District Not Recorded

Vinh Chuong “Jimmy” Kha, 50, and Felix Kha 26, were sentenced today in federal district court in Los Angeles to serve 42 and 46 months, respectively, in prison for crimes related to illegal international trafficking of rhinoceros horn, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice and André Birotte Jr., U.S. Attorney for the Central District of California.

In addition to the prison sentences, the two defendants were ordered to pay a total of $20,000 in criminal fines and pay a $185,000 tax fraud penalty and assessment.  In addition, Jimmy Kha’s Win Lee Corporation was ordered to pay a $100,000 fine.  Jimmy and Felix Kha, along with Win Lee Corporation, were also ordered to pay a total of $800,000 in restitution to the Multinational Species Conservation Fund, a statutorily created fund that is managed by the U.S. Fish and Wildlife Service (FWS) to support international efforts to protect and conserve rhinos and other critically endangered species around the world.  The defendants previously abandoned their portion of interest in $2 million worth of rhino parts and vehicles seized in the investigation.

The Khas are among several individuals charged so far with federal crimes as a result of “Operation Crash,” an ongoing FWS-led investigation of the black market rhino horn trade named for the term used to describe a herd of rhinoceros.

“The Khas engaged in egregious criminal conduct by taking the horns of a species on the brink of extinction and making millions of dollars in the illegal trade in rhino horns,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “The Khas sentence sends a strong message that those who violate the law by illegally trading in rhino horns will be held accountable to the fullest extent of the law.”

“The Khas’ smuggling operation fueled international demand and played a significant role in driving the price of rhino horn to nearly $25,000 per pound,” said U.S. Attorney Birotte. “It was that rising value of rhino horn that encouraged ruthless poachers to scour the South African wilderness in search of profits. The Khas played a role in pushing species like the African black rhino to the brink of extinction, which is why we aggressively prosecuted this case and sought lengthy prison terms.”

“On average, a rhino is slaughtered in Africa every 11 hours to feed the black market for their horns,” said FWS Director Dan Ashe.  “Criminals in this country who are cashing in on this illegal trade should know that the United States will hold them accountable for their crimes and do everything possible to protect wild populations of rhinos.”

On Sept. 14, 2012, the Khas pleaded guilty to charges of conspiracy, smuggling, wildlife trafficking in violation of the Lacey Act, money laundering and tax fraud, and Win Lee Corporation pleaded guilty to smuggling and wildlife trafficking in violation of the Lacey Act.  In February 2012, at the time of the arrest of Jimmy and Felix Kha, FWS agents seized rhinoceros mounts and horns, $1 million in cash, approximately $1 million in gold ingots, jewelry, watches and precious stones, a 2009 BMW 759 Li Sedan and a 2008 Toyota Forerunner from the defendants and their co-conspirators.  Under the plea agreement, the defendants agreed to the forfeiture of these items, which include nine rhino horns and six rhino feet.  Ultimately, prior to sentencing, the defendants formally abandoned all the wildlife and the instrumentalities of the crimes seized from them (such as the vehicles) to the United States.  The Khas’ portion of the seized cash and gold, proceeds of their illegal activities, will be used to pay the $800,000 in restitution ordered at sentencing.
 
Background on Rhinos

With no known predators other than humans, rhinoceros are a prehistoric species and one of the largest herbivores on earth.  All rhinoceros species are protected under U.S. and international law, and the black rhinoceros is listed as endangered.  Despite national and international protection efforts dating back to 1976, the demand for rhino horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on the horns for ornamental carvings, good luck charms or alleged medicinal purposes.  This has led to a decimation of the global rhinoceros population, which has declined by more than 90 percent since 1970.  By the peak of the Kha’s wildlife trafficking conspiracy in 2011, 448 wild rhinos had been slaughtered for their horns in South Africa alone.  Between 2007 and the end of 2011, the poaching of wild South African rhinos increased a tragic and astonishing 3,400 percent, rising from a low of 13 animals in 2007 to 448 animals in 2011.

The Criminal Conduct

Over the course of at least two years from January 2010, through February 2012, Jimmy and Felix Kha conspired with individuals throughout the United States to purchase white and black rhinoceros horn despite knowing that these animals were protected by federal law as endangered and threatened species.  Although Jimmy Kha paid, on average, between $5,000 to $7,000 per pound of rhinoceros horn, the horn acquired by the defendants had a fair market value of at least $1 million to $2.5 million.  Under the plea agreement, the defendants admitted that they purchased the horns in order to export them overseas to be sold and made into libation cups or used for traditional medicine; made illegal payments to Vietnamese customs officials to ensure clearance of horn shipments to that country; and knowingly evaded income taxes owed in 2009 and 2010.  

U.S. Attorney Birotte and Assistant Attorney General Moreno commended FWS and its partners for their outstanding work on this investigation.  Assisting agencies included the U.S. Postal Inspection Service, the Internal Revenue Service Criminal Investigations, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The case is being prosecuted by Assistant U.S. Attorneys Joseph O. Johns and Dennis Mitchell of the U.S. Attorney’s Office for the Central District of California, and Shennie Patel, a Trial Attorney with the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

A federal inmate was sentenced today to life in prison for the violent murder of a fellow inmate in Pennsylvania’s Allenwood Correctional Complex, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Pennsylvania Peter J. Smith.

Ritz D. Williams Jr., 32, of Gila River Indian Reservation, Sacaton, Ariz., pleaded guilty to one count of first degree murder and possession of a weapon on April 15, 2013.  U.S. District Court Judge Yvette Kane sentenced Williams to life without the possibility of parole on May 15, 2013, for his role in the murder of fellow inmate Alvin Allery.

Williams and his co-conspirator Shawn Cooya were indicted by a federal grand jury in February 2008 and a superseding indictment was returned in July 2009.

According to court documents, Williams and Cooya aided each other in the premeditated murder of Allery.  On Sept. 28, 2005, Williams and Cooya stabbed Allery 10 times with a homemade knife and repeatedly kicked him in the head and torso, which resulted in Allery’s death. 

On Jan. 8, 2013, Cooya pleaded guilty to one count of first degree murder and was sentenced to serve life in prison on March 18, 2013.

The case was investigated by the Bureau of Prisons and the FBI. The case was prosecuted by Assistant U.S. Attorneys Wayne P. Samuelson and Michelle Olshefski of the Middle District of Pennsylvania, Trial Attorneys Julie B. Mosley and Mike Warbel of the Criminal Division’s Capital Case Unit, and Assistant U.S. Attorney C.J. Williams of the Northern District of Iowa and formerly with the Capital Case Unit.

Mississippi-based Hancock County Land LLC (HCL) pleaded guilty today to the unpermitted filling of wetlands near Bay St. Louis, Miss., and agreed to pay a $1 million fine and take remedial measures for two felony violations of the Clean Water Act, announced Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney for the Southern District of Mississippi Gregory K. Davis.  HCL admitted causing the unauthorized excavation and filling of wetlands on a 1,710 acre parcel of undeveloped property in Hancock County, west of the intersection of Route 603 and Interstate 10.

According to the charges filed in federal court in Jackson, Miss., when HCL purchased the property, it had been informed by a wetland expert that as much as 80 percent of its land was federally protected wetland connected by streams and bayous to the Gulf of Mexico and, therefore, that the property could not be developed without a permit from the U.S. Army Corps of Engineers.  Such permits typically require that developers protect and preserve other wetlands to compensate for those they are permitted to fill and destroy. 

The charges allege that in spite of additional notice of the prohibition against filling and draining wetlands without authorization, HCL, principally through its minority owner /general contractor, hired an excavation contractor to trench, drain and fill large portions of the property to lower the water table and thus to destroy the wetland that would otherwise have been an impediment to commercial development.  In pleading guilty, HCL admitted that it knowingly ditched, drained and filled wetlands at multiple locations on the Hancock County property without having obtained a permit from the Army Corps of Engineers as required under the Clean Water Act.
 
It is a felony under the Clean Water Act for any person knowingly to discharge pollutants into waters of the United States, including wetlands, without a permit.  A corporation convicted of this offense is subject to a penalty of not more than $500,000 per count.

HCL agreed and was ordered to pay to the federal government a total penalty of $1 million ($500,000 for each of the two counts).  HCL also agreed and was ordered by the court to restore and preserve the damaged wetlands as provided in separate agreements HCL reached with the U.S. Environmental Protection Agency (EPA) and a citizen group, the Gulf Restoration Network.   The agreements require HCL to re-grade and then re-plant, with appropriate native vegetation, the wetland area it excavated and filled and donate approximately 272 acres of the southwest quadrant of its property to the Land Trust for the Mississippi Coastal Plain to be preserved in perpetuity.  HCL is also required to fund its management and maintenance, to pay $100,000 toward the litigation costs of the Gulf Restoration Network, and to pay a civil penalty to the U.S. Treasury of $95,000.
 
HCL entered its plea before senior U.S. District Judge Walter J. Gex III. 

"The defendant deliberately destroyed wetlands that are protected by the law," said Maureen O'Mara, Special Agent in Charge of EPA's criminal enforcement program in Mississippi. "This is a great example of local, state, and federal agencies working together to hold companies accountable for putting profit above the requirements of the law."

U.S. Attorney Davis praised the efforts of the EPA’s Office of Criminal Investigation for its diligent work in the investigation of this matter.  Senior Trial Attorney Jeremy F. Korzenik of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division, and Assistant U.S. Attorney Gaines Cleveland are the prosecutors in charge of the case.

Real estate developer and HCL minority owner, William R. Miller, was charged in November 2012 with  Clean Water Act violations related to the same unauthorized excavation and filling of wetlands near Bay St. Louis.  That case is expected to be scheduled for trial over the next few months. 

The Department of Justice announced today that it has reached a final settlement with the city of Corpus Christi, Texas, to resolve the department’s claim that the city violated Title VII of the Civil Rights Act of 1964 by engaging in a pattern or practice of discrimination against female applicants for entry-level police officer positions.
 
The Justice Department’s complaint, filed in the U.S. District Court for the Southern District of Texas, alleges that Corpus Christi’s use of a physical abilities test between 2005 and 2011 violated Title VII because it unlawfully screened out female applicants for entry-level positions with the police department without the required evidence showing that the test did not properly evaluate whether a candidate was in fact qualified for a police officer position.  Title VII prohibits discrimination in employment on the basis of race, color, sex, national origin or religion, whether the discrimination is intentional or involves the use of employment practices, like physical abilities tests, that have a disparate impact and are not job-related and consistent with business necessity.  

The Justice Department and the city of Corpus Christi initially entered a settlement and requested the court to approve a consent decree in September 2012.  Prior to final entry of the decree by the district court, the Corpus Christi Police Officers’ Association, a union representing most of the city’s police officers, intervened as a party in the lawsuit.  This settlement is the culmination of negotiations between all three parties and has resulted in a joint motion by all parties for entry of an amended consent decree.  The proposed amended consent decree must be approved by the court; upon its approval, all issues raised by the Justice Department’s complaint against the city of Corpus Christi, and the union’s claims, will be resolved.  
 
“The Department of Justice is committed to eliminating artificial barriers that keep qualified women out of public safety work,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division.  “The department commends Corpus Christi for working to adopt new hiring procedures that comply with Title VII and to provide relief to those who were harmed by the city’s previous hiring practices.” 

The amended proposed consent decree requires Corpus Christi to replace the physical abilities test challenged by the United States with a new selection procedure that complies with Title VII.   Additionally, the amended proposed consent decree requires the city to pay $700,000 as back pay to eligible female applicants who took and failed the challenged physical abilities test between 2005 and 2011.  Also under the decree, some women who took and failed the challenged physical abilities test between 2005 and 2011, but who are qualified to perform as police officers, may receive offers of priority employment with retroactive seniority and benefits.  Applicants interested in priority employment must pass the new, lawful selection procedure developed by Corpus Christi under the decree, and they must meet other qualifications required of all applicants considered for entry-level police officer positions with the city.    
 
Enforcement of federal employment discrimination laws is a top priority for the Justice Department.  Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.

Related Materials:

Joint Motion Re 2d Amd Decree
Dkt 56-1 -- 2d Amd Decree
Dkt 56-2 -- Proposed Order

The Justice Department today paid tribute to nine individuals for their extraordinary efforts to recover missing children, rescue children from abuse and prosecute sexual predators during its annual commemoration of National Missing Children’s Day.
 
“The achievements of these honorees, and the stories behind them, remind us that it takes someone very special to do the work that they do,” said Acting Associate Attorney General Tony West. “Days, weeks, months, and as we saw in Cleveland last week, even years can pass between a child’s disappearance and her recovery.  It takes tremendous faith, but more importantly, it takes incredible resolve and resourcefulness to pursue those cases to certain resolution.”
 
“As our Missing Children’s Day honorees demonstrate, community members who remain alert and respond, rescue children every day,” said Acting Assistant Attorney General for the Office of Justice Programs Mary Lou Leary.  “Through support for programs such as AMBER Alert and Internet Crimes Against Children task forces, our office remains committed to assisting communities across the country in protecting the lives and safety of children.”
 
Other speakers included Office of Juvenile Justice and Delinquency Prevention (OJJDP) Administrator Robert L. Listenbee; child protection advocate Heather Bish, whose sister Molly Bish was abducted from her lifeguard job and later found murdered; and John Ryan, president and CEO of the National Center for Missing & Exploited Children.  The nearly 300 ceremony attendees included families of missing children, child advocates and others who support programs to recover missing children.
 
“On this day each year, we pause for a few moments to remember those children who are lost and the families who have been torn apart apart by this unspeakable tragedy,” said  OJJDP Administrator Robert L. Listenbee. “We are also here today to celebrate those children and families who have been reunited and to honor the dedicated citizens who work tirelessly to bring these missing children home.”
 
During the ceremony, Acting Associate Attorney General West presented the following awards:   Attorney General’s Special Commendation: Recognizes the extraordinary efforts of an Internet Crimes Against Children task force or affiliate agency for making significant investigative or program contributions.  Recipients: Assistant District Attorney Eric R. Bellas, North Carolina’s 25th Prosecutorial District; Det. Scott Carico, Burke County, N.C. Sheriff’s Office; Special Agent Casey Drake, N.C. State Bureau of Investigation; Selena Moretz, Burke County Child Advocacy Center; and Special Agent John D. Wydra, Jr., Federal Bureau of Investigation, whose efforts led to the arrest and conviction of a N.C. elementary school teacher who had been sexually molesting children and videotaping and photographing pornographic images of them for many years.
 
Missing Children’s Law Enforcement Award: Recognizes the extraordinary efforts of a law enforcement officer who made a significant investigative or program contribution to the safety of children.  Recipient: Det. Anjanette Biswell of the Quincy, Ill. Police Department, whose work as a computer forensic specialist led to the arrest and guilty plea of a man who was producing, downloading, and distributing pornographic images of two young relatives and other children in Quincy. 
 
Missing Children’s Citizen Award: Honors the extraordinary efforts of private citizens for their unselfish acts to safely recover missing or abducted children.  Recipients: Brandy V. Hinesly and Casey Quillman, Walmart employees in Aberdeen, Wash., for their quick response that led to the rescue of a missing Arkansas teenager who was about to leave the country with her former boyfriend.
 
Missing Children’s Child Protection Award: Honors the extraordinary efforts of a law enforcement officer who made a significant investigative or program contribution to protect children from abuse or victimization.  Recipient: Assistant U.S. Attorney John Luke Walker for the Western District of Louisiana, who served as the lead prosecutor and a driving force behind Operation Delego, the largest child exploitation case ever prosecuted.  His efforts resulted in more than 29 convictions, including a teacher, a police officer, and a high-ranking member of the military. 
 
Esther Jung, a fifth grader from Edwin Rhodes Elementary School in Chino, Calif., received the award as the 14th winner of the Annual National Missing Children’s Day Art Contest. 
 
President Ronald Reagan proclaimed May 25, 1983, the first National Missing Children’s Day to remember Etan Patz, a six-year-old boy who disappeared from a New York City street corner on May 25, 1979. Missing Children’s Day honors his memory and the memories of children still missing.
 
The Office of Justice Programs (OJP), headed by Acting Assistant Attorney General Mary Lou Leary, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. For more information about OJP, please visit: www.ojp.gov.

The Department of Justice today reached a comprehensive agreement with the Missoula, Mont., Police Department to ensure that the police department fairly and effectively responds to reports of sexual assault.  In May 2012, the Justice Department launched an investigation into allegations that the Missoula Police Department was failing to adequately respond to and investigate reports of sexual assault, due to unlawful gender discrimination in violation of the Violent Crime Control and Law Enforcement Act of 1994, and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968.  The Agreement announced today resolves the Justice Department’s investigation of the Missoula Police Department.  The department also released a letter of findings outlining the results of the investigation.

The agreement with the Missoula Police Department requires that the police department:

• implement or revise policies, provide training and change practices to improve its response to sexual assault, including combating gender bias;
• work with an independent Monitor, community-based organizations and other stakeholders, to develop and implement the reforms described in the agreement, and to evaluate OPS’ success in effecting meaningful reform;
• demonstrate that its implementation of the agreement has eliminated a pattern or practice of constitutional violations and that it has put in place systems and oversight that will prevent patterns or practices of unconstitutional conduct from recurring; and
• develop procedures for gathering and analyzing data to assess the incidence and outcomes of reports of sexual assault.

  The city of Missoula anticipates that it will achieve compliance with this agreement within two years.

 
“A police department cannot truly protect women in its community without being prepared to respond to reports of sexual assault effectively and without bias,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division.  “Equal access to the protection of police and the courts is a matter of basic justice.  We commend the City of Missoula and the Missoula Police Department for its cooperation and for taking the steps necessary to maintain women’s safety and promote the community’s confidence in its police response to sexual assault.  The leadership of Mayor Engen and Chief Muir has been indispensable to this process.”

“As the first responder to most reports of sexual assault in Missoula, the Missoula Police Department plays an absolutely critical role in protecting women victims of sexual assault and ensuring that perpetrators of sexual assault are brought to justice,” said Michael Cotter, U.S. Attorney for the District of Montana.  “This agreement will ensure that the department’s officers and detectives are fully prepared to play that role.”

The Justice Department’s review of the Missoula Police Department was one of three simultaneous civil pattern or practice investigations into allegations that law enforcement was systematically failing to protect women victims of sexual assault in Missoula.  Alongside its investigation of the Missoula Police Department, the Justice Department conducted parallel investigations of the Missoula County Attorney’s Office and the University of Montana’s Office of Public Safety.  Last week, the Justice Department and the Department of Education’s Office of Civil Rights entered into twin agreements with the University of Montana to address the university’s response to reports of sexual assault and sexual harassment on campus; those agreements resolved the Justice Department investigation of the university’s Office of Public Safety.  The Justice Department’s investigation of the Missoula County Attorney’s Office is ongoing. 

 
The investigation was conducted jointly by the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the District of Montana.  The prevention of sex-based discrimination is a top priority of the Justice Department’s Civil Rights Division and U.S. Attorney Offices.  The Civil Rights Division has worked to ensure that women are not subject to discriminatory practices related to police services in New Orleans, Puerto Rico and elsewhere.  Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.  Additional information about the U.S. Attorney’s Office for the District of Montana is available on its website at www.justice.gov/usao/mt. 

Attorney General Eric Holder and Acting Assistant Attorney General for the Office of Justice Programs Mary Lou Leary announced several improvements to the Public Safety Officers’ Benefits (PSOB) Program following the completion of a comprehensive review of the program ordered by the Attorney General in May 2012. 

In the coming months, the PSOB office will move to an entirely paperless electronic case management system that will allow claimants to file and monitor the progress of their claims online, in order to improve efficiency, increase timeliness and reduce duplication in its claims administration process.  The PSOB claims process will also be streamlined, consolidating legal and other functions within the Bureau of Justice Assistance (BJA) and eliminating duplicative documentation requirements.  As part of the department’s ongoing efforts to improve the PSOB, BJA will continue to convene its series of stakeholder listening sessions in order to ensure transparency and a positive dialogue between the PSOB Office and its public safety partners in the field. 
        
“These fundamental improvements to the Public Safety Officers’ Benefits Program will help us cut through red tape – and ensure that fallen or injured officers and their families can get the benefits they need in a timely manner,” said Attorney General Holder.  “These improvements are representative of the value that I, the women and men of the Justice Department, and our entire country, must always place on the work of our law enforcement officers. And it’s emblematic of our commitment to standing with all who bravely serve our nation, especially in the toughest of times.”
  
“Over the past five years, the PSOB Office has provided more than $426 million in benefits to fallen police officers, firefighters and other first responders, processing more than 2,857 claims,” said Acting Assistant Attorney General Leary. “But we can do even better.  These improvements will allow BJA to process cases and serve claimants even more efficiently.  We are committed to ensuring that fallen public safety officers and their families get the benefits to which they are entitled under the law in a timely and transparent manner.”

Enacted in 1976, the Public Safety Officers’ Benefits Act allows the Justice Department to recognize the ultimate sacrifice of law enforcement officers, firefighters and other first responders killed in the line of duty by providing a federal benefit to their eligible survivors. BJA’s PSOB Office administers the Death, Disability and Educational Assistance Programs; these benefits assist families who may be struggling with finances in the aftermath of tragedy, as well as officers catastrophically injured in the line of duty and spouses and children seeking educational assistance to attend institutions of higher education. The PSOB Office considers it an honor to assist families and agencies of America’s fallen law enforcement heroes throughout the review of their PSOB cases.

The Office of Justice Programs (OJP), headed by Acting Assistant Attorney General Mary Lou Leary, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. For more information about OJP please visit: http://www.ojp.gov. To read the Attorney General’s speech at the 25th Annual National Law Enforcement Officers Memorial Candlelight Vigil, please visit: http://www.justice.gov/iso/opa/ag/speeches/2013/ag-speech-130513.html.

Two Spring Hill, Tenn., men pleaded guilty in federal court today for their involvement in a racially-motivated conspiracy to interfere with the housing rights of African-American residents of the Spring Lake subdivision of Spring Hill, the Justice Department announced. Dakota James Calderhead, 20, and Kristian Chancellor Mathis, 19, each pleaded guilty in U.S. District Court in Nashville, Tenn., to one count of conspiracy to deprive a person of his civil rights.

According to their plea agreements, on or about December 30, 2011, Calderhead and Mathis conspired to vandalize homes in the Spring Lake subdivision. Mathis admitted to spray painting a swastika and racial slurs on the driveway of an African-American family’s residence.

Calderhead admitted that he fashioned a noose which Mathis hung from a tree outside of the residence. Calderhead also admitted to hanging a second noose from the driver’s side rearview mirror of the school bus located in front of another African-American family’s residence. Both defendants further admitted that their acts of vandalism were intimidating, and motivated, in part, by the race, color, or ethnicity of the victims.

“These innocent families were targeted and subjected to acts of harassment and intimidation for no other reason than their race,”  said Deputy Assistant Attorney General Roy L. Austin Jr. of the Civil Rights Division. "The Justice Department will continue to vigorously enforce federal laws that guarantee the civil rights of all people.”  

“The U.S. Attorney’s Office and our law enforcement partners remain committed to protecting the civil rights of all persons,” said David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.  “Conduct which seeks to deprive any person of their civil rights will always receive the full attention of this office.”

The defendants face maximum statutory penalties of 10 years in prison. U.S. District Judge Todd J. Campbell has scheduled sentencing for August 21, 2013.

This case was investigated by the Memphis Division, Columbia Resident Agency of the FBI and the Maury County Sherriff’s Department. It is being prosecuted by Senior Litigation Counsel Gerard Hogan and Trial Attorney Ryan Murguía of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Hal McDonough of the U.S. Attorney’s Office for the Middle District of Tennessee. Assistance was provided by District Attorney Mike Bottoms from the 22nd Judicial District of Tennessee.

A Detroit-area physician pleaded guilty today to making fraudulent referrals for home health care as part of a $1.6 million home health care fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.

 
Dr. Sonjai Poonpanij, 82, of Rochester, Mich., pleaded guilty before Senior U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. 

 
According to court documents, Dr. Poonpanij admitted that beginning in approximately July 2010, he conspired with others to commit health care fraud by referring Medicare beneficiaries for home health care that was not medically necessary and causing false and fraudulent claims to be submitted to Medicare. 

 
Dr. Poonpanij admitted that he saw patients at a psychotherapy center in Flint, Mich., known as New Century Adult Day Program Services LLC, and referred Medicare beneficiaries at New Century to home health care companies – including a home health care company known as Angle’s Touch Home Health Care LLC – even though he knew that those beneficiaries did not qualify for home health care.  According to court documents, Dr. Poonpanij wrote prescriptions for narcotics requested by the beneficiaries in exchange for their enrollment with Angle’s Touch for home health care that they did not need or receive.  In addition to referring patients that he saw at New Century, Dr. Poonpanij also referred beneficiaries whom he had never seen or treated to Angle’s Touch and other home health agencies.  Dr. Poonpanij signed plans of care for these beneficiaries that were used to bill Medicare for services that were either never actually performed or were not performed in the beneficiaries’ homes as required. 

Court documents allege that between September 2008 and September 2012, Dr. Poonpanij caused Angle’s Touch and two other home health agencies to submit claims to Medicare for services that were not medically necessary and/or not provided, which caused Medicare to pay these companies approximately $1,318,954.

At sentencing, scheduled for Aug. 14, 2013, Dr. Poonpanij faces a maximum penalty of 10 years in prison and a $250,000 fine.

 
This case is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.  It was 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 Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Steven Kern, of Marine City, Mich., was sentenced to serve one year and one day in prison by U.S. District Court Judge Arthur J. Tarnow in the Eastern District of Michigan, the Justice Department and Internal Revenue Service (IRS) announced. On January 28, 2013, Kern pleaded guilty to an indictment charging him with eight counts of filing false corporate tax returns and eight counts of failing to file his individual income tax returns. 

According to court documents, Kern operated the Kern Chiropractic Center in Marine City. From 2003 through 2010, Kern filed false corporate returns for Kern Chiropractic that did not include as gross receipts cash and check payments that Kern diverted from the business for his own personal use. During the same years, Kern failed to file individual tax returns, despite earning more $1.2 million in gross income during that time period. F iled court documents and court proceedings further established that Kern has not filed an individual federal income tax return since 2002 and told IRS – Criminal Investigation special agents he believed signing and filing a completed individual federal tax return was a violation of his constitutional rights.

Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally commended the efforts of special agents of IRS – Criminal Investigation in investigating the case and Tax Division Trial Attorneys Mark McDonald and Jeff Bender for prosecuting the case.

Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings. 

Attorney General Holder and Secretary Sebelius were joined in the announcement by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, FBI Assistant Director Ron Hosko, Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG) and Deputy Administrator and Director of Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity Peter Budetti. 

This coordinated takedown was the sixth national Medicare fraud takedown in Strike Force history.  In total, almost 600 individuals have been charged in connection with schemes involving almost $2 billion in fraudulent billings in these national takedown operations alone. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

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

The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Approximately 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other state and local law enforcement agencies participated in the takedown. 

“Today’s announcement marks the latest step forward in our comprehensive efforts to combat fraud and abuse in our health-care systems,” said Attorney General Holder.  “These significant actions build on the remarkable progress that the HEAT has enabled us to make – alongside key federal, state, and local partners – in identifying and shutting down fraud schemes.  They are helping to deter would-be criminals from engaging in fraudulent activities in the first place. And they underscore our ongoing commitment to protecting the American people from all forms of health-care fraud, safeguarding taxpayer resources and ensuring the integrity of essential health-care programs.”

“The Affordable Care Act has given us additional tools to preserve Medicare and protect the tens of millions of Americans who rely on it each day,” said Secretary Sebelius.  “By expanding our authority to suspend Medicare payments and reimbursements when fraud is suspected, the law allows us to better preserve the system and save taxpayer dollars.  Today we’re sending a strong, clear message to anyone seeking to defraud Medicare: You will get caught and you will pay the price. We will protect a sacred trust and an earned guarantee.”

The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes and money laundering.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, primarily home health care, but also mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services. 

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and often never provided.  In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent billing to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $223 million in fraudulent billing.

“We have made it part of our core mission at the Department of Justice to hold accountable those who steal from the Medicare program to line their own pockets,” said Acting Assistant Attorney General Raman.  “There are Medicare fraudsters in prisons across the country – some who will be there for decades – who can attest to our determination, and our effectiveness.”

“We all feel the effects of health care fraud,” said FBI Assistant Director Hosko. “It leads to higher health care costs and makes it harder for seniors and those who are ill to get the care they need.  The FBI and our law enforcement partners are committed to preventing and prosecuting health care fraud at all levels.  But we need the public’s help.  Take the time to be aware of fraud and call law enforcement if you see anything suspicious included in the billings to your insurance, Medicare, or Medicaid or have any unusual encounters with health care providers.  We can work together to ensure your hard-earned dollars are used to care for the sick and not to line the pockets of criminals.”

“Taxpayers expect us to work harder and smarter, and that is exactly what happened across the nation today,” said HHS Inspector General Levinson. “In addition to the work of my agents and other federal, state, and local law enforcement officials, investigators from nine other IG offices joined us today.  Working together we can break down silos, pool expertise, reduce costs, and the successful result speaks for itself.” 

“Today’s takedown is the result of dedicated commitment to working with our law enforcement partners to root out fraud in the Medicare program,” said CMS Program Integrity Deputy Administrator Budetti.  “This collaboration has been strengthened by the Affordable Care Act, which provided CMS with the tools it needs to stop the flow of money while working to rid our programs of fraud, waste and abuse.”

In Miami, a total of 25 defendants, including two nurses, a paramedic and a radiographer, were charged today and yesterday for their participation in various fraud schemes involving a total of $44 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion.  In one case, three defendants were charged for participating in a $20 million home health fraud scheme involving a home health agency, Trust Care Health Services.  Court documents allege that the defendants bribed Medicare beneficiaries for their Medicare information, which was used to bill for home health services that were not rendered or that were not medically necessary.  According to court documents, the lead defendant spent much of the money from the scheme, and purchased multiple luxury vehicles, including two Lamborghinis, a Ferrari and a Bentley. 

Eleven individuals were charged by the Baton Rouge Strike Force.  Five individuals were charged today, including two doctors, in New Orleans by the Baton Rouge Strike force for participating in a different $51 million home health fraud scheme.  According to court documents, the defendants recruited beneficiaries, offering cash and other incentives in exchange for their Medicare information, which was used to bill medically unnecessary home health services. The Baton Rouge Strike Force also announced a superseding indictment and an information charging six individuals, including another doctor, with over $30 million in fraud in connection with a community mental health center called Shifa Texas.  These charges come on top of charges brought against the owners and operators of Shifa Baton Rouge, a related community mental health center which is at the center of an alleged $225 million scheme charged in an earlier indictment. 

In Houston, two individuals, including a nurse and a social worker, were charged today with fraud schemes involving at total of $8.1 million in false billings for home health care.  The defendants, who are brother and sister, allegedly used patient recruiters to obtain Medicare beneficiary information that they then used to bill for services that were not medically necessary and not provided.

Thirteen defendants were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $23 million.  In one case, three individuals allegedly billed Medicare for more than $8.7 million in fraudulent billing for DME. According to the indictment, the defendants allegedly paid illicit kickbacks to patient recruiters to bribe beneficiaries to participate in the scheme. Once the individuals provided their Medicare information to recruiters, doctors and medical clinics conspiring with the defendants allegedly wrote prescriptions for medically unnecessary power wheelchairs, which they sold to the defendants for illegal kickbacks.

In Detroit, 18 defendants, including two doctors, a physician’s assistant and two therapists, were charged for their roles in fraud schemes involving approximately $49 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.  In one case, three individuals were charged in a $12 million scheme where they allegedly held themselves out to be licensed physicians – which they were not – and signed prescriptions for drugs and documents about purported psychotherapy they provided.

In Tampa, nine individuals were charged in a variety of schemes, ranging from pharmacy fraud health care-related money laundering. In one case, four individuals were charged for their alleged roles in establishing and operating four supposed healthcare clinics in Tampa, Fl. – Palmetto General Health Care Inc., United Healthcare Center Inc., New Imaging Center Inc. and Lord Physical Rehabilitation Center Inc. – which they allegedly used to steal more than $2.5 million from Medicare for surgical procedures that were never performed.  The defendants allegedly billed Medicare for surgical procedures used to treat patients with high blood pressure by collapsing veins in the legs, but they did not actually perform the procedures.    

In Chicago, seven individuals were charged, including two doctors, with a variety of health care fraud schemes. 

In Brooklyn, N.Y., four individuals, including two doctors, were charged in fraud schemes involving $9.1 million in false claims. In one case, three additional individuals were allegedly involved in what is now alleged to be a $15 million scheme where massages by unlicensed therapists were billed to Medicare as physical therapy.  Six defendants were previously charged in the scheme.
 
The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana; the Northern District of Illinois, and the Middle District of Florida; and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.

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

To learn more about HEAT, go to: www.stopmedicarefraud.gov.

A federal grand jury in Nevada today returned an indictment against a former construction company owner for evading federal income and employment taxes, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber, FBI Acting Special Agent in Charge William C. Woerner of the Las Vegas Field Office, and Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department.

Leon Benzer, 46, of Las Vegas, was charged in U.S. District Court in the District of Nevada with two counts of tax evasion.

In January 2013, Benzer was indicted in a related case on charges of wire fraud and conspiracy to commit wire and mail fraud.  According to court documents, from approximately August 2003 through February 2009, Benzer orchestrated a scheme to direct construction defect litigation and repairs at condominium complexes to a conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC).  As a result of this scheme, the indictment alleges that SLC was awarded a contract worth over $7 million for work at the Vistana Homeowner’s Association (Vistana HOA) in Las Vegas.  The case is pending.

According to the indictment returned today, in August 2006 Benzer filed five years’ worth of personal tax forms and business tax returns without any payments accompanying those returns.  As of April 2007, Benzer had allegedly failed to pay his personal tax liability of approximately $459,000 and SLC’s employment tax liability of approximately $687,000 and unemployment tax liability of approximately $18,000.  In May 2007, the IRS issued a notice of intent to file a levy; Benzer subsequently appealed this process and indicated that he wanted to enter into an “offer-in-compromise” with the IRS to pay a portion of what was owed in full satisfaction of all his tax liabilities.  According to the indictment, during this offer-in-compromise process, the IRS requested detailed financial information from Benzer.

Between March 2005 and January 2008, the indictment alleges that Benzer and SLC received over $7 million from the Vistana HOA contract, including a wire transfer of over $1 million on Sept. 21, 2007, to a personal US Bank account that Benzer opened in August 2007. The indictment alleges that when Benzer filed certain IRS forms related to the offer-in-compromise process on Sept. 25, 2007, he failed to disclose this personal U.S. Bank account or the assets contained in it.

The maximum prison sentence for each count of tax evasion is five years in prison and a maximum fine of $100,000.

The charges and allegations against the indicted defendant are merely accusations, and the defendant is considered innocent unless and until proven guilty.

The case is being prosecuted by Senior Deputy Chief Kathleen McGovern, Deputy Chief Charles La Bella and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section.  The case is being investigated by IRS-CI, the FBI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.

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.

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced the guilty verdict of JIAN BING WU yesterday in the United States District Court for Guam. The jury found WU guilty of conspiracy to commit marriage fraud and marriage fraud, based on his fraudulent marriage to Lynda Kathryn Laracuente for an immigration benefit. The charges stem from an Indictment filed on August 22, 2012 against WU and Bradley Jiblits.

The guilty verdict is the result of a six-day jury trial in front of Chief Judge Francis Tydingco-Gatewood. The jury found WU guilty of Count One, Conspiracy to Commit Marriage Fraud, in violation of 18, United States Code, Section 371, and Count Two, Marriage Fraud, in violation of Title 8, United States Code, Section 1325(c). Three co-defendants in related cases pleaded guilty previously and are awaiting sentencing. Defendant Jiblits entered his guilty plea to Conspiracy to Commit Marriage Fraud on November 28, 2012. Lynda Kathryn Laracuente pleaded guilty to Marriage Fraud on November 4, 2011, and Yingzi Zhang pleaded guilty to Aiding and Abetting False Statements on May 3, 2013.

WU’s sentencing hearing is scheduled for August 22, 2013. He faces a statutory maximum penalty of five years imprisonment and a maximum fine of $250,000.

U.S. Attorney Limtiaco stated, “Our immigration laws allow aliens who enter into legitimate marriages with U.S. citizens to gain the right to stay in the United States as permanent resident legal aliens. But aliens who engage in sham marriages to gain legal status in this country, and anyone who helps them to do so, undermine the integrity of that system and commit a fraud against the United States.”

The case was investigated by the Homeland Security Investigations. The case was prosecuted by Assistant United States Attorney Stephen F. Leon Guerrero and First Assistant United States Attorney Stephen P. Sinnott.

WASHINGTON – A former program coordinator at the defunct health provider Health Care Solutions Network Inc. (HCSN) was sentenced in Miami to 70 months in prison today for her role in a $63 million fraud scheme.

 
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; 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 after sentencing by U.S. District Judge Cecilia M. Altonaga.

Dana Gonzalez, 43, of High Point, N.C., pleaded guilty on March 6, 2013, to conspiracy to commit health care fraud. In addition to the prison sentence, Gonzalez was also sentenced to three years of supervised release and ordered to pay $19,428,120 in restitution.

During the course of the conspiracy, Gonzalez was employed as a therapist and program coordinator of HCSN’s Partial Hospitalization Program (PHP).  A PHP is a form of intensive treatment for severe mental illness.

According to court documents, HCSN of Florida (HCSN-FL) operated community mental health centers at two locations.  Gonzalez 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. 

Gonzalez admitted that she routinely fabricated medical records for purported mental health treatment that were used to support false and fraudulent claims to health care benefit programs, including Medicare and Medicaid.  Gonzalez admitted that she routinely fabricated these medical records, despite knowing that many of the ALF referral patients were ineligible for PHP services because many patients suffered from mental retardation, dementia and Alzheimer's disease.  Gonzalez, an unlicensed clinical social worker intern at the time, also admitted to providing unlicensed therapy to PHP patients when licensed therapists were absent.

In total, Gonzalez admitted that during her employment at HCSN, she and her co-conspirators submitted approximately $46,959,975 in false and fraudulent claims. 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 was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case was prosecuted by Trial Attorney Allan J. Medina and former Special Trial Attorney William J. Parente of the Criminal Division’s Fraud Section. In support of the Medicare Fraud Strike Force, the FBI Criminal Investigative Division’s Financial Crimes Section has funded the Special Trial Attorney position.

 
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Safieh Fard, 52, of Escondido, Calif., was sentenced late yesterday to 63 months in prison by U.S. District Judge Cormac J. Carney. Fard was also ordered to pay $594,000 in restitution to the Internal Revenue Service (IRS) for unpaid individual income taxes. Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney Andre Birotte Jr., and the IRS made the announcement.

Fard was convicted by a Santa Ana, Calif., jury on Nov. 21, 2012, of one count of conspiracy to defraud the IRS and one count of conspiracy to launder the proceeds of bank fraud. Fard’s co-conspirators, her sister Sedigheh Bahramian, and two of her sons, Mohsen Kikalaye and Ahmad Kikalaye, pleaded guilty and were sentenced to related counts of bank fraud in 2010.

According to the indictment and evidence introduced at trial, starting in 1997 and continuing through 2004, Fard and her co-conspirators purchased valuable residential real estate properties, including numerous beachfront properties in Newport Beach, Calif. To obtain mortgages to purchase these properties, Fard and her co-conspirators provided false information to federally insured banks that substantially overstated their income and assets on mortgage applications. Fard submitted mortgage applications that falsely stated she earned over $40,000 per month, despite claiming no taxable income on her federal income tax returns during the eight year conspiracy.

Evidence introduced at trial established that Fard and her co-conspirators bought, sold, and transferred ownership of the properties between and among themselves. Ultimately, the properties were sold to third parties resulting in substantial monetary gain. Fard and her co-conspirators then failed to report capital gains on more than $3.7 million from these sales on their federal income tax returns.

The evidence further established that Fard and her co-conspirators Mohsen Kikalaye and Ahmad Kikalaye sold Newport Beach properties to unrelated third parties and received the proceeds in a large lump-sum payment by either wire transfer or check. Fraud proceeds were then transferred through multiple bank accounts to an account in the name of Fard’s co-conspirator Ahmad Kikalaye, who withdrew proceeds in cash in amounts slightly below the $10,000 federal reporting requirement. Fraud proceeds were also used to buy new real estate properties.

The case was investigated by special agents from IRS - Criminal Investigation and the Department of Homeland Security - Homeland Security Investigations and prosecuted by Tax Division Trial Attorneys Erin S. Mellen and Mark L. Williams, with valuable support from the U.S. Attorney’s Office in Santa Ana, Calif.

Robert David Forsyth, of Las Vegas, was sentenced late Friday in U.S. District Court in Las Vegas to 27 months in prison for income tax evasion and failing to file income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced. He was also sentenced to 3 years of supervised release and ordered to pay $306,171. Forsyth was indicted in April 2012 and pleaded guilty to the indictment on April 22, 2013.

According to court documents, from 1999 through 2008, Forsyth worked as a physician and earned income from a variety of sources, including his medical practice, expert witness fees, and, beginning in 2002, Social Security benefits. Forsyth, however, failed to file an individual income tax return from 1999 through 2008. In fact, according to the indictment, Forsyth has not filed an income tax return since the 1994 tax year.

Court documents further established that instead of filing tax returns and paying his taxes, Forsyth, a Canadian citizen and U.S. permanent resident alien, closed all of his personal bank accounts and used a third party business to cash his paychecks. He made extensive use of cash including using cash to pay personal expenses in an effort to avoid detection. Throughout the years that Forsyth evaded payment of his taxes, he used income that he earned to fund his own lifestyle. Instead of paying the IRS, Forsyth spent money on gambling, luxury items, and hotel accommodations in San Jose, Calif., Costa Rica and Bangkok.

Assistant Attorney General Keneally commended the efforts of special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Mark L. Williams, who prosecuted the case.

The Justice Department announced today that the Civil Rights Division will monitor the election on May 14, 2013, in Douglas County, Neb. The monitoring will ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes.  The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.

Justice Department personnel will monitor polling place activities in Douglas County.  A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.

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

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

The Department of Justice announced today the filing of a lawsuit against Niagara County, N.Y., alleging that Niagara County discriminated against Carisa Boddecker, a corrections officer with the Niagara County Sheriff’s Department, when it forced her to take a leave of absence during her pregnancy. According to the complaint, Niagara County’s actions were a violation of Title VII of the Civil Rights Act of 1964, as amended. Title VII is a federal statute that prohibits employment discrimination on the basis of sex, including pregnancy, as well as race, color, national origin and religion.

The suit, filed in the U.S. District Court for the Western District of New York in Buffalo, N.Y., alleges that Boddecker informed her employer of her pregnancy and requested an assignment with no inmate contact, as she was entitled to do under her employer’s pregnancy policy. However, according to the complaint, Niagara County failed to follow its own policy regarding assignments for pregnant corrections officers and also failed to provide the same accommodations to Boddecker that it had provided to corrections officers with other temporary medical disabilities. Instead, Niagara County placed Boddecker on an involuntary leave of absence and allowed her to return to work only after she filed a complaint of discrimination with the Equal Employment Opportunity Commission (EEOC). The United States’ complaint seeks a court order requiring Niagara County to develop and implement policies that would prevent its employees from being subjected to discrimination based upon sex. The United States also seeks monetary relief for Boddecker to compensate her for the damages she sustained as a result of the alleged discrimination.

Boddecker originally filed a charge of sex discrimination with the EEOC, whose Buffalo office investigated the matter, determined that there was reasonable cause to believe that discrimination had occurred, and referred the matter to the Department of Justice.

“Employers must provide pregnant women with the same accommodations they provide to employees who are not pregnant but who are similarly able or unable to work,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “Women should not have to choose between their pregnancies and their jobs, and the Civil Rights Division will continue to vigorously enforce the right of pregnant employees to be free of discrimination in the workplace.”

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

Related Materials:

Niagara County Complaint

Michael George Fitzpatrick, 51, of Hope, Idaho, was sentenced to 42 months in prison by U.S. District Judge Larry A. Burns, the Justice Department and Internal Revenue Service (IRS) announced today. Fitzpatrick was also ordered to serve three years super vised released and to pay just under $1.4 million in restitution to the IRS for unpaid individual and corporate federal income taxes.

Fitzpatrick was convicted of two counts of tax evasion in January 2013 by a Coeur d’Alene, Idaho, jury. A previous jury had convicted him in September 2012 on two counts of failure to file corporate income tax returns but was unable to reach verdicts on the tax evasion counts. Fitzpatrick was remanded into custody immediately after the second trial.

According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004, gross sales from the business, operating under the names Dynamic Solutions Inc. (DSI) and North American Educational Services Inc. (NAES), exceeded $9 million. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of $1,397,762.

The evidence further established that Fitzpatrick last filed an individual income tax return in 1996. At trial, Fitzpatrick argued at length that the income tax laws did not apply to him. However, the evidence showed he expended significant time and expense to put all of his property in the names of nominees.

The evidence at trial also established Fitzpatrick sent over $5 million offshore to a bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During this two-year period Fitzpatrick used over $1 million of his money hidden offshore to buy real estate and to gamble in Las Vegas on nine separate trips to the Bellagio Casino. He also paid a contractor to build a schoolhouse for his kids in his backyard in Hope, Idaho.

“This case sends a strong message that those who defy our nation's tax laws will be investigated and prosecuted to the fullest extent of the law,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The sentence imposed today demonstrates that anyone who attempts to evade taxes by hiding assets in offshore bank accounts faces significant time in prison for these crimes.”

“Paying taxes is a solemn obligation of citizenship,” said U.S. Attorney Wendy J. Olson. “Mr. Fitzpatrick’s conviction and sentence make clear that those who try to hide income or knowingly and falsely claim that the income tax laws do not apply to them will be prosecuted and ordered to pay. I commend the fine work of the Tax Division lawyers and the IRS criminal investigators in this case.”

“The license to run a business is not a license to avoid paying taxes,” said IRS Criminal Investigation Chief Richard Weber. “Today, Mr. Fitzpatrick has been held accountable for his actions of dodging his legal tax responsibilities to report all his income and pay his fair share of taxes. No one should doubt that IRS is committed to pursuing people hiding income offshore.”

Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally and U.S. Attorney Olson thanked special agents from the Boise, Idaho, and Seattle offices of IRS Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell, and Erin S. Mellen, who prosecuted the case with valuable support from the U.S. Attorney’s Offices in Boise and Coeur d’Alene.

Aurelio Cano Flores, a Mexican national and high ranking member of the Gulf Cartel, was sentenced today to serve 35 years in prison for conspiring to import multi-ton quantities of cocaine and marijuana into the United States, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA). 

Cano Flores, 40, aka “Yankee” and “Yeyo,” was sentenced by U.S. District Judge Barbara J. Rothstein in the District of Columbia.  In addition to his prison term, Cano Flores was ordered to forfeit $15 billion in drug proceeds as part of a money judgment.  At a post-trial hearing, the United States proved that from 2000 to 2010, the Gulf Cartel distributed in excess of 1.4 million kilograms of cocaine and 8,000 metric tons of marijuana.  The money judgment represents the gross receipts of the Gulf Cartel’s drug sales into the United States from its principal distribution centers located along the U.S.-Mexico border.

“For over a decade, Aurelio Cano Flores worked with some of the most dangerous criminals in the world to import massive quantities of cocaine and marijuana into the United States,” said Acting Assistant Attorney General Raman.  “As a leader of the Gulf Cartel, one of the most notorious criminal enterprises in Mexico or the United States, he endangered the lives of innocent people on both sides of the border.  As a result of today’s sentencing, he will spend 35 years in federal prison as punishment for his crimes.”

“DEA and its partners use every law enforcement tool possible to bring to justice drug cartel leaders and facilitators who inflict damage on both sides of the border,” said DEA Administrator Leonhart.  “Aurelio Cano-Flores used his position as a Mexican police officer to help one of the most violent and brutal drug trafficking organizations in the world bring vast amounts of drugs into the United States.  Like many other cartel leaders, he posed a threat to the citizens of both the United States and Mexico.  We are confident and pleased that justice was served today by the pronouncement of his lengthy U.S. prison sentence."

Following a trial that lasted over two weeks, Cano Flores was convicted by a federal jury on Feb. 26, 2013, of one count of conspiracy to distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana, knowing and intending the substances would be unlawfully imported into the United States. 

Cano Flores was one of 19 defendants charged in a superseding indictment on Nov. 4, 2010, with drug trafficking offenses.  He was extradited to the United States from Mexico in August 2011 and was ordered detained in federal custody pending trial.  

Evidence presented at trial included dozens of lawfully intercepted telephone conversations between Cano Flores and other leaders of the Gulf Cartel, as well as testimony from previously convicted Cartel members.  According to the trial evidence, Cano Flores began working for the Gulf Cartel in approximately 2001, while he was serving as a police officer in Mexico.  During his time as a police officer, Cano Flores recruited others into the Gulf Cartel, collected drug money and escorted large shipments of cartel drugs to the U.S. border. 

Cano Flores ultimately rose through the ranks of the Gulf Cartel to become a major transporter of narcotics within Mexico to the U.S. border and became the Cartel’s top representative in the important border town of Los Guerra, Tamaulipas, Mexico.  As the “plaza boss” for Los Guerra, Cano Flores oversaw the mass distribution of cocaine and marijuana into the United States on a daily basis.  Testimony established that between 2000 and 2010, the Gulf Cartel grew from an organization of only 100 members controlling three border towns to an organization of 25,000 people controlling the drug trade over approximately half of Mexico.  As established during the trial, the means and methods of this conspiracy included corruption, murder, kidnapping and intimidation.

The case was prosecuted by Trial Attorneys Darrin McCullough and Sean Torriente of the Criminal Division’s Narcotic and Dangerous Drug Section.  The Criminal Division’s Office of International Affairs provided significant assistance in the provisional arrest and extradition of Cano Flores, and the Asset Forfeiture and Money Laundering Section provided assistance at sentencing.  The investigation in this case was led by the DEA Houston Field Division’s Organized Crime Drug Enforcement Strike Force and the DEA Bilateral Investigation Unit.  The case was part of the Organized Crime Drug Enforcement Task Force’s Operation “Day of Reckoning.” 

In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA Inc. , a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, pleaded guilty today to felony charges relating to the manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India, the Justice Department announced today. Ranbaxy also agreed to pay a criminal fine and forfeiture totaling $150 million and to settle civil claims under the False Claims Act and related State laws for $350 million.

The federal Food, Drug and Cosmetic Act (FDCA) prohibits the introduction or delivery for introduction into interstate commerce of any drug that is adulterated. Under the FDCA, a drug is adulterated if the methods used in, or the facilities or controls used for, its manufacturing, processing, packing, or holding do not conform to, or are not operated or administered in conformity with, current Good Manufacturing Practice (cGMP) regulations. This assures that a drug meets the requirements as to safety and has the identity and strength, and meets the quality and purity characteristics, which the drug purports or is represented to possess.

Ranbaxy USA pleaded guilty to three felony FDCA counts, and four felony counts of knowingly making material false statements to the FDA. The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India. Under the plea agreement, the company will pay a criminal fine of $130 million, and forfeit an additional $20 million.

“When companies sell adulterated drugs, they undermine the integrity of the FDA’s approval process and may cause patients to take drugs that are substandard, ineffective, or unsafe,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “We will continue to work with our law enforcement partners to ensure that all manufacturers of drugs approved by the FDA for sale in the United States, both domestic and foreign, follow the FDA guidelines that protect all of us.”

“This is the largest false claims case ever prosecuted in the District of Maryland, and the nation’s largest financial penalty paid by a generic pharmaceutical company for FDCA violations,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein.  “The joint criminal and civil settlement, which reflects many years of work by FDA agents and federal prosecutors, holds Ranbaxy accountable for a pattern of violations and should improve the reliability of generic drugs manufactured in India by Ranbaxy.”

Ranbaxy USA admitted to introducing into interstate commerce certain batches of adulterated drugs that were produced at Paonta Sahib in 2005 and 2006, including Sotret, gabapentin, and ciprofloxacin. Sotret is Ranbaxy’s branded generic form of isotretinoin, a drug used to treat severe recalcitrant nodular acne; gabapentin is a drug used to treat epilepsy and nerve pain; ciprofloxacin is a broad-spectrum antibiotic. In a Statement of Facts filed along with the Information, Ranbaxy USA acknowledged that FDA’s inspection of the Paonta Sahib facility in 2006 found incomplete testing records and an inadequate program to assess the stability characteristics of drugs. “Stability” refers to how the quality of a drug varies with time under the influence of a variety of factors, such as temperature, humidity, and light.  Such testing is used to determine appropriate storage conditions and expiration dates for the drug, as well as to detect any impurities in the drug. 

Ranbaxy also acknowledged that the FDA’s 2006 and 2008 inspections of the Dewas facility found the same issues with incomplete testing records and an inadequate stability program, as well as significant cGMP deviations in the manufacture of certain active pharmaceutical ingredients and finished products. Ranbaxy USA also acknowledged that in 2003 and 2005 the company was informed of cGMP violations by consultants it hired to conduct audits at the Paonta Sahib and Dewas facilities. Those cGMP violations resulted in the introduction into interstate commerce of some adulterated drugs.

Ranbaxy USA further admitted to failing to timely file required reports known to FDA as “field alerts” for batches of Sotret and gabapentin that had failed certain tests. With respect to Sotret, Ranbaxy USA was aware in January 2003 that a batch of Sotret failed an accelerated dissolution stability test but continued to distribute the batch into the United States for another 13 months. With respect to gabapentin, Ranbaxy USA was aware at various times between June and August 2007 that certain batches of gabapentin were testing out-of-specification, had unknown impurities, and would not maintain their expected shelf life. Nevertheless, Ranbaxy USA did not notify FDA and institute a voluntary recall until October 2007.

Ranbaxy USA also admitted to making false, fictitious, and fraudulent statements to the FDA in Annual Reports filed in 2006 and 2007 regarding the dates of stability tests conducted on certain batches of Cefaclor, Cefadroxil, Amoxicillin, and Amoxicillin and Clavulanate Potassium, which were manufactured at the Dewas facility. Ranbaxy USA was found to have conducted stability testing of certain batches of these drugs weeks or months after the dates reported to FDA. In addition, instead of conducting some of the stability tests at prescribed intervals months apart, the tests were conducted on the same day or within a few days of each other. This practice resulted in unreliable test results regarding the shelf life of the drugs. Ranbaxy USA also acknowledged that drug samples waiting to be tested were stored for unknown periods of time in a refrigerator, which did not meet specified temperature and humidity ranges for an approved stability chamber, and that this was not disclosed to the FDA.

The criminal case is U.S. v. Ranbaxy USA, Inc., JFM-13-CR-0238 (D. Md.).

Under the civil settlement, Ranbaxy has agreed to pay an additional $350 million to resolve allegations that it caused false claims to be submitted to government health care programs between April 1, 2003, and September 16, 2010, for certain drugs manufactured at the Paonta Sahib and Dewas facilities. The United States contends that Ranbaxy manufactured, distributed, and sold drugs whose strength, purity, or quality differed from the drug’s specifications or that were not manufactured according to the FDA-approved formulation. The United States further contends that, as a result, Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).

The federal government’s share of the civil settlement amount is approximately $231.8 million, and the remaining $118.2 million will go to the states participating in the agreement.

The civil settlement resolves a lawsuit filed in U.S. District Court for the District of Maryland under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower, Dinesh Thakur, a former Ranbaxy executive, will receive approximately $48.6 million from the federal share of the settlement amount. The case is U.S. ex rel. Thakur v. Ranbaxy Laboratories Limited, Case No. JFM-07-962 (D. Md.).

With the exception of the allegations to which Ranbaxy pleaded guilty in the Criminal Information, there has been no determination of liability as to the claims settled by the civil agreement.

Last year, FDA and Ranbaxy agreed to an injunction that prevents drugs produced at the Paonta Sahib and Dewas facilities from entering the U.S. market until the facilities have been brought into full compliance with the FDCA and its implementing regulations. Since September 16, 2008, when the FDA placed drugs from those facilities on an Import Alert, Ranbaxy has not imported drugs from those facilities into the U.S. In addition, the injunction requires Ranbaxy to review and verify data contained in Ranbaxy’s past drug applications to the FDA. United States v. Ranbaxy Laboratories, Ltd., et al. , Case No. JFM-12-250 (D. Md).

“The FDA expects that companies will comply with the cGMP requirements mandated by law so that consumers can be assured that their medical products are safe and pure,” said John Roth, director of the FDA’s Office of Criminal Investigations. “The investigation that led to this settlement uncovered evidence showing that certain lots of specific drugs produced at the Paonta Sahib facility were defective, in that their strength differed from, or their purity or quality fell below, that which they purported to possess. The FDA and its law enforcement partners will continue to aggressively pursue companies and their executives who erode public confidence in the quality and safety of medical products by distributing products that do not comply with the law.” 

“I would like to express my appreciation for the exceptional work of our investigators and that of their FDA and Department of Justice partners,” said Michael G. Carroll, USAID Deputy Inspector General. “This settlement represents the culmination of years of investigative effort and signals our continuing commitment to the integrity of U.S. government systems and our determination to hold those who seek to defraud or mislead to account.”

The criminal case was prosecuted by the U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Consumer Protection Branch. The civil settlement was negotiated by the U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Commercial Litigation Branch. The case was investigated by agents from the FDA’s Office of Criminal Investigations and USAID’s Office of Inspector General. The FDA’s Office of Chief Counsel, HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, and the National Association of Medicaid Fraud Control Units also provided assistance.

This criminal and civil 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 $10.3 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.

Related Materials:

Ranbaxy Settlement
Information
Attachment A
Attachment B
Attachment C

A federal court permanently barred Larry J. Heath, a Cartersville, Ga., area tax preparer who operated Heath’s Income Tax, Heath & Hames Income Tax and Heath’s Income Tax II, from preparing tax returns for others, the Justice Department announced today. The civil injunction order, to which Heath agreed without admitting the allegations against him, was signed by Judge Harold L. Murphy of the U.S. District Court for the Northern District of Georgia. The government’s complaint in the injunction suit was brought against both Larry Heath and his brother, Andrew R. Heath. The case against Andrew Heath remains pending.

The government complaint alleged that Larry Heath and his businesses repeatedly prepared federal tax returns that unlawfully understated customers’ federal tax liabilities. The suit alleged that Larry Heath concocted bogus losses, expenses, education credits, business expenses and charitable contributions, which he falsely reported on his customers’ federal-income-tax returns.

The Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared, according to the complaint. Larry Heath then supposedly “sold” his business to two different women and used their EFINs to continue to file tax returns, the complaint alleged. The injunction applies to the businesses that were purportedly sold, Heath & Hames Income Tax and Heath’s Income Tax II.

Claiming bogus tax refunds is one of the IRS’s Dirty Dozen Tax Scams .

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

Related Materials:

Heath Injunction Order

A Detroit-area adult day care center owner was sentenced today to serve 40 months in prison for billing for unnecessary psychotherapy services, or services that were not provided, as part of a health care fraud conspiracy which led to more than $19 million in fraudulent Medicare billings.

The sentence was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

Checarol Robinson, 41, was sentenced by U.S. District Judge Nancy G. Edmunds in the Eastern District of Michigan.  In addition to her prison term, Robinson was sentenced to serve two years of supervised release and was ordered to pay $599,438 in restitution, jointly and severally with her co-defendant, Louisa Thompson, who awaits sentencing following a guilty plea for her role in the scheme.
 
Robinson pleaded guilty on Aug. 2, 2012, to an indictment charging her with one count of conspiracy to commit health care fraud and three counts of health care fraud.

According to Robinson’s admissions during her guilty plea proceeding, Robinson owned group homes where Medicare beneficiaries resided.  In return for payments, Robinson provided these Medicare beneficiaries’ information to a fraudulent psychotherapy company – Caldwell Thompson Manor Inc. – owned by co-conspirator Thompson.  That information was then used to bill Medicare for psychotherapy services that were not provided or were not medically necessary.

Robinson later owned and operated P&C Adult Day Center, which was incorporated in May 2010 and purported to provide psychotherapy services.  Robinson admitted she falsely billed Medicare for individual and group therapy services that were not provided by P&C or were not medically necessary, using the Medicare beneficiaries from her group homes.  Thompson, a licensed social worker and Robinson’s co-conspirator from the scheme at Caldwell Thompson, signed patient charts for psychotherapy services purportedly performed at P&C that were medically unnecessary or never performed.

According to court documents, a total of more than $19 million in false claims were submitted by the co-conspirators throughout the course of the conspiracy.   Evidence presented at today’s sentencing demonstrated that Robinson was responsible for causing the submission of more than $2 million in fraudulent billings.

This case was prosecuted by Assistant Chiefs Gejaa T. Gobena and Catherine K. Dick of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross.  It was 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 Eastern District of Michigan.

 Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A Detroit-area home health care agency owner was sentenced today to 60 months in prison for causing the submission of over $1 million in false and fraudulent billing to Medicare as part of a $13.8 million health care fraud conspiracy.

The sentence was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh, III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

According to plea documents, Rehan Khan was an owner of Moonlite Home Care Inc.  As the co-owner of Moonlite, Khan paid and directed the payment of sums to doctors to refer patients for home health care services to Moonlite that were not medically necessary and/or never rendered.  Khan also worked as a physical therapy assistant for several home health agencies in the Detroit area, known as Physicians Choice Home Health Care LLC and First Care Home Health Care LLC.  Khan paid and directed the payment of kickbacks to beneficiaries for Physicians Choice, First Care and Moonlite.  The Medicare beneficiaries sometimes pre-signed forms and visit sheets that were later falsified to indicate that they had received home health services that they had never received.  Other times, the Medicare beneficiaries’ signatures were forged on forms and visit sheets to indicate that they received home health services that they had never received.

               Khan paid and directed the payment of various medical professionals, including nurses, physical therapists, and physical therapy assistants, to create fictitious patient files to document home health services purportedly provided by Moonlite that were never rendered.  Khan also signed fictitious patient files purporting to have given physical therapy services at all three home health care agencies that were in fact never rendered.

                From about January 2011 through about September 2011, Khan submitted or caused the submission of fraudulent claims by Moonlite, for which Medicare paid approximately $891,473. From about January 2009 through about September 2011, Medicare paid approximately $866,512 to Physicians Choice and First Care for fraudulent physical therapy claims based on falsified files and notes signed by Khan.  In total, Khan was responsible for approximately $1,757,985 in false and fraudulent claims to Medicare.

This case was 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 Eastern District of Michigan. The case was prosecuted by Assistant Chief Catherine K. Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Philip A. Ross of the Eastern District of Michigan.

Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

At a hearing today in federal court in the Eastern District of North Carolina, Hysen Sherifi, 29, of Raleigh, N.C., was sentenced by Senior U.S. District Judge W. Earl Britt to life in prison. Sherifi’s co-defendants, Shkumbin Sherifi, 23, and Nevine Aly Elshiekh, 48, were also sentenced to 36 months and 42 months in prison, respectively, both followed by three years of supervised release.

The sentences were announced by John Carlin, Acting Assistant Attorney General for National Security; Thomas G. Walter, U.S. Attorney for the Eastern District of North Carolina; and John Strong, Special Agent in Charge of the FBI Charlotte Division. 

“Today, a convicted terrorist who plotted from his prison cell to behead federal agents and witnesses received the justice he deserved.  As this sentence demonstrates, those who attempt to thwart the judicial process through violence will be prosecuted to the fullest extent of the law.  I thank all those who worked to ensure that Hysen Sherifi’s original terrorist plans against U.S. military personnel and others were derailed, and that his subsequent murder-for-hire plot against those who testified against him was thwarted,” said John Carlin, Acting Assistant Attorney General for National Security.

U.S. Attorney Walker stated, “This case serves as an unfortunate reminder that we must remain ever vigilant in our efforts to detect violent extremists who seek to harm our people and property.”

“Hysen Sherifi, while in prison on a terrorism conviction, hatched a sinister murder for hire plot against the witnesses and FBI agents who helped convict him.   The sentences handed down today send a clear message the FBI and our law enforcement partners will not tolerate attempts to thwart the judicial process,” said FBI Special Agent in Charge Strong.  
 
On Nov. 8, 2012, Hysen Sherifi (Sherifi) was found guilty by a jury of all nine counts of the indictment filed against him.  Sherifi was charged with plotting to kill six witnesses who had testified against him at his 2011 terrorism trial (United States v. Boyd, et al.).  On Nov. 1, 2012, his co-conspirators, Shkumbin Sherifi and Nevine Aly Elshiekh, pleaded guilty to one count of conspiracy to commit murder-for-hire and each testified during the murder-for-hire trial of Sherifi.
 
After his October 2011 terrorism conviction, and while awaiting his sentencing for the same, Sherifi plotted to kill three FBI agents and three government informants who testified at his terrorism trial.  Sherifi sought to kill these individuals as revenge for his conviction; to prevent their testimony at co-conspirator Anes Subasic’s upcoming trial; and to get a new trial for himself.  Sherifi recruited his brother, Shkumbin Sherifi, and Elshiekh, a local school teacher to assist him in his plot.  The Sherifis and Elshiekh then raised money to pay for the murders.
 
In January 2012, Elshiekh met with a government informant whom she believed to be the “middleman” for a hit man in order to discuss the murder plot and possible targets.  Elshiekh then relayed that information to Sherifi during a jail visit.  Sherifi specified that he wanted each target to be beheaded and photographed after the beheading.  At a second meeting with the middleman, Elshiekh confirmed the identity of a government witness to be murdered and made a down payment.  The conspirators then worked together to collect the remaining funds needed to pay for the first murder.  After collecting the funds, the conspirators arranged another series of meetings with the middleman to pay for the murder and get photographic confirmation of the first murder.  On Jan. 22, 2012, the conspirators were all arrested shortly after Shkumbin Sherifi accepted pictures from the supposed middleman, purporting to show a beheaded government witness.
 
On Feb. 21, 2012, a nine-count indictment was filed charging Sherifi, Shkumbin Sherifi, and Elshiekh with conspiracy and aiding and abetting in the attempt to use interstate commerce facilities in the commission of murder-for-hire; conspiracy and aiding and abetting in the attempt to kill another person with intent to retaliate against any person for testimony given by a witness in an official proceeding; and conspiracy and aiding and abetting in the attempt to kill another person with intent to prevent the attendance or testimony of any person in an official proceeding. 
 
The investigation of this case was conducted by the FBI Resident Agencies in Raleigh and Wilmington, N.C., with the assistance of the New Hanover County, N.C., Sheriff’s Office. 
 
The prosecution is being handled by Assistant U.S. Attorneys J. Frank Bradsher and Brian S. Meyers of the U.S. Attorney’s Office for the Eastern District of North Carolina, and Trial Attorney Matthew F. Blue of the Counterterrorism Section in the Justice Department’s National Security Division.

C.R. Bard Inc. has agreed to pay the U nited States $48.26 million to resolve claims that it knowingly caused false claims to be submitted to the Medicare program for brachytherapy seeds used to treat prostate cancer in violation of the False Claims Act. Bard is a New Jersey based corporation that develops, manufacturers, and markets medical products used for a variety of conditions, including prostate cancer.

The settlement requires that Bard pay $48.26 million and it resolves claims relating to Bard’s sale of brachytherapy seeds, a form of radiation therapy, to hospitals. The United States alleged that from 1998 to 2006, Bard provided illegal remuneration to customers and physicians to induce them to purchase Bard’s seeds, in violation of the Anti-Kickback Statute.   The illegal remuneration allegedly took the form of certain grants, guaranteed minimum rebates, conference fees, marketing assistance and/or free medical equipment that Bard paid to customers and/or physicians who used the seeds to perform treatment for prostate cancer.   Hospitals ultimately submitted bills to Medicare for these seeds, which the government alleged were rendered false by Bard’s illegal kickback activity. The government alleged that Bard was liable under the False Claims Act for causing the submission of those false claims.

“This settlement is part of the United States’ on-going effort to comb at  the payment of illegal kickbacks to health care providers,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division.   “Such illegal payments subvert the medical marketplace and provide an unfair advantage to those who break the law.”

“Illegal kickbacks in any form pervert our health care system, which is designed to insure that health care providers make decisions based solely on what is best for the patient,” said U.S. Attorney for the Northern District of Georgia Sally Quillian Yates.

“We will continue to work with our various law enforcement partners in the pursuit of those who abuse publicly funded health care programs such as Medicare and Medicaid, through criminal prosecutions or civil settlements under the False Claims Act,” stated Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office.   “Such abuses as we’ve seen in this case will not be tolerated.”

“Medicare beneficiaries should never have to question whether treatment recommendations are based on their doctors’ best financial interests rather than their best medical advice,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “Companies paying these kickback bribes should expect aggressive investigation and prosecution.”

The civil settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia by Julie Darity, a former Bard manager for brachytherapy contracts administration under the qui tam, or whistleblower provisions, of the False Claims Act.   United States ex rel. Darity v. C.R. Bard, Inc., et al., Civ. Action No. 1:06-cv-0208-SCJ (N.D. Ga.). Under the False Claims Act, private citizens may bring suit for false claims on behalf of the United States and share in any recovery obtained by the government.   The former manager will receive $10,134,600 as her share of the civil settlement.    

In addition, according to a non-prosecution agreement with the United States, Bard has agreed to pay an additional $2.2 million and to take numerous remedial steps, many of which the company identified and began to implement prior to the criminal investigation, to enhance its corporate compliance program to prevent similar illegal actions in the future.   For example, Bard has agreed to refine its Code of Conduct and other written policies and procedures that promote Bard’s commitment to full compliance with all Federal health care program requirements and to develop an effective program to monitor medical education grants provided by Bard to ensure compliance with those requirements.    
 
The resolutions announced today are 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 nearly $10.3 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.

These settlements were the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Georgia; the Department of Justice, Civil Division, Commercial Litigation Branch; the FBI and HHS-OIG, in investigating the allegations in this case.

The Justice Department announced today that St. Bernard Parish, La., has agreed to a settlement valued at more than $2.5 million to resolve separate lawsuits by the United States and private plaintiffs alleging that the parish sought to restrict rental housing to African Americans in the aftermath of Hurricane Katrina.

The United States’ lawsuit alleged, among other things, that the parish: (1) passed a law, known as the permissive use permit ordinance, that prevented homeowners from renting single-family homes in residential zones without first obtaining a permit from the parish; (2) revised its zoning code to reduce dramatically the amount of land available for multi-family apartments; and (3) interfered with individuals’ housing rights. The lawsuit further alleged that these actions were done to limit or deny rental housing to African-Americans in violation of the Fair Housing Act. These actions came on the heels of the parish’s other efforts after Hurricane Katrina to restrict rental housing opportunities, including halting the re-establishment or redevelopment of rental housing and enacting a permit requirement for single-family rentals but exempting renters who were “related by blood” to the homeowners. The parish later rescinded these restrictions.

“The Fair Housing Act is clear that local governments cannot use their zoning and land-use laws to discriminate on the basis of race,” said Eric Halperin, Senior Counsel and Special Counsel for Fair Lending in the Civil Rights Division.  “People should have the freedom to choose where they live, without regard to race, and this innovative settlement will create greater housing opportunities in the New Orleans area.”

“The right of all of our citizens to enjoy fair and equal access to housing opportunities is guaranteed by our laws,” said Dana Boente, U.S. Attorney for the Eastern District of Louisiana.  “The U.S. Department of Justice is committed to fiercely protecting those rights in order to ensure the quality of life all Americans deserve.”

“No community has the right to keep people from living in that community because of their race,” said John Trasviña, U.S. Department of Housing and Urban Development (HUD) Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Justice Department are committed to taking action against municipalities that violate the Fair Housing Act by instituting discriminatory zoning and other housing practices.”

Under the settlement, which still must be approved by the U.S. District Court for the Eastern District of Louisiana, the parish must pay $275,000 to eight aggrieved persons identified by the United States and $15,000 to the United States as a civil penalty, establish a new Office of Fair Housing and hire a fair housing coordinator with a gross annual salary of at least $40,000, spend $25,000 each year in a marketing and advertising campaign to attract renters and developers of multi-family rental housing to the parish, and establish a rental land grant program through which the parish will transfer lands in its possession, free of cost, to qualified persons or entities who are willing to create or rehabilitate housing for rental purposes. The land grant program, which requires the parish to offer lands worth up to $83,000 each year, will last for five years; other programmatic features will last for three. Parish officials must also undergo fair-housing training and provide periodic reports to the United States. In a separate agreement, the parish agreed to pay $1.65 million in compensation, costs and attorneys’ fees to two sets of private plaintiffs.

On Jan. 28, 2011, HUD initiated a fair housing complaint against St. Bernard Parish alleging it adopted and implemented zoning ordinances that denied or restricted housing to persons based on their race. HUD demanded the parish rescind two key discriminatory ordinances and on April 8, 2011, the parish complied.  Following its investigation, HUD referred eight complaints from parish homeowners to the Justice Department alleging that the parish’s zoning processes were discriminatory In January 2012 HUD referred the secretary-initiated complaint to the Justice Department as well. The Justice Department conducted its own investigation and filed suit in January 2012.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  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 HUD at 1-800-669-9777.

Related Materials:

St. Bernard Motion for Approval of the Settlement
St. Bernard Settlement

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

Charles Lee Roberts, aka “Jive,” 67, of Beaumont, Texas, pleaded guilty before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity. 

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

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

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

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

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

At sentencing, scheduled for Sept. 26, 2013, Roberts faces a maximum penalty of life in prison.

Roberts is one of 35 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges.  Ben Christian Dillon, 40, of Houston; James Marshall Meldrum, 40, of Dallas; Chad Ray Folmsbee, 30, of Houston; and Chrisopher Morris, 37, of Dallas, each previously pleaded guilty to racketeering conspiracy for their roles in the criminal enterprise.
  
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite, Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.

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

The Justice Department announced today that it will monitor municipal elections on May 11, 2013, in the cities of Corrigan, Farmers Branch, Irving and Orange, Texas, to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.

Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order.  Federal observers will be assigned to monitor polling place activities in Farmers Branch and Irving based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations, and a Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials.

In addition, Justice Department personnel will monitor polling place activities in the cities of Corrigan and Orange. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.

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

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

The United States has asked a federal court in St. Louis, Mo., to permanently bar Joseph Burns, d/b/a Electronic Tax Service, Joseph Thomas and International Tax Service Inc. (Thomas’s business), from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Burns and Thomas, who previously worked together, prepare fraudulent tax returns for customers from the same office building in the midtown neighborhood of St. Louis.

According to the complaint, the defendants repeatedly fabricate deductions on customers’ returns and report false filing statutses in order to illegally lower their customers’ federal tax liabilities and to generate larger tax refunds. The government alleges that the defendants also prepare returns containing bogus Schedule C income which illegally allows some customers to claim the maximum earned income tax credit. Based on past audit results, the government alleges that the loss to the U.S. Treasury caused by these defendants’ ongoing return preparation activities could be as much as $6 million annually .

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

Related Materials:

Burns/Thomas Complaint

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

“Access to your county’s programs, services and activities is a basic civil right, and the doors to government must be open for people with disabilities,” said Eve L. Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division. “I applaud Stewart County for its dedication to ensuring that all people have full access to the county’s public resources.”

PCA ensures that persons with disabilities have an equal opportunity to participate in civic life. As part of the PCA initiative, Justice Department staff, including investigators and architects, survey government facilities, services and programs in communities across the country. The survey identifies modifications needed for compliance with the ADA. The agreements set out steps each community must take to improve access. PCA agreements require physical modifications to facilities to make them accessible to people with disabilities.

Stewart County, established in 1830, is located in southwest Georgia approximately 37 miles from Columbus, Ga. During the compliance review, the department reviewed 11 county facilities, including the sheriff’s department, health department, senior center, municipal center and RV park, as well as several polling places. The agreement requires the county to correct accessibility barriers identified at the 11 facilities, and to conduct accessibility surveys at additional polling places and voter registration sites, as well as to survey any potential new polling places. The county will also make provisions for individuals with disabilities in its emergency management plans and procedures and will increase the accessibility of its website. Other provisions address effective communication, grievance procedures, sidewalks, and domestic violence programs. The agreement will remain in effect for three years and the department will monitor the county’s compliance with the agreement.

People interested in finding out more about the ADA, today’s agreement with Stewart County, the PCA initiative or the ADA Best Practices Tool Kit for state and local governments can access the ADA webpage at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 (TDD 800-514-0383).

Related Materials:

Stewart County PCA Agreement

A former senior executive of Texas-based ArthroCare Corp., a publicly traded medical device company, pleaded guilty today for his role in a scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas.

David Applegate, 54, pleaded guilty before U.S. Magistrate Judge Mark Lane in Austin, Texas, to two counts of a superseding information which charges him with conspiracy to commit securities, mail and wire fraud and with a false statements violation. Applegate was the senior vice president in charge of ArthroCare’s Spine Division.  Applegate admitted that he and other co-conspirators inflated falsely ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving ArthroCare’s distributors and that he and other co-conspirators caused ArthroCare to file a Form 10-K for 2007 with the U.S. Securities and Exchange Commission that materially misrepresented ArthroCare’s quarterly and annual sales, revenues, expenses and earnings.

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

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

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

Applegate faces a maximum prison sentence of five years in prison for each charge. A sentencing date has yet to be scheduled.

David Applegate’s co-defendant John Raffle is scheduled for trial on July 15, 2013. Defendants are presumed innocent unless and until proven guilty at trial.

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

The former president of Port Arthur Chemical and Environmental Services, LLC (PACES) has pleaded guilty in federal court to occupational safety crimes which resulted in the death of an employee, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and John M. Bales, U.S. Attorney for the Eastern District of Texas.

Matthew Lawrence Bowman, 41, of Houston, pleaded guilty to violating the Occupational Safety and Health Act (OSH Act) and making a false statement.   Bowman admitted to not properly protecting PACES employees from exposure to hydrogen sulfide, a poisonous gas resulting in the death of truck driver Joey Sutter on Dec. 18, 2008.  In addition, Bowman admitted to directing employees to falsify transportation documents to conceal that the wastewater was coming from PACES after a disposal facility put a moratorium on all wastewater shipments from PACES after received loads containing hydrogen sulfide.  The guilty plea was entered today before U.S. Magistrate Judge Zack Hawthorn.  

“Bowman’s actions showed a preference for profit above the safety of his employees, putting them and the public in life threatening situations by not properly identifying the dangerous materials PACES was handling,” said Assistant Attorney General Moreno. “The Justice Department will continue to vigorously enforce laws enacted for the protection of human health and the environment.”

“In this day and age, it seems inconceivable that workers would be exposed to the level of danger that was routine at PACES,” said U.S. Attorney Bales.  “Mr. Bowman’s actions as the leader of the company were more than just cavalier, they were criminal and he is being held to account.  We continue to grieve for the needless loss of life and the pain and suffering of Mr. Sutter’s family and friends.  This investigation and prosecution is the result of an excellent combined effort of the identified agencies and I am grateful for their hard work.”

“The plea agreement reached today sends a strong signal to all who would illegally transport hazardous materials,” said Max Smith, regional Special Agent-in-Charge, U.S. Department of Transportation, Office of Inspector General.  “Working with our law enforcement and prosecutorial colleagues, we will continue our efforts to ensure safety in the transport of these materials and vigorously pursue those who violate the law.”   

“Laws regarding the safe and legal handling of hazardous materials are in place for a reason – to save lives,” said Ivan Vikin, Special Agent in Charge of the U.S. Environmental Protection Agency’s (EPA) criminal enforcement program in Texas.  “The defendant admitted that his actions directly led to the death of one of his employees.  This plea demonstrates that EPA and its partner agencies, the Texas Commission on Environmental Quality’s Environmental Crimes Unit and the Department of Transportation’s Office of the Inspector General, will prosecute anyone whose actions place the public at risk.”

According to information presented in court, Bowman was president and owner of PACES, located in Port Arthur, Texas, and CES Environmental Services (CES) located in Houston.  PACES was in operation from November 2008 to November 2010, and was in the business of producing and selling caustic materials to paper mills.  The production of caustic materials involved hydrogen sulfide, a poisonous gas.  According to the National Institute for Occupational Safety and Health, hydrogen sulfide is an acute toxic substance that is the leading cause of sudden death in the workplace.  Employers are required by the Occupational Safety and Health Administration (OSHA) to implement engineering and safety controls to prevent employees from exposure above harmful limits of hydrogen sulfide.  
Bowman was responsible for approving and directing

PACES production operations, the disposal of hydrogen sulfide wastewater, and ensuring implementation of employee safety precautions. In some cases, Bowman personally handled the investigation of work-related employee injuries, directed the transportation of PACES wastewater, and determined what safety equipment could be purchased or maintained.  In the cases at issue, hazardous materials were transported illegally with false documents and without the required placards.  Most importantly, the workers were not properly protected from exposure to hazardous gases.  The exposure resulted in the deaths of two employees, Joey Sutter and Charles Sittig, who were truck drivers, at the PACES facility on Dec. 18, 2008, and Apr. 14, 2009.  Placarding is critical to ensure the safety of first responders in the event of an accident or other highway incident. Bowman and PACES were indicted by a federal grand jury on July 18, 2012. 

Bowman faces up to five years in federal prison and a fine of up to $250,000 at sentencing.  A sentencing date has not been set.  Charges remain pending against PACES.  The corporation faces a fine of up to $500,000 per count.

This case was investigated by EPA Criminal Investigation Division; the U.S. Department of Transportation Office of Inspector General; the Texas Commission on Environmental Quality - Environmental Crimes Unit, part of the Texas Environmental Enforcement Task Force; the Texas Parks & Wildlife Department - Environmental Crimes Unit; the Houston Police Department - Major Offenders, Environmental Investigations Unit; the Travis County, Texas - District Attorney’s Office; the Harris County, Texas, District Attorney’s Office - Environmental Crimes Division; the Houston Fire Department; OSHA; the U.S. Coast Guard; the Port Arthur Police Department; and the Port Arthur Fire Department.

The case was prosecuted by the U.S. Attorney’s Office for the Eastern District of Texas and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

A Texas man was sentenced today to serve 30 years in prison for producing and distributing material relating to the sexual exploitation of children, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Texas Robert Pitman.

Robert Ramos Jr., 33, of Austin, Texas, was sentenced by U.S. District Judge Lee Yeakel in the Western District of Texas.  In addition to his prison term, Judge Yeakel sentenced Ramos to serve 10 years of supervised release.
 
Ramos pleaded guilty on Oct. 31, 2012, to one count of production of child pornography and one count of distribution of child pornography.

According to court documents and proceedings, Ramos, who was previously an assistant band director at Dessau Middle School in Pflugerville, Texas, admitted that he obtained sexually explicit images of a 13-year-old girl through communicating with her on Facebook using Facebook accounts that falsely portrayed him as a teenaged girl.  Ramos admitted to distributing those images to Timothy Bek, a teacher in New York who was also contacting minor boys and girls for the purpose of obtaining sexually explicit images. 

Ramos admitted at his plea hearing that he viewed via Internet webcam and saved to his computer a video of a five-year-old girl being sexually abused by Jennifer Mahoney, of New Jersey.

Both Bek and Mahoney have been prosecuted in their respective jurisdictions for their criminal activities relating to child pornography.  Bek was sentenced in the Western District of New York on May 23, 2012, to serve 30 years in prison for production and possession of child pornography.   Mahoney was sentenced in the District of New Jersey on Dec. 18, 2012, to serve 30 years in prison in for production of child pornography.

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 the Criminal Division’s Child Exploitation and Obscenity Section (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.

This case was investigated by the FBI and CEOS.  CEOS Trial Attorney Keith Becker and Assistant U.S. Attorney Matthew Devlin of the Western District of Texas are prosecuting this case.

The Department of Justice and the Department of Education’s Office for Civil Rights obtained a comprehensive resolution agreement today with the University of Montana-Missoula in Missoula, Mont., to ensure that it responds swiftly and effectively to allegations of sexual assault and harassment by students. In May 2012, the United States launched a comprehensive review of the university’s handling of sexual assault and harassment complaints over a three-year period, as well as its policies, procedures, training and student education efforts. The Department of Justice today also obtained a separate agreement with the university to resolve allegations that the university’s campus police force, the Office of Public Safety (OPS), discriminated against women by failing to adequately respond to reports of on-campus sexual assault.

The two agreements announced today resolve both of the United States’ investigations of the university: under Title IX of the Education Amendments of 1972 and Title IV of the Civil Rights Act of 1964, which both prohibit sex discrimination in education programs, including sexual assault and harassment, and the Department of Justice’s investigation of the university’s campus police under the Violent Crime Control and Law Enforcement Act of 1994, and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968. The Department of Justice continues to seek resolution in its investigations of the Missoula Police Department and the Missoula County Attorney’s Office for their alleged failure to adequately respond to complaints of sexual assault.

The first agreement details specific steps the university will take to:

• Revise the university’s policies, procedures and investigative practices to provide a grievance procedure that ensures prompt and equitable resolution of sexual harassment and sexual assault allegations;
• Adequately investigate and respond to allegations of retaliation by students who have alleged sexual assault;
• Take sufficient effective action to fully eliminate a hostile environment based on sex, prevent its recurrence and address its effects;
• Ensure that the individuals designated to coordinate its Title IX efforts receive adequate training and coordinate these efforts effectively; and
• Revise the university’s notice of nondiscrimination to adequately inform students that sex discrimination is prohibited. 

The university’s separate agreement with the Department of Justice resolving the investigation of the university’s OPS requires that the university:

• Implement or revise policies, provide training and change practices to improve its response to sexual assault, including combating gender bias;
• Work with an independent monitor, community-based organizations and other stakeholders, to develop and implement the reforms described in the agreement and to evaluate OPS’ success in effecting meaningful reform;
• Demonstrate that its implementation of the agreement has eliminated a pattern or practice of constitutional violations and that it has put in place systems and oversight that will prevent patterns or practices of unconstitutional conduct from recurring; and
• Develop procedures for gathering and analyzing data to assess the incidence and outcomes of reports of sexual assault. 

The university anticipates that it will achieve compliance with this agreement within two years.

“For students to feel safe and welcome on college campuses, sexual assault and harassment must be swiftly and effectively addressed,” said Jocelyn Samuels, Principal Assistant Attorney General for the Civil Rights Division of the Department of Justice. “We applaud the university for its cooperation and for taking the steps necessary to maintain a safe learning environment for all students. These agreements provide a blueprint for colleges and universities across the country to take effective steps to prevent and address sexual assault and harassment on their campuses.”

“Through these agreements, President Engstrom and the University of Montana staff have embraced change, not the status quo–they are problem solvers.  They are to be commended for developing and implementing a plan to resolve safety issues at the university. The agreements entered into today, between the United States and the University of Montana, when fully implemented, will ensure that a safe living and learning environment will exist at the university where our children will be well educated, nurtured and where they will be allowed to achieve their full potential in a wholesome academic setting,” said U.S. Attorney for the District of Montana Michael W. Cotter.

“Sexual harassment and sexual violence exact a devastating toll on students and interfere with their ability to learn in environments that are safe and free from discrimination.  The Department of Education expects that today’s resolution agreement will foster a safer environment and one that gives all students the chance to succeed at the University of Montana,” said Acting Assistant Secretary for Civil Rights at the Department of Education, Seth Galanter.

The prevention of sex-based discrimination is a top priority of the Justice Department’s Civil Rights Division and U.S. Attorney Offices.   Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.   Additional information about the U.S. Attorney’s Office for the District of Montana is available on its website at www.justice.gov/usao/mt.    The enforcement of Title IX is also a top priority of the Department of Education’s Office for Civil Rights.  Additional information about the Office for Civil Rights is available on its website at www.ed.gov/ocr/.

Related Material:

• UM Office of Public Safety Letter of Findings
• UM Letter of Findings
• UM Agreement
• UM Office of Public Safety Agreement
• Deputy Assistant Attorney General for the Civil Rights Division Roy L. Austin Jr. Speaks at the Press Conference on the Agreements with the University of Montana

A federal grand jury in U.S. District Court for the Eastern District of California in Sacramento today returned a superseding indictment charging Andrew B. Katakis, of Danville, Calif., with obstruction of justice related to a federal investigation into conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., the Department of Justice announced.

The remaining allegations are unchanged from the original indictment, which was returned by a federal grand jury on Dec. 7, 2011. The pre-existing counts charge Katakis, Donald M. Parker, Anthony B. Joachim and W. Theodore Longley with conspiring with other unnamed co-conspirators to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions. Wiley C. Chandler, another real estate investor who was also charged in the original indictment, pleaded guilty on Feb. 24, 2012.

The added charge alleges that after Katakis received a letter notifying him that a federal grand jury had subpoenaed his bank account, he deleted and caused others to delete electronic records and documents related to the conspiracies. The superseding indictment alleges that Katakis also installed and caused others to install and use a software program that overwrote deleted electronic records and documents so that they could not be viewed or recovered.

“Obstruction of a grand jury investigation is a crime the Antitrust Division takes seriously,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. “We will prosecute those who subvert the competitive process, as well as those who attempt to conceal their illegal actions by destroying evidence.”      

According to the superseding indictment, Katakis, Parker, Joachim, Longley and co-conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County. The conspirators also devised a scheme to fraudulently acquire titles to selected properties sold at the public auctions and to divert money to co-conspirators that would have gone to the beneficiaries. The indictment alleges that the conspiracy lasted from at least September 2008 until at least October 2009.

“This superseding indictment includes allegations that, in addition to the charges previously alleged, this defendant obstructed justice,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. “The new charge arises out of a long-running investigation that has already resulted in guilty pleas by numerous other defendants who participated in the scheme charged in this case.”

Katakis, Parker, Joachim and Longley are charged with bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million 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. They are also charged with conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The newly added obstruction of justice charge against Katakis carries a maximum sentence of 20 years and a $250,000 fine.

To date, 10 individuals have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation: Anthony B. Ghio, John R. Vanzetti, Theodore B. Hutz, Richard W. Northcutt, Yama Marifat, Gregory L. Jackson, Walter Daniel Olmstead, Robert Rose, Kenneth Swanger and Chandler.

The additional charge today is the latest filed by the department in its ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. The investigation is being conducted by the Antitrust Division’s San Francisco office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division, and the San Joaquin County District Attorney’s Office. Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

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 today announced that a federal grand jury sitting in Milwaukee has indicted Najee C. Moore, 22, on charges of conspiracy, sex trafficking and attempted forced labor, of both minor and adult victims.

The indictment alleges that Moore engaged in the sex trafficking of two different minor victims in 2010 and 2012, respectively, and used force, fraud, and coercion to compel both adult and minor victims to engage in commercial sex acts. The indictment further charges the defendant with conspiring and attempting to compel a victim into forced labor.

The matter is being investigated by the FBI, U.S. Immigrations and Customs Enforcement Homeland Security Investigations, Milwaukee Police Department and the Wisconsin Division of Criminal Investigation.  The case is being prosecuted by Assistant U.S. Attorney Karine Moreno-Taxman of the U.S. Attorney’s Office for the Eastern District of Wisconsin and Trial Attorney Daniel H. Weiss of the Department of Justice’s Civil Rights Division Human Trafficking Prosecution Unit.

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

The Department of Justice announced today the settlement of its lawsuit against the Golden Corral restaurant in Westland, Mich., which alleged that the owners and operators of the Golden Corral violated the Americans with Disabilities Act (ADA) by denying service to a mother and her minor children based on the appearance of the children’s skin due to a genetic skin disorder.

The Justice Department’s lawsuit, filed in the U.S. District Court for the Eastern District of Michigan in Detroit, alleged that the manager of the Golden Corral restaurant demanded that Danielle Duford and her four daughters leave the restaurant based on the appearance of the children’s skin caused by a genetic skin disorder, epidermolysis bullosa, which causes blisters to form on the skin in response to minor injuries and temperature changes. Despite Duford informing the restaurant manager of her children’s disability and repeatedly emphasizing that they did not have a contagious disease, the manager required the family to immediately leave the restaurant, claiming that he had received complaints from other customers. Title III of the ADA prohibits public accommodations, such as restaurants, from discriminating against people on the basis of disability, or their association with an individual with a disability, in the full and equal enjoyment of the goods or services offered.

Under the settlement agreement, which must still be approved by U.S. District Court Judge Stephen J. Murphy III, the defendants will pay $50,000 in damages to Duford and her children and $10,000 in civil penalties to the United States. The defendants will also develop and maintain a non-discrimination policy which covers service to customers with disabilities at the Golden Corral restaurant, and provide training to their employees on their obligations under the ADA.

“No one should be excluded from participating in the basic activities of daily living on account of fears of their disability, nor should children be shamed from going out in public,” said Eve Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division. “We are confident today’s settlement sends that message.”

“We hope that today’s settlement will help prevent discrimination based on unfounded fears by raising awareness of the duties to accommodate individuals with less common disabilities,” said Barbara L. McQuade, the U.S. Attorney for the Eastern District of Michigan.

The case was handled by Assistant U.S. Attorney Susan K. DeClercq in the U.S. Attorney’s Office for the Eastern District of Michigan, in collaboration with the Disability Rights Section of the Civil Rights Division of the Justice Department.

More information about the ADA is available at the Justice Department’s toll-free ADA Information line at (800) 514-0301 or (800) 514-0383 (TTY) and via the ADA website at www.ada.gov or through contacting the U.S. Attorney’s civil rights hotline at 313-226-9151.

The Justice Department announced today that Oregon developer David Montagne and others affiliated with him have agreed to pay $80,000 and remove accessibility barriers at Gateway Village, a 275 unit apartment complex in Salem, Oregon, to settle a lawsuit alleging that they had violated the Fair Housing Act by building the complex with steps and other features that made it inaccessible to persons with disabilities.

Under the terms of the parties’ agreement, Montagne and the other developers, Montagne Development Company, Gateway II LLC, Dav II Investment Group LLC and William Jones, must take extensive actions to make the complex accessible to persons with disabilities. These corrective actions include removing steps from sidewalks, widening interior doorways, reducing threshold heights, replacing excessively sloped portions of sidewalks, and installing properly sloped curb ramps to allow persons with disabilities to access the sidewalks from the parking areas. In addition, these defendants will pay $48,000 to the Fair Housing Council of Oregon, whose investigation revealed the violations and which intervened in the United States’ lawsuit, and $32,000 to establish a settlement fund for the purpose of compensating disabled individuals impacted by the accessibility violations. This settlement does not resolve the entire lawsuit. The case continues against the defendant that provided design and engineering services for Gateway Village, Multi/Tech Engineering.

“The Fair Housing Act ensures that persons with disabilities do not face unnecessary barriers to access to housing of their choice and are able to make full use of that housing,” said Eric Halperin, Senior Counsel and Special Counsel for Fair Lending in the Civil Rights Division. “The Justice Department is strongly committed to the enforcement of the fair housing laws that protect the rights of persons with disabilities to have equal opportunities to enjoy the housing of their choice.”

“Accessible housing is a fundamental protection afforded by the Fair Housing Act,” stated U.S. Attorney for the District of Oregon, S. Amanda Marshall.  “I am committed to working with the Fair Housing Council of Oregon and our federal, state, and local partners to ensure Oregonians have accessible housing choices in accordance with federal law.”

The lawsuit, filed in September 2011, arose as a result of a complaint filed by the Fair Housing Council of Oregon with the U.S. Department of Housing and Urban Development (HUD). After HUD investigated the complaint, it issued a charge of discrimination and referred the matter to the Justice Department.

“Having accessible features in an apartment complex is not just a legal requirement. These features are essential for people with disabilities to live their lives fully and independently,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Justice Department are committed to ensuring that housing developers meet the accessibility requirements of the Fair Housing Act.”

Individuals who are entitled to share in the settlement fund will be identified through a process established in the settlement.  Persons who believe they were subjected to unlawful discrimination at Gateway Village either when they lived there or considered living there should contact the Justice Department toll-free at 1-800-896-7743 mailbox # 9993 or e-mail the Justice Department at fairhousing@usdoj.gov .

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt .  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov , or contact HUD at 1-800-669-9777.

Two former employees at the Marine Corps Logistics Base Albany (MCLB-Albany) have pleaded guilty to receiving bribes related to a scheme to funnel freight hauling business to a local transportation company resulting in the loss of millions of dollars to the United States government, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

Mitchell D. Potts, 48, and Jeffrey S. Philpot, 35, both of Sylvester, Ga., each pleaded guilty today before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official.

During their guilty pleas, Potts, the former Traffic Office Supervisor for the Defense Logistics Agency (DLA) at MCLB-Albany, and Philpot, the former Lead Transportation Assistant in the Traffic Office, admitted to participating in a scheme whereby Potts and Philpot assisted Person A, the owner of several local commercial trucking companies, in obtaining trucking business from the DLA in exchange for the payment of cash and other things of value.  Both defendants admitted that they took a variety of steps designed to push business to Person A and his companies, including: 1) delaying shipments for a period of hours or days, thereby reducing the time available to fulfill the shipping request and assuring that it would be awarded to a local trucking company, usually one owned by Person A; 2) “short loading” shipments awarded to Person A’s companies so that it would appear to require more trucks than necessary to move the subject freight, resulting in additional loads being awarded to Person A’s companies; 3) indicating that removable gooseneck (RGN) trailers were required for shipments, which resulted in many loads being directed to Person A’s companies because they always had RGNs available; and 4) creating “ghost shipments” where Person A billed the DLA for shipments that were never made.  Both Potts and Philpot admitted that their actions led to millions of dollars of overcharges to the government.

Potts and Philpot admitted that they received cash payments from Person A when he visited the traffic office, sometimes multiple times per week.  They also admitted receiving lunches provided by Person A several times a week during the relevant period and that they also received gift cards and other things of value.  Potts admitted receiving approximately $209,000 in kickbacks from Person A during the roughly three-year scheme.  Philpot admitted receiving approximately $523,000 in cash and other things of value from Person A during the same period. 

At sentencing, Potts and Philpot each face a maximum penalty of 15 years in prison and a fine of not more than twice the pecuniary loss to the government.  As part of their plea agreements with the United States, both Potts and Philpot have agreed to forfeit the bribe proceeds they received from the scheme, as well as to pay full restitution to the Department of Defense.  Sentencing is scheduled for Aug. 15, 2013.

The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, the Defense Criminal Investigative Service, and the Defense Logistics Agency Office of the Inspector General. The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia. 

Today, the Justice Department announced that former Sheriff of Wilcox County, Ga., Stacy Bloodsworth was sentenced to 10 years in prison for assaulting an inmate inside the Wilcox County Jail and for conspiring to cover up the assault. Four other people have also been sentenced for their roles in the same assault and cover-up. Bloodsworth’s son, Austin Bloodsworth, was sentenced to 18 months in prison; former Wilcox County inmate-trustee Willie James Caruthers was sentenced to 18 months in prison; former South Central Georgia Drug Task Force Agent Timothy King Jr. was sentenced to 6 months in prison and former Wilcox County Jailer Casey Owens was sentenced to probation.

Stacy Bloodsworth pleaded guilty on Oct. 22, 2012. During his plea hearing, Stacy Bloodsworth admitted that on July 23, 2009, while he was the sheriff, he was inside the Wilcox County Jail with several other individuals, including Austin Bloodsworth, Caruthers, King and Owens. Stacy Bloodsworth ordered three inmates out of their cells because he was angry that one of them reportedly had a cell phone, in violation of Wilcox County Jail regulations. Bloodsworth hit all three inmates, and also watched as other participants struck and kicked the inmates. After it appeared that one inmate’s jaw had been broken, Stacy Bloodsworth used a wrench in an attempt to put his broken jaw back into place. Approximately one week later, the inmate was brought to a local hospital, where his jaw had to be wired shut. The other two inmates who had been assaulted suffered lacerations, bruising and pain.

During the plea hearing, Stacy Bloodsworth further admitted that he concocted a false cover story about the assaults in order to cover up the involvement of the law enforcement officials. Specifically, Stacy Bloodsworth ordered Caruthers, Austin Bloodsworth, King and Owens that, if they were ever questioned about the incident, they should say that Caruthers and the victim got into a fight after the inmate called Caruthers a racial slur. Stacy Bloodsworth, knowing that this statement was false, also instructed Caruthers and Owens to write this false cover story in a report. In addition, in August 2010, after learning that the inmate whose jaw had been broken had hired an attorney and had initiated a lawsuit, then-Sheriff Bloodsworth met with King and Owens and again instructed them that to relay the false story about the cause of the inmate’s broken jaw. In April 2011, then-Sheriff Bloodsworth relayed the false cover story regarding the cause of inmate’s broken jaw to FBI Special Agents.

“Today’s sentence reflects that law enforcement officers who assault inmates in their custody and make false statements erode the trust of the people they have sworn to protect,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to prosecuting law enforcement officers who abuse their power and violate the constitutional rights of individuals in their custody.”

“We expect our law enforcement officers to protect and serve the public, but in this case the defendants did neither,” said U.S. Attorney for the Middle District of Georgia Michael Moore.  “The sentences handed down today bring closure to an alarming case, where those sworn to uphold the law now feel the full weight of it.”

Caruthers pleaded guilty to assaulting the inmate, and to conspiring to cover up the assault. Austin Bloodsworth and Timothy King Jr. each pleaded guilty to conspiring to cover up the assault, while Owens pleaded guilty to misprision of a felony.

This case was investigated by the FBI and was prosecuted by Trial Attorney Christine M. Siscaretti and Special Litigation Counsel Gerard V. Hogan of the Justice Department’s Civil Rights Division, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia.

Miami residents Raymond Arias, 42, and his wife, Emelitza Arias, 25, have been sentenced in Detroit to 100 months and 12 months in prison, respectively, for their participation in a $13.3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service’s Office of Inspector General’s (OIG) Chicago Regional Office, made the announcement after sentencing by U.S. District Paul D. Borman of the Eastern District of Michigan.

The Ariases were also sentenced to two years of supervised release following their respective prison terms. At sentencing on May 7, 2013, the court ordered Raymond Arias to pay $5.4 million in restitution. Today at sentencing, the court ordered Emelitza Arias to pay $531,883 in restitution, jointly and severally.  The defendants agreed to forfeit approximately $40,000 seized by federal agents during the investigation.  

The Ariases pleaded guilty on Oct. 17, 2012, to one count of conspiring to commit health care fraud.  According to the plea documents, beginning in approximately 2009, Raymond Arias opened Elite Wellness where he submitted claims to Medicare for infusion therapy treatments that were never rendered.  In three months, Elite Wellness submitted in excess of $10 million in claims to Medicare.  Emelitza Arias joined the scheme by opening a second clinic, Carefirst Physical Therapy & Rehabilitation Center, which submitted approximately $940,000 in claims to Medicare for infusion therapy treatments that were never rendered. 

The case was 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 Eastern District of Michigan. This case was prosecuted by Trial Attorney Catherine Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Philip A. Ross of the Eastern District of Michigan.

Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,480 individuals who collectively have falsely billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the 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.

Miami residents Raymond Arias, 42, and his wife, Emelitza Arias, 25, have been sentenced in Detroit to 100 months and 12 months in prison, respectively, for their participation in a $13.3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service’s Office of Inspector General’s (OIG) Chicago Regional Office, made the announcement after sentencing by U.S. District Paul D. Borman of the Eastern District of Michigan.

The Ariases were also sentenced to two years of supervised release following their respective prison terms. At sentencing on May 7, 2013, the court ordered Raymond Arias to pay $5.4 million in restitution. Today at sentencing, the court ordered Emelitza Arias to pay $531,883 in restitution, jointly and severally.  The defendants agreed to forfeit approximately $40,000 seized by federal agents during the investigation.  

The Ariases pleaded guilty on Oct. 17, 2012, to one count of conspiring to commit health care fraud.  According to the plea documents, beginning in approximately 2009, Raymond Arias opened Elite Wellness where he submitted claims to Medicare for infusion therapy treatments that were never rendered.  In three months, Elite Wellness submitted in excess of $10 million in claims to Medicare.  Emelitza Arias joined the scheme by opening a second clinic, Carefirst Physical Therapy & Rehabilitation Center, which submitted approximately $940,000 in claims to Medicare for infusion therapy treatments that were never rendered. 

The case was 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 Eastern District of Michigan. This case was prosecuted by Trial Attorney Catherine Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Philip A. Ross of the Eastern District of Michigan.

Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,480 individuals who collectively have falsely billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the 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.

Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division, announced today that she will be leaving the Department of Justice on June 7, 2013.

 “Over the last four years, Ignacia Moreno has been a powerful champion for the mission of the Environment and Natural Resources Division,” said Attorney General Eric Holder. “Under her leadership, the division has achieved extraordinary results on behalf of the American people – obtaining record-setting penalties against those responsible for the tragic Deepwater Horizon oil spill, successfully defending EPA’s historic greenhouse gas rules, negotiating landmark settlements with Indian tribes to resolve decades-long disputes over the management of trust resources and advancing the goals of environmental justice to protect America’s most vulnerable communities.  Although I wish her all the best as she takes the next steps in her already remarkable career, I will miss Ignacia’s expertise and sound judgment.  And I will always be grateful for her unwavering dedication to and outstanding service on behalf of the American people.”
 
“Serving in the administration of President Barack Obama and under the leadership of Attorney General Eric Holder has been a tremendous honor,” said Assistant Attorney General Moreno.  “I am grateful for the outstanding work of the division’s talented and dedicated public servants and the steadfast support of the department’s leadership.  Together, we have vigorously enforced and defended the nation’s environmental laws for the benefit of all Americans, promoted responsible stewardship of our nation’s natural resources, protected tribal sovereignty, treaty rights and natural resources, and found creative solutions to complex problems that had previously defied resolution.  I believe that the division’s work will benefit the American people for years to come.”

In 2009, President Obama nominated Moreno to serve as the Assistant Attorney General for the Environment and Natural Resources Division.  She was confirmed by a unanimous vote of 93 to 0 in the U.S. Senate on Nov. 5, 2009.  She had previously served in the Clinton administration from 1994 to 2001 as a special assistant, counsel and principal counsel to the Assistant Attorney General for the Environment and Natural Resources Division.  

Holding Accountable Those Responsible for the Deepwater Horizon Oil Spill

  On April 20, 2010, an explosion and fire destroyed the Deepwater Horizon offshore drilling rig in the Gulf of Mexico and triggered a massive oil spill.  Eleven people aboard the rig tragically lost their lives.  Since then, Assistant Attorney General Moreno’s top enforcement priority has been to bring to justice those responsible for the Deepwater Horizon oil spill.  Under her leadership, in December 2010, the United States brought a civil action in the Eastern District of Louisiana  against BP, Anadarko, MOEX and Transocean for civil penalties under the Clean Water Act and a declaration of liability for natural resources damages under the Oil Pollution Act.  The first phase trial on liability has recently concluded in New Orleans.  Other key milestones have been achieved in the litigation.  On June 18, 2012, the court approved a settlement under which MOEX agreed to pay $70 million in civil penalties under the Clean Water Act and to spend $20 million on projects that will preserve and protect habitat and resources in the Gulf States.  Under a settlement approved by the court on Feb. 19, 2013, Transocean will implement enhanced safety measures in its drilling operations and pay a $1 billion civil penalty—the largest environmental civil penalty in history. 

Record-Setting Enforcement Results

During Assistant Attorney General Moreno’s tenure, the division has achieved record recoveries from parties responsible for violating the nation’s environmental laws.  Since 2009, the division has secured more than $29 billion in corrective measures through court orders and settlements.  The division also has obtained nearly $3.4 billion in civil and stipulated penalties, cost recoveries, natural resource damages, and other civil monetary relief, including more than $1.4 billion recovered for the Superfund.  During that time period, the division prosecuted 192 criminal cases against 358 defendants, and obtained a total of 155 years in confinement and almost $256 million in criminal fines, restitution, community service funds and special assessments.  The division’s enforcement efforts have achieved significant reductions in emissions and discharges of harmful pollutants into the nation’s air, land and water.

Landmark Decision on Greenhouse Gas Regulations

Under Assistant Attorney General Moreno’s leadership, the division successfully defended the Environmental Protection Agency’s (EPA) historic rulemakings under the Clean Air Act designed to reduce the emission of greenhouse gases that contribute to global climate change.  In June 2012, in one of the most significant environmental decisions of the past decade, a unanimous panel of the D.C. Circuit Court in Coalition for Responsible Regulation v. EPA upheld EPA’s greenhouse gas regulations.  

Successful Defense of the Administration’s Domestic Energy Agenda

 Since 2009, the division has defended the administration’s efforts to safely and responsibly develop domestic energy sources.  Under Assistant Attorney General Moreno’s leadership, the division has successfully defended dozens of challenges to permits and rights-of-way issued by federal land managers to promote the development of renewable energy projects on public lands, including solar, wind and electric power transmission projects located in California, Delaware, Oregon, Maine, Massachusetts, Nevada, Tennessee and Vermont. 

Historic Results to Address Tribal Claims and to Protect Tribal Rights and Resources

Assistant Attorney General Moreno has been steadfast in strengthening the United States’ government-to-government relationship with Native American tribes and resolving longstanding disputes between the tribes and the United States.  She has made it a priority to protect tribal sovereignty, safeguard tribal lands and resources, and honor tribal treaty rights through affirmative litigation.  She led the development of the department’s Eagle Feathers Policy to clarify and expand the longstanding department practice of not prosecuting members of federally recognized tribes for possessing or using eagle feathers or other protected bird parts for religious or cultural purposes.  In addition, Assistant Attorney General Moreno led the division’s efforts to resolve decades-long and costly litigation brought by more than 100 tribes against the United States relating to the government’s management of trust funds and trust resources.  During her tenure, the United States has settled cases with 69 tribes, and has agreed to pay about $1.7 billion to resolve the tribes’ claims in a fair and reasonable manner. 

 Significant Progress in Advancing the Goals of Environmental Justice

During her tenure, Assistant Attorney General Moreno has been fully committed to achieving the goals of environmental justice.  She has traveled throughout the United States to inner cities, Indian reservations, the Gulf States, the southwest border, Appalachia, and rural America, and has observed first-hand that many communities still suffer disproportionately from the burdens of pollution.  The division has furthered the goals of environmental justice by ensuring that all communities enjoy the benefit of a fair and even-handed application of the law and have a meaningful opportunity for input into the consideration of appropriate remedies.  Under Assistant Attorney General Moreno’s leadership, environmental justice considerations have become a fully integrated part of the resolution of the cases handled by the division.  

Division Ranked One of the Best Places to Work in the Federal Government

 During each year of Assistant Attorney General Moreno’s tenure, the Environment and Natural Resources Division has not only performed great work, it has won recognition as a great place to work.  In the annual survey conducted by the Partnership for the Public Service, the division has been ranked one of the top-five best places to work in the entire federal government in each of the past three years—including two #1 rankings.  The division also has scored among the top federal agency subcomponents for effective leadership, empowerment, fairness, teamwork and strategic management.  Assistant Attorney General Moreno has made it a priority to promote diversity in the workplace and a better quality of life for all employees.

Personal Background

Assistant Attorney General Moreno was born in Cartagena, Colombia, and immigrated with her family to the United States as a child.  After receiving her law degree from New York University in 1990, she joined the law firm of Hogan & Hartson in Washington, D.C., and worked in the firm’s environmental and litigation practice groups.  In 1994, President Clinton appointed Moreno to the Department of Justice, where she led significant environmental enforcement initiatives and expanded the Environment and Natural Resources Division’s international program.  In 2001, she joined the law firm of Spriggs & Hollingsworth in Washington, D.C., where she was of counsel and then a partner, specializing in environmental and mass tort litigation.  In 2006, she assumed the position of counsel, corporate environmental programs at the General Electric Company, where she worked until her confirmation as Assistant Attorney General in 2009.  Throughout her career, Assistant Attorney General Moreno has been strongly committed to public service, and has served pro bono as general counsel of the Hispanic National Bar Association and president of the Hispanic Bar Association of the District of Columbia.  She also has held leadership positions with the American Bar Association, the District of Columbia Bar, the Washington Lawyers’ Committee for Civil Rights and Urban Affairs, and the Center for International Environmental Law.  

Two employees of a U.S. broker-dealer and a senior official in Venezuela’s state economic development bank have been charged in New York’s federal court for their alleged roles in a massive international bribery scheme.

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

According to the criminal complaint unsealed today, Tomas Alberto Clarke Bethancourt (Clarke) and Jose Alejandro Hurtado – who were both employees of a U.S. broker-dealer (Broker-Dealer) – and Maria de los Angeles Gonzalez de Hernandez (Gonzalez) – who is a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (BANDES) – are accused of conspiring to pay bribes to Gonzalez in exchange for her directing BANDES’s financial trading business to the Broker-Dealer.  Gonzalez, 54, a resident of Caracas, Venezuela, was arrested in Miami on May 3, 2013.  Clarke, 43, and Hurtado, 38, were also arrested Friday in Miami, where they reside.  All three defendants were presented yesterday in federal court in Miami and remain in custody. 

   “Today’s announcement is a wake-up call to anyone in the financial services industry who thinks bribery is the way to get ahead,” said Acting Assistant Attorney General Raman. “The defendants in this case allegedly paid huge bribes so that foreign business would flow to their firm.  Their return on investment now comes in the form of criminal charges carrying the prospect of prison time.  We will not stand by while brokers or others try rig the system to line their pockets, and will continue to vigorously enforce the FCPA and money laundering statutes across all industries.”

“The defendants’ arrests lay bare a web of bribery and corruption in which employees of a U.S. broker-dealer allegedly generated tens of millions of dollars through transactions in order to fund kickbacks to a Venezuelan government official in exchange for her directing the Venezuelan economic development bank’s financial trading business to their employer,” said U.S. Attorney Bharara. “As alleged, the defendants also engaged in international money laundering to carry out their corrupt scheme.  This Office, along with all of our federal partners, is committed to holding individuals who violate the Foreign Corrupt Practices Act to account.”

  “As alleged, the defendants conspired to use Venezuela’s economic development bank as their personal piggy bank,” said FBI Assistant Director-in-Charge Venizelos. “Clarke and Hurtado reaped huge commissions from their trading of the bank’s assets, and kicked back significant sums to Gonzalez.  The brazenness of the alleged scheme was exemplified in their buying bank bonds and selling them back on the same day.”

  In a separate action, the U.S. Securities and Exchange Commission (SEC) announced civil charges against Clarke, Hurtado, and two others.

According to the allegations in the criminal complaint unsealed today, the forfeiture complaint, and other documents filed in Manhattan federal court, Clarke and Hurtado worked or were associated with the Broker-Dealer, based in New York City, principally through its Miami offices.  In 2008, the Broker-Dealer established a group called the Global Markets Group, which included Clarke and later Hurtado, and which offered fixed income trading services to institutional clients.  One of the Broker-Dealer’s clients was BANDES.  Gonzalez was an official at BANDES and oversaw the development bank’s overseas trading activity.  At her direction, BANDES conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales. 

From April 2009 through June 2010, Clarke, Hurtado, and Gonzalez participated in a bribery scheme in which Gonzalez directed trading business she controlled at BANDES to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES.  Agents and employees of the Broker-Dealer, including Clarke and Hurtado, devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.  Emails, account records, and other documents collected from the Broker-Dealer and other sources reveal that Gonzalez received a substantial share of the revenue generated by the Broker-Dealer for BANDES -related trades.  Specifically, Gonzalez received monthly kickbacks from Broker-Dealer agents and employees that were frequently in six-figure amounts.

Some of the trades the Broker-Dealer executed for BANDES had no discernible business purpose.  For instance, in January 2010, the Broker-Dealer executed at least two round-trip trades between itself and BANDES for the same bonds on the same day.  In other words, the Broker-Dealer bought certain bonds from BANDES and then immediately sold those same bonds back to the bank.  The result of the trades was that BANDES was left with the same bond holdings as before the trades, except that it had paid the Broker-Dealer approximately $10.5 million in mark-ups in the course of the two round-trip transactions.  

Certain payments to Gonzalez directly from Hurtado and an entity controlled by Clarke totaled at least $3.6 million. When added together with other payments referenced in the Complaint, Gonzalez received a total of at least $5 million.    

To further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that she held in Switzerland, among other places.  For instance, Clarke used an account he controlled in Switzerland to transfer funds to an account Gonzalez controlled in Switzerland.  Gonzalez then transferred some of this money to an account she held in the United States.  Additionally, Hurtado and his spouse received substantial compensation from the Broker-Dealer, portions of which Hurtado transferred to an account held by Gonzalez in Miami and to an account held by an associate of Gonzalez in Switzerland.  Hurtado also sought and received reimbursement from Gonzalez for the payment of U.S. income taxes related to the money that he used to make kickback payments to Gonzalez. 

In addition to the criminal complaint, on May 6, 2013, the government filed a civil forfeiture action in Manhattan federal court, seeking the forfeiture of assets held in a number of bank accounts associated with the scheme, including several bank accounts located in Switzerland.  The forfeiture complaint also seeks the forfeiture of several properties in the Miami area related to Hurtado that were purchased with his proceeds from the scheme.  As set forth in the forfeiture complaint, in addition to Gonzalez, another BANDES official, identified as CC-1 in the forfeiture complaint, also received kickback payments as part of the scheme.  Also on May 6, 2013, the Court issued seizure warrants for multiple bank accounts and a restraining order relating to the Miami properties.
                                                                                        
This ongoing investigation is being conducted by the FBI, with assistance from the SEC and the Justice Department’s Office of International Affairs. Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.  Assistant United States Attorney Carolina Fornos is also responsible for the forfeiture aspects of the case.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

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

A Romanian national pleaded guilty today to participating in an international, multimillion-dollar scheme to remotely hack into and steal payment card data from hundreds of U.S. merchants’ computers, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the District of New Hampshire John P. Kacavas and Holly Fraumeni, Resident Agent in Charge of the U.S. Secret Service, Manchester, N.H., Resident Office.

Adrian-Tiberiu Oprea, 29, of Constanta, Romania, pleaded guilty in U.S. District Court in the District of New Hampshire to one count of conspiracy to commit computer fraud, one count of conspiracy to commit wire fraud and two counts of conspiracy to commit access device fraud.

The indictment to which Oprea pleaded guilty charges that, from approximately 2009 to 2011, he conspired with co-defendants Iulian Dolan and Cezar Butu to hack into hundreds of U.S.-based computers to steal credit, debit and payment account numbers and associated data (collectively “payment card data”) that belonged to U.S. cardholders.

According to the indictment, Oprea and Dolan remotely hacked into U.S. merchants’ “point-of-sale” (POS) or “check out” computer systems, where customers’ payment card data was electronically stored.   Specifically, Oprea used the Internet to identify vulnerable POS systems that were based in the United States.  After identifying a vulnerable system, Oprea gained access to the system and installed software programs called “keystroke loggers” (or “sniffers”) onto the POS systems.  These programs recorded and stored all of the data that was keyed into or swiped through the merchants’ POS systems, including customers’ payment card data.
 
Oprea retrieved the card data and then electronically transferred it to various electronic storage locations (“dump sites”) that he had set up.  Oprea later attempted to use the stolen payment card data to make unauthorized charges on, or transfers of funds from, the accounts.  He also attempted to transfer the stolen payment card data to other co-conspirators for their use for similar purposes. 

During the course of the conspiracy, the co-conspirators hacked into several hundred U.S. merchants’ POS systems and stole payment card data belonging to more than 100,000 U. S. cardholders.

Dolan and Butu previously pleaded guilty for their roles in the scheme.  Dolan is scheduled to be sentenced on Aug. 15, 2013.  In his plea agreement, Dolan agreed to be sentenced to serve seven years in prison.  On Jan. 7, 2013, Butu was sentenced to serve 21 months in prison.
 
The case was investigated by the U.S. Secret Service, with the assistance of the New Hampshire State Police and Romanian authorities.

The case is being prosecuted by Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.  Significant assistance was provided by the Criminal Division’s Office of International Affairs.

Xavier Jiménez-Benceví, aka “Xavi,” 28, faces life in prison following his conviction of murdering Delia Sánchez-Sánchez, a federal witness on a drug trafficking case, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Rosa Emilia Rodríguez-Vélez.  

On April 30, 2013, Jiménez-Benceví was convicted of four counts of murder of a federal witness, possession of a firearm, attempted kidnapping and possession of a machine gun. According to court records and evidence at trial, on June 21, 2010, Jiménez-Benceví murdered a woman he believed was about to report his drug distribution activities to federal agents. He conspired with others to lure the woman, Delia Sánchez-Sánchez, to a public location, and then he fatally shot her.

 The counts of conviction on capital murder charges necessitated a separate penalty phase of the trial, which began on May 1, 2013. Today, the jury announced it was unable to reach a unanimous sentencing verdict. As a result, a sentence of life in prison will be imposed on Aug. 6, 2013.  The federal system does not have parole.

The case was investigated by the FBI and the Puerto Rico Police Department, and prosecuted by Assistant U.S. Attorneys José Capó-Iriarte, Ilianys Rivera-Miranda and Luke V. Cass and Trial Attorney James Dennis Peterson of the Capital Case Unit of the Justice Department’s Criminal Division.

Today the U.S. Marshals Service (USMS) concluded Operation Guardian, a three-year, national initiative specifically targeting the country’s most dangerous noncompliant sex offenders. Deputy Marshals and law enforcement partners arrested 345 individuals who had failed to register with state authorities as required by law.

Marshals worked with state and local officials to identify specific non-registering fugitives based on their danger to the public and prior convictions for sex offenses. As of today, USMS investigators have located 427 offenders of 444 sought (or 96 percent of those targeted), including 82 individuals found outside the United States. These individuals represent more than 500 prior convictions for sexual offenses.

“I’d like to thank each of the Deputy U.S. Marshals and state and local law enforcement officials who contributed to the success of this important operation.  These dedicated professionals have helped to make our communities safer by taking dangerous fugitives off the streets,” said Attorney General Eric Holder. “Today’s announcement sends a clear message: that the Justice Department and its allies are firmly committed to safeguarding our nation’s young people from all forms of exploitation and abuse.  And we are determined to bring noncompliant sex offenders to justice.”

“The U.S. Marshals Service will not tolerate noncompliant and violent sex offenders who evade the law. The message we send to these individuals is there is nowhere you can hide,” said USMS Director Stacia Hylton. “Operation Guardian enabled us to bring to bear the full weight of international, federal, state and local law enforcement resources and intelligence to locate the most egregious sex offenders—those who have victimized innocent children.”

The USMS assigns 129 criminal investigators to conduct sex offender, non-registrant investigations on a full-time basis. Operation Guardian was a collaborative effort led by the USMS in cooperation with Interpol, the Diplomatic Security Service, Customs and Border Protection, and the National Center for Missing and Exploited Children (NCMEC).

“The National Center for Missing & Exploited Children is proud to partner with the U.S. Marshals in helping to protect our nation’s children,” said John Ryan, chief executive officer, NCMEC.  “We applaud the overwhelming success of Operation Guardian which located hundreds of the country’s most dangerous noncompliant sex offenders.”

Among those arrested during Operation Guardian were:

·          Lee Roy Ramirez, one of “Wisconsin’s Most Wanted,” arrested on April 22, 2013, in Portland, Ore. Ramirez was wanted by the Wisconsin Department of Corrections since 2003 for probation violation on an original charge of second degree sexual assault of a child. The intensive fugitive investigation covered several states and ultimately led investigators to Oregon. Ramirez is in custody in Oregon awaiting extradition back to Wisconsin.

·          James K. Jenkins, arrested on Oct. 9, 2012, in Garland, Texas. Jenkins was wanted in DeKalb County, Ga., for failure to register as a sex offender and for probation violation based on a weapons offense. His original offense occurred Dec. 15, 1999, when he raped a 15-year-old girl. He was convicted of statutory rape and sentenced to three years in prison, 7 years of probation and required to register as a sex offender in the state of Georgia. Jenkins moved and did not notify the probation office or the sheriff’s office of his location. In October 2012, a Crimestoppers program received an online tip that placed Jenkins in Garland. Investigators conducted surveillance and arrested Jenkins with a loaded .38-caliber handgun in close proximity.

·          David Sherant, arrested Oct. 3, 2012, by Deputy U.S. Marshals from the District of Nevada and members of the Las Vegas SOAP Task Force. Sherant was wanted by the Utah Department of Corrections for violating his term of supervision by failing to register as a sex offender. He was convicted in August 2000 of sexual exploitation of a minor. After release from the Utah State Prison, Sherant absconded parole, and failed to register as a sex offender as required by law. Investigators learned that the 31-year-old Sherant was passing himself off as 18-year-old “Mikey Miller” currently residing in Las Vegas. On Oct. 15, 2012, Sherant was extradited to Utah. His probation was revoked and he was remanded to the custody of the Utah Department of Corrections.

·          Darrell Craig Sinclair, arrested on Feb. 28, 2012, in Mexico. Sinclair was wanted by the Riverside County, Calif., Sheriff’s Department for almost 10 years on a $500,000 arrest warrant for failure to register as a sex offender. He was previously convicted of one count of lewd acts against a child in Los Angeles County in 1976, and seven counts of lewd acts against a child in Orange County, Calif., in 1983. USMS investigators determined that Sinclair was in Ajajic, Mexico, and he was taken into custody by Mexican Immigration Officials. Mexican immigration officials escorted Sinclair to Los Angeles International Airport, where he was arrested by Deputy U.S. Marshals.

·          Michael Rybkin, arrested on Nov. 9, 2010, in New York. Rybkin was wanted by the Hudson County, N.J., Sheriff’s Department for a parole violation and by Immigration and Customs Enforcement on a warrant of deportation, and is a sex offender in the State of New Jersey. Rybkin is a German citizen. USMS investigators developed information that Rybkin was residing in New York City and using the internet. Rybkin, who was previously banned from New York City Public Libraries, was observed masturbating in front of two female children in October 2010 at a library, but eluded capture. On Oct. 27, 2010, Rybkin was charged by the USMS with violating the Adam Walsh Act and a federal warrant was issued for his arrest. On Nov. 9, 2010, USMS investigators arrested Rybkin at the Grand Central Branch of the New York City Public Library. On March 10, 2011, Rybkin pleaded guilty to the Adam Walsh Act violation, and was sentenced Jan. 19, 2012, by U.S. District Court Judge William Pauley to 63 months incarceration and lifetime supervised release on electronic monitoring.

The Behavioral Analysis Unit at the USMS National Sex Offender Targeting Center worked with the investigators to identify information related to the fugitives across a number of personal or social dimensions, including past sexual offending behavior. The prior convictions of the located offenders represent hundreds of victims and thousands of known sexual assaults. Most of the sexual assault events were engaged against children, and many involved extreme violence.

The NCMEC estimates more than 700,000 sex offenders reside in the United States and that more than 100,000 are classified as noncompliant or unregistered. Since its inception in 2006, the Sex Offender Investigations Branch has planned and executed more than 900 sex offender compliance and enforcement operations. During these operations, the USMS partnered with more than 4,800 state and local law enforcement agencies to conduct more than 150,000 compliance checks.

A Las Vegas mortgage agent was sentenced late yesterday to serve 15 months in prison for her participation in a mortgage fraud scheme that netted more than $1.2 million in fraudulent mortgage loans, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Acting Special Agent in Charge William C. Woerner of the FBI’s Las Vegas Field Office announced today. 

Heidi Haischer, 44, was sentenced by U.S. District Judge Miranda M. Du in the District of Nevada.  In addition to her prison term, Haischer was sentenced to serve three years of supervised release. 

In November 2012, after a four-day trial, a federal jury in Las Vegas found Haischer guilty of one count of wire fraud and one count of conspiracy to commit wire fraud for submitting fraudulent loan documents to purchase two homes.

According to court documents and evidence presented at trial, Haischer participated in a mortgage fraud scheme while employed as a mortgage broker in Nevada.  From December 2006 to January 2007, Haischer and her co-conspirators fraudulently secured loans totaling over $1 million to obtain properties with the intent to flip and sell them for profit.  Evidence at trial showed that Haischer and her co-conspirators subsequently enriched themselves by collecting brokerage commissions generated by the sales of the properties.

The court documents and trial evidence demonstrated that Haischer submitted multiple loan applications in which she overstated her income, submitted false verification of employment and misrepresented her intent to reside in one of the properties as her primary residence.  Additionally, Haischer presented inflated bank account balances supported by forged bank statements to make it appear that she had assets she did not have, in order to help qualify for mortgage loans for which she otherwise would not have been eligible. 

Co-conspirator Kelly Nunes was convicted in a related case in Las Vegas on Feb. 2, 2012, of one count of bank fraud and one count of conspiracy to commit wire and bank fraud.  On July 11, 2012, Nunes was sentenced to 51 months in prison.

This case was investigated by the FBI.  Trial Attorneys Thomas B.W. Hall and Brian R. Young of the Criminal Division’s Fraud Section prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada.

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

Corey Thompson was sentenced today to serve 30 months in prison for his involvement in a sophisticated stolen identity refund fraud conspiracy, the Justice Department and the Internal Revenue Service (IRS) announced. In July 2012, Thompson pleaded guilty to one count of conspiracy to file false claims and to one count of aggravated identity theft.

According to court documents, in January 2012, Corey Thompson and his co-conspirators filed at least 27 fraudulent 2011 tax returns that requested a total of $91,304 in refunds. Thompson and his co-conspirators obtained the means of identification from a prison guard and from an employee at a debt collection agency.

Court documents also state that in 2011 and 2012, Thompson worked as an independent contractor for a cable company. As an independent contractor, Thompson installed cable and internet access. To perpetrate the conspiracy, Thompson hijacked the internet service of customers for whom he had performed work. From his home, Thompson used his laptop and his specialized knowledge and equipment to essentially shut down the customer’s internet and then take over that customer’s internet. Thompson would then file false tax returns using the hijacked internet which made it appear as if the false tax returns were being filed by the customer. Thompson directed the tax refunds to be placed on pre-paid debit cards. The pre-paid debit cards were intercepted by the U.S. Postal Service.

The case was investigated by Special Agents of the IRS - Criminal Investigation and Postal Inspectors of the U.S. Postal Service. Trial attorneys Jason H. Poole, Justin Gelfand and Michael Boteler of the Justice Department's Tax Division and Assistant U.S. Attorney Jared Morris prosecuted the case.

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