District Not Recorded

A federal grand jury has returned an indictment Thursday charging Jeffery Deshon Applewhite, aka Jeffery Donald Mason, of Los Angeles, with aiding and assisting the preparation and presentation of false and fraudulent federal income tax returns, the Justice Department and Internal Revenue Service (IRS) announced.

 

According to the indictment, from 2006 through 2011, Applewhite, a certified public accountant who owned and operated tax preparation businesses, including Applewhite and Company, CPA and Mason Financial Services Inc., aided and assisted in the preparation and presentation of false and fraudulent federal income tax returns containing claims for deductions and credits to which his clients were not entitled. Some counts allege that Applewhite used another individual’s preparer tax identification number without permission in preparing false federal income tax returns.

 

The maximum penalty for aiding and assisting the preparation of false claims is three years in prison and a fine of $250,000 for each count of conviction. The maximum penalty for each count of identity fraud is fifteen years and a fine of $250,000.

 

This case is being investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles O’Reilly and Erin Mellen of the Justice Department’s Tax Division are prosecuting the case.

 

An indictment contains only allegations against an individual and, as with all defendants, must be presumed innocent unless and until proven guilty beyond a reasonable doubt.

The leader of a violent and highly sophisticated jewelry theft ring pleaded guilty today for his participation in a racketeering conspiracy, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; and James Newman, Acting Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division.

Alexander Cuadros-Garcia, aka “Alex,” “Brujo,” “Aleto” and “Manuel Gonzalez”, 37, of Richmond, Va., pleaded guilty before U.S. Magistrate Judge Tommy Miller in the Eastern District of Virginia, Newport News Division, to racketeering conspiracy. 

According to court documents, Cuadros-Garcia led an organized criminal group that stole more than $4.6 million in jewelry from victims in Virginia and at least six other states.  In March 2012, Cuadros-Garcia was charged along with seven other individuals who were members of the Richmond-based ring that regularly conducted lengthy surveillance on jewelry stores to identify vulnerable individuals and then follow their targets back to the individuals’ hotel or home. 

In most of the robberies, several men would suddenly appear as the victims approached or entered their car, punch out the car’s windows, threaten the victims at knife-point and steal the victims’ merchandise.  In addition, the robbers would puncture the victims’ car tires and steal their cell phone to reduce the chance of pursuit or apprehension.  After a successful robbery, members of the ring would travel to New York to sell the merchandise to businessmen, who coordinated re-selling the stolen property or melting it down for future use.

At sentencing, scheduled for June 19, 2013, Cuadros-Garcia faces a maximum penalty of 20 years in prison.

 Cuadros-Garcia’s co-defendants Raul Antonio Escobar-Martinez, William Leandro Herrera-Bohorquez and Juanita Diaz previously pleaded guilty for their roles in the theft ring.  Escobar-Martinez and Herrera-Bohorquez were sentenced on March 7 and March 14, 2013, respectively, to serve 87 months in prison.
 
 The investigation of this case was led by the ATF’s Washington Field Division, with the assistance of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the police departments in Williamsburg, Virginia Beach, Henrico County, Chesterfield, Prince William County and Fairfax County in Virginia, along with the Virginia State Police; the Baltimore County, Md., Police Department; the Port Authority of New York and New Jersey; the New York City Police Department; and the police departments in Rutherford, N.J., and Gwinnett County, Ga.; and the Morris County, N.J. Prosecutor’s Office. 

 Assistant U.S. Attorney Eric M. Hurt of the Eastern District of Virginia and Trial Attorney Jerome M. Maiatico of the Criminal Division’s Organized Crime and Gang Section prosecuted the case on behalf of the United States.

On March 14, 2013, a federal grand jury in Macon, Ga., returned an 18 count indictment alleging that Natashia and Detrick Tucker, a husband and wife couple who owned and operated a tax preparation business named T&T Express located in Pine Mountain, Ga., conspired to defraud the United States by preparing and filing fraudulent tax returns that illegally claimed inflated tax refunds for their clients. The indictment also charges both of the Tuckers with specific counts of aiding the filing of false tax returns, including Natashia Tucker’s personal returns. The Tuckers were arrested and made their initial appearances in court today.

 

An indictment is merely a formal charge by the grand jury. The defendants are presumed innocent unless and until proven guilty. If convicted of the conspiracy charge, Natashia and Detrick Tucker each face a maximum potential sentence of ten years’ imprisonment. Further, they face maximum of three years in prison for each count of conviction for aiding the filing of false tax returns.

 

The case is being prosecuted by Trial Attorneys Alexander Effendi and Charles Edgar Jr. of the Justice Department’s Tax Division and Michael Solis of the U.S. Attorney’s Office for the Middle District of Georgia. The case was investigated with the assistance of special agents of IRS-Criminal Investigation and the Georgia Department of Revenue.

 

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

Kenny McLaughlin, 35, a corrections officer at the Stone County Regional Facility in Stone County, Miss., pleaded guilty today in federal court to ordering the beating of an inmate at the detention facility.

 

According to court documents filed in connection with his guilty plea, on May 12, 2008, McLaughlin, while working as a corrections officer, ordered an inmate to arrange an unwarranted assault on another inmate. As a result of McLaughlin’s order, the victim was assaulted by two fellow inmates in the shower area of the cellblock. McLaughlin was aware of the assault as it happened but did not notify any other officer or medical personnel of the assault. The victim suffered fractured ribs, cuts to his face and bruises to his chest.

 

“Law enforcement officers do not have the right to order that an individual, whether incarcerated or not, be beaten by others,” said Deputy Assistant Attorney General Roy L. Austin Jr. of the Department of Justice’s Civil Rights Division. “The Justice Department is committed to prosecuting law enforcement officers who violate the constitutional rights of individuals in their custody.”

 

The statutory maximum sentence for this offense is 10 years in prison. Sentencing is scheduled for June 26, 2013.

 

This case was investigated by the Gulfport Resident Agency of the Jackson, Miss., Division of the FBI and is being prosecuted by Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi and Trial Attorney Dana Mulhauser of the Civil Rights Division of the Department of Justice.

CDW-Government LLC (CDW-G) has agreed to pay $5.66 million to resolve allegations that it submitted false claims in connection with a U.S. General Services Administration (GSA) contract, the Justice Department announced today. CDW-G is a wholly-owned subsidiary of Illinois-based CDW Corporation and a reseller of information technology, equipment, services, office supplies and related products. The settlement resolves allegations that, during the period 1999 to 2011, CDW-G improperly charged government purchasers for shipping, sold products to the United States that were manufactured in China and other countries that are prohibited by the Trade Agreements Act, and underreported sales in order to avoid paying GSA its “Industrial Funding Fee,” a fee based on total contract sales that is designed to cover GSA’s costs of contract administration.

 

“Protecting the federal procurement process is a top priority for the Department of Justice,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “Contractors who abuse that process and undermine American trade interests will be held accountable for their actions.”

 

“My office will not tolerate any abuse of the contracting process with the United States,” said Stephen R. Wigginton, U.S. Attorney for the Southern District of Illinois. “My warning is both simple and certain: If you knowingly overcharge the United States, we will pursue all remedies available to us and we will recover the government’s losses.”

 

The allegations arose from a lawsuit filed in a federal court in East Saint Louis, Ill., under the qui tam or whistleblower provisions of the False Claims Act. Those provisions allow private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment that may result. The relator in this case, former CDW-G sales representative Joe Liotine, will receive $1,585,892.56 of the total recovery as a statutory award. The relator may also be entitled to receive additional amounts from the defendant for attorneys’ fees and costs.

 

The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is captioned U.S. ex rel. Joe Liotine, vs. CDW-Government, Inc., 05-cv-33-DRH-DGW. The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Southern District of Illinois and the GSA Office of Inspector General.

Mary Bennett, Narendrakumar Patel and Eugenia Burks, all residents of Elmore County, Ala., were sentenced for their roles in an identity theft and tax fraud scheme. Bennett was sentenced today to 75 months in prison; Patel was sentenced yesterday to 24 months in prison; and Burks was sentenced yesterday to 18 months in prison. Bennett had previously pleaded guilty to conspiracy to commit mail and wire fraud, as well as aggravated identity theft, while Burks also had pleaded guilty to conspiracy. Patel pleaded guilty to forging state securities. Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, Acting U.S. Attorney for the Middle District of Alabama Sandra J. Stewart, the U.S. Secret Service and the Internal Revenue Service (IRS) made the announcement.

 

According to court documents, the defendants were part of a conspiracy to fraudulently obtain both federal income tax refunds as well as state income tax refunds from several different states by using stolen identities to file false tax returns. Fraudulently obtained refund checks were mailed to various addresses used by the conspiracy, while other refunds were obtained through direct deposits into numerous bank accounts controlled by the conspiracy. Bennett admitted to being the one responsible for actually filing the false tax returns and also to storing stolen identity information at her home. Some of the checks obtained by the scheme were cashed by Patel, the former owner of a check-cashing business, who admitted that he knowingly cashed the forged checks and shared in the proceeds.

 

The case was investigated by special agents of the U.S. Secret Service and the IRS - Criminal Investigation. Tax Division Trial Attorney Jason H. Poole and Assistant U.S. Attorney Todd Brown prosecuted the case.

 

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

The Department of Justice’s Office on Violence Against Women (OVW) today announced a new Mentor Court Initiative to support criminal and civil domestic violence courts across the country.

“Specialized domestic violence courts play a vital role in our efforts to end violence against women,” said Bea Hanson, Acting Director of OVW. “Providing courts with the resources they need to safely and quickly intervene in cases of intimate partner violence not only saves lives, but sends a message to offenders that reducing domestic violence is a priority for our justice system.”

OVW selected courts in Brooklyn, N.Y., Ada County, Idaho, and Dallas with years of experience honing strategies that enhance offender accountability and improve victim safety. These well-established programs will serve as role models and disseminate proven strategies. Each court will receive $66,000 for a 24-month project. 

Successful domestic violence courts process cases more efficiently, increase offender compliance, impose enhanced penalties, and achieve higher rates of conviction. There are now over 200 domestic violence courts in the United States. These courts require training and support, which is particularly effective when provided by peers.  

As mentors, the three courts will share their expertise by hosting site visits and linking courts with peers facing similar challenges. They will help other domestic violence courts implement best practices, improve procedures, replicate relevant programming, and build the overall capacity of state court systems to respond effectively to these difficult cases.

The Mentor Court Initiative builds on OVW’s commitment to strengthening the court response to domestic violence. Since 2010, OVW has awarded over $10 million to court systems via the Court Training and Improvements Grant Program (Courts Program). The Courts Program supports judicial education and the specialized court planning and implementation integral to creating a collaborative and effective response to the crimes of domestic violence, dating violence, sexual assault, and stalking.

The three courts chosen for the Mentor Court Initiative applied to an open solicitation and were reviewed based on the criteria set forth in the solicitation.  The chosen courts are geographically diverse and have each developed and implemented different models that reflect the needs of their communities:

The Brooklyn Integrated Domestic Violence Court (IDV) hears misdemeanor criminal domestic violence cases as well as related family law and divorce cases in a high-volume urban setting. Since its inception in 2003, the Brooklyn IDV Court has disposed of over 19,000 cases involving 3,008 families in Kings County, NY, which has a population of 2.5 million. Located directly adjacent to the Brooklyn Family Justice Center, the Brooklyn IDV Court is able to work closely with the Kings County District Attorney’s specialized domestic violence bureau and connect victims with 25 on-site government agencies and community-based organizations.

The Ada County Domestic Violence Court has responded to misdemeanor criminal domestic violence cases since 2006. Located in Boise, Idaho, the court handles more than 300 active cases a year, using intense supervised probation, post-sentence judicial monitoring, specialized offender assessment and treatment, and comprehensive case planning. Ada County’s Domestic Violence Court will serve as an example for mid-size and rural communities that often face a distinct set of challenges when developing and operating specialized courts.

County Criminal Court #10 in Dallas was the first specialized domestic violence court in the state of Texas, opening in 1996. Dallas County is home to 2.4 million people, and includes diverse municipalities ranging from densely populated urban areas to smaller suburbs. County Criminal Court #10 focuses on high-risk offenders, assigning them to a separate probation docket with enhanced judicial monitoring and compliance. A strong partnership with the Department of Probation has increased supervision of these high-risk offenders.

OVW, a component of the U.S. Department of Justice, provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation.  Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. In addition to overseeing 22 federal grant programs, OVW often undertakes initiatives in response to special needs identified by communities facing acute challenges. More information is available at www.ovw.usdoj.gov.

The Justice Department announced today that it reached an agreement with Forsyth County, N.C., and Sheriff William T. Schatzman of Forsyth County to resolve allegations that they violated the employment rights of North Carolina Army National Guard soldier Michael Russell under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

The Justice Department’s complaint alleged that Sheriff Schatzman and Forsyth County violated USERRA by terminating Russell’s employment with the Forsyth County Sheriff’s Office without cause and without notice within one year after his reemployment following his return from active military duty.  Russell, an Iraq war veteran, had worked as a deputy sheriff and sergeant deputy sheriff with the Forsyth County Sheriff’s Office since 1989.  In February 2010, Russell completed a one-year deployment to Iraq with the North Carolina Army National Guard, and returned to his position with Forsyth County as a sergeant deputy sheriff.  On Nov. 29, 2010, less than one year following Russell’s reinstatement to his sergeant deputy sheriff position, Sheriff Schatzman and Forsyth County discharged Russell from his employment without cause.  According to the Justice Department’s complaint, Russell’s employment as a deputy sheriff was terminated because of Sheriff Schatzman’s belief that Russell had supported the election campaign of another candidate for Forsyth County Sheriff, Dave Griffith.  However, Russell did not support Griffith’s campaign for Forsyth County Sheriff and his termination was therefore without cause.

USERRA prohibits employers from discriminating against service members with respect to employment opportunities based on their past, current or future uniformed service obligations.  USERRA also provides service members such as Russell special protection from discharge from their civilian employment after returning from uniformed service, such as a deployment lasting more than 180 days.  Under USERRA, individuals who have served over 180 days may not be discharged from their civilian jobs within one year of their return from military service, except for cause

Under the terms of the agreement, which was filed as a Consent Decree in the U.S. District Court for the Middle District of North Carolina, Schatzman and Forsyth County have agreed to pay $96,000 in lost wages to Russell.  Schatzman and Forsyth County have also agreed to provide Russell with an employment reference letter that accurately reflects the content of his performance evaluations prior to his termination.

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

The Justice Department initiated the lawsuit after Russell filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter and determined that the complaint had merit.  This case was handled by the Employment Litigation Section of the Civil Rights Division. 

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

Related Materials:

Forsyth Consent Decree

Justin D. Schoenauer, 41, also known as Corey J. Schoenauer, a resident of Twin Falls County, Idaho, was sentenced late yesterday in U.S. District Court for the District of Idaho to 27 months in prison for income tax evasion.  Schoenauer was also sentenced to three years of supervised release and ordered to pay $429,436 in restitution.  Schoenauer was indicted in February 2012 and pleaded guilty to the offense on Oct. 30, 2012.   

 

According to court documents, Schoenauer was a general contractor who, for the past 10 years, operated a sole proprietorship called Patagonia Construction, a business engaged primarily in building homes.  Schoenauer admitted that during tax years 2005 through 2008, he concealed Patagonia’s business receipts.  Schoenauer further admitted that he directed some customers to make checks payable to him personally, rather than to Patagonia, then ensured that those checks were not deposited into Patagonia’s main bank account.  When having tax returns prepared, Schoenauer falsely told his return preparer that all of his business receipts were deposited into the main Patagonia bank account, thereby concealing Patagonia’s gross receipts and causing the preparation and filing of false tax returns.  Schoenauer paid the Internal Revenue Service (IRS) $35,000 at sentencing, which will be applied to his outstanding tax liability.

 

“When a business owner cheats on his taxes, he gains an unfair advantage over honest businesses and cheats all honest taxpayers,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally.  “This sentence shows that we will hold such criminals accountable.”   

 

“Paying income tax is a solemn obligation of citizenship,” said U.S. Attorney for the District of Idaho Wendy J. Olson.  “Integrity in business transactions required to be reported to the federal government is essential to the proper functioning of our economy.  Those who hide income, evade taxes and launder profits undermine our democracy.  This sentence sends a strong message that those who seek to avoid their tax responsibilities will be properly punished.”

 

“The license to run a business is not a license to evade paying taxes,” said Richard Weber, Chief, IRS Criminal Investigation.  “Mr. Schoenauer’s misconduct, concealing business receipts and having checks made payable to himself, is offensive to all honest business owners. IRS Criminal Investigation continues to protect the U.S. tax system by investigating and bringing to justice individuals who violate tax laws.”

 

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

A federal court permanently barred a Gary, Ind., tax-preparation firm and its owner, John Newlin, from preparing tax returns for others, the Justice Department announced today. The civil injunction order, to which Newlin and Quick Sam agreed without admitting the allegations against them, was signed by Judge Jon E. DeGuilio of the U.S. District Court of the Northern District of Indiana.

The government in the civil injunction suit alleged that Newlin’s business, Quick Sam Tax Refund, had repeatedly prepared federal income tax returns that unlawfully understated customers’ income tax liabilities. According to the complaint, Quick Sam guaranteed its customers that they would receive the largest refund by getting their taxes prepared at Quick Sam. In order to deliver on this promise, the complaint alleges, Quick Sam employees fabricated bogus business expenses, claimed improper tax credits, and reported fictitious dependents to illegally increase customers’ tax refunds. Newlin and Quick Sam allegedly gave bonuses to employees for engaging in these fraudulent practices.

Several Quick Sam employees have been accused of fraud in the past, according to the complaint. Charles Standifer, Rhonda Murphy, Chanel Bandy and Brittaney Walker-Lipsey, all former Quick Sam tax return preparers, have pled guilty to tax-related crimes. The complaint alleges that the total harm to the government caused by Newlin and Quick Sam’s illegal conduct possibly exceeded $35 million in lost tax revenue.

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:

United States v. John Newlin, et al.
Stipulated Final Judgment of Permanent Injunction and Order Against John Newlin and World Changers, Inc. (PDF)

Acting Assistant Attorney General for the Office of Justice Programs Mary Lou Leary announced that Robert L. Listenbee Jr. has assumed the role as administrator of the Office of Juvenile Justice and Delinquency Prevention (OJJDP). A highly respected public defender and juvenile justice system reformer, Listenbee began as OJJDP administrator Monday. Melodee Hanes, who has served as acting administrator since January 2012, will become OJJDP’s principal deputy administrator.

 

“It is a pleasure to welcome Bob Listenbee as OJJDP’s new Administrator.  Bob has been a champion for juvenile justice issues for many years, and did a tremendous job as co-chair of my task force on Children Exposed to Violence,” said Attorney General Eric Holder. “I’m also deeply grateful to Melodee for her leadership and renewed focus on ensuring that children are treated fairly by the juvenile justice system.  I look forward to continuing to work with both of these dedicated public servants as we carry on these critical efforts.” 

 

“Bob Listenbee will bring tremendous leadership and experience to the Office of Juvenile Justice and Delinquency Prevention in efforts to support positive youth development and keep our children safe from violence,” said Acting Assistant Attorney General for the Office of Justice Programs Mary Lou Leary. “In her time as acting administrator, Melodee Hanes successfully championed initiatives to reduce both children’s exposure to violence and the high volume of students entering the juvenile justice system following school suspensions. I thank them both and look forward to our work on these important issues together.”

 

Before joining OJJDP as administrator, Listenbee co-chaired Attorney General Eric Holder’s National Task Force on Children Exposed to Violenceand served as a member of OJJDP’s Federal Advisory Committee on Juvenile Justice, which advises the President, Congress, and the OJJDP Administrator on juvenile justice policy. Previously, Listenbee served as a trial lawyer at the Defender Association of Philadelphia, and served as chief of its Juvenile Unit.  He received his B.A. from Harvard University and his J.D. from the Boalt Hall School of Law at the University of California, Berkeley.

 

OJJDP provides national leadership and resources to communities across the country to address juvenile delinquency and victimization. For more information on OJJDP’s efforts, please visit: www.ojjdp.gov.

 

The Office of Justice Programs (OJP) which provides federal leadership in developing the nation’s ability to prevent and control crime, administer justice and assist victims. OJP has six bureaus and offices: 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 (SMART). For more information, please visit: www.ojp.gov.

The Justice Department today announced recent results of its civil injunction efforts to combat unscrupulous tax return preparers and tax fraud promoters. According to Internal Revenue Service (IRS) estimates, 60 percent of taxpayers use tax professionals to prepare and file their tax returns. Paid tax return preparers now prepare more than 80 million individual tax returns annually. For more than a decade, the department’s Tax Division, working with the Internal Revenue Service, has pursued a civil injunction program to stop fraudulent return preparers and promoters from violating federal tax laws and consumer protection laws. With the current tax-filing season underway, the Tax Division in the last six months has obtained permanent injunctions against more than 30 preparers and promoters doing business all over the United States.

 

Since Oct. 1, 2012, the Tax Division has obtained civil injunctions against both large-scale return preparation franchises and smaller, independent return preparers and promoters across the country. For example, on Oct. 22, 2012, a U.S. District Court in Dayton, Ohio, entered preliminary injunctions against ITS Financial LLC and its CEO, Fesum Ogbazion. ITS Financial is the parent company that owns the Dayton-based Intstant Tax Service tax-preparation franchise operation. Instant Tax Service claims to be the fourth-largest tax-preparation firm in the nation. The preliminary injunction remains in force pending trial on the government’s request for a permanent injunction, currently scheduled for May 2013. During December, January and February, federal district courts also permanently enjoined current and former Instant Tax Service franchisees in Las Vegas, Kansas City and Los Angeles , and entered a preliminary injunction against an Instant Tax Service franchisee in Indianapolis. Similarly, on March 1, 2013, a U.S. District Court in Tennessee permanently shut down a licensee of Memphis-based Mo’ Money Taxes LLC and MoneyCo USA LLC. Federal courts have also shut down return preparers in Mississippi, Florida, Louisiana and South Carolina, and promoters of alleged tax-fraud schemes in Michigan, New York and Kansas.

 

As alleged in the Tax Division’s civil injunction complaints, fraudulent return preparers commonly falsify information to take advantage of refundable credits available under federal tax law, often improperly manipulating customers’ income, expenses and dependents to hit the so-called “sweet spot” to maximize the refundable credit claimed. They also take advantage of customers by selling deceptive loan products with exhorbitant fees. As identified in the government’s complaints, some of the fraudulent schemes and practices that have been stopped through injunction orders recently include:

 

·          Preparing phony tax-return forms with fabricated businesses and income;

·          Claiming false education and homebuyer credits;

·          Claiming false and inflated deductions;

·          Claiming false filing status;

·          Claiming false dependents;

·          Selling deceptive loan products;

·          Filing tax returns without customer consent or authorization;

·          Preparing bogus W-2 forms, based on information from employee paystubs;

·          Falsifying information on returns to claim inflated earned income tax credits; and

·          Filing fraudulent tax returns using stolen taxpayer identities to obtain improper tax refunds.

 

Some preparers try to conceal their fraud by not signing the returns they prepare and by using stolen or fake social security numbers to misidentify the paid preparer.

 

“It is important that we make clear, especially now when honest taxpayers are filing their returns, that we will pursue those who would abuse our nation’s tax laws,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “Fraudulent tax return preparers and tax scheme promoters too often seek to take advantage of their customers as well as to undermine our tax system. I commend the Tax Division’s attorneys and our colleagues at the Internal Revenue Service for their steady diligence and tireless work in uncovering and shutting down these schemes and scams.”

 

In the past decade, the 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. Return preparer fraud is one of the IRS’s “ Dirty Dozen Tax Scams.” For more information about choosing a tax return preparer, see the IRS website and the IRS YouTube Channel.

The Department of Justice announced today that it has entered into a consent decree with Summit County, Ohio, and related parties, which if approved by the court, will resolve a sex discrimination lawsuit in which the United States intervened in June 2012.  The United States joined a lawsuit brought in the U.S. District Court for the Northern District of Ohio by 21 female deputy sheriffs at the Summit County Jail who claimed they were subjected to discrimination due to a sex-segregated job assignment system implemented at the jail in January 2012. The United States’ complaint in intervention alleged that this system discriminated against female deputies because of their sex and constituted a pattern or practice of sex discrimination in violation of Title VII of the Civil Rights Act of 1964.  As a result of this discriminatory practice, the United States alleged female deputies lost the job assignments and shifts they had earned based on their seniority as well as opportunities to bid on overtime postings.  

“Bringing an end to practices in the law enforcement community that discriminate against women is a major priority of the Justice Department and the Civil Rights Division.  Practices that facially discriminate on the basis of sex that cannot be justified under the law, like the job assignment system used by Summit County, present a major hurdle to workplace equality that the Justice Department will not ignore,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General, Civil Rights Division. 

In July 2012, shortly after the United States joined the lawsuit, Summit County abandoned its sex-segregated job assignment system. Under the terms of the consent decree, Summit County has agreed to take several steps to ensure that any job assignment system implemented at the Summit County Jail will comply with Title VII and only use sex-based assignments, if at all, to the limited extent that they are reasonably necessary to the normal operation of the jail.  To make this determination, the county will conduct a staffing analysis and develop a lawful staffing plan, which it will review regularly during the life of the decree.  The county will also provide training on sex discrimination as well as engage in recruitment efforts to encourage qualified female applicants to apply for deputy positions.  Finally, the county will pay $400,000 in individual monetary relief to the affected female deputies and to cover their attorney fees.

“This agreement ensures that female deputies at the Summit County Jail will have the opportunity to do the same jobs as their male counterparts,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “We will continue to press for equality for women in the workplace.”

This is the first pattern or practice lawsuit brought by the Justice Department as a result of a joint project with the Equal Employment Opportunity Commission (EEOC) designed to ensure vigorous enforcement of Title VII against state and local governmental employers by enhancing cooperation between the EEOC and the Civil Rights Division.  Enforcement of federal employment discrimination laws is a top priority for the Justice Department with this case being handled by attorneys assigned to both the Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Ohio.

“Our partnership with Department of Justice allows for the strategic investigation and efficient resolution of discrimination claims in the public sector,” said EEOC District Director Spencer H. Lewis Jr., of the EEOC Philadelphia District Office.   The Philadelphia District Office of the EEOC oversees Pennsylvania, Maryland, Delaware, West Virginia and parts of New Jersey and Ohio. 

Title VII prohibits discrimination in employment on the basis of gender, race, color, national origin or religion, and prohibits retaliation against an employee who opposes an unlawful employment practice, or because the employee has made a charge or participated in an investigation, proceeding or hearing under the act. More information about Title VII and other federal employment laws is available on the Department of Justice website at www.usdoj.gov/crt/emp/index.html.
 
The EEOC enforces federal laws prohibiting employment discrimination.  Further information about the EEOC is available on its website at www.eeoc.gov.

Related Materials:

Summit County Proposed Consent Decree

David Marrero, a federal inmate in the custody of the Bureau of Prisons, was sentenced today to 46 months in prison for tax fraud committed while in prison, the Justice Department and the Internal Revenue Service (IRS) announced. Twenty-four months of the sentence imposed will run concurrent with Marrero’s current 10 year federal sentence, and 22 months will run consecutive to his 10 year sentence. Marrero had pleaded guilty in December 2012 to filing false claims.

 

According to court documents, while serving his federal sentence in Montgomery County, Ala., Marrero began sending various false documents to the IRS and to the federal judge who had presided over his case in Florida. Among the documents Marrero sent were fictitious money orders and false tax returns making claims for refunds, including one tax return claiming a $2,719,438 refund—the amount of restitution Marrero had been ordered to pay following his conviction in Florida. The fraudulent tax returns were based upon false IRS Forms 1099-OID on which Marrero had fraudulently claimed that various companies withheld a substantial amount of federal taxes from him when, in fact, the companies had withheld nothing. Marrero also used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.

 

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

 

Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

Honeywell Resins and Chemicals LLC has agreed to pay a $3 million civil penalty for alleged Clean Air Act violations at its Hopewell, Va., plant, and improve the facility’s air pollution control equipment and processes, the Justice Department and the U.S. Environmental Protection Agency (EPA) announced today.

The proposed consent decree resolves violations of federal and state air pollution regulations at the Hopewell plant, the world’s largest single-site producer of caprolactam used in the production of nylon, and ammonium sulfate used for fertilizer.  According to EPA and the Virginia Department of Environmental Quality, the facility violated Clean Air Act limits on emissions of nitrogen oxide (NOx), benzene and other volatile organic compounds (VOCs) and particulate matter.  The plant also allegedly failed to comply with requirements to upgrade air pollution control equipment, to detect and repair leaks of hazardous air pollutants, and to develop safeguards on benzene waste. 

In addition to the $3 million civil penalty, Honeywell has agreed to reduce harmful air pollutants, install selective catalytic reduction at four production trains at the facility, conduct a third-party benzene waste operations audit, and implement an enhanced leak detection and repair program at the facility.  Honeywell will also perform a mitigation project valued at approximately $1 million at the facility. The settlement reduces annual emissions of NOx by about 6,260 tons, and cuts annual emissions of benzene, other VOCs and hazardous air pollutants by 100 tons.  The estimated cost for injunctive relief to address these emissions will be approximately $66 million dollars. The civil penalty will be split evenly between Virginia and the United States.

As part of the settlement, Honeywell did not admit liability for the violations, but has certified that it is now in compliance with applicable Clean Air Act regulations. The proposed consent decree is subject to a 30 day public comment period and final court approval.  For more information, see http://www.justice.gov/enrd/ConsentDecrees/Honeywell_Consent_Decree_Lodged.PDF

ALICIA A. G. LIMTIACO, United States Attorney for the Districts of Guam and CNMI, announced that a verdict was reached on Tuesday, March 26, 2013, after a two-week jury trial in the criminal case of U.S. v. Jae Chul Shin, Criminal Case No. 12-00041.

Defendant Shin, age 34, was found guilty of Importation of Methamphetamine Hydrochloride, in violation ofTitle 18, United States Code, § 2 and Title 21, United States Code, §§ 22, 952 and 960. The defendant used a courier to import 407 grams of methamphetamine worth approximately $250,000.

The defendant was remanded to the custody of the United States Marshal and will be held in jail until sentencing which is scheduled for July 8, 2013, at 1:30 P.M. in the District Court of Guam. Under federal law, the defendant faces a mandatory minimum of ten years imprisonment without parole and a maximum fine of four million dollars.

Assistant U.S. Attorney Karon V. Johnson prosecuted the case for the United States and was assisted by Special Agents from the Department of Homeland Security, Immigration and Customs Enforcement. Special credit is also given to Officer Shaun Kim of the Guam Police Department who acted as interpreter.

WASHINGTON – The Department of Justice today declined to state its enforcement intentions regarding the implementation of a proposal submitted by IPXI Holdings LLC and its wholly-owned subsidiary Intellectual Property Exchange International Inc. (IPXI) to develop an exchange for the trading of unit license rights (ULRs) to sets of patents.  The department said that although IPXI’s proposed exchange potentially could benefit the intellectual property (IP) marketplace and encourage innovation through increased licensing efficiency, sublicense transferability and greater transparency, it also potentially raises competitive concerns. Due to the inherent uncertainties and potential competitive concerns associated with IPXI’s novel business model, the department declined to state its enforcement intentions. 

 
The department’s position was stated in a business review letter to counsel for IPXI from Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

 

IPXI proposes to create a proprietary market for patent licenses.  To do so, the company intends to obtain exclusive patent licenses that it will then sublicense through the sale of tradable instruments called ULRs, which are standardized licenses for defined sets of patents and uses under terms and conditions set jointly with patent holders.  As part of the process, IPXI will review the patent rights at issue by examining validity, current infringement and other issues, and determine market interest to license those patents. 

 

IPXI may become the exclusive licensor of patents or patent bundles that might otherwise compete.  IPXI has proposed certain procedures that might mitigate the likelihood that anticompetitive effects will materialize. However, because IPXI cannot predict in advance the patents or markets that might be at issue, the department is unable to engage in the fact-intensive analysis necessary to assess the likely competitive effects of the proposal.  In addition, given the novelty of IPXI’s proposal, it is possible that other potential competitive concerns may later emerge once IPXI’s platform is operational.

 

Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided.  The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.

 

A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.

A federal jury in Montgomery, Ala., found James Timothy Turner, also known as Tim Turner, guilty late Friday of conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the Internal Revenue Service (IRS), failing to file a 2009 federal income tax return and falsely testifying under oath in a bankruptcy proceeding, the Justice Department, the IRS and the FBI announced today.

 

Based on the evidence introduced at trial and court filings, Turner, the self-proclaimed “president” of the so-called sovereign citizen group “Republic for the United States of America” (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious “bonds” to the United States government in payment of federal taxes. Although the evidence at trial revealed the bonds are fictitious and worthless, witnesses testified that Turner used special paper, financial terminology and elaborate borders in an effort to make them look “real” and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million “bond” in his own name and of aiding and abetting others in sending fifteen other “bonds” to the Treasury Department to pay taxes and other debts.

 

The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious “bonds.” Turner filed a purported $17.6 billion maritime lien in Montgomery County, Ala., Probate Court against another individual. Finally, evidence presented at trial demonstrated that the FBI began an investigation after Turner and three other individuals sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days or be “removed.”

 

“The jury’s verdict in this case sends a message that defrauding the government and others through the use of bogus financial documents will not be tolerated,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “Disagreement with the law is no excuse for the real harm caused by these self-interested tax defiers.”

 

“These sovereign citizen groups use these retaliatory tax liens and fraudulent tax schemes as weapons against the United States and its citizens,” stated Acting U.S. Attorney Sandra J. Stewart.  “It is only the hard work of law enforcement that can stop these criminals from using these financial weapons. I would like to thank the law enforcement officers who worked vigilantly on this case to bring this criminal to justice.”

 

“Those who create elaborate schemes and fraudulent tax elimination tactics run a high risk of prosecution,” stated Richard Weber, Chief, IRS Criminal Investigation. “Mr. Turner’s attempts to thwart the IRS, as well as the assistance and training he provided to others, was not tax planning, it was criminal activity. IRS-Criminal Investigation is committed to vigorously pursuing those who promote illegal financial transactions designed to evade the payment of taxes. For those who would consider similar behavior, let this case be a strong warning that there is no secret formula for evading the payment of taxes and no one is above the law.”

 

Turner remains in federal custody pending sentencing. Turner faces a potential maximum prison term of 164 years, a maximum potential fine of $2,350,000 and mandatory restitution.

 

“The prosecution of individuals who intentionally impede the IRS by submitting fictitious and frivolous documents, in an attempt to avoid paying federal taxes, is a vital element in maintaining public confidence in our tax system,” stated Veronica Hyman-Pillot, Special Agent in Charge of IRS Criminal Investigation. “Hopefully the verdict will send a message to other individuals like Turner, that this conduct will not be tolerated.”

 

“This joint investigation exemplifies the government’s commitment to investigate and prosecute those, who through tax schemes, attempt to cheat and steal from the government,” stated Stephen Richardson, Special Agent in Charge of the FBI, Mobile Division.   

 

This case was investigated by special agents of the FBI and IRS-Criminal Investigation, and is being prosecuted by Tax Division Trial Attorney Justin Gelfand and Middle District of Alabama Assistant U.S. Attorney Gray Borden.

Alexis Candelario-Santana, 41, faces life in prison following his conviction of murdering eight people and an unborn child and attempting to murder 19 others during a mass shooting at a Puerto Rico pub in 2009, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez.

 On March 8, 2013, Candelari-Santana was convicted of 28 counts of violent crime in aid of racketeering activity, one count of racketeering conspiracy, nine counts of using a firearm in relation to a crime of violence, one count of conspiracy to possess with intent to distribute a controlled substance and one count of possession of a firearm with a prior conviction. These offenses occurred on Oct. 17, 2009, in what became known as the “La Tombola Massacre.” 

 The counts of conviction on capital murder charges necessitated a separate penalty phase of the trial.  That phase began on Monday, March 15, 2003. On Saturday, March 23, 2013, the jury announced it was unable to reach a unanimous sentencing verdict. As a result, a sentence of life in prison will be imposed.  There is no parole in the federal system.

 According to the evidence presented at trial, from approximately 1993 through 2003, Candelario-Santana was the leader of the drug trafficking organization that operated principally in Sabana Seca, Toa Baja, Puerto Rico.  The organization purchased its drugs in bulk, processed and packaged the drugs and sold them at Sabana Seca through numerous sellers, runners and enforcers under Candelario-Santana’s control.  The organization sold crack, cocaine, heroin and marijuana, and members of the organization routinely possessed firearms in order to protect the drug points. In addition, the evidence introduced at trial established that, between 1995 and 2001, Mr. Candelario-Santana either personally killed, or ordered others to kill, 13 individuals whom he viewed as threats to his drug trafficking organization or as being disloyal members of his drug trafficking organization. 

 In approximately 2002, Candelario-Santana was arrested and charged in the Commonwealth of Puerto Rico with numerous murders.  Sometime after Candelario-Santana’s arrest, co-defendant Carmelo Rondón-Feliciano took charge of the organization.  Candelario-Santana ran the drug trafficking organization from prison until approximately 2006, when he was marginalized by co-conspirator Wilfredo Semprit-Santana and Rondón-Feliciano.  According to evidence presented at trial, Candelario-Santana was infuriated at being removed from power within the drug trafficking organization.

 On Sept. 25, 2006, Rondón-Feliciano was arrested and charged in the District of Puerto Rico with federal drug trafficking crimes.  These charges stemmed, in part, from Rondón-Feliciano’s distribution of narcotics in Sabana Seca.  After Rondón-Feliciano’s arrest, co-conspirator Semprit-Santana took charge of the organization.
 
 In February 2009, Candelario-Santana was released from prison. 

 On Oct. 17, 2009, Semprit-Santana held the grand opening of a pub he rented called La Tómbola, located in Toa Baja, Puerto Rico.  The event was heavily attended, with people congregating inside and outside the establishment.  At approximately 11:50 p.m., Candelario-Santana, co-defendant David Oquendo-Rivas, and others, drove to La Tómbola.  When they arrived, they immediately opened fire on the patrons located outside.  Candelario-Santana and Oquendo-Rivas entered La Tómbola and opened fire on the people inside.  Nine people and an 8-month unborn child were killed as a result of the gunfire, and 19 other victims were shot and injured.  The individuals killed included Candelario-Santana’s godson, Rondón-Feliciano’s stepson and Candelario-Santana’s cousin. The evidence introduced at trial demonstrated that 335 expended shell-casings were recovered from the La Tombola crime scene.  The ballistics evidence established that eight .9 mm semi-automatic pistols, three 40 caliber semi-automatic pistols, two 45 caliber semi-automatic pistols, three AK-47-type assault rifles and one AR-15-type assault rifle, were used at the La Tombola crime scene. 

 Candelario Santana will be formally sentenced on June 21, 2013.

The case was investigated by FBI and the Puerto Rico Police Department, with the collaboration of U.S. Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Postal Inspection Service; Instituto de Ciencias Forenses; and the Puerto Rico Department of Justice.  The case is being prosecuted by First Assistant U.S. Attorney María Dominguez-Victoriano and Assistant U.S. Attorney Marcela Mateo of the U.S. Attorney’s Office for the District of Puerto Rico, and Trial Attorney Bruce R. Hegyi of the Criminal Division’s Capital Case Unit. 

The Justice Department announced today that it reached an agreement with Poulan Pecan, resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA). Poulan Pecan is a supplier of pecans located in Poulan, Ga.

 

The Justice Department’s Civil Rights Division initiated its investigation of Poulan Pecan in 2012, based on a claim by an individual who called a department hotline and complained that the pecan-producing company requested specific documentation from her to establish her work authorization. The department’s investigation concluded that Poulan Pecan discriminated against work-authorized non-U.S. citizens by requiring specific and more documents than necessary from them when completing the Form I-9, Employment Eligibility Verification, while not imposing similar requirements of U.S. citizens.

 

Under the terms of the agreement, Poulan Pecan will pay $500 in civil penalties and be subject to monitoring of its employment eligibility verification practices for a period of one year. Designated Poulan Pecan officials have already completed training by the Justice Department on the anti-discrimination provision of the INA. The case settled prior to the Justice Department filing a complaint in this matter.

 

“Individuals should be treated equally during the employment eligibility verification process,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division.  “This means not placing additional requirements, documentary or otherwise, on individuals based on their citizenship status.”

 

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

WASHINGTON – The Department of Justice today filed a motion to dismiss its antitrust lawsuit against Blue Cross Blue Shield of Michigan (BCBSM) after the state of Michigan passed a law that prohibits health insurers from using most favored nation clauses (MFN) in contracts with health care providers.  In its lawsuit, the department challenged BCBSM’s use of MFNs, alleging that its agreements with hospitals raised hospital prices charged to other insurers, prevented insurers from entering local markets and discouraged discounts.  The department said the combination of the new law and a previous order by the Michigan Insurance Commissioner that prohibits MFN clauses in health insurer’s provider contracts provides the relief the department sought in its lawsuit against BCBSM, rendering further proceedings unnecessary.

 
The department and the state of Michigan’s Attorney General today filed a stipulated motion requesting that the U.S. District Court for the Eastern District of Michigan in Detroit dismiss the lawsuit without prejudice.  BCBSM joined in the motion.  The department’s Antitrust Division, along with the state of Michigan, originally filed its lawsuit on Oct. 18, 2010.

 
“The Department of Justice’s antitrust lawsuit alleged that Blue Cross Blue Shield of Michigan’s MFN clauses likely raised health care costs, harmed consumers and prevented other health plans from entering local markets,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The law just enacted by Michigan addresses the department’s concerns by eliminating MFNs and ensuring that Michigan consumers will benefit from enhanced health insurance competition.” 

In the healthcare context, MFN provisions generally refer to contractual clauses between health insurance plans (buyers) and healthcare providers (sellers) that essentially guarantee that no other plan can obtain a better rate than the plan wielding the MFN.

 

On March 18, 2013, the state of Michigan enacted legislation that, among other reforms, prohibits health insurers, including BCBSM, from including or using MFNs in provider contracts.  The MFN ban takes effect on Jan. 1, 2014.  Since Feb. 1, 2013, the Michigan Insurance Commissioner’s order has prohibited all MFN clauses in any health insurer’s provider contracts.

 

The department and the state of Michigan alleged in their complaint that the MFN clauses in BCBSM’s contracts with Michigan hospitals decreased competition among health plans.  Some of BCBSM’s MFN clauses required hospitals to charge BCBSM’s competitors at least as much as the hospitals charged BCBSM.  Other BCBSM MFN clauses required hospitals to charge competitors more than the hospitals charged BCBSM, often by a specified percentage.  Moreover, BCBSM often agreed to raise the prices that it paid hospitals, in part to obtain MFN clauses.   

 

At trial, the department and the Michigan Attorney General intended to demonstrate that BCBSM’s MFN clauses reduced competition between BCBSM and its rival insurers and discouraged other health plans from entering or expanding in markets throughout Michigan, which increased prices self-funded employers and their employees paid to hospitals, and likely increased prices other Michigan residents and their employers paid to health plans and hospitals.

The Antitrust Division continues to investigate the use of MFN clauses in health plan contracting in other areas.  The department has observed that MFN clauses used by health plans that have market power in the sale of health insurance can reduce competition by, for example, encouraging hospitals to contract with smaller health plans at higher rates or through less efficient reimbursement models.  The department remains committed to challenging any anticompetitive use of MFN clauses by health plans.  The division has seen increased awareness of the potential anticompetitive effects of MFN clauses.  For example, insurers in areas such as North Carolina have recently stopped using MFN clauses in their contracts with hospitals and other providers.

 

Blue Cross Blue Shield of Michigan is a Michigan nonprofit healthcare corporation headquartered in Southfield, Mich.  It is the largest provider of commercial health insurance in Michigan.

 

The case remains open until the court acts on the stipulated motion for dismissal without prejudice.

The Justice Department announced today that Alabama-based Caddell Construction has agreed to pay to the United States $1,150,000 to settle allegations that it violated the False Claims Act by falsely reporting to the Army Corps of Engineers that it hired and mentored a Native American-owned company to work on construction projects at Fort Bragg, N.C., and Fort Campbell, Ky.

The Army Corps contracted with Caddell between 2003 and 2005 to build barracks at the two bases. As part of the contracts, Caddell represented that it would hire and mentor Mountain Chief Management Services, a Native American-owned company, under the Department of Defense’s Mentor-Protégé and Indian Incentive Programs. The Mentor-Protégé Program reimburses companies for the time and cost of mentoring small disadvantaged businesses, while the Indian Incentive Program provides a rebate to contractors for subcontracting with Native American-owned businesses.

 

The United States alleged that from April 2003 to March 2005, Caddell falsely represented in its invoices and supporting documents that it was mentoring Mountain Chief and that Mountain Chief was performing work on the construction projects. According to the government, Mountain Chief allegedly was merely a pass-through entity used by Caddell to claim payments under the two programs, and didn’t perform the work or receive the mentoring services for which Caddell received payment.

 

“Contractors that subvert important government programs, such as those designed to benefit small and Native American-owned businesses, will be held accountable,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “We will work tirelessly to ensure that participants in federal programs and benefits receive only the money to which they are entitled.”

 

Caddell’s former director of business development, Mark Hill, and Mountain Chief’s former president, Daniel Chattin, were indicted on related charges in federal district court for the Middle District of Alabama in January 2012. Both are awaiting trial. In December 2012, Caddell entered into a non-prosecution agreement with the United States under which it agreed to pay the United States $2 million and to cooperate in the ongoing criminal matter.

 

The civil case was handled by the Civil Division of the Department of Justice, with investigative assistance provided by the General Services Administration Office of Inspector General and the Defense Criminal Investigative Service.

A registered nurse who fabricated nursing visit forms in connection with a $24 million home health care fraud conspiracy in Detroit pleaded guilty today for her role in the 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.

Beverly Cooper, 59, of Detroit, pleaded guilty before U.S. District Judge Victoria A. Roberts in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. 

Cooper admitted that she and others conspired to defraud Medicare through home health care companies operating in the Detroit area, including Reliance Home Care LLC, First Choice Home Health Care Services Inc. and Accessible Home Care Inc.  According to court documents, Cooper fabricated nursing visit notes and other documents to give Medicare the impression that she had provided home health care services, when, in fact, home health care was not needed and/or was not being provided.  Cooper also admitted that while at these companies, she signed nursing visit notes for home visits made by other unlicensed individuals to give Medicare the false impression that she had provided home health care.  Court documents reveal that Cooper understood that the documents she created would be used by these companies to submit claims to Medicare for home health services that were not medically necessary and/or not provided. 

Court documents show that when home health companies were inspected by state regulatory agencies, Cooper and her co-conspirators participated in staged home health visits, posing as employees of these companies and treating fake patients, all to give inspectors the false impression that these companies’ operations were legitimate and that home health services were in fact being provided. 

Court documents allege that between 2006 and May 2012, Cooper’s conduct caused Reliance, First Choice and Accessible to submit claims to Medicare for services that were not medically necessary and/or not provided, causing Medicare to pay these companies approximately $5,403,703.

At sentencing, scheduled for July 23, 2013, Cooper faces a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being prosecuted by Trial Attorney William G. Kanellis and Assistant Chief Gejaa Gobena 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.

An Orlando resident was sentenced today to serve life plus five years in prison for forcing multiple minor and adult victims to engage in prostitution, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Florida Robert E. O’Neill.

Weylin O. Rodriguez, 29, was sentenced by U.S. District Judge Mary S. Scriven in the Middle District of Florida.  In addition to his prison term, Rodriguez was sentenced to serve lifetime supervised release.
 
On Nov. 2, 2012, Rodriguez was found guilty by a federal jury of sex trafficking of a minor by force, fraud and coercion; using a firearm in furtherance of a sex trafficking crime; transporting minors over state lines for the purpose of engaging in prostitution through coercion and enticement; and being a felon in possession of a firearm

According to evidence presented at trial, in December 2010, Rodriguez met a 15-year-old minor in Ybor City, Fla.  Rodriguez offered to give the minor a ride home, but instead of taking her home, he drove her to Orlando and forced her to engage in prostitution. 

The investigation revealed that beginning on Thanksgiving Day 2010, Rodriguez held two other female victims for several months and forced them into prostitution.  In approximately January 2011, Rodriguez transported the girls between Orlando and Charlotte, N.C. for the purpose of prostitution.

In addition to the minors, Rodriguez recruited at least two adult victims by promising them jobs as models.  Once the girls met with Rodriguez, he held them against their will and forced them into prostitution.    

This case was investigated by the FBI, the Orlando Metropolitan Bureau of Investigation, the Orange County, Fla., Sheriff's Office and the Charlotte-Mecklenburg Police Department.  The case is being prosecuted by Assistant U.S. Attorney Stacie B. Harris of the U.S. Attorney’s Office for the Middle District of Florida and Trial Attorney Maureen Cain of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).

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

The Justice Department’s Office of Justice Programs (OJP) is planning to invest more than $20 million to strengthen the firearm background check system by improving states’ abilities to share information with the National Instant Criminal Background Check System (NICS). OJP’s Bureau of Justice Assistance (BJA) and Bureau of Justice Statistics (BJS) are providing funding for three grants to support state, territorial and tribal efforts to reduce information gaps and make instantly available to NICS all records prohibiting the purchase or possession of firearms.

 

“As part of President Obama’s comprehensive plan to reduce gun violence, the Administration is committed to enhancing and strengthening the national criminal record system in support of stronger firearm background checks,” said Attorney General Eric Holder.  “The Department of Justice intends to take immediate and effective action to work with states to fill gaps in information currently available to the NICS system.”

 

The NICS background check system is the most efficient and effective way to keep guns out of the hands of dangerous individuals, but in order to work, the system must have timely and accurate information about these individuals.  States are a critical source for several key categories of relevant records and data, including criminal history records and records of persons prohibited from having guns because of domestic violence or for mental health reasons. 

 

The grants would be used to improve access to and reporting of prohibiting mental health information such as involuntary commitments to mental health facilities, felony convictions as well as misdemeanor convictions of domestic violence, domestic violence restraining orders and immediate access to active felony and misdemeanor warrants. The grants will also support upgrades and enhancements to electronic submissions of fingerprints to state and federal systems as well as linking of arrest and disposition. Funding will be provided under National Criminal History Improvement Program (NCHIP), NICS Act Record Improvement Program (NARIP), and a new, one-time initiative called, Improving the Completeness of Firearm Background Checks through Enhanced State Data Sharing. This new initiative creates a competitive grant program designed to incentivize states, territories and tribes to share information with NICS by closing information gaps that inhibit complete and accurate background checks.

 

Since 1995, the BJS has provided grants and technical assistance to states to improve criminal history data availability for background checks and other purposes under the NCHIP. In 2009, after the Virginia Tech shootings, BJS launched the NARIP, addressing information requirements of NICS firearm background checks and requiring states to make additional records available. BJA also supports information sharing among the nation’s state and local government agencies, directly supporting the mission of BJS and President Obama’s plan to reduce gun violence. 

 

For more information on Improving the Completeness of Firearm Background Checks through Enhanced State Data Sharing, please visit: www.bja.gov/Funding/13FirearmBackgroundCheckSol.pdf.

 

For more information on President Obama’s plan to reduce gun violence, please visit: www.whitehouse.gov/issues/preventing-gun-violence.

The Justice Department announced that, jointly with the Meridian Public School District in Meridian, Miss., and private plaintiffs, it has filed a landmark consent decree to prevent and address racial discrimination in student discipline in district schools.  If approved by the court, the proposed consent decree will resolve the department’s investigation into complaints that the district unlawfully and disproportionately subjects black students to suspension, expulsion and school-based arrest, often for minor infractions.  In the course of the investigation, the department found that black students frequently received harsher disciplinary consequences, including longer suspensions, than white students for comparable misbehavior, even where the students were at the same school, were of similar ages, and had similar disciplinary histories.  The consent decree would amend a longstanding federal school desegregation decree enforced by the United States, which prohibits the district from discriminating against students based on race.

 

“The American dream is rooted in education. In Meridian, that dream has long been delayed by discipline practices that deny students access to education,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “We commend the Meridian Public School District for taking this huge step toward ensuring that its schools are safe and welcoming to all students and that education is a road to success instead of a pipeline to prison.”

 

Under the consent decree, the district will take steps to create safe and inclusive learning environments in all Meridian schools, including providing students with supports and interventions before excluding them from school; limiting the use of discipline measures that remove students from the classroom; ensuring that discipline consequences are fair and consistent; establishing clear guidelines for when law enforcement intervention is appropriate; providing training to give teachers and administrators the tools necessary to manage their schools in a safe, effective and positive manner; and building data-driven monitoring and accountability systems.

 

“Punitive and discriminatory discipline policies prevent the promise of Brown v. Board of Education from being a reality today,” said Gregory K. Davis, U.S. Attorney for the Southern District of Mississippi. “This consent decree will help bring equal justice and opportunity back into reach for the children of Meridian.”

 

The consent decree:

• Limits exclusionary discipline such as suspension, alternative placement and expulsion, and prohibits exclusionary discipline for minor misbehavior;
• Prohibits school officials from involving law enforcement officers to respond to behavior that can be safely and appropriately handled under school disciplinary procedures;
• Requires training for school law enforcement officers on bias-free policing, child and adolescent development and age appropriate responses, practices proven to improve school climate, mentoring and working with school administrators ;
• Revises policies at the district’s alternative school to create clear entry and exit criteria and provide appropriate supports to speed students’ transitions back to their home schools;  
• Requires enhanced due process protections in student discipline hearings;
• Expands use of a behavior and discipline management system known as positive behavior intervention and supports (PBIS) at all schools;
• Requires teachers and administrators to use developmentally appropriate tiered prevention and intervention strategies before removing students from instruction;
• Requires monitoring of discipline data to identify and respond to racial disparities;
• Requires training on all revised policies and procedures; and
• Implements measures to engage families and communities as partners in revising policies and as participants in regular school and community informational forums.

The division filed a related case against the Meridian Police Department, the Lauderdale County Youth Court and the state of Mississippi in October 2012, alleging that those defendants systematically violate the due process rights of students referred by the district. That case remains pending in the U.S. District Court for the Southern District of Mississippi.

 

The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, among other bases, in public schools is a top priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Related Materials:

Meridian Consent Decree

A superseding indictment against four Police of Puerto Rico (POPR) officers was announced today by Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division; Rosa Emilia Rodriguez-Velez, U.S. Attorney for the District of Puerto Rico; and Carlos Cases, Special Agent in Charge of the FBI San Juan Field Office.

 

POPR Lieutenant Erick Rivera Nazario and Officer David Colon Martinez were indicted on civil rights charges alleging that they violated the constitutional rights of Jose Irizarry Perez while he was celebrating the local election results at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008. Rivera was also charged with violating the civil rights of Irizarry Perez’s father, Jose Irizarry Muniz. In addition, Rivera, Colon, Officer Miguel Negron Vazquez and Sergeant Antonio Rodriguez Caraballo were indicted for obstruction of justice and making false statements to the FBI and a federal grand jury.

 

According to the 18 count superseding indictment, while Colon held and restrained Irizarry Perez, Rivera and another POPR officer assaulted Irizarry Perez with their hands and a police baton, which resulted in bodily injury to Irizarry Perez. The superseding indictment alleges that Irizarry Perez was thereby deprived of his right to be free from unreasonable seizures by those acting under color of law. Although Irizarry Perez died as a result of injuries he sustained on Nov. 5, 2008, the superseding indictment does not include charges that his death resulted from the defendants’ conduct. Rivera, who was a supervisor at the time of the incident, was also charged with failing to intervene and failing to keep Irizarry Perez and his father from harm when an officer whom Rivera supervised assaulted the victims in Rivera’s presence.

 

In addition, the superseding indictment alleges that all four of the charged officers made false statements concerning the incident to the FBI and to the federal grand jury which had been investigating the incident. Colon and Negron were also charged with obstruction of justice for submitting false police reports and for providing misleading information to the Puerto Rico prosecutor that initially investigated the matter. Rivera was additionally charged with obstruction of justice for submitting a false police report, and Rodriguez was charged with obstruction of justice for providing misleading information to the Puerto Rico prosecutor.

 

If convicted, Rivera faces a maximum penalty of 10 years in prison for each of three charged counts of civil rights violations; a maximum of 20 years in prison for one charged count of obstruction of justice by submitting a false police report; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.

 

If convicted, Colon faces a maximum penalty of 10 years in prison for one charged count of a civil rights violation; a maximum of 20 years in prison for one charged count of obstruction of justice by submitting a false police report and two charged counts of providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.

 

If convicted, Negron faces a maximum penalty of 20 years in prison for one charged count of obstruction of justice by submitting a false police report and one charged count of providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.

If convicted, Rodriguez faces a maximum penalty of 20 years in prison for one charged count of obstruction of justice by providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.

 

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

 

This case is being investigated by the San Juan Division of the FBI and is being prosecuted by Assistant U.S. Attorney Jose A. Contreras from the U.S. Attorney’s Office for the District of Puerto Rico and Senior Litigation Counsel Gerard Hogan and Trial Attorney Shan Patel from the Civil Rights Division of the U.S. Department of Justice.

Dennis Frisbie Jr., 33, former deputy with the Muskogee County, Okla., Sheriff’s Office, who was assigned as a detention officer at the Muskogee County Jail (MCJ), pleaded guilty today in U.S. District Court for the Western District of Oklahoma to one count of making material false statements to the FBI.

 

“Law enforcement officers who make false statements erode the trust of the people they have sworn to protect,” said Deputy Assistant Attorney General for the Civil Rights Division Roy L. Austin Jr. “The Civil Rights Division is committed to prosecuting members of law enforcement who impede investigations of police misconduct.”

 

According to court documents, during the summer of 2011, FBI agents interviewed Frisbie as part of a federal investigation into allegations of inmate abuse at MCJ. Subsequently, on July 10, 2011, and then again on July 12, 2011, the defendant falsely reported to the FBI, both verbally and in a handwritten statement, that he been shot in the shoulder by an unknown subject in retaliation for his cooperation with this federal investigation. As a result of what the defendant reported, the FBI halted its investigation, out of concern that potential witnesses were in physical danger.

 

However, in September 2011, the defendant admitted that he had lied to the FBI and that he had not been shot by an unknown assailant. Instead, the defendant admitted that the gunshot wound was self-inflicted. The defendant acknowledged that he knowingly and willfully lied to the FBI and these lies were material, in that they directly affected the federal investigation into allegations of abuse at MCJ.

A sentencing date has not yet been set.

 

This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and is being prosecuted by Trial Attorneys Fara Gold and Dana Mulhauser of the Civil Rights Division of the U.S. Department of Justice.

Two shipping firms based in Germany and Cyprus today pleaded guilty to felony obstruction of justice charges and violating the Act to Prevent Pollution from Ships related to the deliberate concealment of vessel pollution from four ships that visited U.S. ports in New Jersey, Delaware and Northern California, announced the Department of Justice Environment and Natural Resources Division, the U.S. Attorney’s Offices in New Jersey and Delaware, and the U.S. Coast Guard. 

 U.S. Attorney for the District of New Jersey Paul J. Fishman and U.S. Coast Guard Deputy Commander of the Delaware Bay Sector Capt. Todd Wiemers announced the plea agreement – which includes a $10.4 million penalty, $2.6 million of which will be used address environmental damage caused by Hurricane Sandy – at a press conference in Newark, N.J.

According to a multi-district plea agreement arising out of charges brought in the District of New Jersey and District of Delaware, Columbia Shipmanagement (Deutschland) GmbH (CSM-D), a German corporation, and Columbia Shipmanagement Ltd. (CSM-CY), a Cypriot company, have agreed to pay a $10.4 million penalty and be placed on probation for four years.  During probation, the companies will be subject to the terms of an environmental compliance program that requires outside audits by an independent company and oversight by a court appointed monitor.  The shipping firms admitted that four of their ships (three oil tankers and one container ship) had intentionally bypassed required pollution prevention equipment and falsified the oil record book, a required log regularly inspected by the U.S. Coast Guard.  The case is the largest vessel pollution settlement in either New Jersey or Delaware. The guilty pleas were entered before U.S. District Judge Susan D. Wigenton in Newark federal court. Sentencing is set for June 24, 2013.

“Deliberate pollution and intentional falsification of ship records to hide environmental crimes are serious offenses.  These reprehensible actions not only damage the marine environment, but also put law breakers at a competitive advantage over those who respect the law and play the by rules” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “We intend to send a message with these prosecutions that those engaged in deliberate despoiling of our precious natural resources will be vigorously prosecuted.”

 “We in New Jersey are as sensitive as anyone to the need to preserve the shoreline,” said U.S. Attorney for the District of New Jersey Paul J. Fishman. “Shipping companies who foul the water by deliberately discharging oil and lying about it to the Coast Guard can expect to be prosecuted.”

“This prosecution is a fine example of multi-district cooperation in enforcing federal environmental law and achieving a just sentence,” said U.S. Attorney for the District of Delaware Charles M. Oberly III.”

“This was a case of wilful pollution and deliberate falsification of records designed to deceive the Coast Guard,” said Captain David Fish, Chief of Investigations for the Coast Guard. “It takes both resources and a culture of compliance to abide by the law. We are hopeful that the remedial measures required as part of this criminal conviction will have a positive impact on these companies and serve as a message to other maritime companies as to what is expected.” The proposed $10.4 million penalty includes $2.6 million in organizational community service payments to assist the coastal maritime environment in New Jersey and Delaware damaged by Hurricane Sandy.  The plea agreement directs the funds to environmental projects that will be selected by the National Fish & Wildlife Foundation to help conserve, preserve, and restore the coastal environment of New Jersey and Delaware hit by Hurricane Sandy.   

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

 The Delaware investigation began in October 2012, after several crew members of the M/T Nordic Passat provided the Coast Guard with a thumb drive containing photographs and video showing how illegal discharges had been sent overboard through the ship’s sewage system.  They also alleged that sludge had been put into the ship’s cargo tanks and that logs showing sludge had been incinerated onboard had been falsified.  The charges involving the M/V Cape Maas stem from a whistleblower report to the Coast Guard when the ship visited the port in San Francisco.  He provided a video showing the operation of the oily water separator pumping overboard without the use of the oil content monitor to detect and prevent oil from being illegally discharged.   

Just two weeks prior to today’s plea, the defendants and their attorneys disclosed violations on a fourth ship, the M/T Cape Taft that was then anchored in New York waters and destined for New Jersey.  After the ship disclosed problems to the company, an internal investigation revealed that the ship’s oily water separator had been used improperly for some time.  Instead of sensing a sample of overboard discharges, it was instead flushed with fresh water by the crew.  The ship’s oil record book was revised by CSM-D to reveal 16 instances where it was false.  The defendants cooperated with the investigation and provided the government with video replays of the oil content monitor showing when the crew had “tricked” the sensor with fresh water.

In pleading guilty, the defendants have admitted the following in a detailed joint factual statement filed in court:

• The King Emerald oil tanker used three different methods to illegally dispose of oily bilge waste.  In April 2012, approximately five tons of oily waste was discharged in the exclusive economic zone of Costa Rica approximately 45 miles from a national park.

• At least three chief engineers and the second engineer were involved in illegal discharges and intentional falsification of the oil record book for the King Emerald. In one instance, the oily water separator was operated solely for the purpose of generating data on the ship’s electronic recording device to account for an illegal discharge that had already taken place.

• During the Coast Guard boarding in Carteret, N.J., the second engineer lied to inspectors and then hid a valve used to make illegal discharges in an overhead space on the ship.

• Oil contaminated bilge waste was illegally pumped overboard from the M/T Nordic Passat on the orders of the chief engineer and second engineer with a portable pump and “magic hose” that was draped down three levels of the engine room to dump overboard through the sewage system.

• Illegal discharges have been made from the M/T Nordic Passat since 2006 by “tricking” the sensor designed to detect oil with fresh water during overboard discharges on a regular and routine practice by or at the direction of the chief engineer and second engineer.  As a result, virtually every discharge totaling approximately 2,000 tons of unmonitored and oil contaminated bilge  waste were discharged into ocean waters illegally and in violation of MARPOL over at least a six year period and all of the corresponding entries in the oil record book were false. 

• During the Coast Guard boarding of the Nordic Passat, senior ship engineers lied to the Coast Guard and told lower level crew members to lie. 

• On the M/V Cape Maas, a container ship, the manufacturer’s seal on the oil content monitor had been broken and fresh water had been used to trick the sensor.  

The plea agreement sets forth the counts charged as to each defendant in each district including six counts involving three vessels in New Jersey and four counts involving one ship in Delaware.  The guilty pleas include violations of the Act to Prevent Pollution from Ships for failing to maintain an accurate oil record book; obstruction of justice, and making false statements.  The maximum penalty for each of these felony offenses is $500,000 or up to twice the gross gain or loss from the offense for a corporation. 

This prosecution was made possible through the combined efforts of the U.S. Coast Guard Districts 1, 5 and 11, Coast Guard Sectors New York, Delaware Bay, and San Francisco, Coast Guard Investigative Service, Coast Guard Office of Maritime and International Law, and the Coast Guard Office of Investigations and Analysis.  The cases were prosecuted by Richard A. Udell, Senior Trial Attorney, and Stephen Da Ponte, Trial Attorney, of the Environmental Crimes Section of the U.S. Department of Justice Environment and Natural Resources Division, Kathleen O’Leary, Assistant U.S. Attorney in New Jersey, and Edmond Falgowski, Assistant U.S. Attorney in Delaware.  Assistance was also provided by the U.S. Attorney’s Office for the Northern District of California. 

 

Peruvian national Jessie Katherine Gonzales Urquizo and Bahamian national Irene Mildred Janette Burrows were sentenced today to serve 60 months and 36 months in prison, respectively, for their roles in smuggling undocumented migrants to the United States for private financial gain, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

Urquizo, 37, and Burrows, 66, were sentenced by U.S. District Judge Kenneth A. Marra in the Southern District of Florida.

On Jan. 11, 2013, Urquizo and Burrows both pleaded guilty to charges arising from facilitating the illegal smuggling of Brazilian nationals into the United States by working for a known human smuggler in Brazil.  According to court documents, the pair charged between approximately $100 and $125 per day in exchange for providing lodging and transportation to undocumented migrants waiting to be transported by boat to the United States.  As part of the scheme, Urquizo and Burrows received instructions from Brazil-based smugglers on when and where to deliver certain undocumented migrants to waiting boats for passage to the United States

Urquizo and Burrows admitted that they brought undocumented migrants, all of whom are Brazilian nationals, to the United States for financial gain. Urquizo admitted to taking payment for lodging the undocumented migrants at various hotels and stash houses, including a nursing home operated by Burrows, her co-defendant and mother-in-law. Urquizo further admitted that she arranged for food to be taken to the undocumented migrants, transported the undocumented migrants to a waiting boat upon instructions from a known human smuggler in Brazil, and demanded payment for her services. For her part, Burrows admitted to working with Urquizo, taking payment for lodging undocumented migrants at her nursing home, and providing transportation.

The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Alexandra Hui of the Southern District of Florida.

The investigation was conducted by the ICE Homeland Security Investigations in Miami. 

The United States has asked a federal court in Montgomery, Ala., to bar Kenya Hendrix Adams from preparing tax returns for others, the Justice Department announced today. According to the government complaint, Adams has repeatedly prepared federal tax returns that understate her clients’ federal tax liabilities. The suit alleges that Adams did so by falsely claiming or inflating tax credits or fabricating deductions.

The suit alleges that the IRS has completed examinations of 315 returns prepared by Adams and that 88 percent of those returns understated the filing taxpayer’s liability. Because Adams prepared almost 2,000 returns over a five year period between 2007 and 2012, the suit alleges that the harm to the U.S. Treasury as a result of her conduct could be in the millions of dollars.

Claiming bogus tax refunds is one of the Internal Revenue Service’s “Dirty Dozen” tax scams .  The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website.

Related Materials:

United States v. Kenya Hendrix Adams
Complaint for Permanent Injunction (PDF)
 

The Justice Department announced today that it has reached a cooperative settlement agreement with the Arapahoe, Colo., County Sheriff’s Office under the Americans with Disabilities Act (ADA). This agreement is a companion to one reached on March 8, 2013, with the city of Englewood, Colo.

 

The Justice Department received complaints by individuals who are deaf, the Colorado Association of the Deaf and the Colorado Cross-Disability Coalition that officers for the city of Englewood and the Arapahoe Sheriff’s Office were not providing qualified sign language interpreters and other auxiliary aids and services when needed for effective communication with people who are deaf, including arrestees, victims and witnesses. The department’s complainants had also filed a lawsuit based on the same allegations in federal district court, Lawrence et al. v. City of Englewood, et al. While the department initiated investigations into the allegations against Englewood’s police department and the Arapahoe County Sheriff’s Office, and considered intervening in the private lawsuit, it also reached out to the parties to see if there were grounds for a cooperative resolution. All parties, including city of Englewood’s Police Chief John Collins and Arapahoe County Sheriff Grayson Robinson, expressed a commitment to ensure full compliance with the ADA.

 

The resulting settlement agreements include some model ways to ensure people who are deaf or hard of hearing are able to communicate effectively with law enforcement. For instance, officers for Englewood and Arapahoe County will use this pictogram to ask whether a deaf or hard of hearing person requests a sign language interpreter: www.justice.gov/opa/images/sign-lang-small.gif.

 

Once the person expresses a need for a sign language interpreter, Englewood and Arapahoe have agreed to provide one under most circumstances, often within an hour of the request.

 

“People who are deaf or hard of hearing need to be able to communicate clearly with police and sheriff officers, whether they are crime victims, witnesses, arrestees, detainees, or just members of the public,” said Eve Hill, Senior Counselor to the Assistant Attorney General for the Civil Rights Division. “Citizens of the City of Englewood and Arapahoe County should be proud of their leaders. I also have to express gratitude to the Colorado Cross-Disability Coalition and the Colorado Association of the Deaf for their important work – and creative problem-solving-- in this area.”

 

“Englewood Police Chief John Collins and Arapahoe County Sheriff J. Grayson Robinson deserve our thanks and appreciation for their effort to provide effective models for Colorado’s – and the nation’s – law enforcement communities to work with deaf and hard of hearing citizens,” said U.S. Attorney for the District of Colorado John Walsh.  “I strongly encourage law enforcement agencies throughout Colorado to follow their lead and adopt these tried-and-true measures.  Doing so is simple, cost-effective, and will enhance law enforcement agencies’ protection of public safety while complying with the Americans with Disabilities Act.”  

 

Under the settlements, the city of Englewood and Arapahoe County will each pay $35,000 to the private plaintiffs. In addition, they will enter into contracts with qualified sign language interpreters to ensure ready availability, train their staff on the ADA, appoint ADA coordinators, post signs indicating the availability of sign language interpreters and other auxiliary aids and services for people who are deaf or hard of hearing, provide text telephones and volume control telephones, modify their handcuffing policies for people who use sign language or hand writing to communicate, stock and provide hearing aid and cochlear implant processor batteries in the detention facility, and adopt policies consistent with the ADA. The private plaintiffs also signed these agreements, which resolved the Department of Justice’s investigations as well as the private lawsuit.

 

For more information on the ADA and law enforcement, visit www.ada.gov. Those interested in finding out more about these settlements or the obligations of law enforcement under the ADA may also call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov . ADA complaints may be filed by email to ada.complaint@usdoj.gov .

Related Materials:

American Sign Language sign to indicate whether a sign language interpreter is necessary
Arapahoe Settlement Agreement

A federal grand jury in San Juan, Puerto Rico, has returned an indictment against Thomas Farmer, a former executive of Jacksonville, Fla.-based Crowley Liner Services, for participating in a conspiracy to fix rates and surcharges for freight transported by water between the continental United States and Puerto Rico, the Department of Justice announced today.

 

The indictment, filed today in the U.S. District Court in San Juan, charges Farmer, the former vice president of price and yield management of Crowley, with conspiring with co-conspirators to suppress and eliminate competition by agreeing to fix rates and surcharges for Puerto Rico freight services from at least as early as mid-2005 until at least April 2008.           

 

Crowley transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.

 

The indictment alleges, among other things, that Farmer and co-conspirators carried out the conspiracy by attending meetings and engaging in conversations and communications in the continental United States and Puerto Rico to fix, stabilize and maintain rates and surcharges for Puerto Rico freight services; to allocate customers of Puerto Rico freight services between and among the conspirators; and to rig bids submitted to customers of Puerto Rico freight services.

 

“Today’s indictment charges this executive with participating in a price-fixing conspiracy that affected the cost of shipping many consumer goods to Puerto Rico,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously pursue individuals who engage in anticompetitive behavior.” 

 
Farmer is charged with price fixing in 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.

 

As a result of this ongoing investigation, three companies, including Crowley, and six individuals have pleaded guilty or been convicted at trial. Five of the individuals and the three companies have been ordered to serve sentences ranging from seven months to four years in prison and to pay more than $46 million in criminal fines. The sixth individual, Frank Peake, was convicted at trial in January 2013 and is currently scheduled to be sentenced on May 31, 2013.

 
This case is part of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the coastal water freight transportation industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section; the Baltimore Resident Agency of the Department of Defense’s Office of the Inspector General, Defense Criminal Investigative Service (DCIS); the Miami Field Office of the Department of Transportation’s Office of Inspector General; and the Jacksonville Field Office of the FBI. Anyone with information concerning anticompetitive conduct in the coastal water freight transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or contact DCIS’s Baltimore Resident Agency at 410-347-1620.

Brazilian nationals Juliana Rose Tome-Froes and her husband, Fabio Rodrigues Froes, were sentenced today in Miami to 60 months and 46 months in prison, respectively, for smuggling undocumented migrants to the United States for profit, announced 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 and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

Tome-Froes, 36, and Froes, 49, were sentenced by U.S. District Court Judge Federico A. Moreno in the Southern District of Florida.  In addition to the prison sentences, Judge Moreno ordered each defendant to forfeit $150,000 in illegal proceeds.      

On Jan. 16, 2013, Tome-Froes and Froes pleaded guilty to charges arising from their involvement in human smuggling.  According to court documents, from at least October 2008 until approximately September 2010, the defendants organized, operated and managed a human smuggling network that spanned from Brazil to France, England, The Bahamas and the United States.  The defendants met with undocumented migrants and negotiated forms of payment to be smuggled into the United States.  Before the undocumented migrants departed Brazil, the defendants instructed them to act like tourists and explained that the itinerary through Europe would support a tourist cover story.  In exchange for approximately $16,000, Tome-Froes, with assistance from Froes, arranged air transportation from Brazil to Paris, then London and Nassau, Bahamas.  Tome-Froes arranged the undocumented migrants’ lodging in Paris and Nassau, and then instructed them to fly to Freeport, Bahamas, where they waited for a boat to transport them to the United States.  For the final leg into the United States, Tome-Froes coordinated with various individuals in South Florida to pilot a small boat to Freeport, which picked up the undocumented migrants and transported them to the United States.  According to court documents, the defendants knew the undocumented migrants did not have authorization to enter the United States. 

The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Marton Gyires of the Southern District of Florida.  The investigation was conducted by ICE Homeland Security Investigations in Miami.

The Unified Government of Wyandotte Co. and Kansas City, Kan., has agreed to a settlement to address unauthorized overflows of untreated raw sewage and to reduce pollution levels in urban stormwater, the Department of Justice and Environmental Protection Agency (EPA) announced today.

The settlement, lodged today in federal court in Kansas City, Kan., requires the Unified Government to implement improved operation and maintenance programs for its sewer system, perform initial work to address sewer overflows, and implement an improved Storm Water Management Plan. The Unified Government will also develop a proposed overflow control plan for the sewer system by September 2016 for approval by EPA.  Unified Government’s implementation of that plan, once approved, will be embodied in a subsequent judicial settlement.

 “Today’s agreement will put the Unified Government of Wyandotte County on a clear path toward compliance with the Clean Water Act,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The settlement will address deficiencies and require improvements to Wyandotte County’s sewer and stormwater systems that will reduce risks and bring cleaner water for the benefit of the county resident’s health and the environment.”

“EPA is working with cities to find effective, affordable solutions to control raw sewage and stormwater overflows,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement allows the Unified Government to tackle their most important water quality problems first, while preparing a long-term approach to keep local waterways protected in the future.”

“This settlement is good news for Kansas,” said Barry Grissom, U.S. Attorney for the District of Kansas. “By protecting our rivers, we are ensuring clean drinking water supplies, protecting public health, improving recreation and leaving a legacy of healthy rivers for future Kansans.”

 “We are pleased that this settlement will result in the vigorous efforts by the Unified Government to improve its wastewater and stormwater programs,” said Karl Brooks, EPA regional administrator. “These programs will provide significant health and environmental benefits to the citizens of Kansas City, Kansas and Wyandotte County.  Of special note are the immediate actions by the Unified Government to address sewer overflows in the northeast area of the city where there is a high proportion of low income and minority residents.” 

The Unified Government’s sewer system collects and receives domestic, commercial and industrial wastewater from approximately 110,000 area residents. The system includes five wastewater treatment plants and more than 800 miles of sewer lines. The system is served by about one-third combined sewers, which carry both stormwater and wastewater, and the remainder by separated sewers.

Since 2004, the Unified Government has reported more than 450 illegal sewer overflows from its sewer system. These overflows resulted in the discharge of raw sewage into the Missouri River, the Kansas River and their tributaries. Untreated sewage from overflows can cause serious water quality problems and health issues from pollutants including harmful bacteria, oxygen-depleting substances, suspended solids, toxic metals and chemicals, and nutrients. The overflows are in violation of the federal Clean Water Act (CWA) and the terms of the city’s National Pollutant Discharge Elimination System (NPDES) permits for operation of its sewer system.

Under the agreement, the Unified Government is required to perform initial work primarily in the combined sewer portion of the system, located in the oldest developed area of the city, which is expected to provide relief to residences and other properties in the urban core that are often impacted by overflows.

The settlement also requires the Unified Government to implement an improved Storm water management plan, designed to reduce pollutants in stormwater. Municipal stormwater sewers carry significant amounts of pollution into urban rivers, lakes and streams. Pollutants such as lead, copper, oxygen-depleting materials and sediment in municipal stormwater can clog streams, harm or kill aquatic life, and result in human exposure to harmful substances. The existing stormwater management program at issue in this settlement was drafted by the Unified Government and made part of the stormwater discharge permit issued by the state of Kansas in 2001 and reissued in 2007.
Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s highest priorities. Reductions in sewer and stormwater overflows are accomplished by obtaining cities’ commitments to implement timely, affordable solutions to these problems, which may also include the use of integrated municipal stormwater and wastewater plans. Integrated plans are intended to be an option to help municipalities meet their CWA obligations by optimizing the benefits of their infrastructure improvement investments through the appropriate sequencing of work. This approach can also lead to more sustainable and comprehensive solutions, such as green infrastructure, that improve water quality and enhance community vitality.

The partial settlement, lodged today in the U.S. District Court for the District of Kansas, is subject to a 30-day public comment period and approval by the federal court.  A copy of the consent decree is available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html. 

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

More information about integrated municipal stormwater and wastewater plans: http://cfpub.epa.gov/npdes/integratedplans.cfm

A New York man was sentenced today in Buffalo to serve 11 years in prison for committing mail fraud and attempting to escape the charges by exerting pressure on a U.S. Attorney’s spouse and candidate for office, the Justice Department announced.

James F. Lagona, 52, of Snyder, N.Y., was sentenced by Chief U.S. District Judge William M. Skretny in the Western District of New York.  Lagona was sentenced to serve nine years in prison on 27 mail fraud charges, one year in prison on one obstruction of justice charge and one year in prison for committing obstruction while on release in the fraud case.  In addition to Lagona’s prison term, he was sentenced to serve three years of supervised release and ordered to pay restitution of $6,396,359 for the fraud charges.

On Feb. 23, 2011, in a case prosecuted by the U.S. Attorney’s Office for the Western District of New York, a federal jury found Lagona guilty of committing 27 counts of felony mail fraud related offenses for his role in the Watermark M-One Financial Services Ponzi scheme.  According to evidence presented at trial, Lagona and his co-conspirators operated a scheme that solicited investors for waterfront real estate and promised a 10 percent return on investment after one year.  In truth, no investments were made, and new investors were recruited to pay off the earlier investors.  A total of 94 victims suffered a loss of over $6 million as a result of the scheme.

On Dec. 18, 2012, in a case prosecuted by the Justice Department’s Criminal Division, Lagona pleaded guilty to a one-count information charging him with endeavoring to influence, obstruct and impede the due administration of justice.  Lagona has been detained since Nov. 15, 2012, pursuant to a criminal complaint.

During his plea proceeding in December, Lagona admitted to obtaining a private meeting with a campaign staffer working for U.S. Representative Kathy Hochul of New York, who was then involved in a close race for reelection against her opponent.  Lagona also admitted that during the Nov. 2, 2012, meeting – four days before the election – he identified himself as a clergyman, claimed that he had been involved in discussions with the political party of Rep. Hochul’s election opponent, and falsely claimed that the opponent’s party was interested in featuring him in an advertisement or rally to claim wrongful prosecution and religious persecution.  He told the campaign staffer that he would instead publicly support Rep. Hochul, if her spouse, Western District of New York U.S. Attorney William J. Hochul Jr., dismissed the criminal case against him.  The campaign staffer subsequently reported the meeting to the FBI.

Lagona admitted to meeting with the campaign staffer a second time on Nov. 3, 2012.  During the meeting, which was covertly recorded by the campaign staffer under the FBI’s supervision, Lagona admitted to specifying that he sought a “quid pro quo” in exchange for refusing to campaign with the party of Rep. Hochul’s opponent and for publicly supporting her instead.  Lagona admitted he told the staffer that in exchange he wanted his case dismissed and for no further charges to be brought against him.  Following the meeting, Lagona made efforts to follow up with the staffer by phone.

The criminal complaint in which Lagona was originally charged with obstruction, unsealed on Nov. 15, 2012, notes that the criminal investigation revealed no evidence that the campaign staffer, Rep. Hochul or her campaign ever intended to accept or considered accepting Lagona’s proposal, nor that the proposal was ever communicated to or considered by U.S. Attorney Hochul.  The investigation has revealed no evidence that any member of the opposing party ever considered using Lagona during the campaign.

The fraud case was prosecuted by Assistant U.S. Attorney Gretchen L. Wylegala of the U.S. Attorney’s Office for the Western District of New York and investigated by the U.S. Postal Inspection Service Boston Division and the Internal Revenue Service-Criminal Investigation New York Field Office.  The obstruction case was prosecuted by Trial Attorney J.P. Cooney of the Criminal Division’s Public Integrity Section and investigated by the FBI Buffalo Division. 

The Justice Department announced that it has reached an agreement with the city of Wheatland, Calif., that, if approved by the court, will allow it to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the city from the preclearance requirements of Section 5 of the Voting Rights Act. Wheatland is located in Yuba County, Calif., which is a jurisdiction subject to Section 5. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.  

 

Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the U.S. Attorney General, prior to their implementation. Section 4 of the Act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.

 

The city of Wheatland filed its bailout action in the U.S. District Court for the District of Columbia on Jan. 14, 2013. City officials had contacted the attorney general prior to filing its action, indicating that the City was interested in seeking a bailout. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city of Wheatland meets the Voting Rights Act’s requirements for bailout.  

 

“In the Voting Rights Act, Congress provided a means for a covered jurisdiction to be exempted from the preclearance requirements of Section 5 if the jurisdiction meets the specific eligibility requirements of the Act,” said Matthew Colangelo, Deputy Assistant Attorney General for the Civil Rights Division. “I am pleased that city officials worked cooperatively with the department in providing the information we requested and in resolving this matter in the way envisioned by the Voting Rights Act.”

 

The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the city that would have originally precluded a bailout if it had occurred during the 10 year period preceding entry of the consent decree.  

 

Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

Hospice of Arizona L.C., along with a related entity, American Hospice Management LLC, and their parent corporation, American Hospice Management Holdings LLC, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to the Medicare program for ineligible hospice services, the Justice Department announced today.

 

The Medicare hospice benefit is available for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain, and stress of a terminal illness. Today’s settlement resolves allegations that Hospice of Arizona, and its related entities, submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care or for whom the hospice billed at a higher reimbursement rate than it was entitled.

 

The government alleged that Hospice of Arizona and its related entities, engaged in certain practices that resulted in the admission of ineligible patients or inflated bills, including pressuring staff to find more patients eligible for Medicare, adopting procedures that delayed and discouraged staff from discharging patients from hospice when they were no longer appropriate for such services, and not implementing an adequate compliance program that might have addressed these problems. As part of the settlement, American Hospice Management Holdings has agreed to enter into a corporate integrity agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.

 

“This settlement is the result of the Justice Department’s efforts to prevent the misuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons at the end of their lives,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division.

 

“The hospice industry relies on the Medicare Trust Fund, and payments for unnecessary services jeopardize its financial viability,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein.

 

“Medicare and taxpayers depend on hospice agencies to provide medically appropriate services to terminally ill patients,” said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona. “When providers place more importance on the bottom line than on the care of these vulnerable patients, they can expect to face serious penalties.”

 

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.

 

The allegations settled today arose from a lawsuit filed by a former Hospice of Arizona, L.C. employee, Ellen Momeyer, under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery. The whistleblower in this case will receive $1.8 million. The case is United States ex rel. Momeyer v. Hospice of Arizona, L.C., et al., No. 1:10-cv-280 (D. Md.).

 

This matter was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Maryland, and the Office of the Inspector General for the Department of Health and Human Services.

 

The claims settled by this agreement are allegations only; there has been no determination of liability.

Sean Rosales pleaded guilty in Miami federal court to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.

Rosales, a dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities, was arrested in Chicago late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.

Eleven other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted in the United States.

“The Department of Justice is committed to cracking down on financial fraud, including business opportunity fraud schemes,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities.”

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

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

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

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

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

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.

“Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”

“ The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity schemes ,” said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.

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

The Department of Justice announced last week that it has entered into a settlement agreement with the McDuffie County Schools in Georgia to modify the zoning of the district’s elementary schools and ensure the school district complies with other obligations to desegregate its schools in the areas of student assignment, faculty recruiting and assignment and transportation.

The consent order, if approved by the court, requires the district to alter the elementary school zones in order to increase the number of African-American students in the de jure white school, where the enrollment has remained majority white and disproportionate to the racial composition of the district as a whole. The consent order also requires the district to eliminate racial disparities in how teachers and staff are assigned to the district’s schools and to engage in affirmative efforts to recruit African-American personnel. The consent order also contains provisions for student transfers, gifted and talented programs, discipline, transportation, and monitoring and reporting. Finally, the district will establish a diversity advisory council to evaluate and monitor the implementation of the zone changes and the district’s continued efforts toward desegregation. The consent order allows the district, upon demonstration of successful implementation of the provisions in the order, to move for unitary status on Dec. 15, 2015.

“We applaud the McDuffie County Schools for agreeing to take prompt voluntary corrective actions to ensure that it fully meets its desegregation obligations in three years,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division will continue to work to ensure that McDuffie and all school districts under federal desegregation orders fully eliminate the vestiges of segregation in their schools.”

Edward J. Tarver, U.S. Attorney for the Southern District of Georgia, said, “I admire the McDuffie County School District’s efforts in working to amicably resolve what were once highly contentious issues in our society. The United States Attorney’s Office will provide assistance to the School District and the Civil Rights Division to ensure continued compliance with this Consent Order.”

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

Executives at two Arlington, Va.-based businesses have pleaded guilty to fraudulently obtaining more than $31 million in government contract payments that should have gone to disadvantaged small businesses.

 The guilty pleas were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and NASA Inspector General Paul K. Martin.

 “These executives used their knowledge and experience to abuse a program created to ensure minority small business owners could compete for government contracts,” said U.S. Attorney MacBride. “They not only illegally obtained millions from the United States, they also victimized legitimate minority owners who didn’t get the bids.”

“Keith Hedman and his co-conspirators fraudulently obtained valuable government contracts intended for minority-owned small businesses, and pocketed millions of dollars for themselves,” said Acting Assistant Attorney General Raman.  “They abused an important government program, and will now face the consequences.”

“This investigation confirmed that these executives repeatedly took actions that gave them a fraudulent advantage in the contracting process,” said NASA Inspector General Martin.  “I commend the outstanding efforts of our agents and our law enforcement partners involved in this case in protecting the integrity of the 8(a) program.”

 According to court documents, Keith Hedman, 53, of Arlington, formed an Arlington-based security service consulting company in approximately 2001.  Hedman formed the company, listed as Company A in court filings, with an African-American woman who was listed as its president and CEO to enable the company to participate in the Small Business Administration’s (SBA) Section 8(a) program, which enables certain small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses.  In 2001, Hedman’s company received approval to participate in the 8(a) program on the basis of the African-American president and CEO’s listed role, but when she left the company in 2003, Hedman became its sole owner and the company was no longer 8(a)-eligible.

 Hedman admitted that in 2003 he created a shell company, listed as Company B in court records, to ensure he could continue to gain access to 8(a) contracting preferences for which Company A was not qualified.  Prior to applying for the shell company’s 8(a) status, Hedman selected an employee, Dawn Hamilton, 48, of Brownsville, Md., to serve as a figurehead owner based on her Portuguese heritage and history of social disadvantage, when in reality the new company would be managed by Hedman and senior leadership at Company A.  To deceive the SBA, they falsely claimed that Hamilton formed and founded the company and that she was the only member of the company’s management.  They continued to mislead the SBA through 2012, even lying to the SBA to overcome a protest filed by another company accusing Hedman’s former company and the shell company of being inappropriately affiliated.

 From Company B’s creation through February 2012, Hedman – not Hamilton – exercised ultimate decision-making authority and control over the company by controlling its finances, allocation of personnel and government contracting activities.  Hedman nonetheless maintained the impression that Hamilton was leading the company, including through forgeries of signatures by Hamilton to documents she had not seen or drafted.  Hedman also retained ultimate control over the shell business’s bank accounts throughout its existence.  In 2011, Hedman withdrew $1 million in cash from Company B’s accounts and gave the funds in cash to Hamilton and three other co-conspirators. In total, Hedman and Hamilton secured through the shell company more than $31 million in government contract payments, which generated more than $6 million in salary and payments for the conspirators that they were not entitled to receive.

 In addition, Hedman admitted that he agreed to pay a $50,000 bribe through the shell business to a U.S. government contracting official for the official’s help in securing contracts for Company B.

 Hedman and Hamilton pleaded guilty on March 13 and March 15, 2013, respectively, in U.S. District Court for the Eastern District of Virginia to major government fraud and face a maximum penalty of 10 years in prison and a multimillion-dollar fine for that charge. Hedman also pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison.  Hedman agreed to forfeit more than $6.3 million, and Hamilton agreed to forfeit more than $1.2 million.  Hedman is scheduled to be sentenced on June 21, 2013, before U.S. District Judge Gerald Bruce Lee.  Hamilton’s sentencing is scheduled for June 21, 2013, before U.S. District Judge T. S. Ellis, III.

 In addition, the following individuals have also pleaded guilty to major fraud or conspiracy to commit major fraud:

• David George Lux, 62, of Springfield, Va., pleaded guilty today before U.S. District Judge Leonie M. Brinkema.  Lux served as the chief financial officer at Company A from 2007 through February 2012 and performed work for Company B throughout that time while officially on Company A’s payroll.  He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• Joseph Richards, 51, of Arlington, pleaded guilty on March 14, 2013, before U.S. District Judge Brinkema in the Eastern District of Virginia.  Richards served as the chief operating officer and chief of staff for Company A from 2005 through 2008 and then vice president from 2010 through February 2012.  He also served as Company B’s chief of staff from 2008 through 2010.  According to court documents, Richards performed work for Company B throughout his time at both companies. He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• David Sanborn, 60, of Lexington, S.C., pleaded guilty on March 13, 2013, before U.S. District Judge Claude M. Hilton in the Eastern District of Virginia.  Sanborn served as vice president at Company A from 2001 through 2009 and the company’s president from 2010 through February 2012.  According to court documents, Sanborn performed work for Company B from its inception while on Company A’s payroll.  He is scheduled to be sentenced on June 28, 2013, by Judge Hilton.

 This case was investigated by the NASA Office of the Inspector General (OIG), the SBA OIG, the Defense Criminal Investigative Service, the General Services Administration OIG and the Department of Homeland Security OIG.  Assistant U.S. Attorneys Chad Golder and Ryan Faulconer, a former Trial Attorney for the Criminal Division’s Fraud Section, are prosecuting the case on behalf of the United States.

The Justice Department announced today that it will monitor elections on March 19, 2013, in Beaufort, Berkeley, Charleston and Dorchester Counties, S.C., and in the village of Port Chester, N.Y. The monitoring will ensure compliance with the Voting Rights Act of 1965, which prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. Port Chester is required to provide assistance in Spanish.

 

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 Dorchester County based on the attorney general’s certification and in Port Chester based on a court order. The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.

 

In addition, Justice Department personnel will monitor polling place activities in Beaufort, Berkeley, and Charleston Counties in South Carolina. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.

 

In January 2008, a federal district court found that Port Chester’s at-large method of electing the village board of trustees violated the Voting Rights Act and prevented Hispanic voters from participating equally in the electoral process, resolving a lawsuit filed by the department’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of New York. In November 2009, the court ordered that a cumulative voting system be adopted to remedy this violation, and in December 2009, the department and the village entered into a consent decree, which was approved by the court. The consent decree includes an extensive voter education plan with education and training provisions to ensure that the voters in Port Chester are fully familiar with cumulative voting. The decree also requires that bilingual poll officials will be present at every polling place in Port Chester, and that all election-related materials must be translated into Spanish. The March 2013 election will be the second municipal election since the entry of the consent decree.

 

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.

Tyrone Thompson was sentenced today to 137 months in prison by U.S. District Judge Hugh Lawson in the Middle District of Georgia for conspiracy and filing fraudulent tax returns in order to receive tax refunds, to which the defendant was not entitled, the Justice Department and Internal Revenue Service (IRS) announced. In addition to Thompson, the scheme involved four others who had already been sentenced. Judge Lawson also ordered Thompson to pay $516,363 in restitution to the IRS. In October 2012, all five defendants pleaded guilty to filing a false claim for tax refunds. In addition, Thompson pleaded guilty to conspiracy to file false claims for tax refunds.

 

According to court documents, Thompson organized a scheme in which he prepared and filed fraudulent federal income tax returns using the names of other individuals. He included with the returns fictitious Schedules C reporting business income and losses and also claimed false First-Time Homebuyer Credits, in order to obtain tax refunds to which he and his co-defendants were not entitled. He directed fraudulently-obtained refunds to be deposited to his co-defendants’ bank accounts. The attempted tax refund fraud exceeded $400,000.

 

“Today’s lengthy jail sentence sends a strong message that those who would consider committing tax fraud should think carefully about the serious risks involved,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “As millions of honest, hard-working taxpayers prepare and file their tax returns, they should be assured that those who would shirk their civic duty or try to ‘game the system’ will be investigated by the IRS and, where appropriate, criminally prosecuted by the Department of Justice.”

 

“These folks are stealing from every good tax paying citizen, and we won’t tolerate it,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.

 

“Tyrone Thompson organized a scheme to file fraudulent tax returns using the identities of third parties in order to receive false refunds,” said Richard Weber, Chief, IRS Criminal Investigations. “Mr. Thompson cheated the government by filing false Schedule C and false First-Time Homebuyer Credit forms to increase the fraudulent tax refunds. IRS Criminal Investigation has made investigating refund fraud a top priority and we will vigorously pursue those who undermine the integrity of the U.S. tax system.”

 

Assistant Attorney General Keneally commended the efforts of Special Agents of IRS - Criminal Investigation, who investigated the case, and Trial Attorneys Charles Edgar and Alexander Effendi of the Tax Division, who prosecuted the case.

BALTIMORE --Immigration Judge Elizabeth A. Kessler from the Executive Office for Immigration Review, Baltimore Immigration Court, delivered the keynote speech and administered the oath of allegiance to approximately 75 candidates during a naturalization ceremony at the George H. Fallon Federal Building in Baltimore, Md., on March 15, 2013. The Baltimore District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Alberto Gonzales appointed Judge Kessler in January 2006. Judge Kessler received a bachelor of arts degree in 1987 from Columbia University, a master of arts degree in 1992 from Yale Graduate School, and a juris doctorate in 1992 from Yale Law School. From 2003 to 2006, she served as a deputy associate attorney general at the Department of Justice (DOJ). She previously served as a deputy general counsel for the U.S. Department of Energy. From 1997 to 1999, Judge Kessler served as general counsel, U.S. Senate Judiciary Committee, Subcommittee on Immigration in Washington, D.C. From 1995 to 1997, she served as counsel, U.S. Senate Judiciary Committee. From 1993 to 1994, Judge Kessler was an attorney, Civil Division, Appellate Staff, at DOJ and a Bristow Fellow, Office of the Solicitor General. From 1992 to 1993, she served as a law clerk with Judge Richard J. Cardamone, U.S. Court of Appeals for the 2nd Circuit. Judge Kessler is a member of the Maryland State and District of Columbia Bars.

- EOIR -

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

Executive Office for Immigration Review

The Department of Justice has granted a request by the White Earth Nation for the United States to assume concurrent criminal jurisdiction on the 1,300 square mile White Earth reservation in northern Minnesota, Deputy Attorney General James M. Cole announced today.

The decision was the first action of its kind under the landmark Tribal Law and Order Act of 2010 (TLOA), which granted the Justice Department discretion to accept concurrent federal jurisdiction to prosecute major crimes within areas of Indian country that are also subject to state criminal jurisdiction under Public Law 280.  Public Law 280 is the 1953 law that mandated the transfer of federal law enforcement jurisdiction for certain tribes to six states, including Minnesota.  The decision, relayed yesterday in a letter to the tribe signed by Deputy Attorney General Cole, will take effect on June 1, 2013.  Tribal, state, and county prosecutors and law enforcement agencies will also continue to have criminal jurisdiction on the reservation. 

“Our goal in granting this request is to strengthen public safety and security for the people of White Earth,” said Deputy Attorney General Cole.  “We look forward to partnering with the tribe and our state and local counterparts to support White Earth in ensuring justice on the reservation.” 

“The public safety challenges facing our tribal communities are serious and complex,” said U.S. Attorney for the District of Minnesota B. Todd Jones. “The United States Attorney’s Office will continue working closely and collaboratively with our tribal and local partners towards our common goal – improving public safety.  It is our hope that with the additional jurisdiction, our Office will be able to support our tribal and county partners for the benefit of all communities.”

The Department of Justice already has jurisdiction to prosecute crimes such as drug trafficking and financial crimes wherever they occur in the United States – including on the White Earth reservation.  The change announced today will expand this existing jurisdiction on the reservation to allow federal prosecution of major crimes such as murder, rape, felony assault and felony child abuse.

The decision followed careful consideration of the request and information provided by the White Earth Nation, as well as by the Justice Department’s Office of Tribal Justice, the Executive Office for United States Attorneys, the U.S. Attorney's Office for the District of Minnesota, the FBI, the U.S. District Court, state and local law enforcement partners and other sources.

Two California men have been charged in an indictment unsealed today in Boston with remotely hacking into merchants’ computerized cash registers in order to obtain fraudulent gift cards, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Resident Agent in Charge Holly Fraumeni of the U.S. Secret Service (USSS) Manchester, N.H. Office

Shahin Abdollahi, aka “Sean Holdt,” 46, of Lake Elsinore, Calif., and Jeffrey Thomas Wilkinson, 35, of Rialto, Calif., were both charged with one count of conspiracy to commit computer intrusion and wire fraud, and one count of wire fraud.
 
According to the indictment, Abdollahi owned Subway franchises in Southern California from 2005 to 2008, and later operated a California company called “POS Doctor,” which sold and installed point-of-sale (POS) computer systems to Subway restaurant franchises around the country.  POS systems are a type of computerized checkout register that allows merchants to manage customer purchases made by credit, debit and gift cards.

The indictment alleges that beginning in approximately 2011, Abdollahi and Wilkinson conspired to remotely hack into POS systems in Subway restaurant franchises around the country.  According to the indictment, members of the conspiracy hacked into at least 13 Subway POS systems that Abdollahi sold through POS Doctor and fraudulently added at least $40,000 in value to Subway gift cards.  Abdollahi and Wilkinson allegedly used the fraudulent gift cards to make purchases at Subway, and Wilkinson also allegedly sold fraudulent gift cards to others using eBay and Craigslist.

The case was investigated by the USSS and is being prosecuted by Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam J. Bookbinder of the District of Massachusetts.

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

A former medical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to serve 144 months in prison for his role in a fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, announced 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.

Dr. Gary Kushner, 72, of Plantation, Fla., was sentenced by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida.  In addition to the prison term, Kushner was ordered to serve three years of supervised release.
 
Kushner was convicted on Aug. 28, 2012, of one count of conspiracy to commit health care fraud and one substantive count of health care fraud, following a two-month jury trial.

According to the evidence at trial, Kushner and his co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness.  Instead of providing legitimate PHP services, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided or were not properly reimbursable by Medicare.  Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. 

The evidence at trial further showed that, as Biscayne Milieu’s medical director, Kushner authorized the treatment of patients that he knew were ineligible for PHP treatment.  Biscayne Milieu then billed Medicare for millions of dollars in PHP treatments for these patients under Kushner’s name.  Evidence further revealed that Kushner would often conduct cursory examinations lasting only minutes before authorizing such fraudulent billings. 

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

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 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.

Attorney General Eric Holder announced today $1.8 million in new resources to improve access to criminal legal services and strengthen indigent defense across the nation. In remarks during the “50 Years Later: The Legacy of Gideon v. Wainwright” event hosted by the Department of Justice, the Attorney General emphasized the department’s commitment to ensuring that all those accused of a crime, regardless of their wealth, education or class, have adequate legal representation and counsel. March 18th marks the 50th Anniversary of the U.S. Supreme Court’s landmark decision in Gideon v. Wainwright, where the court unanimously ruled that even those unable to afford counsel are entitled to counsel by court appointment. At today’s event, Attorney General Holder led a discussion on keeping and continuing the promise of Gideon, which included U.S. Supreme Court Justice Elena Kagan and former Vice President Walter Mondale, who, as Minnesota Attorney General in 1963, organized the submission of the amicus curiae brief to the U.S. Supreme Court with 21 state attorneys general in support of Clarence Gideon.

 “Despite half a century of progress, far too many Americans still struggle to gain access to the legal assistance they need, and far too many children and adults enter our justice systems with little understanding of their rights,” said Attorney General Holder. “This is unacceptable and unworthy of a legal system that stands as an example for the world. I’m proud to say that today’s Justice Department is rising to the challenge to confront the obstacles facing indigent defense providers.”

Acting Associate Attorney General Tony West also delivered remarks about reclaiming Gideon’s petition at today’s ceremony.

 “The constitutional right to counsel is a cornerstone of our criminal justice system,” said Acting Associate Attorney General Tony West.  “It’s a principle that resides at the core of our concept of equal justice under the law, to which the Department of Justice remains deeply committed.  Gideon reminds us that justice is as much a journey as it is a destination -- as much a process as it is an outcome -- and that we must give equal attention to both.”
 
 At the event, Attorney General Holder discussed the importance of the Department’s Access to Justice Initiative, which he launched in 2010, to address the access to justice crisis in the criminal and civil justice system and help ensure that the justice system delivers outcomes that are fair to everyone, regardless of wealth and status. Strengthening the indigent defense system is among the Initiative’s priorities. 

“Fair treatment and justice are the right of everyone, no matter what their income,” said Deborah Leff, Acting Senior Counselor of the Access to Justice Initiative.  “Clarence Earl Gideon won a victory in the U.S. Supreme Court for all Americans.  It is now our responsibility to make sure that Gideon’s promise is fulfilled.”

The following Bureau of Justice Assistance (BJA) initiatives were a part of today’s announcement:

• $720,000 toward the upcoming grant solicitation, Answering Gideon’s Call: National Assistance to Improve the Effectiveness of Right to Counsel Services, which will enable an organization to work directly with states and counties to improve their ability to provide quality representation to indigent defendants and implement innovative strategies.
• $540,000 for two new jurisdictions, chosen by BJA, from last year’s Answering Gideon’s Call solicitation that will improve public defender and other indigent defense systems. The two new jurisdictions will join four jurisdictions, selected last year, to receive assistance with improving the capacity of indigent defense systems and increase the knowledge base about those systems.
• $140,000 toward opportunities through BJA’s National Training and Technical Assistance Center (NTTAC) that will provide technical assistance to help jurisdictions meet their constitutional obligation and provide adequate representation to indigent defendants.  Additionally, these funds will support an initiative that will collect data to help determine ineffective components of criminal justice systems, and enable stakeholders, including district attorneys and judges, to join public defenders in the call for more manageable caseloads and to ensure adequate time is devoted to their clients.

The following Office of Juvenile Justice and Delinquency Prevention (OJJDP) solicitation was also part of today’s announcement:

• $400,000 for the Office of Justice Programs’ Office of Juvenile Justice and Delinquency Prevention competitive solicitation, Juvenile Indigent Defense National Clearinghouse. This award will support the improvement of juvenile indigent defense by providing a broad range of activities and services to improve the overall level of systemic advocacy, improving the quality of juvenile indigent defense representation and ensuring professional and ongoing technical support to the juvenile indigent defense bar.

For more information on the DOJ’s Access to Justice Initiative, which works to strengthen and improve legal services for disadvantaged groups, please visit: www.justice.gov/atj and www.justice.gov/atj/gideon/.

Related Materials:

Attorney General Eric Holder Speaks at the Justice Department's 50th Anniversary Celebration of the U.S. Supreme Court Decision in Gideon v. Wainwright
Acting Associate Attorney General Tony West Speaks at the Justice Department's 50th Anniversary Celebration of the U.S. Supreme Court Decision in Gideon v. Wainwright

An employee of the Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response (HHS-ASPR) pleaded guilty today in Washington, D.C., to defrauding the United States by submitting fraudulent employment offers in order to claim retention bonuses totaling $138,875, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division . 

 

Michael A. Balady , 62, of Springfield, Va., pleaded guilty before U.S. District Judge Rudolph Contreras in the District of Columbia to a criminal information charging him with one count of wire fraud.

 

According to court documents, Balady worked in the HHS-ASPR first as the director of acquisition management systems in ASPR’s Biological Advanced Research and Development Authority and later as the acting director of ASPR’s Office of Acquisitions, Management, Contracts and Grants. As part of his plea, Balady admitted that he conspired with an employee of a communications firm based in Alexandria, Va., to fabricate employment offers for a position with that firm in order to justify retention bonuses paid to him by HHS. Retention bonuses are monetary incentives paid by HHS to employees deemed essential to its mission who would be likely to leave in the absence of such a bonus.

 

From 2009 until 2012, Balady improperly received retention bonus payments totaling $94,940. In June 2012, HHS approved another retention bonus in the amount of $38,875, but that bonus was never paid to Balady. As part of the plea agreement, Balady resigned from HHS and has agreed to pay restitution to HHS in the amount of $94,940.

 

At sentencing, scheduled for June 12, 2013, Balady faces up to 20 years in prison and a fine of $250,000.

 

This case is being prosecuted by Trial Attorneys Richard B. Evans and Mark Angehr of the Criminal Division’s Public Integrity Section, and is being investigated by the HHS Office of the Inspector General.