Staffing will pay $2,250 in civil penalties to the United States, undergo Justice Department training on the anti-discrimination provision of the INA and be subject to monitoring of its employment eligibility verification practices for a period of one year.  

“The anti-discrimination provision protects work-authorized individuals from being treated differently in the hiring process based on discriminatory assumptions about their status,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division.  “The Civil Rights Division is fully committed to vigorously enforcing the law.”

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

The Justice Deparment announced today that Andre James Hertzog, 29, of St. Paul, Minn. pleaded guilty to participating in a sex trafficking conspiracy.  Hertzog pleaded guilty in U.S. District Court for the District of Minnesota.

During his plea hearing, Hertzog admitted that from April 2011 to August 2012, he and a co-conspirator, Nicole Bramer, of St. Paul, Minn., engaged in a scheme to recruit two young women and compel them to engage in commercial sex acts.  Working together, Hertzog and the co-conspirator used coercive tactics, including physical violence and psychological coercion, to isolate the victims and cause them to engage in commercial sex acts.  Hertzog further admitted that his co-conspirator transported the older victim across state lines for the purpose of having her engage in commercial sex acts in July 2011, and that he and the co-conspirator transported the younger victim across state lines for the purpose of having her engage in commercial sex acts in July and August of 2012. The defendant admitted he knew that the co-conspirator used her computer to advertise the commercial sex services of one of the victims on the website backpage.com.

 At sentencing, Hertzog faces a maximum penalty of up to life in prison on the sex trafficking conspiracy charge. 

 On May 29, 2013,  the co-defendant, Nicole Bramer, pleaded guilty to participating in the sex trafficking conspiracy.  Bramer also faces a maximum penalty of up to life in prison on the sex trafficking conspiracy charge. 

“The defendants preyed upon vulnerable young women and used violence, threats, and psychological intimidation to exploit the victims and coerce them into prostitution ,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “The department of Justice is committed to prosecuting those who sexually exploit vulnerable women for financial benefit.  I also would like to commend the FBI for its strong commitment to this effort and for its outstanding work in this case.”

“Human Trafficking often victimizes the most vulnerable among us.  The FBI remains fully committed to bringing to justice those who engage in this heinous crime,” said FBI Special Agent in Charge J. Chris Warrener.

The is being investigated by the Minneapolis Field Office  of the FBI and prosecuted jointly by Special Assistant U.S. Attorney Mark Kappelhoff, Trial Attorney Christine M. Siscaretti and Amanda Gregory of the Department of Justice, Civil Rights Division.

Anyone who may have information about this or any other human trafficking matter is encouraged to report that information to the Federal Bureau of Investigation at 763-569-8000.  For information about human trafficking, the National Human Trafficking Resource Center’s toll-free hotline (1-888-373-7888) is available to answer calls from anywhere in the country.

The Justice Department announced today that it has reached an agreement with Vincent Porcaro Inc. (VPI) resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA).  VPI is a Rhode Island company that provides warehousing, distribution, light assembly and packaging for regional, national and international companies.

The department’s investigation was initiated based on a referral from U.S. Citizenship and Immigration Services (USCIS).  The department’s investigation found that VPI, beginning in October 2012, required non-citizens to present specific U.S. Department of Homeland Security-issued documents to establish their identity and work authorization while not making similar requests of U.S. citizens. The INA’s anti-discrimination provision prohibits employers from discriminating against noncitizens in the employment eligibility verification process by demanding more or different documents than U.S. citizens are required to present. 

Under the settlement agreement, VPI agreed to provide training to its human resources personnel on the INA’s anti-discrimination provision, pay $43,092 in civil penalties to the United States, create a $30,000 back pay fund to compensate individuals who suffered economic injuries as a result of VPI’s documentary practices, and be subject to monitoring by the department for a period of two years.

“Employers who create or change their employment eligibility verification policies and practices have an obligation to ensure that those changes are consistent with the anti-discrimination provision of the INA,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division.  “The division is committed to identifying and addressing employer policies and practices that do not satisfy that obligation.”

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

Fifty-five hospitals located throughout twenty-one states have agreed to pay the United States a total of more than $34 million to settle allegations that the health care facilities submitted false claims to Medicare for kyphoplasty procedures, the Justice Department announced today.  Kyphoplasty is a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. 

In many cases, kyphoplasty can be performed safely and effectively as an outpatient procedure without any need for a more costly hospital admission.  The settlements announced today resolve allegations that the settling hospitals frequently billed Medicare for kyphoplasty procedures on a more costly inpatient basis, rather than an outpatient basis, in order to increase their Medicare billings.   

“Hospitals that participate in the Medicare program must bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “The Department of Justice is committed to ensuring that Medicare funds are expended appropriately, based on the medical needs of patients rather than the desire of medical providers to maximize profits.”

 The settling facilities, and the amounts they have agreed to pay, include the following: 

• Atrium Medical Center, Middletown, OH, has agreed to pay $4,232,992.50.
• Altru Health System, Grand Forks, ND, has agreed to pay $1,492,690.
• Cedars Sinai Medical Center, Los Angeles, CA, has agreed to pay $1,485,846.
• Des Peres Hospital, St. Louis, MO, has agreed to pay $900,000.
• Mount Sinai Medical Center, Miami, FL, has agreed to pay $1,846,194.00.
• New England Baptist Hospital, Boston, MA, has agreed to pay $374,814.48.
• St. Anne’s Hospital, Fall River, MA, has agreed to pay $552,745.
• The Queen’s Medical Center, Honolulu, HI, has agreed to pay $1,055,249.57.
• Trover Health System, Madisonville, KY, has agreed to pay $1,162,837.
• Wayne Memorial Hospital, Goldsboro, NC, has agreed to pay $1,250,000. 
• Twenty-three hospitals affiliated with HCA Inc., Nashville, TN, have agreed to pay a total of $7,145,842.72.  These include:  Aventura Hospital & Medical Center (Aventura, FL); Capital Regional Medical Center (Tallahassee, FL); Coliseum Medical Center (Macon, GA); Coliseum Northside Hospital (Macon, GA); Conroe Regional Medical Center (Conroe, TX); Denton Regional Medical Center (Denton, TX); Doctors Hospital of Sarasota (Sarasota, FL); Edmond Regional Medical Center (Edmond, OK); Fawcett Memorial Hospital (Port Charlotte, FL); Fort Walton Beach Medical Center (Fort Walton Beach, FL); Garden Park Medical Center (Gulf Port, MS); JFK Medical Center (Atlantis, FL); Los Robles Regional Medical Center (Thousand Oaks, CA); North Florida Regional Medical Center (Gainesville, FL); Northlake Medical Center (Tucker, GA); Oklahoma University Medical Center (Oklahoma City, OK);  Palmyra Medical Center (Albany, GA); Redmond Regional Medical Center (Rome, GA); Southwest Florida Regional Medical Center (Fort Myers, FL); St. Lucie Medical Center (Port Saint Lucie, FL); Summit Medical Center (Hermitage, TN); Sunrise Hospital & Medical Center (Las Vegas, NV); and Wesley Medical Center (Wichita, KS).
• Six hospitals affiliated with Lifepoint Hospitals, Inc., Brentwood, TN, have agreed to pay a total of $2,522,502.69.  These include:  Andalusia Regional Hospital (Andalusia, AL); Jackson Purchase Medical Center (Mayfield, KY); Lake Cumberland Regional Hospital (Somerset, KY); Minden Medical Center (Minden, LA); Russellville Hospital (Russellville, AL); and Western Plains Medical Complex (Dodge City, KS).     
• Five hospitals affiliated with Trinity Health, Livonia, MI, have agreed to pay a total of $3,910,017.53.  These include:  Mercy Medical Center – Dubuque (Dubuque, IA); Mercy Medical Center - Sioux City (Sioux City, IA); St. Joseph Mercy Hospital (Pontiac, MI); Mercy Health Partners (Muskegon, MI); and Mount Carmel New Albany Surgical Hospital (New Albany, OH).  
• Four hospitals affiliated with Morton Plant Mease BayCare Health System, Clearwater, FL, have agreed to pay a total of $2,378,325.45.  These include:  Morton Plant Hospital (Clearwater, FL); Morton Plant North Bay Hospital (New Port Richey, FL); Mease Dunedin Hospital (Dunedin, FL); and Mease Countryside Hospital (Safety Harbor, FL).    
• Three hospitals affiliated with Baptist Memorial Health Care Corporation, Memphis, TN, have agreed to pay a total of $691,168.  These include:  Baptist Memorial Hospital-Golden Triangle (North Columbus, MS); Baptist Memorial Hospital-Collierville (Collierville, TN); and Baptist Memorial Hospital-Memphis (Memphis, TN).   
• Two hospitals affiliated with Covenant Health, Knoxville, TN, have agreed to pay a total of $1,845,641.74.  These include Parkwest Medical Center (Knoxville, TN) and Methodist Medical Center of Oak Ridge (Oak Ridge, TN).
• Two Hospitals affiliated with Bayhealth Medical Center, Newark, DE, have agreed to pay a total of $1,115,306.37.  These include Bayhealth Kent General Hospital (Dover, DE) and Bayhealth Milford Memorial Hospital (Milford, DE).   

 “This office will continue to ensure that sound medical decisions determine the ultimate treatment of a patient, not the financial interests of hospitals,” said U.S. Attorney William J. Hochul, Western District of New York. “We will not stand by and allow hospitals to inflate their profits based on unnecessary hospital admissions at the expense of the Medicare program or any other federal program. The settlements announced today will help maintain the integrity of this important program and all government-funded programs.”  

 “Whenever hospitals knowingly overcharge Medicare, critically needed resources are wasted and health costs are driven up,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “When taxpayers’ dollars are threatened, OIG and its federal partners will take action.”

The Justice Department has now reached settlements with more than 100 hospitals totaling approximately $75 million to resolve allegations that they mischarged Medicare for kyphoplasty procedures.  In addition to today’s settlement, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.        

 “It has never been more important to protect the Medicare Trust Fund, and this includes ensuring that Medicare is not burdened with the high costs of medically unnecessary admissions.  The Office of Inspector General will continue to ensure that the Medicare Program is protected from fraud, waste, and abuse,” said Tom O'Donnell, Special Agent in Charge of the Office of Investigations of the HHS-OIG New York Regional Office.  “The settlements related to kyphoplasty billing that have been reached with over 100 hospitals represent one of the largest and most successful multi-party health care investigations in the nation.”

 All but four of the settling facilities announced today were named as defendants in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in Buffalo, N.Y., by Craig Patrick and Charles Bates.  Mr. Patrick is a former reimbursement manager for Kyphon, and Mr. Bates was formerly a regional sales manager for Kyphon in Birmingham, Ala.  The whistleblowers will receive a total of approximately $5.5 million from the settlements announced today. 

 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 settlements were the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General. 

The claims resolved by these settlements are allegations only, and there has been no determination of liability.

CyTerra Corporation has agreed to pay the federal government $1.9 million to resolve civil liability arising from its failure to provide the U. S. Department of the Army with accurate, complete and current cost or pricing data for its sales of mine detectors, the Justice Department announced today.  CyTerra, headquartered in Waltham, Mass., manufactures equipment, including portable mine detectors, used by the U. S. military.

 
“The Department of Justice will hold accountable those who undermine the integrity of the public contract process in pursuit of financial gain,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the U. S. Department of Justice.  “Those who wish to do business with the government are expected to do so fairly, and those who don’t will face the consequences.” 

 
In 2003, the Department of the Army awarded CyTerra a contract for the production and delivery of AN/PSS-14 hand-held mine detection units.  The contract was modified several times to provide for the production and delivery of additional mine detection units.  The government contended that, in connection with the negotiations concerning three of these contract modifications, CyTerra knowingly failed to provide the Army with the most recent cost or pricing data on the number of labor hours needed to produce a mine detector.  Under the Truth in Negotiations Act, CyTerra was required to provide cost or pricing data that was “accurate, complete and current.”  The government alleged that if the Army had received such information, it would have negotiated a lower price. 

“Contractors who negotiate with the government must be scrupulous in their dealings with the government,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts.  “Government contractors should be on notice that the requirements of the Truth in Negotiations and False Claims Acts will be enforced.” 

           
The civil settlement resolves a lawsuit pending in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the U. S. and share in any recovery.  The action was filed by Kevin Bartczak and Keith Aldrich, two former CyTerra executives.  As part of today’s resolution, Bartczak and Aldrich will share $361,000 from the civil recovery.  

The case is being handled by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Commercial Litigation Branch, with investigative assistance from the Defense Criminal Investigative Service.

“The Defense Criminal Investigative Service (DCIS) is committed to working with its partner agencies, such as the U.S. Department of Justice, the Naval Criminal Investigative Service and the Army Criminal Investigation Command, to ensure the integrity of the Defense Department’s procurement process,” said Leigh-Alistair Barzey, Resident Agent-in-Charge of the DCIS Boston Resident Agency.  “This settlement agreement reflects that commitment and is a successful resolution of this investigation, which could not have occurred without the direction of the Department of Justice and the assistance of the Defense Contract Audit Agency’s Investigations Support Division.”

 
The civil lawsuit is captioned United States ex rel. Bartczak, et al. v. CyTerra Corporation., Civil Action No. 06-CA-10550-NMG.

 
The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Corporate investor Barry Diller will pay a $480,000 civil penalty to settle charges that he violated premerger reporting and waiting requirements when he acquired voting securities of The Coca Cola Company, the Department of Justice announced today.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Diller for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976.  At the same time, the department filed a proposed settlement that, if approved by the court, will settle the charges. 

The HSR Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements on individuals and companies over a certain size before they consummate acquisitions resulting in holding stock or assets above a certain value, which at the time of Diller’s violations ranged from $63.4 million to $68.2 million and is currently $70.9 million.

Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the Department of Justice.  For a party in violation of the HSR Act the maximum civil penalty is $16,000 a day. 

 
For further details on this matter, contact the FTC’s Office of Public Affairs, 202-326-2180.

Three individuals charged in connection with operating a series of fraudulent business opportunity companies were arrested Friday following their indictment by a federal grand jury in Miami on June 25, 2013, the Justice Department and the U.S. Postal Inspection Service announced today.  Mitchell Berman (aka Brian Griffin), of Boca Raton, Fla., Robert Gallo (aka Bobby Pace, Vincent Pastone, Joe Barone, Bobby Marino, Anthony Russo), of Coconut Creek, Fla., and Steven Axelrod (aka Michael Hutton), of Wellington, Fla., were arrested and charged with conspiracy to commit mail fraud and mail fraud.  Mitchell Berman was also charged with criminal contempt of court. 

The indictment alleges that the defendants operated a series of fraudulent companies that sold coffee display racks business opportunities.  Buyers were told they would receive display racks and packets of coffee, as well as assistance in establishing and maintaining a business selling the coffee. 

Beginning in August 2000 and continuing through October 2011, the indictment charges that Berman, Gallo, and Axelrod operated a series of five coffee display rack business opportunity companies:  Selective Services Business, Best Gourmet Coffee, Cambridge Coffee, Royal Gourmet Coffee and South Beach Coffee.  The business opportunities the defendants sold cost a minimum of approximately $10,000.  Each company operated for six months to a year, and after one company closed, the next opened. 

The indictment alleges that Berman and Gallo ran the companies, while working as salesman together with Axelrod.  All three defendants allegedly made numerous false statements to potential purchasers of the business opportunities to induce them to buy.  Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits, that prior purchasers of the business opportunities were earning substantial profits, that purchasers would be given lucrative “commercial accounts,” and that the company would provide assistance in establishing and maintaining the business.  According to the indictment, purchasers made little to no money on their investments, were unable to find profitable locations or accounts, and were not provided the support promised by defendants.  In making misrepresentations to potential purchasers, Berman was violating a December 2000 federal court order barring him from misrepresenting profits, locations, and other aspects of business opportunities.

According to the indictment, once purchasers began filing complaints with the Better Business Bureau or state authorities, the defendants shut down each of their companies in turn, and opened the next one.  In order to evade detection, all the defendants allegedly used aliases and gave out false addresses for the company.  The indictment alleges that Berman and Gallo also avoided listing their own names on corporate and promotional documents, and instead paid people who did not work at the companies to be titular presidents. 

“The Department of Justice is committed to protecting consumers from business opportunity fraud schemes,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “As this indictment demonstrates, we will continue to prosecute individuals who seek to swindle innocent Americans out of their hard-earned money.” 

All three defendants were charged with conspiracy to commit mail fraud.  In addition, Berman was charged with 8 counts of mail fraud and 9 counts of criminal contempt; Gallo was charged with 8 counts of mail fraud; and Axelrod was charged with 4 counts of mail fraud.  If convicted, Berman, Gallo, and Axelrod face a maximum statutory term of 20 years in prison, a possible fine, and mandatory restitution on each conspiracy and mail fraud count.  Berman faces a maximum statutory term of up to life in prison, a possible fine, and mandatory restitution on each of the criminal contempt counts. 

“Business opportunity schemers use deceit to target and victimize hard-working Americans who are seeking opportunities to better provide for themselves and their families,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “We will continue to vigorously pursue these individuals who seek to steal the American Dream from their victims.”

“Cases like this one illustrate the Postal Inspection Service’s dedication to investigating business opportunity fraud that insidiously targets innocent victims,” said Ronald Verocchio, U.S. Postal Inspector in Charge in Miami.
  
The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.

This case was brought in coordination with President Barack Obama’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.  For more information on the task force, please visit www.stopfraud.gov

Acting Assistant Attorney Stuart Delery commended the investigative efforts of the Postal Inspection Service.  The case is being prosecuted by Assistant Director Richard Goldberg and Trial Attorney Cindy Cho of the Consumer Protection Branch of the Civil Division of the Department of Justice. 

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