District Not Recorded

Anthony K. Mastrogiovanni, 30, of Crofton, Md., pleaded guilty today to the sexual exploitation of minors to produce child pornography.

The guilty plea was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland  Rod J. Rosenstein; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service’s Washington Division.

According to filed court documents and proceedings, between 2006 and 2012, Mastrogiovanni was a U.S. Navy reservist who sexually exploited more than 30 male juveniles, ranging from 9 to 16 years of age, in Maryland and Louisiana to produce child pornography.  During that time period, Mastrogiovanni met and befriended his victims through his involvement in civic organizations or his military affiliation.  Mastrogiovanni captured sexually explicit video of the victims on cameras hidden in his residences in Louisiana and Maryland.

Mastrogiovanni has been in federal custody since he was arrested by inspectors of the U.S. Postal Inspection Service in Las Vegas on July 19, 2012.  A search of his Las Vegas hotel room recovered external hard drives containing over 30,000 images of child pornography, including video of his juvenile victims.  That same day, federal agents searched Mastrogiovanni’s apartment in Crofton where they discovered a hidden video camera and video transmitting equipment as well as digital media containing additional child pornography. 

As part of his plea agreement, Mastrogiovanni will be required to register as a sex offender in the place where he resides, where he is an employee and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).

Mastrogiovanni faces a minimum mandatory sentence of 15 years in prison and a maximum of 30 years in prison followed by up to lifetime of supervised release for sexual exploitation of a minor to produce child pornography. U.S. District Judge J. Frederick Motz has scheduled sentencing for July 31, 2013.

The investigation was conducted by the U.S. Postal Inspection Service, with the assistance of the Air Force Office of Special Investigations, Naval Criminal Investigative Service and FBI’s Maryland Child Exploitation Task Force. The case is being prosecuted by Trial Attorney Keith A. Becker of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney P. Michael Cunningham of the District of Maryland.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

Today, Bridgette Rivers, a resident of Montgomery, Ala., pleaded guilty to her involvement in a conspiracy to use stolen identities to file fraudulent tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. 

According to the court documents, Rivers provided identity information to her co-conspirators, Barbara Murry, Veronica Temple and Yolanda Moses.  Those co-conspirators used these stolen identities and others to file false tax returns that fraudulently requested tax refunds from the IRS.  Rivers also recruited another individual to provide her bank account information to the conspiracy.  The fraudulently obtained tax refunds went into that individual’s bank account and the individual would then withdraw the money to give to Rivers.

This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Michael Boteler and Jason Poole of the Justice Department’s Tax Division are prosecuting the case, with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.

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

Wal-Mart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty today in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.

As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.

According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.

“By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Wal-Mart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Wal-Mart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”

“Federal laws that address the proper handling, storage and disposal of hazardous wastes exist to safeguard our environment and protect the public from harm,” said André Birotte Jr., the U.S. Attorney for the Central District of California. “Retailers like Wal-Mart that generate hazardous waste have a duty to legally and safely dispose of that hazardous waste, and dumping it down the sink was neither legal nor safe. The case against Wal-Mart is designed to ensure compliance with our nation’s environmental laws now and in the future.”

“As one of the largest retailers in the United States, Wal-Mart is responsible not only for the stock on its shelves, but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Wal-Mart's failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Wal-Mart is in a position to be an industry leader by ensuring that not only Wal-Mart, but all retail stores properly handle their waste.”

“This tough financial penalty holds Wal-Mart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than 2 million pounds of pesticides, were improperly handled under Wal-Mart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Wal-Mart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”

“The FBI holds all companies, regardless of size, to the same standards,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We will continue to work closely with our law enforcement partners to ensure there is a level playing field for all businesses and that everyone follows the rules.”

“Today Wal-Mart is taking responsibility for violating laws that protect people from hazardous wastes and chemicals,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Walmart is committing to safe handling of hazardous wastes at all of its facilities nationwide, and action that will benefit communities across the country.”

Wal-Mart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols and cleaners. Once discarded, these products are considered hazardous waste under federal law.

Wal-Mart pleaded guilty this morning in San Francisco to six misdemeanor counts of negligently violating the Clean Water Act. The six criminal charges were filed by the U.S. Attorney’s Office in Los Angeles and San Francisco (each office filed three charges), and the two cases were consolidated in the Northern District of California, where the guilty pleas were formally entered before U.S. Magistrate Judge Joseph C. Spero. As part of a plea agreement filed in California, Wal-Mart was sentenced to pay a $40 million criminal fine and an additional $20 million that will fund various community service projects, including opening a $6 million Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste.

In the third criminal case resolved today, Wal-Mart pleaded guilty in the Western District of Missouri to violating FIFRA. According to a plea agreement filed in Kansas City, beginning in 2006, Wal-Mart began sending certain damaged household products, including regulated solid and liquid pesticides, from its six return centers to Greenleaf LLC, a recycling facility located in Neosho, Mo., where the products were processed for reuse and resale. Because Wal-Mart employees failed to provide adequate oversight of the pesticides sent to Greenleaf, regulated pesticides were mixed together and offered for sale to customers without the required registration, ingredients, or use information, which constitutes a violation of FIFRA. Between July 2006 and February 2008, Wal-Mart trucked more than 2 million pounds of regulated pesticides and additional household products from its various return centers to Greenleaf. In November 2008, Greenleaf was also convicted of a FIFRA violation and paid a criminal penalty of $200,000 in 2009.

Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Wal-Mart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community and the public. In addition, Wal-Mart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.

In conjunction with today’s guilty pleas in the three criminal cases, Wal-Mart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Wal-Mart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.

The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.

In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.

A Pennsylvania man was sentenced today to serve 12 years in prison for coercing and enticing a minor and possessing child pornography, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Western District of Pennsylvania David J. Hickton; and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia.

 

Jeffrey W. Herschell, 54, of Washington, Pa., was sentenced by U.S. District Judge David Stewart Cercone in the Western District of Pennsylvania.  According to a statement of facts entered into the record by the government and agreed to by the defendant, Herschell sent money to the Philippines in February 2010 for a live, online sex show that included a 12-year-old minor female engaging in sexual activity.  Herschell also admitted to possessing child pornography videos at his Pennsylvania residence.

 

This case was prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).  This case was investigated by ICE-HSI Pittsburgh and the ICE-HSI Attache’s Office in the Philippines with significant assistance from the National Bureau of Investigation (Philippines) and the Philippine National Police.

 

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

Mythili Raman, Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice; Preet Bharara, U.S. Attorney for the Southern District of New York; Steven G. Hughes, Special Agent-in-Charge of the New York Office of the U.S. Secret Service; Richard Weber, Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI); and James T. Hayes Jr., Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), announced today the unsealing of an indictment charging Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business.  Liberty Reserve is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S., who conducted approximately 55 million transactions – virtually all of which were illegal – and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking. 

Five defendants were arrested on May 24, 2013, including Arthur Budovsky, the principal founder of Liberty Reserve, who was arrested in Spain; Vladmir Kats, the co-founder of Liberty Reserve, who was arrested in Brooklyn, New York; Azzeddine El Amine, a manager of Liberty Reserve’s financial accounts, who was arrested in Spain; and Mark Marmilev and Maxim Chukharev, who helped design and maintain Liberty Reserve’s technological infrastructure, who were arrested in Brooklyn and Costa Rica, respectively.  Two other defendants, Ahmed Yassine Abdelghani (Yassine) and Allan Esteban Hidalgo Jimenez (Hidalgo), are at large in Costa Rica. 

In addition to the criminal charges brought in the indictment, five domain names were seized, namely, the domain name of Liberty Reserve and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the Liberty Reserve money laundering conspiracy and constitute property involved in money laundering.  The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with Liberty Reserve and were listed on Liberty Reserve’s website as “pre-approved exchangers.”  The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada and the U.S.

In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network today announced that Liberty Reserve has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act.  This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving Liberty Reserve.

Acting Assistant Attorney General Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace.  The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system.  By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear:  money launderers can run, but they can’t hide from the U.S. justice system.  Combating the threat of global illicit finance requires using every tool we have at our disposal, and today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”

U.S. Attorney Bharara said: “ As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers.   The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking.  As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”

Secret Service Special Agent-in-Charge Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud.  Cyber criminals should be reminded today that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems.  We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”

IRS-CI Chief Weber said: “We are now entering the cyber age of money laundering.  Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity.  What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”

ICE HSI Special Agent-in-Charge Hayes said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection.  HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”

According to the allegations in the indictment, the civil forfeiture complaint, and other documents filed in federal court:

Background

Liberty Reserve was incorporated in Costa Rica in 2006 and operated the digital currency commonly referred to as “LR.” While the company billed itself as the Internet’s “largest payment processor and money transfer system,” serving “millions” of people around the world, including the U.S., at no time did the company register with the U.S. Department of the Treasury as a money transmitting business, as required by law.

Budovsky, the principal founder of Liberty Reserve, directed and supervised its operations, finances, and corporate strategy.  Kats, a co-founder, helped operate the company until 2009.  The day-to-day operations of Liberty Reserve were managed, at different times, by Hidalgo and Yassine.  El Amine managed various financial accounts controlled by Liberty Reserve, while Marmilev and Chukharev were primarily responsible for designing and maintaining the company’s technological infrastructure. 

Overview of Liberty Reserve’s Money Laundering Operation

The defendants created, structured and operated Liberty Reserve as a criminal bank-payment processor designed to help users conduct illegal transactions anonymously and launder the proceeds of their crimes.  It emerged as one of the principal money transfer agents used by cyber criminals around the world to distribute, store, and launder the proceeds of their illegal activity.  The company grew into a financial hub of the cybercrime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.  Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cyber criminals around the world to conduct anonymous and untraceable financial transactions.

The defendants also protected the criminal infrastructure of Liberty Reserve by, among other things, lying to anti-money laundering authorities in Costa Rica and pretending to shut down Liberty Reserve after learning the company was being investigated by U.S. law enforcement.  They then continued operating the business through a set of shell companies, and moved tens of millions of dollars through shell company accounts maintained in Cyprus, Russia, China, Hong Kong, Morocco, Spain, Australia and elsewhere.

The Criminal Design of Liberty Reserve

In order to use LR currency, a user first had to open an account through the Liberty Reserve website and provide basic identifying information.  Unlike traditional banks or legitimate online processors, Liberty Reserve did not require users to validate their identities.  Users routinely established accounts under false names, including such blatantly criminal names as “Russia Hackers” and “Hacker Account.”  As part of the investigation, a law enforcement agent opened and executed transactions through an undercover account at Liberty Reserve in the name of “Joe Bogus” and the address “123 Fake Main Street” in “Completely Made Up City, New York.”        

Once an account was established, the user could conduct transactions with other Liberty Reserve users.  In these transactions, the user could receive transfers of LR from other users’ accounts, and transfer LR from his or her own account to other users, including any “merchants” that accepted LR as payment.  Liberty Reserve charged a one-percent fee up to a maximum of $2.99, every time a user transferred LR to another user through the Liberty Reserve system.  For an additional “privacy fee” of 75 cents per transaction, a user could hide his or her own Liberty Reserve account number when transferring funds, effectively making the transfer completely untraceable, even within Liberty Reserve’s already opaque system.    

To add an additional layer of anonymity, Liberty Reserve did not permit users to fund their accounts by transferring money to the company directly through a credit card transfer or other means.  Users also could not withdraw funds from their accounts directly.  Instead, Liberty Reserve users were required to make any deposits or withdrawals through the use of third-party “exchangers,” which enabled the company to avoid collecting any information about its users through banking transactions or other activity that would leave a centralized financial paper trail.  Budovsky, Kats and El Amine owned and operated certain Liberty Reserve exchanger services.

The Liberty Reserve website recommended a number of “pre-approved” exchangers, which tended to be unlicensed money transmitting businesses operating in countries without significant governmental money laundering oversight or regulation, such as in Malaysia, Russia, Nigeria, and Vietnam.  The exchangers charged transaction fees for their services that were much higher than the fees charged by mainstream banks or payment processors for comparable money transfers.

The Criminal Use of Liberty Reserve

To further enable the use of Liberty Reserve for criminal activity, its website offered a “shopping cart interface” that “merchant” websites could use to accept LR currency as a form of payment.  The “merchants” who accepted LR currency were overwhelmingly criminal in nature.  They included traffickers of stolen credit card data and personal identity information, peddlers of various types of online Ponzi and get-rich-quick schemes, computer hackers for hire, unregulated gambling enterprises, and underground drug-dealing websites. 

In addition to being used to process payments for illegal goods and services online, Liberty Reserve was also used by cyber criminals to launder criminal proceeds and transfer funds among criminal associates.  For example, Liberty Reserve was used by credit-card theft and computer-hacking rings operating in countries around the world, including Vietnam, Nigeria, Hong Kong, China, and the U.S., to distribute proceeds of these conspiracies among the members involved.

The defendants were well aware that Liberty Reserve functioned as an unlawful money-laundering enterprise.  In an online chat between Kats and Yassine that was captured by law enforcement, Kats explicitly described Liberty Reserve’s activities as “illegal” and noted that “everyone in USA” such as “DOJ” knows “LR is [a] money laundering operation that hackers use.”       

*                *                *

Liberty Reserve, Budovsky, 39, a citizen of Costa Rica who resides in the Netherlands, Kats, 41, of Brooklyn, New YorkYassine, 42, of Costa RicaHidalgo, 28, of Costa Rica,El Amine, 46, of Costa Rica,Marmilev, 33, of Brooklyn, New York, and Chukharev, 27, of Costa Rica,are each charged with one count of conspiracy to commit money laundering, which carries a maximum term of 20 years in prison, one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum term of five years in prison, and operation of an unlicensed money transmitting business, which carries a maximum term of five years in prison.  The terms of incarceration apply to the individual defendants. 

This case was investigated by the Secret Service, the IRS-CI and ICE HSI, which worked together in this case as part of the Global Illicit Financial Team. The Secret Service’s New York Electronic Crimes Task Force assisted with the investigation, as well as the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office.  The Shadowserver Foundation acted as the hosting provider for the domain names that were seized pursuant to the Court-authorized seizure warrants. The Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section also provided support.

This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section, which is overseen by Acting Assistant Attorney General Mythili Raman; and the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds Unit and Asset Forfeiture Unit.

If you believe you were a victim of a crime and were defrauded of funds through the use of Liberty Reserve, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact (888) 238-0696 or (212) 637-1583.

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

WASHINGTON – The former president and CEO, and the former vice president of corporate finance of China North East Petroleum Holdings Limited (CNEP), an oil and gas company whose stock is traded in the United States, have been charged with defrauding investors in connection with public offerings of stock.

 
Acting Assistant Attorney General Mythili Raman of the Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Assistant Director in Charge George Venizelos of the FBI’s New York Field Office; and Chief Richard Weber of the Internal Revenue Service’s Criminal Investigation (IRS-CI), made the announcement.

 
Wang Hongjun, 41, and Chao Jiang, 32, both Chinese citizens residing in California and New York, respectively, were indicted on May 23, 2013, with one count of conspiracy to commit wire and securities fraud and four counts of securities fraud, which each carry a maximum penalty of 25 years in prison. Jiang is also charged with two counts of false statements to the U.S. Securities and Exchange Commission (SEC) during sworn testimony, which each carry a maximum penalty of five years in prison. The indictment was made public today.

 

According to the indictment, Hongjun served as the president and CEO of CNEP from 2009 to 2010, and as the chairman of the Board of Directors beginning in 2010.  Jiang served as the vice president of corporate finance and corporate secretary of CNEP from 2008 until approximately 2011.  The charges allege that in June of 2009, CNEP registered a shelf offering with the SEC proposing to sell up to $40 million of CNEP common stock in the United States on the New York Stock Exchange.  In September and December of 2009, CNEP made two separate offerings pursuant to the June registration.  In documents filed with the SEC related to the offerings, and in other public statements to investors, Hongjun and Jiang informed investors that CNEP intended to use the funds raised from the securities offerings for general corporate purposes and to repay a prior corporate debt. 

 

The indictment alleges that, instead of using the offering proceeds as represented to CNEP’s investors, Hongjun and Jiang misappropriated approximately $1,265,000 of the proceeds by wiring the money to bank accounts in the name of their family members – approximately $965,000 to Jiang’s father and approximately $300,000 to Hongjun’s wife – which was used, in part, to purchase a home in California, jewelry and a Mercedes-Benz.

 

In addition, the indictment alleges that Jiang testified falsely under oath to the SEC in Washington, D.C., about these transactions.  In that testimony, Jiang stated that none of his family members had received anything of value over $500 from CNEP, despite having wired $965,000 from CNEP’s bank account to the account of his father.  Jiang also testified falsely regarding the use of proceeds from the securities offerings.

 

An indictment is merely an accusation, and defendants are presumed innocent until proven guilty in a court of law.

 

In a related action, the SEC had previously filed a civil enforcement action against Hongjun, Jiang and others in the Southern District of New York.

 

The case was investigated by the FBI’s New York Field Office and IRS-CI.  The department wishes to thank the SEC for its significant assistance in this case. The investigation is continuing.

This case is being prosecuted by Trial Attorneys Daniel Kahn and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Johnson for the District of Columbia.

 

The Department of Justice announced today that there is insufficient evidence to pursue federal criminal civil rights charges against any Milwaukee Police Department officer for the in-custody death of the late Derek Williams on July 6, 2011.

 

Officials from the U.S. Attorney’s Office for the Eastern District of Wisconsin, the department’s Civil Rights Division and the FBI met today with the Williams family and its representatives to inform them of this decision.

 

The department conducted a comprehensive and independent investigation of the events surrounding the arrest of Mr. Williams, who died while in the custody of Milwaukee police officers.  Specifically, special agents of the FBI interviewed over 50 civilian and law enforcement witnesses; consulted with various medical experts on Mr. Williams’ cause of death; conducted a physical examination of the involved squad car and recording system; and visited and canvassed the scene.  The special agents of the FBI also analyzed the patrol car video of the incident; the police radio transmissions; the autopsy reports; the testimony and exhibits admitted at the public inquest; the Milwaukee Police Department’s investigative file, including all the eyewitness and forensic evidence; the Milwaukee County District Attorney’s Office’s memorandum declining state charges; the City of Milwaukee’s Fire and Police Commission’s report; and the report of the special prosecutor. 

 

Under the applicable federal criminal civil rights law, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids.  This is the highest standard of intent imposed by law.  Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation.  Specifically, the team of prosecutors and FBI agents considered two types of potential violations of federal criminal civil rights law.  First, they considered whether any Milwaukee police officer violated the law by willfully using unreasonable force during Mr. Williams’ arrest.  Second, they examined whether the officers willfully and unreasonably failed to respond to Mr. Williams’ medical need.

 

The federal investigation revealed no medical evidence to corroborate the use of unreasonable force by any officer, such as using excessive force while restraining Mr. Williams on the ground.  The vast majority of the witnesses interviewed provided no evidence of a willful violation of the applicable civil rights statute.  The two civilian eyewitnesses who reported observing unreasonable force gave inconsistent and conflicting accounts that could not be corroborated.

 

There is also insufficient evidence that the response by any officer to Mr. Williams’ medical needs was objectively unreasonable or carried out with willful intent.  The investigation did not reveal evidence that the officers had notice of Mr. Williams’ medical need, and the officers stated they did not know he had a medical need.  The squad car video depicting Mr. Williams’ death as he sat in the back of the vehicle is tragic and alarming to watch, but the evidence does not establish that the video duplicates what the officers saw in the back of the squad car that night.  The infrared camera, which captures images with little or no light, clearly showed Mr. Williams in the back of the car.  However, it cannot be established that this was the vantage point of the subject officers for several reasons.  First, there is no backseat lighting in the car and there were minimal artificial lighting sources where the squad car was located.  Next, each officer had custody of Mr. Williams for only a short duration of time and no officer watched Mr. Williams for the entire time that he was in distress in the squad car.  Finally, there is no evidence that the officers were watching Mr. Williams on the squad car monitor in the front seat. 

 

Although Mr. Williams made repeated statements to officers that he could not breathe, the officers observed him to be breathing. Based on both officer and civilian witness testimony, the lack of more significant physical signs of asphyxiation diminished the officers’ beliefs that Mr. Williams was in any distress.  Furthermore, the officers responded with medical treatment once it was obvious to them that Mr. Williams needed help.  The facts do not establish beyond a reasonable doubt a willful failure to act in response to a known medical need. 

 

Finally, after consulting with various medical experts, some of whom later testified at the county public inquest, the cause of Mr. Williams’ death remains unknown; it is equally unclear that any delay by officers in providing medical attention to Mr. Williams contributed to his death. Therefore, after a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that any Milwaukee police officer acted willfully with a bad purpose to violate the law.  Accordingly, the investigation into this incident has been closed without prosecution.

                                   

The Office of the U.S. Attorney for the Eastern District of Wisconsin, the Civil Rights Division and the FBI devoted significant time and resources into conducting a thorough and independent investigation.  The department is committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated.  The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.

The Department of Justice announced today that there is insufficient evidence to pursue federal criminal civil rights charges against any Milwaukee Police Department officer for the in-custody death of the late Derek Williams on July 6, 2011.

 

Officials from the U.S. Attorney’s Office for the Eastern District of Wisconsin, the department’s Civil Rights Division and the FBI met today with the Williams family and its representatives to inform them of this decision.

 

The department conducted a comprehensive and independent investigation of the events surrounding the arrest of Mr. Williams, who died while in the custody of Milwaukee police officers.  Specifically, special agents of the FBI interviewed over 50 civilian and law enforcement witnesses; consulted with various medical experts on Mr. Williams’ cause of death; conducted a physical examination of the involved squad car and recording system; and visited and canvassed the scene.  The special agents of the FBI also analyzed the patrol car video of the incident; the police radio transmissions; the autopsy reports; the testimony and exhibits admitted at the public inquest; the Milwaukee Police Department’s investigative file, including all the eyewitness and forensic evidence; the Milwaukee County District Attorney’s Office’s memorandum declining state charges; the City of Milwaukee’s Fire and Police Commission’s report; and the report of the special prosecutor. 

 

Under the applicable federal criminal civil rights law, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids.  This is the highest standard of intent imposed by law.  Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation.  Specifically, the team of prosecutors and FBI agents considered two types of potential violations of federal criminal civil rights law.  First, they considered whether any Milwaukee police officer violated the law by willfully using unreasonable force during Mr. Williams’ arrest.  Second, they examined whether the officers willfully and unreasonably failed to respond to Mr. Williams’ medical need.

 

The federal investigation revealed no medical evidence to corroborate the use of unreasonable force by any officer, such as using excessive force while restraining Mr. Williams on the ground.  The vast majority of the witnesses interviewed provided no evidence of a willful violation of the applicable civil rights statute.  The two civilian eyewitnesses who reported observing unreasonable force gave inconsistent and conflicting accounts that could not be corroborated.

 

There is also insufficient evidence that the response by any officer to Mr. Williams’ medical needs was objectively unreasonable or carried out with willful intent.  The investigation did not reveal evidence that the officers had notice of Mr. Williams’ medical need, and the officers stated they did not know he had a medical need.  The squad car video depicting Mr. Williams’ death as he sat in the back of the vehicle is tragic and alarming to watch, but the evidence does not establish that the video duplicates what the officers saw in the back of the squad car that night.  The infrared camera, which captures images with little or no light, clearly showed Mr. Williams in the back of the car.  However, it cannot be established that this was the vantage point of the subject officers for several reasons.  First, there is no backseat lighting in the car and there were minimal artificial lighting sources where the squad car was located.  Next, each officer had custody of Mr. Williams for only a short duration of time and no officer watched Mr. Williams for the entire time that he was in distress in the squad car.  Finally, there is no evidence that the officers were watching Mr. Williams on the squad car monitor in the front seat. 

 

Although Mr. Williams made repeated statements to officers that he could not breathe, the officers observed him to be breathing. Based on both officer and civilian witness testimony, the lack of more significant physical signs of asphyxiation diminished the officers’ beliefs that Mr. Williams was in any distress.  Furthermore, the officers responded with medical treatment once it was obvious to them that Mr. Williams needed help.  The facts do not establish beyond a reasonable doubt a willful failure to act in response to a known medical need. 

 

Finally, after consulting with various medical experts, some of whom later testified at the county public inquest, the cause of Mr. Williams’ death remains unknown; it is equally unclear that any delay by officers in providing medical attention to Mr. Williams contributed to his death. Therefore, after a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that any Milwaukee police officer acted willfully with a bad purpose to violate the law.  Accordingly, the investigation into this incident has been closed without prosecution.

                                   

The Office of the U.S. Attorney for the Eastern District of Wisconsin, the Civil Rights Division and the FBI devoted significant time and resources into conducting a thorough and independent investigation.  The department is committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated.  The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.

Attorney General Eric Holder delivered keynote remarks after U.S. Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas administered the Oath of Allegiance to 70 new citizens today during a special naturalization ceremony at the Department of Justice’s Great Hall.

 
“Like millions of immigrants who came before them – including my father and grandparents, who came to this country many years ago from Barbados – these new citizens have demonstrated remarkable faith in the principles of equality, opportunity and justice that have always stood at the core of our identity as a nation,” said Attorney General Holder.  “Many of them have faced great difficulties – and grave dangers – to reach this moment.  But each of their individual stories proves the enduring promise of the American dream, and it’s a tremendous honor to welcome them as the newest members of our great and diverse American family.”

“The Department of Justice has a proud history of protecting vulnerable immigrants from those who seek to exploit them,” said Director Mayorkas. “It is an honor to welcome these new citizens alongside the Attorney General in the Great Hall—a symbol of the promise our nation makes to all its citizens to secure equal justice under the law.”

 
The new citizens naturalized at today’s ceremony hailed from the following 34 countries: Afghanistan, Albania, Argentina, Bangladesh, Belarus, Bolivia, Brazil, Canada, Colombia, Egypt, El Salvador, Ethiopia, Germany, Ghana, India, Iran, Iraq, Kosovo, Lebanon, Mexico, Morocco, Mozambique, Nepal, Pakistan, Paraguay, Peru, the Philippines, Romania, Russia, South Korea, Syria, Turkey, United Kingdom and Vietnam.

The department and USCIS are part of a multi-agency, nationwide initiative to combat immigration services scams. This initiative targets immigration scams involving the unauthorized practice of immigration law (UPIL), which occurs when legal advice and/or representation regarding immigration matters is provided by an individual who is not an attorney or accredited representative.

 

For more information on USCIS and its programs, please visit www.uscis.gov or follow USCIS on Twitter ( @uscis ), YouTube ( /uscis ), Facebook(/ uscis ), and the USCIS blog The Beacon .

 

Jeremy McCusker, a former correctional officer at Roxbury Correctional Institution (RCI) in Hagerstown, Md., yesterday pleaded guilty to assaulting an inmate and conspiring with other officers to cover up that assault.  McCusker is the sixth former RCI officer to enter a guilty plea in federal court. 

 

According to court documents filed in connection with his guilty plea, McCusker admitted that, during the midnight shift on March 8-9, 2008, he, Lanny Harris, Philip Mayo and two other RCI officers were involved in an assault of an inmate, identified by the initials K.D.   McCusker acknowledged that he and other RCI officers assaulted K.D. in order to punish him for striking an officer during a prior shift.

 
McCusker also admitted that he and other RCI officers discussed how they would cover up their involvement in the assault of K.D.  McCusker admitted that he provided false and misleading information to federal and state authorities in an effort to cover up his involvement in the assault.

           

“Mr. McCusker has admitted that he and other correctional officers assaulted an inmate in order to punish him and that they subsequently conspired to cover up their criminal conduct,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division.  “The Justice Department will continue to vigorously prosecute officers who use their official position to both commit and cover up violations of federal criminal law.”

 

McCusker faces a statutory maximum penalty of 15 years in prison.  Sentencing is set for Aug. 23, 2013, before U.S. District Judge James K. Bredar.

 

In related cases before Judge Bredar, former RCI Correctional Officers Ryan Lohr, Philip Mayo, Dustin Norris, Walter Steele, and Lanny Harris each has entered a guilty plea.  Nine other current or former RCI officers still face federal charges in connection with the alleged assault of K.D.   

 

The investigation by the Frederick Resident Agency of the FBI is ongoing.  The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division of the Department of Justice, with the assistance of Michael Cunningham of the U.S. Attorney’s Office for the District of Maryland.

 

Pharmaceutical company ISTA Pharmaceuticals, Inc. pled guilty earlier today to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Justice Department announced today.  U.S. District Court Judge Richard J. Arcara accepted ISTA's guilty pleas.  The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom. 

 

ISTA pled guilty in the Western District of New York to criminal charges that the company conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce.  Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA).  Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery.  In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.  

 

Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema.  The evidence showed that continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians.  These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.

 

ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses.  These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others.  ISTA agreed that this conduct represented an intent to defraud under the law.

   

In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute.  Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program.  In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.  In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.

 

Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge. 

 

ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs.  The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma.  The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs.  The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84.  Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims. 

 

"As today's global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  "Health care fraud in any form undermines the integrity of our health care system and can drive up costs for all of us." 

 

"Today's resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public," said United States Attorney William J. Hochul, Jr.  "The fact that ISTA offered doctors illegal inducements - such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions - makes the company's illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay." 

 

"It is especially concerning when companies actively take steps to conceal improper conduct which may jeopardize public health," said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. "We will continue to work tirelessly with the Department of Justice and our law enforcement counterparts to uncover such conduct."

 

In addition to the criminal fines and asset forfeiture, ISTA's parent company, Bausch+Lomb, Incorporated (B+L), has agreed to maintain a Compliance and Ethics Program.  B+L has agreed that it will maintain policies and procedures that: (1) prohibit the involvement of sales and marketing personnel and others on the businesses' commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse; (2) require sales agents to discuss only those product uses that are consistent with what is indicated on the product's approved package labeling and to forward requests for information regarding uses of B+L's products not approved by FDA to a Medical Affairs Professional; and (3) prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program.  The Program also requires that B+L's President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L's Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L's prescription pharmaceutical products.

 

The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, which permit 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 lawsuits were filed in the Western District of New York and are captioned United States ex rel. Keith Schenker v. ISTA Pharmaceuticals, Inc. and United States, et al., ex rel. DJ PARTNERSHIP 2011, LLP  v. ISTA Pharmaceuticals, Inc.  As part of today's resolution, Mr. Schenker will receive approximately $2.5 million from the federal share of the civil recovery.

 

Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal healthcare programs.  Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA's possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs.  In June 2012, B+L acquired ISTA.  Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services' Office of Inspector General, ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement.  Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement.  Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs.  Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.

 

"We agreed to enter into this Divestiture Agreement based on the facts of this case, including that B+L did not have a corporate relationship with ISTA during the improper conduct," said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  "In addition, B+L acquired ISTA more than a year after the improper conduct ended, and B+L did not hire any of ISTA's executives or senior management."

 

The criminal case was prosecuted by Assistant Director Jeffrey Steger of the Consumer Protection Branch of the Civil Division of the Department of Justice and Assistant United States Attorney MaryEllen Kresse of the Office of the U.S. Attorney for the Western District of New York.  They were assisted by Associate Chief Counsel Kelsey Schaefer of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.  The case was investigated by the Food and Drug Administration's Office of Criminal Investigations and Health and Human Services Office of Inspector General.  The civil settlement was handled by Trial Attorneys Colin Huntley and Benjamin Young of the Commercial Litigation Branch of the Civil Division of the Department of Justice and Assistant United States Attorney Kathleen Lynch of the Office of the U.S. Attorney for the Western District of New York.

 

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 $10.4 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 $14.3 billion.

Julian Zapata Espinoza, also known as “Piolin,” 32, pleaded guilty today to the murder of U.S. Immigration and Customs Enforcement (ICE) Special Agent Jaime Zapata and the attempted murder of ICE Special Agent Victor Avila in Mexico.  The court also unsealed today the guilty pleas of three other defendants on related murder, attempted murder, racketeering and accessory charges. 

The guilty pleas, in the U.S. District Court for the District of Columbia, were announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Assistant Director Ronald T. Hosko of the FBI Criminal Investigative Division; and ICE Director John Morton.
 
As set forth in court filings, on Feb. 15, 2011, Espinoza, a commander in Los Zetas Cartel, a heavily armed Mexican narco-trafficking cartel and transnational criminal organization, attempted to hijack Special Agent Zapata’s and Special Agent Avila’s armored government vehicle as the agents were driving on Highway 57 in San Luis Potosi.  Two armed Zetas hit squads, or “estacas,” forced the agents off the road and surrounded their vehicle.  Espinoza, the leader of the attack, ordered the agents to exit their vehicle.  When the agents refused and attempted to identify themselves as American diplomats from the U.S. Embassy, the hit squad members fired weapons near and into the vehicle, striking both agents.  Estaca members continued to fire at the vehicle as the agents attempted to escape by driving away.  Special Agent Zapata died as a result of the gunshot wounds he suffered during the attack, and Special Agent Avila was seriously injured.

On April 19, 2011, Espinoza was indicted by a federal grand jury in the District of Columbia on multiple counts pertaining to the murder of ICE Special Agent Zapata and the attempted murder of ICE Special Agent Avila and, on Dec. 20, 2011, was extradited from Mexico to the United States.  This morning, the defendant entered a guilty plea before Chief Judge Royce C. Lamberth to the murder of Special Agent Zapata, an officer and employee of the United States, and the attempted murder of Special Agent Avila, an officer and employee of the United States. 

In addition to the announcing the guilty plea of Espinoza, prosecutors also announced related guilty pleas by three other defendants.  Ruben Dario Venegas Rivera, also known as “Catracho,” 25, pleaded guilty on Aug. 1, 2011, to federal charges concerning the murder of Special Agent Zapata and attempted murder of Special Agent Avila.  Jose Ismael Nava Villagran, also known as “Cacho,” 30, pleaded guilty on Jan. 4, 2012, also to federal charges concerning the murder and attempted murder of the ICE agents.  Francisco Carbajal Flores, also known as “Dalmata,” 38, pleaded guilty on Jan. 10, 2012, to conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity and to being an accessory after the fact to the murder and attempted murder of the ICE agents.

As part of their guilty pleas, Espinoza, Rivera and Villagran admitted to being members of a Los Zetas hit squad and to participating directly in the Feb. 15, 2011, ambush of the two Special Agents.  The fourth defendant, Flores, acknowledged assisting Zetas members after the Feb. 15 attack.

  All four defendants face a maximum sentence of life in prison.  No sentencing date has been set for the defendants.

“Special Agent Zapata died for his country in a senseless and brutal attack, and Special Agent Avila was grievously wounded in the same ambush by members of Los Zetas Cartel,” said Acting Assistant Attorney General Raman. “Both men are American heroes who dedicated themselves to protecting the United States, only to be attacked by vicious thugs.  I hope that today’s announcement of guilty pleas by the Cartel members directly responsible for the attack brings some measure of justice to the victims and their families.  A team of dedicated prosecutors and investigators has worked day and night to identify and hold these defendants accountable.  Our work is far from over, and we will continue to devote our full resources and work with our law enforcement partners here and abroad to investigate and prosecute those responsible.”

“The deadly ambush of two highly dedicated and courageous American law enforcement officers by the Los Zetas drug cartel demanded an intense, dedicated and forceful response,” said U.S. Attorney Machen. “The message to any criminal who dares to commit an act of violence against a U.S. law enforcement officer serving in a foreign land is unmistakable - if you commit such a heinous crime, we will not forget, we will not falter, and we will not rest until you are brought to justice.  Our work in this critical case will continue until all of those who participated in the murder of Special Agent Zapata and attempted murder of Special Agent Avila are held accountable.” 

“With the assistance of our law enforcement partners, assailants responsible for murdering Agent Zapata and wounding Agent Avila have been brought to justice,” said FBI Assistant Director Hosko.  “While there is nothing we can do to change what happened that fateful day in Mexico, let it be known that an attack against any federal agent serving his or her country is an attack on all federal agents and as such remains a priority for the FBI until those responsible are brought to justice.”

“Today’s announcement is a very important milestone in the effort to see that justice is served in the murder of ICE Special Agent Zapata and the attempted murder of ICE Special Agent Victor Avila,” said ICE Director Morton. “Both men were trying to make the world a safer place, and today’s result is a very welcome step to honor their service and sacrifice.”

This case is being investigated by the FBI, with substantial assistance from ICE, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, the Customs and Border Protection, the Diplomatic Security Service and the U.S. Marshals Service. 
 
The case is being prosecuted by the Organized Crime and Gang Section and the Narcotic and Dangerous Drug Section of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the District of Columbia.  The Office of International Affairs of the Justice Department’s Criminal Division provided substantial assistance.

The owner of an investment company pleaded guilty today for his role in an investment scheme involving false promises, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.

David Eugene Howard II, 34, of Queens Village, N.Y., pleaded guilty before U.S. District Judge T. S. Ellis III in the Eastern District of Virginia to one count of mail fraud. 

According to the plea documents, from in or about March 2008 through in or about April 2009, Howard falsely represented to investors that his company, Flatiron Systems LLC, traded pooled equity accounts using a proprietary trading system called “Pathfinder.” Through distributing false and misleading letters, operating agreements, account statements and other materials, he caused investors to send investments of at least $5,000, which were deposited into an account that he exclusively controlled and which he later misappropriated for his own benefit and the benefit of others.

Over the course of his scheme, Howard directly misappropriated approximately $373,000 of $1.8 million in investor funds.  Howard’s misappropriation included approximately $86,000 in transfers to his personal bank account, cash withdrawals and personal expenditures made with his company debit card, to include approximately $34,500 in charges at a night club and approximately $3,600 in charges towards the purchase of a Tiffany necklace for Howard’s girlfriend at the time.

According to court documents, in December 2008, Howard falsely informed investors that trading had been voluntarily halted so that an independent audit could be performed. Nonetheless, Howard continued to transfer approximately $26,500 in investor funds to his personal bank account, along with additional cash withdrawals and personal expenditures over the course of the following four months.  Howard followed up with another letter which falsely advised investors of prolonged audit and tax procedures, which his nonexistent attorneys and accountants were purportedly diligently working on.

At sentencing, Howard faces a maximum penalty of 20 years in prison, a fine of $250,000 or twice the gross gain or loss, and full restitution.  Sentencing is scheduled for Sept. 20, 2013.

In a related action, the U.S. Securities and Exchange Commission (SEC) filed a civil enforcement action against Howard on March 21, 2011.

This prosecution is the result of an investigation by the FBI’s Washington Field Office, along with a parallel investigation by the SEC. The case is being prosecuted by Trial Attorneys Mark Grider, N. Nathan Dimock, and Luke B. Marsh of the Justice Department Criminal Division’s Fraud Section, and by Assistant U.S. Attorney Kosta S. Stojilkovic of the Eastern District of Virginia. 

 

An Independence, Mo., woman was indicted by a federal grand jury today for violating the civil rights of an African-American family by setting fire to their residence, announced Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division of the Department of Justice, and Tammy Dickinson, U.S. Attorney for the Western District of Missouri.

 Victoria A. Cheek-Herrera, 33, of Independence, was charged in a three-count indictment returned by a federal grand jury in Kansas City, Mo.

Today’s indictment charges Cheek-Herrera with participating in a conspiracy to threaten and intimidate an Independence family from exercising their constitutional right to reside in their home because of their race or color. It also charges Cheek-Herrera with committing a racially-motivated arson and with using fire during the commission of a felony. 

 According to the indictment, Cheek-Herrera conspired with others on June 26, 2008, to injure, oppress, threaten and intimidate Larry Davis, Stacey Little and the couple’s minor children in the free exercise of their constitutional right to occupy and rent their home in Independence, because of their race and color. Davis, Little and their children are all African American.

 The indictment alleges that Cheek-Herrera discussed with others her desire to set fire to the home of Davis and Little, and that Cheek-Herrera and a co-conspirator drew a swastika and wrote the words “White Power” on the driveway to Davis and Little’s residence. Cheek-Herrera allegedly asked a juvenile acquaintance for gasoline then helped create a Molotov cocktail by filling a glass bottle with gasoline and inserting a rag into the bottle to serve as a wick. Cheek-Herrera and a co-conspirator then allegedly lit the wick and threw the gasoline-filled bottle into the side of the house that Davis and Little were renting, which set the residence on fire.

If convicted, Cheek-Herrera faces a statutory maximum penalty of 10 years in prison and a fine of $250,000 for one charged count of conspiracy against rights, a statutory maximum penalty of 10 years in prison and a fine of $250,000 for one charged count of interference with housing rights, and a penalty of 10 years imprisonment consecutive to any other sentence and a fine of $250,000 for one charged count of using fire during the commission of a felony.

The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney David M. Ketchmark and Trial Attorney Shan Patel of the Civil Rights Division of the U.S. Department of Justice. It was investigated by the FBI.

The owner and sole operator of an environmental laboratory was found guilty yesterday in U.S. District Court for the Southern District of Mississippi  of all counts of a federal indictment charging falsification of records and obstructing a federal criminal investigation, announced Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division and the U.S. Attorney for the Southern District of Mississippi Gregory K. Davis.

Tennie White, owner, operator and manager of Mississippi Environmental Analytical Laboratories Inc., was charged in a three-count felony indictment with two false statements counts and one count of obstructing proceedings.  The jury found the White guilty of all counts after an eight day trial before U.S. District Judge Henry T. Wingate at the federal courthouse in Jackson, Miss.

“Our environmental regulatory system depends on the self-reporting of accurate information, including what is being released into the environment.  When laboratories who are paid to test and report samples of what is being discharged into our nation’s waters fabricate results and lie to investigators, they will be prosecuted,” said U.S. Attorney Davis. 

“Americans expect their public water supply to be clean and safe to use,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in Mississippi.  “In order to safeguard public health it is absolutely essential that governments receive accurate test results and measurements.  Violators who submit false reports undermine our efforts to protect the public and the environment.  Today’s guilty verdict by a jury demonstrates that the American people will not tolerate laboratories and their managers who place the public at risk by knowingly falsifying test results.”

As describe in the indictment, White was hired to perform laboratory testing of a manufacturer’s industrial process waste water samples and then to use those results to complete monthly discharge monitoring reports for submission to the Mississippi Department of Environmental Quality.  The indictment alleged that from October to December 2008 White created three discharge monitoring reports (DMRs) that falsely represented that laboratory testing had been performed on samples when, in fact, such testing had not been done.  The indictment further alleged that White created a fictitious laboratory report and presented it to her client for use in preparing another DMR for January 2009.  The indictment also alleged that White made false statements to a federal agent during a subsequent criminal investigation. 

Sentencing has been scheduled for Aug. 8, 2013 in federal court in Jackson.  For the false statements charges, the defendant is facing a maximum sentence of five years in prison and a $250,000 fine per count.  The obstructing proceedings charge carries a maximum sentence of 20 years in prison and a $250,000 fine.  
 
The case was prosecuted by Trial Attorney Richard J. Powers of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, and Assistant U.S. Attorney Gaines Cleveland of the U.S. Attorney’s Office for the Southern District of Mississippi.

The Justice Department announced today that it has reached an agreement with ISS Facility Services Company resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA).  ISS, with headquarters in San Antonio, Texas, employs approximately 15,000 employees in the United States.

 
The Justice Department’s investigation was initiated based on a referral from the U.S. Citizenship and Immigration Services (USCIS).  The investigation focused on whether the ISS offices in Dallas and Houston were requiring non-citizens to present specific U.S. Department of Homeland Security-issued documents to establish their identity and work-authority 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. 

 
According to the settlement agreement, ISS agreed to ensure that all its offices complied with the company’s existing employment eligibility verification policies and procedures and to provide training of its human resources personnel on the INA’s anti-discrimination provision.  ISS also agreed to pay $49,800 to the United States and to identify and compensate any individuals who may have suffered economic injuries as a result of its practices.  Under the agreement, ISS’ employment eligibility verification practices will be subject to monitoring by the department for a period of two years.

   

“Employers cannot create higher hurdles for non-U.S. citizens in the employment eligibility verification process than those required of U.S. citizens unless required by law,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division. “We commend ISS for its exemplary cooperation in working with the department to identify the source of the problems in its employment eligibility verification process at two of its offices and to work with the department in addressing those problems.”

 

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 Linda White Andrews, an OSC trial attorney.   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 .

A federal complaint has been unsealed charging Dante Phearse, 32, of Houston, with calling in bomb threats to two synagogues located in Houston, announced Deputy Assistant Attorney General for the Civil Rights Division Roy L. Austin Jr. and U.S. Attorney for the Southern District of Texas Kenneth Magidson.

The sealed complaint was filed Thursday, May 16, 2013, and unsealed today.  Phearse is expected to make an initial appearance in Houston tomorrow at 10:00 a.m. before U.S. Magistrate Judge Nancy Johnson.  At that time, the government expects to request he be detained pending further criminal proceedings.

Phearse is charged with one count of using an instrument of interstate commerce to communicate a threat to destroy a building by means of an explosive device.  The complaint and accompanying affidavit allege that on the evening of April 30, 2013, Phearse telephoned two different synagogues in Houston - Congregation Beth Israel and Congregation Or Ami - and left voice mails threatening to bomb the Jewish houses of worship on May 2, 2013.

A criminal complaint is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

If convicted, Phearse faces up to 10 years in federal prison and a possible $250,000 fine.

The case is being investigated by the Houston Police Department and the FBI.  Trial Attorneys Saeed Mody and Nicholas Murphy of the Civil Rights Division and Assistant U.S. Attorneys for the Southern District of Texas Ruben R. Perez and Joe Magliolo are prosecuting.

Frank Carter, 43, a former officer with the Laredo, Texas, Police Department (LPD), has been sentenced to prison following his conviction for violating the civil rights of an arrestee, announced Assistant Attorney General for the Civil Rights Division Thomas E. Perez and U.S. Attorney Kenneth Magidson.  Carter pleaded guilty on Thursday, March 7, 2013.

              

Today, U.S. District Judge Diana Saldana, who accepted the guilty plea, handed Carter a sentence of a year and a day in federal prison to be immediately followed by one year of supervised release.  In handing down the sentence, Judge Saldana commended Carter for accepting responsibility for his actions.  Carter will also have to complete 75 hours of community service in the first six months following his release from prison.

Carter admitted that on May 26, 2012, while using his authority as a LPD officer, he struck a male victim who was handcuffed and detained in the backseat of Carter’s patrol car. Carter admitted he struck the victim several times.

 

According to information presented in court at the time of the plea, rear facing dash camera audio and video recordings revealed Carter had yelled obscenities at the victim while he punched the victim in the head and body.  Carter also repeatedly slammed the victim’s face into the back of the seat.  The victim remained handcuffed during the entire incident and never resisted or attempted to harm Carter.

 

Carter was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

 

This case was investigated by the LPD, FBI and Texas Rangers.  Civil Rights Division Trial Attorneys Ryan Murguia and Christopher Lomax and Assistant U.S. Attorney Ruben R. Perez prosecuted the case.           

A former Chicago police officer and two members of the Latin Kings street gang were sentenced to prison today in Hammond, Ind., federal court for racketeering conspiracy and related crimes.

Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement following the sentencing hearings before U.S. District Judge Rudy Lozano in the Northern District of Indiana.

A former officer with the Chicago Police Department, Antonio C. Martinez, Jr., 40, of Chicago, was sentenced today to 144 months in prison after pleading guilty on Nov. 18, 2011, to racketeering, drug, and robbery conspiracies and other related charges. According to court records, Martinez and another officer committed armed robberies on behalf of a Latin Kings gang member – in some instances while in uniform and driving police-issued vehicles. They stole drugs, weapons and cash, and in some instances they were given a portion of the funds they stole as payment for committing the armed robberies.

Hiluterio Chavez, aka “Tails,” 37, of Chicago, was sentenced today to 240 months in prison after pleading guilty on Jan. 24, 2012, to racketeering and drug conspiracies. Chavez, who became a Latin Kings member at an earlier age, admitted in court that he traveled with other Latin Kings leadership from the Chicago area to Texas to facilitate the organization of the Latin Kings in Texas and to ensure their allegiance to the Chicago Latin Kings. Among other crimes, Chavez participated in a robbery with Martinez and presented himself as a law enforcement officer.

Jermaine Ellis, aka “J-Dub,” 21, of Chicago, was sentenced today to 205 months in prison after pleading guilty on July 30, 2010, to racketeering conspiracy. Ellis, who also became a Latin Kings member at an early age, admitted that while a juvenile he participated in the shooting deaths of James Walsh and Gonzalo Diaz in Griffith, Ind., on Feb. 25, 2007.

Court records allege that the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States.  The Latin Kings is a well-organized street gang that has specific leadership and is composed of regions that include multiple chapters. 

The Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings.  Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”

Twenty-three Latin Kings members and associates have been indicted in this case.  Aside from Martinez, Ellis and Chavez, 19 of the other defendants pleaded guilty and one remains a fugitive. 
 
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.

The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana.  Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.

Tracey Montgomery, of Montgomery County, Ala., pleaded guilty today in the U.S. District Court for the Middle District of Alabama to her role in a large scale stolen identity refund fraud, the Justice Department and the Internal Revenue Service (IRS) announced today.
 
On April 17, 2013, a federal grand jury in Montgomery, Ala., indicted Montgomery on conspiracy and theft of government money charges. According to court documents, Montgomery opened two bank accounts which were used to receive deposits of fraudulent tax refunds. Between August 2009 and February 2011, at least six false federal income tax refunds totaling approximately $49,221 were directed to Montgomery’s bank accounts. Montgomery was able to withdraw the false tax refund money before the IRS caught her. The overall scheme Montgomery participated in is alleged to have involved over $500,000 in false refunds.  As a result of her plea, Montgomery faces a maximum potential sentence of 10 years in prison.

This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr., Michael Boteler, and Greg Bailey of the Justice Department's Tax Division are prosecuting the case with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.    

Rodriquez Thomas, of Montgomery County, Ala., pleaded guilty today in the U.S. District Court for the Middle District of Alabama to conspiring to cash fraudulently obtained federal tax refund checks, the Justice Department and the Internal Revenue Service (IRS) announced. 

According to court documents, Thomas, along with his co-conspirators, Jesse Johnson and Quanesha Johnson, obtained U.S. Treasury tax refund checks that were issued as a result of the filing of fraudulent tax returns. Thomas and the Johnsons and others cashed approximately 77 fraudulently obtained U.S. Treasury tax refund checks that totaled approximately $137,016 by bringing them to a bank teller, Debora Gray, who worked for a bank in Wetumpka, Ala., and who participated in the scheme. 

Jesse and Quanesha Johnson and Debora Gray have all previously pleaded guilty to their involvement and are awaiting sentencing. Thomas faces a maximum sentence of five years in prison for the conspiracy. He is also subject to fines, mandatory restitution and forfeiture.     

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

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

Two members of the Latin Kings street gang were sentenced today in Hammond, Ind., federal court for racketeering conspiracy, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.

Martin Anaya, aka “Lefty,” 42, of Chicago, was sentenced today by U.S. District Judge Rudy Lozano to 360 months in prison after a jury returned a guilty verdict on Sept. 26, 2012, to racketeering and drug conspiracies.

Jason Ortiz, aka “Creeper” 29, of Chicago, was sentenced today to serve 300 months in prison after pleading guilty on July 30, 2010, to racketeering conspiracy by U.S. District Judge Lozano.

According to the third superseding indictment filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States.  The Latin Kings is a well-organized street gang that has specific leadership and is composed of regions that include multiple chapters.  The third superseding indictment charges that the Latin Kings were responsible for more than 20 murders.

Also according to the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings.  Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”

During Anaya’s trial, the government presented evidence of several murders committed by the members of the Latin Kings. In addition, cooperating defendants testified that the Latin Kings were responsible for more than 150 kilograms of cocaine and 1,000 kilograms of marijuana over the course of the racketeering conspiracy.

Evidence of one the murders presented at trial involved the shooting death of Christina Campos that occurred at 107th block of Hoxie Avenue, Chicago, on April 22, 2009. Witnesses testified that Anaya, Ortiz, Brandon Clay, a defendant previously sentenced to 360 months in this case, and a fourth Latin King member drove across the south side of Chicago to a Latin Counts’ neighborhood. The Latin Kings confronted Campos and two other Latin Count members as they were walking to their car.  Ultimately, gun shots were fired resulting in Campos being fatally shot.  At the trial, the jury acquitted Anaya on the charges related to Campos’ murder.  Nevertheless, during the sentencing hearing, Judge Lozano found Anaya responsible for Campos’ death.

During his guilty plea proceeding, Ortiz acknowledged that on Feb. 25, 2007, he, along with four other defendants, rode on a “mission” from Illinois to Griffith, Ind.  While armed with three firearms, they were ordered to ambush – that is shoot to kill – rival gang members who were attending a party. Once two Latin Dragon members James Walsh, aka “Jim Boy” and  Gonzalo Diaz, aka “Chalo,” left the party, the Latin Kings, including Ortiz, rode up in a vehicle and two of Ortiz’s co-defendants got of the vehicle and shot and killed Walsh and Diaz. 

Twenty-three Latin Kings members and associates have been indicted in this case.  Aside from Anaya and Ortiz, 20 of the other defendants pleaded guilty and one remains a fugitive. 
 
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.

The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana.  Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.

An indictment is not evidence of guilt. Those charged in the indictment are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Today, the Justice Department’s Civil Rights Division issued a letter detailing the findings of its investigation into conditions of confinement at Escambia County Jail, a jail located in northwest Florida, housing roughly 1,300 prisoners.  The department found that, although the jail under the leadership of Sheriff David Morgan has recently implemented a series of meaningful reforms, conditions at the jail still routinely violate the constitutional rights of prisoners. 

Specifically, the department concluded that known systemic deficiencies at the facility, stemming mainly from staffing shortages, continue to subject prisoners to excessive risk of assault by other prisoners and to inadequate mental health care.  Additionally, the department found that until recently, the jail had an informal policy and practice of designating some of its housing units as only for African-American prisoners.  By segregating some of its prisoners on the basis of race, the jail not only stigmatized and discriminated against many of its African-American prisoners, it also fanned combustible racial tensions within the jail.

“We commend Sheriff Morgan for his willingness to work aggressively to remedy many of the problems brought to his attention during the course of our investigation,” said Roy L. Austin Jr., Deputy Assistant Attorney General of the Civil Rights Division. “We hope to work cooperatively with the Sheriff and the County to address and remedy the remaining unconstitutional conditions of confinement at Escambia Jail.”

The department conducted this investigation pursuant to its authority under the Civil Rights of Institutionalized Persons Act (CRIPA) to enforce constitutional mandates.  The department’s investigation was broad based and included a review of practices relating to the level of security at the jail, the adequacy of medical and mental health services, and sanitation/environmental conditions. 

Under its CRIPA authority, in addition to investigating the conditions of confinement at correctional facilities, the department has also investigated conditions at psychiatric hospitals, nursing homes, residential facilities serving persons with developmental disabilities, and juvenile correctional facilities. CRIPA’s focus is on systemic deficiencies rather than on the misconduct of individuals.  Please visit www.justice.gov/crt to learn more about CRIPA and other laws enforced by the Department’s Civil Rights Division

The investigation was conducted by Special Litigation Counsel Avner Shapiro and Senior Trial Attorney David Deutsch of the Civil Rights Division’s Special Litigation Section.  The findings letter will be available on the Department’s Web site at www.justice.gov/crt. 

Related Materials:

Escambia County Jail Findings Letter

A former health care clinic director and licensed therapist was sentenced in Miami to 111 months in prison today in connection with a health care fraud scheme involving defunct health provider Health Care Solutions Network Inc. (HCSN).

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, made the announcement.

 Paul Thomas Layman, 66, of Miami, pleaded guilty on March 7, 2013, to conspiracy to commit health care fraud.

During the course of the conspiracy, Layman was employed as a substance abuse counselor, therapist and clinical director of HCSN’s Partial Hospitalization Program (PHP).  A PHP is a form of intensive treatment for severe mental illness.
        
HCSN of Florida (HCSN-FL) operated community mental health centers at three locations. During his employment, Layman worked full time at all HCSN-FL locations in various capacities.  According to court documents, Layman was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid.  Layman 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. 

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

 HCSN of North Carolina (HCSN-NC) operated one location in Hendersonville, N.C.  At HCSN-NC, Layman served as the clinical director and assisted HCSN owner Armando Gonzalez in obtaining necessary licensing, credentials and Medicare authorizations for HCSN-NC.  According to court documents, from 2008 through 2009, Layman purportedly supervised the therapists within the HCSN-NC PHP, including Alexandra Haynes, who was an unlicensed therapist purportedly performing PHP therapy to HCSN-NC patients.  Gonzalez and Haynes were sentenced to 168 months and 70 months, respectively, in prison. 

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

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

Charles Kokesh was indicted by a federal grand jury in Pensacola, Florida, for violating the Endangered Species Act and the Lacey Act by selling two African elephant tusks and for making false accounts of wildlife related to that sale, the Justice Department announced today.

The three count indictment returned yesterday alleges that Kokesh legally imported a sport-hunted African elephant trophy mount from Namibia, but thereafter illegally sold the two tusks, from New Mexico to a buyer in Florida.  The sale price was approximately $8,100, to be paid in a combination of currency and guns.  After the sale, Kokesh allegedly falsely described that sale, in an email to personnel at the U.S. Fish and Wildlife Service, as a shipment to an appraiser in anticipation of a donation to a non-profit entity.  Kokesh similarly falsely accounted for the location and disposition of the tusks in subsequent correspondence.  Each false account and record is charged under the Lacey Act.

African elephants are protected under the Endangered Species Act and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).  Both the United States and Namibia are signatories to CITES.  African elephant populations in Namibia are listed in Appendix II of CITES, which includes species that are not necessarily threatened with extinction now, but may become so unless trade in specimens of such species is strictly regulated.  Since 2000, the Namibian African elephant listing has specified that the species cannot be used for commercial purposes. 

The United States implements CITES through the Endangered Species Act and regulations issued thereunder.  To implement the CITES prohibition against commercial use of African elephant specimens, regulations issued under the Endangered Species Act proscribe the commercial use, including sale, of sport-hunted African elephant trophies, even if the trophies are legally hunted and imported. 

According to a recent report produced by CITES and partner organizations, entitled “Elephants in the Dust –The African Elephant Crisis,” populations of elephants in Africa are under severe threat as the illegal trade in ivory grows – with the number of elephants killed doubling and the  amount of ivory seized tripling over the last decade.  An estimated 17,000 elephants were illegally killed in 2011 to feed the illegal trade.  More information is available at www.cites.org/eng/news/pr/2013/20130306_ivory.php.

An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.

The maximum penalty for the charged violation of the Endangered Species Act is up to six months in prison and a $25,000 fine.  The maximum penalty for making a false statement is up to five years in prison and a $250,000 fine.

The case was investigated by the U.S. Fish and Wildlife Service and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and is being prosecuted by the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and the U.S. Attorney’s Office for the Northern District of Florida.

For more information about CITES visit www.CITES.org.

U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today.  U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease.  Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration.  The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen.  However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.

“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “We will continue to protect scarce Medicare dollars.”

“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland.  “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”

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 $10.2 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 $14.2 billion.

The allegations settled today arose from a lawsuit filed by Laura Davis against DCA under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery.  Ms. Davis will receive $1,314,000 as part of today’s settlement.

This case was handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the District of Maryland with assistance from the Office of Inspector General for the Department of Health and Human Services.  The claims settled by this agreement are allegations only, and there has been no determination of liability.  The whistleblower suit is captioned United States ex rel. Laura Davis v. Dialysis Corporation of America, No. 1:08-cv-2829 (D. Md.).

Two DENSO Corp. executives – Yuji Suzuki and Hiroshi Watanabe – have agreed to plead guilty for their roles in international conspiracies to fix prices and rig bids of certain automotive components installed in U.S. cars, the Department of Justice announced today.  The executives, both Japanese nationals, have also agreed to serve time in a U.S. prison.

Yuji Suzuki, a senior manager in DENSO’s Toyota Sales Division, has agreed to serve 16 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. Hiroshi Watanabe, a group leader in DENSO’s Toyota Sales Division at the time of the offense, has agreed to serve 15 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. 

“The conspirators reached agreements to fix prices and allocate bids, and took measures such as using code names and meeting in secret to cover their tracks,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Cracking down on international price-fixing cartels that target U.S. businesses and consumers has been, and will continue to be, among the top priorities for the Antitrust Division.”

According to the two-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Suzuki, along with co-conspirators, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of, electronic control units and heater control panels sold to Toyota Motor Corporation and Toyota Motor Engineering and Manufacturing North America Inc. in the United States and elsewhere.  According to the charges, Suzuki participated in the electronic control units conspiracy from at least as early as August 2005 until at least December 2008 and participated in the heater control panels conspiracy from at least as early as July 2005 until at least December 2008.

According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Watanabe participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of, heater control panels sold to Toyota from at least as early as June 2008 and continuing until at least February 2010 in the United States and elsewhere. 

In March 2012, DENSO  pleaded guilty and was sentenced to pay a $78 million criminal fine for its role in the conspiracies related to electronic control units and heater control panels.

Electronic control units are electrical components, similar to tiny computers, which are embedded throughout cars and control various electrical systems or subsystems in an automobile.  For example, a body electronic control unit controls the power windows, power locks and other electronic components on the door.  Heater control panels are located in the center console of a car and control the temperature inside the car.

“Those individuals who engage in price fixing and bid rigging negatively impact the automotive industry by causing vehicle buyers and makers to pay higher prices.  The FBI is committed to pursuing and prosecuting these criminals,” said Robert D. Foley III, Special Agent in Charge, FBI Detroit Division.

According to the charges against Suzuki and Watanabe, they carried out the conspiracies by participating, or directing the participation of subordinate employees, in meetings and conversations to coordinate and fix prices of automotive parts installed in U.S. cars and elsewhere.

To date, nine companies and 14 executives have pleaded guilty or agreed to plead guilty in the department’s ongoing investigation into price fixing and bid rigging in the automotive parts industry.  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 pleaded guilty and were sentenced to pay a total of more than $809 million in criminal fines.  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.

Suzuki and Watanabe are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine 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.

Related Materials:

Watanabe Information
Suzuki Information

Arturo Rojas-Coyotl, Odilon Martinez-Rojas, and Severiano Martinez-Rojas, all of Tenancingo in the state of Tlaxcala, Mexico have been indicted on charges of sex trafficking and alien harboring, announced the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Georgia. A fourth man, Daniel Garcia-Tepal, also of Tlaxcala, Mexico, is charged with encouraging and inducing aliens to enter and reside in the United States unlawfully. 

 According to U.S. Attorney Yates, the charges and other information presented in court: Rojas-Coyotl and his uncles Odilon Martinez-Rojas and Severiano Martinez-Rojas used force, fraud and coercion to compel three women to engage in prostitution in Atlanta and Norcross, Ga. at various times between 2006 and 2008. Daniel Garcia-Tepal and Arturo Rojas-Coyotl are also charged with encouraging and inducing a fourth woman to unlawfully enter and remain in the United States between 2010 and 2013. 

 Special Agents of the FBI and ICE Homeland Security Investigations arrested Arturuo Rojas-Coyotl, Odilon Martinez-Rojas, and Daniel Garcia-Tepal in a highly coordinated law enforcement sweep today. Severiano Martinez-Rojas remains a fugitive and is believed to be in Mexico.  The FBI will coordinate with its legal attaché in Mexico City to affect his arrest and subsequent extradition back to the U.S.  Four search warrants were also executed today in Atlanta and Norcross, Ga. in conjunction with the arrests.

 Rojas-Coyotl, 26, Martinez-Rojas, 41, Martinez-Rojas, 48, and Garcia-Tepal, 28, are scheduled for arraignment today.  Each sex trafficking charge carries a maximum sentence of life in prison while each alien harboring charge has a maximum sentence of 10 years in prison, with all counts carrying a fine of up to $250,000 each.  In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

 This case is being investigated by Special Agents of the FBI and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  Interagency cooperation in international sex trafficking operations is imperative and vital to the success of the prosecution. 

 Assistant U.S. Attorney Susan Coppedge and Trial Attorney Benjamin Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit are prosecuting the case. 

 Anyone with information related to sex trafficking should call the Atlanta FBI hotline at 404-679-9000 or the National Human Trafficking Resource Center at 1-888-3737-888.

 Members of the public are reminded that the indictment contains only allegations.  A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

Attorney Mitchell J. Stein, 53, of Hidden Hills, Calif., was convicted by a jury in the Southern District of Florida for his role in operating a five-year, multimillion-dollar market manipulation and fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Stein was charged in a December 2011 indictment and on May 20, 2013, he was convicted on all counts: conspiracy to commit mail and wire fraud and three counts each of mail fraud and wire fraud, each of which carries a maximum penalty of 20 years in prison; three counts of securities fraud, which each carry a maximum penalty of 25 years; three counts of money laundering, which each carry a maximum penalty of 10 years; and one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison. Stein is being detained until sentencing, which is scheduled for Aug. 16, 2013.

 According to evidence presented at trial, Stein’s wife held a controlling interest in Signalife Inc., a publicly-traded company currently known as Heart Tronics that purportedly sold electronic heart monitoring devices.  Stein engaged in a scheme to artificially inflate the price of Signalife stock by creating the false impression of sales activity for Signalife.  Specifically, the evidence at trial showed that Stein and his co-conspirators created fake purchase orders and related documents from fictitious customers, then caused Signalife to issue press releases and file documents with the U.S. Securities and Exchange Commission (SEC) trumpeting these fictitious sales.  Evidence at trial also proved that in a further effort to create the false appearance of sales activity, Stein arranged to have Signalife products shipped to and temporarily stored with an individual who had not purchased any products.

 Evidence at trial further proved that Stein disguised his selling of stock during the conspiracy by placing shares in purportedly blind trusts, and that he had a co-conspirator sell shares of Signalife stock after Stein caused false information to be disseminated to the public.  Stein also caused Signalife to issue shares to third parties so that those third parties could sell the shares and remit the proceeds of those sales to Stein.  From one co-conspirator alone, Stein received illicit gains of over $1.8 million. 
  
 In addition, evidence at trial proved that Stein conspired to obstruct the SEC’s investigation into Heart Tronics by testifying falsely and arranging for others to testify falsely in an effort to conceal the scheme described above.

This case was investigated by the U.S. Postal Inspection Service and the Office of the Special Inspector General for the Troubled Asset Relief Program.

This matter was referred to the Department by the SEC, which conducted a parallel investigation and in December 2011 announced the filing of a civil enforcement action against Stein and others.  The Department thanks the SEC for its substantial assistance in this matter.  The Department also acknowledges the substantial assistance of FINRA’s Criminal Prosecution Assistance Group. 
  
This case is being prosecuted by Assistant Chief Albert B. Stieglitz, Jr. and Trial Attorneys Kevin B. Muhlendorf and Andrew H. Warren of the Criminal Division’s Fraud Section.

 

Michael Parker, of Baltimore, Md., who was the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northern Virginia, was sentenced yesterday to 54 months in prison by U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, the Justice Department and Internal Revenue Service (IRS) announced. In addition, Parker was sentenced to serve three years of supervised release after his release from prison. In December 2009, Parker pleaded guilty to one count of conspiracy to defraud the United States for his role in KPMG’s promotion, marketing, and implementation of a tax shelter product known as SLOTS. 

According to the plea agreement and statements made during trial and related proceedings before U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, Parker admitted to conspiring with others to defraud the IRS with regard to tax shelter transactions. Parker, a CPA and an attorney, acted as the Chief Operating Officer of TransCapital Corporation during the alleged conspiracy. Parker testified at the trial of an accountant who was a tax partner at KPMG, LLC, at its Tysons Corner, Va., office, and an attorney for TransCapital, both of whom were acquitted of conspiracy charges after a four-week jury trial.  

According to the plea agreement, trial testimony and other statements, from 1998 through 2006, Parker and others marketed and implemented a tax shelter to KPMG clients called the Sale Leaseback of Tenant Improvements Strategy (SLOTS). The SLOTS shelter enabled client corporations to claim tax deductions totaling more than $240 million on corporate income tax returns filed with the IRS. During 2002 through 2004, the IRS audited three U.S. corporations that had claimed losses generated by SLOTS transactions, including The Kroger Company. Parker identified Kroger as the Fortune 500 corporation that did the largest SLOTS tax shelter transaction, and which claimed over $178 million in loss deductions, causing over $64 million in tax loss to the IRS. Parker admitted that he and the others conspired to impede and impair the IRS by making false and misleading statements to IRS agents and attorneys during these audits, including the Kroger audit. Additionally, Parker admitted that he and others concealed certain aspects of the tax shelter transaction from SLOTS clients, including Kroger, for the purpose of impeding and impairing the IRS. Parker further acknowledged that the SLOTS tax shelter and related transactions were themselves nothing more than devices to disguise and conceal mere financing transactions.

 Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked the U.S. Attorney’s Office for the Southern District of Ohio for their assistance in this case, and also thanked the IRS-Criminal Investigation agents who investigated the case, as well as Tax Division Attorneys John E. Sullivan, Richard M. Rolwing, and Alexander Robbins who prosecuted the case.

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

Two Alabama real estate investors and their company were sentenced today in U.S. District Court for the Southern District of Alabama in Mobile, for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

Robert M. Brannon, of Laurel, Miss., and his son, Jason R. Brannon, of Mobile, Ala., were each sentenced to serve 20 months in prison for their participation in the conspiracies. The Brannons and their Mobile-based company, J&R Properties LLC, were ordered to pay $21,983 in restitution to the victims of the crime.

“Today’s sentences send a strong message that the Antitrust Division will continue to hold individuals and companies accountable for their anticompetitive conduct,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Whether on a local, national or international scale, bid rigging and fraud subvert the competitive process and the division will remain vigilant in vigorously pursuing those who violate the antitrust laws for their own financial enrichment.”

On Dec. 12, 2012, the Brannons and their company, pleaded guilty to an indictment originally returned on June 28, 2012, in the U.S. District Court for the Southern District of Alabama, charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud. According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
 
The indictment also charged the Brannons and their company with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices; to make payoffs to and to receive payoffs from co-conspirators; and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The indictment charged the Brannons and their company with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

“The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses,” said Stephen E. Richardson, Special Agent in Charge of the FBI’s Mobile Division.

A total of eight individuals and two companies have pleaded guilty in the U.S. District Court for the Southern District of Alabama, in connection with this investigation. The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html¬.

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

The Department of Justice announced today that it has reached a settlement with Cinemark Holdings Inc. and Rave Holdings LLC (Rave Cinemas) that requires Cinemark to divest movie theaters in Kentucky, New Jersey and Texas, in order to proceed with its $220 million acquisition of Rave Cinemas movie theaters.  In addition, Cinemark’s chairman is required to divest Movie Tavern Inc., which operates theaters in Ft. Worth and Denton, Texas, that compete with Rave Cinemas.  The department said that the original deal is likely to lead to higher ticket prices for moviegoers and that the divestitures of theaters in Louisville, Ky., southern New Jersey, Fort Worth, and Denton or Hickory Creek, Texas, will preserve competition in those areas, benefitting consumers.

            The department’s Antitrust Division and the state of Texas filed a civil lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition.  At the same time, the department and the state of Texas filed a proposed settlement that requires the divestitures.  If approved by the court, the settlement would resolve the lawsuit and the department’s and the state of Texas’ concerns about the competitive harm to consumers that would result from the acquisition.

            “Cinemark’s proposed acquisition of Rave Cinemas would likely reduce competition among theaters showing first-run, commercial movies in the affected areas of Kentucky, New Jersey and Texas, causing moviegoers to pay higher ticket prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The divestitures required by the department and the state of Texas will ensure that competition among movie theaters in the affected areas is preserved.”

            According to the complaint, the movie theaters compete on multiple dimensions to attract moviegoers, such as the quality of the viewing experience, sound systems, largest screens, best picture clarity, best seating, and quality of food and drinks.  More than 1 billion movie tickets were sold in the United States in 2012, with total box office revenue reaching about $9.7 billion.

            The department said that Cinemark and Rave Cinemas are each other’s most significant competitor in the area in and around Voorhees-Somerdale, N.J., and in the eastern portion of Louisville, Ky., and that Rave Cinemas and Movie Tavern are each other’s most significant competitor in the western portion of Fort Worth, Texas.  In the area in and around Denton, Texas, all three companies presently operate theatres.  In markets in which Movie Tavern and Rave Cinemas currently compete, the department said that Cinemark’s chairman, Lee Roy Mitchell, would have an ability and financial incentive to dampen competition once Rave Cinemas was acquired by Cinemark. 

            The proposed acquisition would likely reduce price competition among Cinemark, Rave Cinemas and Movie Tavern in the affected markets.  The complaint states that if no longer motivated to compete, Cinemark, Rave Cinemas and Movie Tavern would also have less incentive to maintain, upgrade and renovate their theaters, to improve those theaters’ amenities and services and to license the most popular movies, reducing the quality of the viewing experience for the moviegoer.

The requirement to divest three movie theaters in the locations where Cinemark and Rave Cinemas are currently each other’s closest competitor and to require Mitchell to divest Movie Tavern and its 16 theaters will alleviate the competitive harm to moviegoers from this transaction. 

Cinemark, a Plano, Texas-based company, owns and operates 298 theaters with a total of 3,916 screens in 39 states.  Its U.S. box office revenues were approximately $1 billion in 2012. 

Rave Cinemas, a Dallas-based company, owns and operates 35 movie theaters with a total of 518 screens in 12 states.  Its U.S. box office revenues were approximately $169 million in 2012. 

Movie Tavern, also a Dallas-based company, owns and operates 16 movie theaters with a total of 130 screens in seven states.  Its U.S. box office revenues were approximately $31 million in 2012.  Movie Tavern is owned by Alder Wood Partners L.P., a Dallas-based limited partnership controlled by Mitchell and his wife.

As required by the Tunney Act, the proposed settlement and the department’s competitive impact statement will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 4000, Washington, D.C. 20530 (telephone: 202-307-0468).  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed consent decree upon finding that it serves the public interest.

Sean Rosales, a dual United States and Costa Rican citizen, was sentenced today in connection with a series of business opportunity fraud ventures based in Costa Rica, the Justice Department and the U.S. Postal Inspection Service announced today.  Rosales was sentenced by U.S. District Court Judge Ursula M. Ungaro in Miami to 97 months in prison and 5 years supervised release.  Rosales was also ordered to pay more than $7.3 million in restitution.

On March 20, Rosales pled guilty to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud.  Rosales was arrested in Chicago, Illinois late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011.   The indictment alleged that Rosales and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses.  The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.

Prior to Rosales’ sentencing today, eleven other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica.  Rosales is the eighth of those individuals to be convicted and sentenced in the United States.

“Many Americans dream of owning and operating their own small business, but fraud schemes such as the one perpetrated by this defendant can turn that dream into a nightmare,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice will continue to be aggressive in prosecuting those who take advantage of innocent, hardworking Americans through business opportunity fraud.”

Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc., and Powerbrands Distributing Company.  The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000.  Each company operated for several months, and after one company closed, the next opened.  The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.

Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States.  In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities. 

The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands.  Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.

The companies employed various types of sales representatives, including fronters, closers and references.  A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement.  A closer subsequently spoke to potential purchasers to finalize deals.  References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.  The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.

Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States.  USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M.  Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev.  Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver.  Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla. 
 
“Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the fraudsters conduct their operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “Increased international law enforcement cooperation eliminates safe havens for those who seek to cheat Americans from overseas.”

“The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect Americans from the predatory nature of business opportunity frauds,” said Ronald Verrochio, U.S. Postal Inspector in Charge, Miami Division.

Acting Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service.  The case was being prosecuted by Assistant Director Jeffrey Steger and trial attorney Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.

The Department of Justice has filed a lawsuit and sought a preliminary injunction against N.Y. Fish Inc.; New York City Fish Inc.; Maxim Kutsyk, Pavel Roytkov, Leonid Staroseletesky, and Steven Koyfman under the federal Food, Drug, and Cosmetic Act (FDCA).  New York City Fish manufactures and distributes ready-to-eat fishery products, including smoked salmon and mackerel, and operates out of a food processing facility located at 738 Chester Street in Brooklyn. N.Y. Fish previously operated a similar fish processing business out of the same location, employing virtually all of the same employees.  Although N.Y. Fish has ceased manufacturing, FDA believes that N.Y. Fish products continue to be distributed and sold.  The complaint alleges that all defendants have a history of processing fishery products under insanitary conditions, with inadequate safety procedures.

“Consumers depend on food producers to follow the right procedures to make sure our food is safe to eat,” said Acting Assistant Attorney General for the Civil Division Stuart F. Delery.  “As this case demonstrates, the Department of Justice is committed to taking action against those who produce or process food under insanitary conditions or with inadequate safety procedures.”

“Inspectors who visited the defendants’ facility found more than Nemo; they found life-threatening bacteria.  Despite repeated warnings and direction to sanitize the facility, the defendants have failed to do so.  They cannot be allowed to continue to distribute potentially unsafe food to our families.  Those who store, package and sell the food that we eat must maintain basic standards of cleanliness in their facilities.  We are committed to protecting the public from health risks by ensuring that food manufacturers comply with federal laws prohibiting them from preparing, packing and holding food products under insanitary conditions,” stated Loretta E. Lynch, the United States Attorney for the Eastern District of New York. 

According to the complaint, FDA conducted seven inspections of the Chester Street facility between 2006 and 2013.  The inspections showed a repeated failure to minimize the risk of contamination by two dangerous types of bacteria: Listeria monocytogenes and Clostridium botulinum.  People who eat food contaminated with Listeria monocytogenes can contract the disease listeriosis, which can be serious,even fatal,for vulnerable groups such as newborns and those with impaired immune systems.  Complications from the disease can also lead to miscarriage.  Clostridium botulinum spores can produce the toxin that causes botulism.  Eating food tainted with this toxin can lead to paralysis and potentially death.

FDA’s most recent inspection occurred in February 2013, when New York City Fish was operating the Chester Street facility.  According to court filings, the company missed critical processing steps that are essential to prevent the growth and toxin production of Clostridium botulinum and to eliminate any Listeria monocytogenes contamination, including heating fish for a dangerously short time and using insufficiently salty brining solution. 

FDA previously investigated the facility in August 2012, when it was operated by N.Y. Fish.  FDA inspectors discovered widespread sanitation problems and a similar failure to meet critical steps necessary to prevent contamination.  They also found salmon products and production equipment contaminated with Listeria monocytogenes, even after the company attempted to clean and sanitize the facility. 

Further testing by the FDA revealed that certain strains of Listeria monocytogenes it found likely had persisted in the Chester Street facility for years.  FDA contends that the facility is so infiltrated with Listeria monocytogenes that New York City Fish must institute heightened monitoring and strict sanitation procedures to have any hope of eradicating this life-threatening organism, but that it has failed to do so. 

The lawsuit is being brought by Assistant U.S. Attorney Elliot M. Schachner of the Eastern District of New York, and Trial Attorney Adrienne Fowler of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Julie Dohm of the FDA.

Indian national Kaushik Jayantibhai Thakkar and Brazilian national Fabiano Augusto Amorim were each sentenced today to serve 36 months in prison for their roles in smuggling undocumented migrants to the United States for private financial gain, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson for the Southern District of Texas and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

Thakkar, 33, and Amorim, 28, were sentenced by U.S. District Judge Ewing Werlein Jr. in the Southern District of Texas.  In addition to their prison terms, Thakkar and Amorim were sentenced to serve two years of supervised release.

On Dec. 2, 2012, and Jan. 4, 2013, respectively, Thakkar and Amorim each pleaded guilty to one count of conspiracy to bring undocumented migrants into the United States for profit and to one count of unlawfully bringing two undocumented migrants into the United States for profit. 

According to court documents, Thakkar and Amorim worked together and with other co-conspirators to smuggle individuals from India into the United States.  In support of the conspiracy, Thakkar and others recruited individuals in India who were willing to pay up to $60,000 to be smuggled into the United States.  For their smuggling operations, Thakkar and Amorim and their associates used a network of co-conspirators in South America, Central America, the Caribbean and the United States, including the state of Texas.  Using this network, Thakkar, Amorim and their co-conspirators transported groups of undocumented migrants from locations within India through South America, Central America and the Caribbean and then into the United States by various means, including by air travel, automobiles, water craft and foot.  Many of these smuggling events involved illegal entry into the United States via the border between the United States and Mexico near McAllen and Laredo, Texas.

A third co-conspirator, Maria Adela De Luna, pleaded guilty on Nov. 9, 2012, to one count of conspiracy to harbor undocumented migrants in the United States.  On Feb. 15, 2013, De Luna was sentenced to serve 19 months in prison and three years of supervised release for her role in the conspiracy. 

The investigation was conducted by agents with ICE-Homeland Security Investigations (HSI) in McAllen and Houston, with the assistance of U.S. Customs and Border Protection’s Alien Smuggling Interdiction Unit.  This case is being prosecuted jointly by Assistant U.S. Attorneys Leo J. Leo III and Casey MacDonald of the Southern District of Texas and Trial Attorney Stephen Curran of the Criminal Division’s Human Rights and Special Prosecutions Section.
 
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI.  The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns.  ECT has dedicated investigative, intelligence and prosecutorial resources.  ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.

Connie M. Knight, 47, previously of Belle Chasse, La., was sentenced to serve 57 months in prison in New Orleans federal court late yesterday for providing fraudulent hazardous waste safety training in the wake of the Deepwater Horizon explosion and spill, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division, and Dana Boente, U.S. Attorney for the Eastern District of Louisiana. In addition, Ms. Knight was ordered to pay victim restitution in the amount of $25,300.

“On the heels of the largest environmental disaster in U.S. history, Knight illegally profited from a community already suffering from the impacts of the oil spill by impersonating a federal official and raising false hopes for employment.  For that she is being held accountable to the fullest extent of the law,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division.  “The Department of Justice is committed to environmental justice and will vigorously prosecute those who victimize vulnerable communities.”

“Knight took advantage of an environmental disaster and the resulting vulnerabilities of an immigrant community,” said U.S. Attorney Boente.  “Her callous crime focused on her financial gain, ignoring the potential harm to the restoration of the Louisiana coastal region.”

On Jan. 24, 2013, Knight pleaded guilty to three felony criminal charges and one misdemeanor criminal charge for creating false identification documents and impersonating a federal official. Court documents explained how, in the wake of the Deepwater Horizon oil spill, Knight impersonated a high-ranking Occupational Safety and Health Administration (OSHA) hazardous waste safety instructor and inspector in order to collect money from individuals who hoped to work on the cleanup effort that followed the spill.  Knight created and used multiple false federal identifications to bolster her credibility as an OSHA employee and to convince attendees, who were primarily from the Southeast Asian fishing community, that she could ensure them lucrative employment cleaning the spill.  In reality, Knight did not have any connection to OSHA, to the cleanup effort, nor did she have training in hazardous waste safety.

Daniel R. Petrole, Deputy Inspector General for the U.S. Department of Labor’s Office of Inspector General stated, “Today’s sentencing sends a strong message to those who would intentionally engage in fraudulent activity that compromises the integrity of the Department of Labor’s OSHA program.”

“The defendant not only defrauded  people who were desperate for jobs, but also created a risk that poorly trained workers could expose both themselves and the public to hazardous waste that was improperly handled or cleaned up,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance.

Knight claimed her classes satisfied the various safety requirements that all individuals were to complete in order to be employed at a Deepwater Horizon hazardous waste cleanup site. Her fraudulent classes, however, lasted as little as two hours, while the legitimate certifications would take at least six days of classroom training followed by three days of on-site training.  At least some attendees later gained access to hazardous waste cleanup sites based on the fraudulent certifications created by Knight.

“OSHA will not tolerate fraudulent training or unscrupulous activity when workers' health and lives may be at stake,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “Inadequate training jeopardizes the safety and health of workers cleaning up hazardous waste sites.”

At the sentencing, Federal District Court Judge Lance Africk considered statements from victims who recounted how Knight targeted the Southeast Asian fishing communities in southern Louisiana, many of whom did not speak or read English.  Court documents explained that because many shrimp grounds were closed from the time of the spill through late 2010, Gulf fishermen had to seek other means of employment.  To gain access to these fishermen and their families, Knight convinced young bilingual individuals from Southern Louisiana, who believed her to be an OSHA trainer, that she could be a source of employment for their struggling communities.  She then used those individuals to publicize her trainings throughout the Vietnamese, Cambodian and Laotian neighborhoods.

According to court documents, Knight required each attendee to pay between $150 and $300 cash to enter a class, and there were at least 950 victims in the Eastern District of Louisiana.   After a short presentation in English, Knight would provide false completion certifications and tell attendees to ready their vessels for BP cleanup work, which she claimed would be coming any day.

This case was investigated by the U.S. Department of Labor Office of Inspector General and the U.S. Environmental Protection Agency Criminal Investigation Division, with assistance from the Occupational Safety and Health Administration, the FBI, investigators from the Florida Fish and Wildlife Conservation Commission and the Plaquemines Parish, La., Sheriff’s office.

The case was prosecuted by Patrick M. Duggan of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division and Emily K. Greenfield of the U.S. Attorney’s Office for the Eastern District of Louisiana.

Today, a federal judge unsealed a three-count indictment returned by a grand jury in the Southern District of Florida charging Jetta McPhee, 59, of Tamarac, Fla., for her role in bringing 143 Haitian nationals to the United States on fraudulently obtained guest worker visas that McPhee and her co-conspirator secured based on false representations that there were jobs awaiting those workers.

The indictment alleges that from April 2008 to July 2009, McPhee conspired with Marie Nicole Dorval to commit visa fraud by making false representations to the federal government about the availability of construction jobs in order to secure H-2B guest worker visas for Haitian nationals.  Dorval previously pleaded guilty to visa fraud conspiracy in connection with her role in the scheme.  According to the indictment, McPhee prepared a fraudulent contract falsely representing that an American company needed 150 full-time construction workers for 10 months at an hourly wage of $8.42.  McPhee and her co-conspirator then submitted this fraudulent contract to the U.S. Department of Labor and to U.S. Citizenship and Immigration Services in connection with their application for the H-2B guest worker visas.

According to the indictment, McPhee and her co-conspirator recruited workers in Haiti, promising them full-time employment and other benefits, including the possibility of obtaining permanent residency, and charged the workers fees for the employment opportunity.  The indictment alleges that after several recruits were denied visas, McPhee traveled to the U.S. embassy in Port-au-Prince, Haiti to facilitate approval of the visas based on the false representations of available construction jobs. According to the indictment, 143 Haitian nationals ultimately entered the U.S. on guest worker visas the co-conspirators obtained based on the false representations.  When the workers arrived, there were no jobs for them.

The indictment charges McPhee with one count of conspiracy to commit visa fraud,   and two counts of visa fraud for aiding and abetting the presentation of fraudulent documents to the U.S. Department of Labor and to the U.S. Citizenship and Immigration Services.

If convicted, McPhee could face a maximum sentence of five years in prison and a fine of $250,000 on the conspiracy charge, and 10 years in prison and a fine of $250,000 on each of the two visa fraud charges.

 This case is being investigated by the Department of Homeland Security, Homeland Security Investigations, and the Department of Labor Office of the Inspector General.  The case is being prosecuted by Trial Attorneys Chiraag Bains and Roy Conn from the Justice Department’s Civil Rights Division.

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

 

A Texas Army National Guard captain has been charged for his alleged role in a bribery and wire fraud scheme and two former soldiers in the Texas Army National Guard were sentenced for their roles in a separate scheme to defraud the National Guard Bureau and its contractor, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

These cases arose from an investigation concerning allegations that former and current soldiers and military and civilian contract recruiters in the San Antonio and Houston areas engaged in a wide-ranging scheme to obtain fraudulent recruiting referral bonuses.  To date, 11 people have been charged in this ongoing investigation, including yesterday’s 17-count indictment of Fabian Barrera, 46, of Schertz, Texas, a Captain in the Army National Guard accused of personally obtaining more than $185,500 in fraudulent recruiting bonuses.  Barrera made his initial appearance on May 16, 2013, in the U.S. District Court for the District of Maryland, before U.S. Magistrate Judge Jillyn K. Schulze.  The public is reminded that an indictment is merely a charge and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker, Inc., to administer the Guard Recruiting Assistance Program (G-RAP), which was designed to offer monetary incentives to soldiers who referred others to join the U.S. military.  To participate in the G-RAP, an eligible soldier needed to establish an online recruiting assistant (RA) account.  Through these recruiting programs, a participating soldier could receive up to $3,000 in bonus payments for every person he or she referred to serve in the U.S. military.

Barrera, an RA in the G-RAP between approximately December 2005 and February 2012, is alleged to have paid Army National Guard recruiters for the names and Social Security numbers of potential soldiers and used this information to claim that he was responsible for referring dozens of potential soldiers to join the military, though he allegedly did not recruit any of those people.  As a result, Barrera is accused of receiving more than approximately $185,000 in fraudulent recruiting bonuses, and the indictment alleges that Barrera paid various recruiters in the form of checks and cash payments.

 Former Staff Sergeant Jermaine Britt, 39, of Richmond, Texas, was sentenced today to 30 months in prison by Chief U.S. District Judge Biery for his role in obtaining $86,500 in fraudulent bonus payments. According to court documents, Britt served as a recruiter in the Houston area from approximately November 2006 until November 2012. He conspired with former Specialist Stephanie Heller, 37, of Wharton, Texas, who was an RA in the G-RAP and claimed approximately $44,500 in fraudulent bonuses through her account.  Heller made approximately $19,750 in bribe payments to Britt, who served as a recruiter in the Houston area from approximately November 2006 until November 2012. Heller also made a $1,000 bribe payment to another recruiter in exchange for Britt and that recruiter providing the personal information of potential soldiers.  In addition to accepting bribes from Heller, Britt worked with at least two other RAs to claim fraudulent bonus payments and accepted a total of $23,750 in bribe payments in exchange for providing the personal information of potential soldiers.

Britt also admitted that he obstructed justice by coaching Heller to make false statements to federal agents.  In September of 2012, Heller recorded two conversations with Britt.  In those conversations, Britt told Heller how she could provide false stories to federal agents to innocently explain incriminating conduct, such as large cash withdrawals from her bank account, her receipt of emails from Britt in which Britt provided the personal identifiers of potential soldiers, and her use of Britt’s military computer to make referrals under her RA account.

Britt pleaded guilty to conspiracy to commit bribery and wire fraud, bribery, and obstruction of justice on Nov. 9, 2012. Heller pleaded guilty to conspiracy to commit bribery and wire fraud and bribery on Oct. 4, 2012. Heller was also sentenced today to five years’ probation, and her cooperation was instrumental in the case against Britt.

These cases are being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter, and Sean F. Mulryne of the Criminal Division’s Public Integrity Section.  These cases are being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army CID, and from the San Antonio Field Office of the Internal Revenue Service Criminal Investigation.

Larreka Jackson was sentenced yesterday to 48 months in prison for her role in a multi-million dollar conspiracy to use stolen identities to obtain tax refunds, the Department of Justice and the Internal Revenue Service (IRS) announced today. Jackson was also ordered to pay restitution in the amount of $721,519.12. In January 2013, Jackson pleaded guilty to one count of conspiracy to file false claims and  one count of aggravated identity theft.

On Aug. 15, 2012, a federal grand jury in Montgomery, Ala., returned a 25-count indictment charging Larreka Jackson with conspiring to file false tax returns using stolen identities, filing false claims, wire fraud and aggravated identity theft.  According to court documents, Jackson and Chiquanta Davis operated a tax preparation business called It’s Tax Time in Montgomery, Ala. Jackson and Davis used It’s Tax Time as a front to file false tax returns using stolen identities. Jackson and Davis unlawfully obtained the names and Social Security numbers of actual persons and filed false tax returns using those names. Jackson directed the fraudulent tax refund to bank accounts controlled by her and her co-conspirators.  

 Chiquanta Davis was previously sentenced to 66 months in prison for her role in the conspiracy.

The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.

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

For more than 40 years, the federal Witness Security (WitSec) Program has enabled the government to bring to justice the most dangerous criminals by providing critical protection for witnesses fearing for their safety.  Over the last two decades, it has been a key tool in thwarting planned attacks and prosecuting those responsible for some of the worst acts of terrorism in American history, including the 1993 World Trade Center bombing, the 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City and the 2009 New York City subway suicide-bomb plot.  No terrorism-linked witness has ever committed an act of terrorism after entering the program. 

The number of former known or suspected terrorists ever admitted into the WitSec Program represents a fraction of one percent of the total WitSec population, and the vast majority were admitted into the program prior to Sept. 11, 2001.  To date, the FBI has not identified a national security threat tied to the participation of terrorism-linked witnesses in the WitSec program.

All WitSec participants undergo careful vetting before being admitted into the program, including a complete psychological evaluation and consideration of the witness’s value to the underlying prosecution, the nature of the threat against the witness and the potential risk to the relocation community.  Witnesses are admitted only if relevant federal law enforcement officials have determined that the witness is suitable for the program and the need to admit the witness outweighs any potential risk to the public. Those officials include: the FBI or other sponsoring law enforcement agency investigating the underlying criminal conduct; the U.S. Attorney for the district prosecuting the underlying criminal conduct; the U.S. Marshals Service (USMS), which protects witnesses who require a change of identity and relocation services; and the Department’s Office of Enforcement Operations (OEO), which oversees the WitSec Program.

The Justice Department agrees with the Inspector General’s audit report that the WitSec Program’s requirements for admitting and monitoring participants needed to be enhanced for terrorism-linked witnesses.  In May 2012, the Justice Department developed and implemented formal protocols that the Inspector General recognized as a “significant milestone.”  These enhancements, which have been in effect for a year, include:

• Complete information sharing between USMS, OEO, FBI, the Terrorist Screening Center (TSC) and the National Joint Terrorism Task Force (NJTTF)

• A highly restrictive travel policy that prohibits without exception WitSec participants with a Watchlist status of “No Fly” from traveling on commercial flights

• Consultation with the Justice Department’s National Security Division whenever a terrorism-linked witness is admitted into the WitSec Program

• Close coordination with the Department of Homeland Security in cases involving foreign nationals

The Justice Department has completed action on 15 of the 16 recommendations made in the Inspector General’s report.  The sole remaining recommendation requires the Department to perform a manual review of all 18,000-plus case files of WitSec Program participants dating back to the 1970s.  The department has thus far completed its review of nearly 20 years of records.

Related Materials:

ODAG Public Response to OIG WitSec Interim Audit Report

An Oregon man has been charged with allegedly orchestrating a $50 million securities fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California.

 

Bradley Holcom, 55, of Canby, Ore., was arrested Tuesday following his indictment in U.S. District Court for the Southern District of California.  The indictment, which was filed on May 9, 2013, and unsealed late yesterday, charges Holcom with eight counts of mail fraud, four counts of wire fraud and one count of securities fraud.

 

According to the indictment, Holcom made false statements to investors in connection with the sale of approximately $50 million worth of promissory notes that he sold to more than 150 investors located throughout the United States from at least 2004 through 2010.  The indictment alleges that Holcom solicited investors to provide funds for the development of raw land for commercial and residential purposes through an investment program he operated called the Trust Deed Investment Program.  Holcom allegedly falsely told investors who purchased notes through the Trust Deed Investment Program that they would receive a lien on a specific piece of property he was developing and that the lien would be in first position, which would allow investors to directly foreclose on the underlying development property if Holcom was unable to repay the principal due under the notes.

 

Despite his statements to investors, Holcom allegedly never provided investors with a lien on the property he was purportedly developing and instead conveyed to investors a lesser interest that did not allow investors to directly foreclose on the property to protect their investment.  In addition, the indictment alleges that while Holcom promised investors that their purported lien would be in first position, Holcom solicited investments for properties that he knew were already encumbered by first position liens. 

 
According to the indictment, Holcom also allegedly sold properties that were supposedly serving as the security for investors without informing investors that the property they had financed for development was gone. 

The indictment alleges that by approximately 2008, Holcom’s financial condition had seriously deteriorated, but he continued to solicit investors for new funds by making misrepresentations about his true financial condition and the manner in which he was using investor money.

           

The maximum penalty for each wire fraud and mail fraud count is 20 years in prison.  The count of securities fraud carries a maximum penalty of 25 years in prison.

 

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

 

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

 

This case was investigated by the FBI’s Phoenix Division – Yuma Resident Agency.  The case is being prosecuted by Trial Attorney Henry P. Van Dyck and Deputy Chief Daniel Braun of the Criminal Division’s Fraud Section, and by Assistant U.S. Attorney Stephen Clark of the U.S. Attorney’s Office for the Southern District of California.  The department recognizes the substantial assistance of the U.S. Securities and Exchange Commission.

Mosii Mays Blackwell, of Detroit, Mich., pleaded guilty in the Eastern District of Michigan to obstructing the Internal Revenue Service (IRS) and bank fraud, the Justice Department and the IRS announced today.

According to the information and other documents filed in court, from April 2004 to December 2012, Blackwell failed to report to the IRS over $4.5 million in gross receipts generated by Detroit area businesses that he operated and controlled through various entities, such as the Detroit Manufacturing Group, Moci Jeans, Arzel Corp., Renaissance Contractors and Greentree Entertainment Group, LLC.

In addition, the information states that on November 5, 2004, Blackwell executed a bank fraud scheme by causing a loan application to be submitted to mortgage lender that falsely reported the applicant was employed by one of his business entities at a salary of $18,000 each month.

Blackwell faces a maximum potential sentence of 33 years in prison and a fine of up to $1,250,000.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked Special Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Mark McDonald and Christopher O’Donnell for prosecuting the case.

The Justice Department today announced a settlement with the architects and civil engineers involved in the design and construction of multifamily housing complexes located in Mississippi, Louisiana and Tennessee.  The department’s lawsuit alleges that nine multifamily housing complexes with more than 800 units covered by the Fair Housing Act’s accessibility requirements were designed and built without required accessible features.  No settlement has been reached with the developer, builder or former owners of these properties, who are alleged to have violated not only the Fair Housing Act, but also the Americans with Disabilities Act.

Under the settlement, which was approved today by the U.S. District Court for the Southern District of Mississippi yesterday evening, nine architects and civil engineers will pay a total of $865,000 to make the complexes for which they were responsible accessible to persons with disabilities.  They will also pay $60,000 to compensate aggrieved persons harmed by the inaccessible housing alleged in the government’s lawsuit.  The settlement requires these defendants to undergo training on the Fair Housing Act and to provide periodic reports to the government.

“Persons with disabilities are entitled to equal access to housing under the Fair Housing Act,” said Eric Halperin, Senior Counsel and Special Counsel for Fair Lending in the Civil Rights Division.  “This settlement makes clear that the department takes seriously the accessibility requirements for multifamily housing.”

“The U.S. Attorney’s Office is committed to working with the Civil Rights Division to help ensure that those who design and construct housing units make them accessible to persons with disabilities in compliance with the Fair Housing Act and the Americans with Disabilities Act,” said Gregory K. Davis, U.S. Attorney for the Southern District of Mississippi.

The architects and civil engineers involved in this settlement are Stephen G. Hill, Pickering Firm Inc. a/k/a Pickering Inc.; Larry Singleton d/b/a Singleton Hollomon Architects, H D Lang And Associates Inc.; Richard A. Barron, Architect, Shows, Dearman & Waits Inc.; Canizaro Cawthon Davis f/k/a Canizaro Trigiani Architects; Evans-Graves Engineers Inc. and J.V. Burkes & Associates Inc. 

The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  Title III of the Americans with Disabilities Act requires, among other things, that public accommodations comply with specific requirements related to architectural standards to ensure accessible public and common use areas.   More information about the Civil Rights Division and the laws it enforces is available at www.usdoj. gov/crt .  Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov , or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777. 

 

WASHINGTON - INTERPOL Washington, the United States National Central Bureau (USNCB), announced the capture and return of Shilo Watts, 38, a United States citizen and resident of Atascosa County, Texas from Oman to the United States. Watts is wanted in Texas for charges of aggravated sexual assault of a minor, beginning when the minor was three years old and continuing over a prolonged period of time. In 2012, Watts fled the United States, resulting in the issuance of federal felony charge of unlawful flight to avoid prosecution.

In April, INTERPOL Washington expedited the publication of an INTERPOL Red Notice, or international wanted persons notice, for Watts based on the charges in Texas. The Red Notice was disseminated via INTERPOL's network to its 190 member countries around the world. Based on the efforts of investigators from the U.S. Marshals Service (USMS) International Investigations Branch, USMS Western District of Texas, and the U.S. Department of State Bureau of Diplomatic Security Service, Watts' was traced to Oman where the INTERPOL Red Notice provided police with the authority to arrest and lawfully return Watts to the United States on May 15. Watts is currently in the custody of U.S. authorities and faces a maximum sentence of life in prison.

INTERPOL Washington Director Shawn Bray stated, “The capture of Shilo Watts is a great example of partnership between foreign, federal, state, and local law enforcement authorities, including the U.S. Marshals Service, Diplomatic Security Service, Office of International Affairs at the U.S. Department of Justice, and INTERPOL Washington. Through the close coordination of these authorities paired with the use of INTERPOL's international resources, the U.S. Marshals Service and the Diplomatic Security Service located, arrested and returned Watts to face justice in Texas in a matter of days.”

 

 A former stock broker was sentenced to prison today for his role in an extensive pump-and-dump stock manipulation scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division , U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma, Special Agent in Charge James E. Finch of the FBI’s Oklahoma City Division and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.

Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison.  In addition to his prison term, Lankford was ordered to forfeit $250,000.  Proceeds from forfeited assets will be used to partially restitute victims. 

On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.

“Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” said Acting Assistant Attorney General Raman.  “As this case shows, stockbrokers and other professionals will be punished if they break the law.  Lankford now faces substantial time in prison for his manipulation scheme.”

“The U.S. Attorney’s Office and the Department of Justice are committed to identifying and prosecuting criminals who defraud investors and steal their savings,” said U.S. Attorney Williams.  “Pump and dump schemes like these have a devastating financial impact on the victims and undermine public confidence in our nation’s financial system.”

According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill.  The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks.  A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges.  Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.

“Stock manipulation and securities fraud are high investigative priorities of the FBI,” said FBI Special Agent in Charge Finch.  “This case is the result of a lengthy investigation which involved outstanding cooperation between the FBI, IRS Criminal Investigations, and the SEC.  The FBI will continue to work with our law enforcement partners to protect investors and bring those who commit these types of fraud to justice.”

“Using fraud and deception to jeopardize the financial markets and launder funds are not victimless crimes,” said IRS-CI Chief Weber.  “Mr. Lankford and his co-defendants thought they latched onto a clever scheme to reap a vast wealth of illegal profits.  Today, justice has been served.  IRS-CI works in close alliance with our law enforcement partners, and together we will hold those who engage in similar conduct accountable.”

According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients.  According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies.  The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price.  For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value. 

According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.

Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.

Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants.  Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012.  James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme.  Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme.  Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison.  The fifth defendant, Dean Sheptycki, remains a fugitive.

The case is being prosecuted by Trial Attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma.  The case is being investigated by IRS-CI and the FBI.  The department wishes to thank the Securities and Exchange Commission, which referred the matter for prosecution.  The department also wishes to thank the Criminal Division’s Office of International Affairs, the U.S. Department of State and the U.S. Marshals Service for their work in securing Lankford’s extradition.

This case 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Drs. David Leon Fredrick and Patricia Lynn Hough, of Englewood, Fla., were indicted by a federal grand jury in Fort Myers, Fla., for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks, the Department of Justice and IRS announced today.   

According to the indictment, Fredrick and Hough, married doctors, served on the Board of Directors of two Caribbean-based medical schools – one located on Saba, Netherlands Antilles, and one located on Nevis, West Indies. Fredrick had an ownership interest in the medical school on Nevis until 2007, when both medical schools were sold. 

The indictment alleges that Fredrick and Hough conspired with each other and with Beda Singenberger, a citizen and resident of Switzerland who is under indictment in the Southern District of New York, and a UBS banker to defraud the IRS. They carried out the conspiracy by creating and using nominee entities and undeclared bank accounts in their names and the names of the nominee entities at UBS and other foreign banks to conceal assets and income from the IRS, including the sale of real estate associated with the medical school on Saba and shares they owned in the medical school on Nevis. The real estate was sold for more than $33 million, all of which was deposited into one of their undeclared accounts in the name of a nominee entity.

It is further alleged in the indictment that Fredrick and Hough used emails, telephone and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS. It is alleged that Fredrick and Hough caused funds from the medical schools’ undeclared accounts to be transferred to undeclared accounts in their individual names or in the names of nominee entities. Fredrick and Hough then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Fla. Fredrick also transferred more than $1 million to his relatives. 

Fredrick and Hough were also charged with four counts of filing false tax returns for 2005, 2006, 2007 and 2008. The indictment alleges that Fredrick and Hough filed false tax returns which substantially understated their total income and failed, on Schedule B, Parts I and III, to report that they had an interest in or signature or other authority over bank, securities or other financial accounts located in foreign countries. U. S. citizens, resident aliens and legal permanent residents of the United States have an obligation to report to the IRS on the Schedule B of a U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. U. S. citizens and residents also have an obligation to report all income earned from foreign bank accounts on their tax returns. 

A trial date has not been scheduled.  An indictment is merely an accusation, and every defendant is presumed innocent unless and until proven guilty. 

The conspiracy charge carries a maximum potential penalty of five years in prison and a $250,000 fine. The false return charges each carry a maximum potential penalty of three years in prison and a $250,000 fine.

This case is being prosecuted by Trial Attorney Caryn Finley of the Justice Department’s Tax Division and was investigated by IRS – Criminal Investigation.

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

Fazliddin Kurbanov, 30, was arrested Thursday morning in Boise, Idaho, as part of a federal terrorism investigation.  Federal terrorism charges were filed Thursday afternoon in Boise and Salt Lake City, Utah.  Kurbanov, an Uzbekistan national, legally present in the United States, was living in Boise at the time of his arrest.

 A federal grand jury in Boise returned a three-count indictment charging Kurbanov with one count of conspiracy to provide material support to a designated foreign terrorist organization, one count of conspiracy to provide material support to terrorists and one count of possessing an unregistered destructive device.
 
A federal grand jury in Salt Lake City returned an indictment charging Kurbanov with one count of distribution of information relating to explosives, destructive devices and weapons of mass destruction. 

 The charges were announced by David B. Barlow, U.S. Attorney for the District of Utah; Wendy J. Olson, U.S. Attorney for the District of Idaho; John Carlin, Acting Assistant Attorney General for National Security at the U.S. Department of Justice; and Mary Rook, Special Agent in Charge of the FBI’s Salt Lake City Division.

 The arrest was the culmination of an investigation by the FBI’s Salt Lake City Division, which covers Idaho and Utah; and Joint Terrorism Task Forces (JTTF) in Idaho and Utah, which include a number of federal, state and local law enforcement agencies.

Kurbanov’s activities were closely monitored by federal agents during the investigation and any potential threat posed by Kurbanov has been contained.  Kurbanov is scheduled to make his initial appearance in federal court in Boise tomorrow.  He will be transferred to Utah at the conclusion of the prosecution in Idaho.   

 “Today’s arrest and these indictments underscore our commitment to aggressively and thoroughly investigate those who conspire to engage in unlawful terrorist activities,” said U.S. Attorney Olson.  “The thorough and exhaustive work of our JTTF, in partnership with our investigating and prosecuting partners in Utah, Colorado and at the National Security Division, put a stop to this criminal activity and ensured the public’s safety.  I commend the men and women at every level of law enforcement, including the FBI, the Department of Homeland Security, Homeland Security Investigations, Ada County and Canyon County Sheriff’s Offices and the Boise City Police Department, who assisted in this effort.”

 “One of our highest priorities is disrupting potential acts of terrorism.  The coordinated investigation, arrest, and indictments in this case demonstrate the commitment of all involved to do just that. The tireless work of agents, analysts and law enforcement officers to detect and guard against acts of terrorism has helped ensure the safety of the communities they serve,” U.S. Attorney Barlow said today. “The judicial part of the process will now begin in Idaho and Utah.”

 “Today’s arrest underscores the need for continued vigilance against terrorist threats both at home and abroad.  I thank the many agents, analysts and prosecutors responsible for this important investigation,” said Acting Assistant Attorney General Carlin.

 “As always, the FBI’s top priority is the safety and security of our nation and its citizens.  The indictments and arrest are the result of months of exhaustive investigation on the part of agents, analysts, and officers who worked indefatigably to achieve that end,” said FBI Special Agent in Charge Rook.
   
Idaho Charges

 The Idaho indictment alleges in count one that between August 2012 and May 2013, Kurbanov knowingly conspired with unnamed co-conspirators to provide material support and resources to the Islamic Movement of Uzbekistan, a designated foreign terrorist organization.  The indictment alleges that the material support and resources included himself, computer software and money. 

In count two, the indictment further alleges that the defendant conspired to provide material support and resources, including himself, to terrorists knowing that the material support was to be used in preparation for and in carrying out an offense involving the use of a weapon of mass destruction.  

The indictment also alleges in count three that on or about Nov.15, 2012, Kurbanov possessed a destructive device consisting of a combination of parts intended for use in converting any device into a destructive device and from which a destructive device could be readily assembled.  According to the indictment, the parts were a hollow hand grenade, hobby fuse, aluminum powder, potassium nitrate and sulfur. 

 If convicted on the Idaho charges, Kurbanov faces a maximum of 15 years in prison on each of the conspiracy counts and 10 years in prison on the possession of an unregistered destructive device count.  The Idaho charges are being prosecuted by Assistant U.S. Attorneys Aaron Lucoff and Heather Patricco and National Security Division Trial Attorney Larry Schneider.

Utah Charges

 The one-count indictment filed in Utah alleges that from about Jan. 14, 2013, continuing through Jan. 24, 2013, Kurbanov taught and demonstrated how to make explosive devices and distributed information relating to the manufacture and use of an explosive or weapon of mass destruction with the intent that the teaching, demonstration and information be used for, and in furtherance of, an activity that would constitute a federal crime of violence.

 The indictment alleges the defendant showed internet videos, conducted instructional shopping trips, provided written recipes and gave verbal instructions on where to obtain the necessary components to construct and use improvised explosive devices.  The indictment also alleges that Kurbanov intended that the videos, written recipes, verbal instructions and shopping trips be used for training in the construction and use of explosive devices to commit a crime of violence, such as the use of weapons of mass destruction; bombings of a place of public use, a public transportation system or infrastructure facility; or destroying a building in interstate commerce.

 If convicted on the Utah charge, Kurbanov faces up to 20 years in federal prison.

 The Utah charges are being prosecuted by U.S. Attorney Barlow, Assistant U.S. Attorney John W. Huber and National Security Division Trial Attorney Larry Schneider.
 
 An indictment is not a finding of guilt and is not evidence.  Individuals charged in an indictment are presumed innocent unless or until proven guilty beyond a reasonable doubt in a court of law.

(If you have questions regarding the Idaho case, please call Pam Bearg, PIO in the Idaho U.S. Attorney’s Office, at 208-334-1211. For questions on the Utah case, please call Melodie Rydalch, PIO in the Utah U.S. Attorney’s Office at 801-325-3206. Questions for the FBI Salt Lake City Division can be directed to Public Affairs Specialist Deb Bertram at 801-579-1400 or by e-mail at deborah.bertram@ic.fbi.gov.)    

Related Materials:

Utah Indictment
Idaho Indictment

Glenn Powell Jr. pleaded guilty today in the Middle District of Alabama to his role in a large scale stolen identity refund fraud, the Justice Department and the Internal Revenue Service (IRS) announced.  

On April 17, 2013, a federal grand jury in Montgomery, Ala., indicted Powell on conspiracy and theft of government money charges.  According to court documents, Powell opened two bank accounts on which he was the only authorized signer. Between August 2009 and February 2011, at least 49 false federal income tax refunds totaling approximately $95,926 were directed to Powell’s bank accounts.  Powell was able to withdraw approximately $46,423.71 in false tax refunds before the IRS stopped him.  The overall scheme Powell participated in is alleged to have involved over $500,000 in false refunds. 

As a result of his plea, Powell faces a maximum potential sentence of 10 years in prison.

This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr., Michael Boteler and Greg Bailey of the Justice Department’s Tax Division are prosecuting the case, with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.

FALLS CHURCH, Va. - In order to better serve its stakeholders, including the detainee population, the Executive Office for Immigration Review today announced it will be establishing a full-time presence and opening an immigration court in the Department of Homeland Security contract detention facility in Adelanto, Calif., on May 20, 2013.

Contact information for the new location is as follows:

LOCATION: Adelanto Detention Facility
10250 Rancho Road, Suite 201A
Adelanto, Calif. 92301

HOURS OF OPERATION: 7:30 a.m. to 4 p.m. Monday through Friday

TELEPHONE:    (760) 246-5404

- EOIR -

The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.

Executive Office for Immigration Review

The Justice Department today announced that a federal grand jury in Memphis, Tenn., has returned a one-count indictment charging Justin Shawn Baker, 25, of Jackson, Tenn., with violating the civil rights of students and faculty of the Margolin Hebrew Academy.

The indictment alleges that on or about Jan. 12, 2013, Baker defaced a Torah and religious prayer books which the students and faculty of the Margolin Hebrew Academy were using for a worship service conducted at the Doubletree Hotel in Jackson.

“This kind of vandalism strikes at the heart of religious freedom in this country, and it will not be tolerated,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “Our nation’s civil rights laws protect all denominations, and those who would strike at the right of peaceful citizens to worship will be held accountable.”

“Freedom to practice one’s religion without prejudice is one of the bedrock principles upon which our nation was founded,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “Criminal acts such as those alleged in the indictment represent an attack on the rights that generations of Americans have fought and died to ensure and protect.  Our dedicated civil rights unit will continue to protect and defend the rights of our citizens through vigorous enforcement of federal law.”

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty. If convicted, the defendant faces a maximum penalty of 1 year in prison.

This case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorneys Larry Laurenzi and Jonathan Skrmetti of the U.S. Attorney’s Office for the Western District of Tennessee and Trial Attorney Douglas Kern of the Civil Rights Division’s Criminal Section.