District Not Recorded

The U.S. District Court for the District of Arizona today approved a consent decree filed by the Department of Justice, together with private plaintiffs and the Tucson Unified School District. The consent decree is a detailed and concrete plan to desegregate Tucson public schools that will provide African-American and Latino students the educational support and programs they need to learn and thrive.

The consent decree is the latest step in this longstanding desegregation case, originally filed in 1974.  The United States intervened in the case in 1976.  In 2012, the court asked the parties to develop a plan to desegregate the district. After extensive negotiations, the parties jointly submitted the four-year plan requiring the district to undertake a robust set of measures to comply with its longstanding obligations to desegregate its schools. The consent decree touches on nearly every aspect of school operations and lays a strong foundation for a high quality educational environment for all students.

“The plan approved by the court today is a game-changer for the children of Tucson,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It reflects the collective efforts of families and educators in Tucson, and the strong collaboration of the parties in this case, to forge a new path forward for the Tucson public schools.”

The consent decree will ensure that the district:

·          Implements a range of student assignment and transportation strategies to promote integration;

·          Builds and supports a diverse community of teachers and administrators;

·          Establishes culturally responsive curricula to engage and increase the academic achievement of African-American and Latino students;

·          Promotes a safe and inclusive school environment through effective and supportive school discipline policies;

·          Provides all students with increased access to advanced academic opportunities;

·          Strengthens programs to support the academic success and engagement of African-American and Latino students;

·          Develops and implements training and professional development to support culturally responsive learning environments;

·          Engages students, families and communities in school programs and activities;

·          Conducts ongoing monitoring and data-driven evaluations of its desegregation efforts, and submits regular compliance reports. 

The racial desegregation of schools is a top priority of the Civil Rights Division. The United States is involved in nearly 200 racial desegregation cases in school districts around the country. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Attorney General Eric Holder announced today the appointment of U.S. Attorney for the District of North Dakota Timothy Q. Purdon as chair of the Native American Issues Subcommittee (NAIS) of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC).  Attorney General Holder also appointed U.S. Attorney for the Western District of Oklahoma Sanford C. Coats to serve as vice chair.  

“The Native American Issues Subcommittee, the oldest subcommittee of the Attorney General’s Advisory Committee, is vital to the department’s mission in Indian Country to build and sustain safe and secure communities for future generations,” said Attorney General Holder.  “I am confident that U.S. Attorneys Purdon and Coats have the expertise and dedication to lead this important group as we work to fulfill the department’s role in protecting and serving this country’s first Americans.”

U.S. Attorney Purdon was appointed to the NAIS in 2010, and he served as vice chair throughout 2012.  U.S. Attorney Purdon replaces U.S. Attorney for the District of South Dakota Brendan V. Johnson. 

U.S. Attorney Coats was appointed to the NAIS in 2010, and he also served in the AGAC from 2010 through 2011.  U.S. Attorney Coats continues his work with the AGAC’s Resource Allocation Working Group.

Attorney General Holder also thanked U.S. Attorney Johnson for serving as chair of the NAIS for the past three years, 2009-2012.  “Brendan Johnson’s dedication and commitment to improving public safety in Indian Country will continue to positively impact tribal communities for years to come.  His leadership has brought the U.S. Attorney community together to address a myriad of important issues in Indian Country, and his guidance has been an invaluable asset to this department.  I look forward to my ongoing work with U.S. Attorney Johnson as a member of the AGAC.”

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the Attorney General on policy, management, and operational issues impacting the offices of the U.S. Attorneys.  The NAIS is made up of 30 U.S. Attorneys from across the United States whose Districts contain Indian Country or one or more federally recognized tribes. The NAIS focuses exclusively on Indian Country issues, both criminal and civil, and is responsible for making policy recommendations to the Attorney General of the United States regarding public safety and legal issues that impact tribal communities.

A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Gilbert Chung of Burlingame, Calif. Chung is the 27th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Chung conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif. Chung was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as January 2010 and continuing until about December 2010.

“The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously enforce the antitrust laws and to prosecute those who violate them at the expense of distressed homeowners.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

"Today’s charges are another example of our resolve to bring to justice those who engaged in fraudulent bid rigging and anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We continue our partnership with the Antitrust Division in aggressively pursuing individuals who participate in these criminal acts.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

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

**The fraud charge(s) referenced in this press release were

subsequently dismissed on the government’s motion.**

The Justice Department announced today that it has sued two Miami tax return preparers, seeking to bar them from preparing federal tax returns for others. The civil injunction suit alleges that Marlen Monzon, her son Yanko Rodriguez, and their Miami business, Tri Stars Multiservices Corporation, claim bogus deductions and credits on customers’ federal tax returns.

Monzon and Rodriguez allegedly included fabricated claims for business expenses on customers’ tax returns even though the customers have no business. According to the complaint, these fabricated expenses offset the customer’s wage income and improperly lower the customer’s reported taxable income. This generates (or increases) a refund, and often qualifies customers for credits to which they are not entitled. The complaint alleges that the Internal Revenue Service has examined 498 tax returns for tax years 2008 through 2011, and found that nearly every return claimed that the customer operated a nonexistent business and reported a business loss. This allegedly reduced the customers’ reported tax liability by an average of $7,031 per return, for a total of $3,494,336 in lost revenue.

According to the complaint, in 2008, the IRS assessed penalties against Monzon in the amount of $43,000 based on her preparation of tax returns claiming bogus Fuel Tax Credits. The complaint alleges that, rather than claiming bogus Fuel Tax Credits, Monzon now simply reports bogus gasoline expenses related to nonexistent businesses on her customers’ tax returns.

In the past 10 years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Website .

Related Materials:

Rodriguez Complaint

A Miami title agent and former mortgage broker was found guilty late yesterday, Feb. 4, 2013, for her role in a “reverse mortgage” fraud scheme in connection with a loan worth more than $400,000, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

After a six-day jury trial before the Honorable Richard W. Goldberg, sitting by designation in the Southern District of Florida, a federal jury convicted Yesenia Pouparina (aka Yesenia Campos), 40, of four counts of wire fraud and one count of mail fraud for her role in securing a fraudulent Home Equity Conversion Mortgage (HECM), commonly referred to as a reverse mortgage loan, and making false representations related to the occupancy of the property and its subsequent “short sale.”  A HECM is a federally insured loan that enables older Americans to withdraw equity from a home so they can remain independent and financially secure.  The jury also found that three bank accounts controlled by the defendant, which were seized by the government during the course of the investigation, should be forfeited.

According to court documents and evidence presented at trial, Pouparina, a licensed title agent in the state of Florida, devised a scheme to obtain a reverse mortgage loan on her own property in the name of her mother, an individual who failed to meet the requirements of the HECM program.  Pouparina submitted to a lending institution a false loan application and doctored records in support of that application, misrepresenting her mother’s eligibility to participate in the HECM program.  Pouparina acted as the title agent for the loan and disbursed the loan proceeds directly to her own personal bank accounts.  Pouparina also enriched herself by collecting fees generated by the loan, and also profited by using the loan proceeds in connection with her business as a “hard money lender” in other mortgage deals.   

Judge Goldberg ordered Pouparina to surrender to the U.S. Marshals on Feb. 20, 2013.  At sentencing, currently scheduled for May 9, 2013, Pouparina faces a maximum potential penalty per count of 20 years in prison and a $250,000 fine, or twice the net gain or loss from the offense.

This case was investigated by the Office of Inspector General, U.S. Department of Housing and Urban Development.  Trial Attorneys Sandra L. Moser and Mary Ann McCarthy of the Justice Department Criminal Division’s Fraud Section prosecuted the case, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.

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

Attorney General Eric Holder announced today that the Department of Justice has filed a civil lawsuit against the credit rating agency Standard & Poor’s Ratings Services alleging that S&P engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). The lawsuit alleges that investors, many of them federally insured financial institutions, lost billions of dollars on CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks. The complaint also alleges that S&P falsely represented that its ratings were objective, independent, and uninfluenced by S&P’s relationships with investment banks when, in actuality, S&P’s desire for increased revenue and market share led it to favor the interests of these banks over investors.

“Put simply, this alleged conduct is egregious – and it goes to the very heart of the recent financial crisis,” said Attorney General Holder. “Today’s action is an important step forward in our ongoing efforts to investigate – and – punish the conduct that is believed to have contributed to the worst economic crisis in recent history. It is just the latest example of the critical work that the President’s Financial Fraud Enforcement Task Force is making possible.”

Attorney General Eric Holder was joined in announcing the filing of the civil complaint by Acting Associate Attorney General Tony West, Principal Deputy Assistant Attorney General for the Civil Division Stuart F. Delery, and U.S. Attorney for the Central District of California André Birotte Jr. Also joining the Department of Justice in making this announcement were the attorneys general from California, Connecticut, Delaware, the District of Columbia, Illinois, Iowa and Mississippi, who have filed or will file civil fraud lawsuits against S&P alleging similar misconduct in the rating of structured financial products. Additional state attorneys general are expected to make similar filings today.

“Many investors, financial analysts and the general public expected S&P to be a fair and impartial umpire in issuing credit ratings, but the evidence we have uncovered tells a different story,” said Acting Associate Attorney General West. “Our investigation revealed that, despite their representations to the contrary, S&P’s concerns about market share, revenues and profits drove them to issue inflated ratings, thereby misleading the public and defrauding investors. In so doing, we believe that S&P played an important role in helping to bring our economy to the brink of collapse.”

Today’s action was filed in the Central District of California, home to the now defunct Western Federal Corporate Credit Union (WesCorp), which was the largest corporate credit union in the country. Following the 2008 financial crisis, WesCorp collapsed after suffering massive losses on RMBS and CDOs rated by S&P.

“Significant harm was caused by S&P’s alleged conduct in the Central District of California,” said U.S. Attorney for the Central District of California Birotte. “Across the seven counties in my district, we had huge numbers of homeowners who took out subprime mortgage loans, many of which were made by some of the country’s most aggressive lenders only because they later could be securitized into debt instruments that were given flawed ‘AAA’ ratings by S&P. This led to an untold number of foreclosures in my district. In addition, institutional investors located in my district, such as WesCorp, suffered massive losses after putting billions of dollars into RMBS and CDOs that received flawed and inflated ratings from S&P.”

The complaint, which names McGraw-Hill Companies, Inc. and its subsidiary, Standard & Poor’s Financial Services LLC (collectively S&P) as defendants, seeks civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on three forms of alleged fraud by S&P: (1) mail fraud affecting federally insured financial institutions in violation of 18 U.S.C. § 1341; (2) wire fraud affecting federally insured financial institutions in violation of 18 U.S.C. § 1343; and (3) financial institution fraud in violation of 18 U.S.C. § 1344. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the losses suffered as a result of the alleged violations. To date, the government has identified more than $5 billion in losses suffered by federally insured financial institutions in connection with the failure of CDOs rated by S&P from March to October 2007.

“The fraud underpinning the crisis took many different forms, and for that reason, so must our response,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department’s Civil Division.  “As today’s filing demonstrates, the Department of Justice is committed to using every available legal tool to bring to justice those responsible for the financial crisis.”

According to the complaint, S&P publicly represented that its ratings of RMBS and CDOs were objective, independent and uninfluenced by the potential conflict of interest posed by S&P being selected to rate securities by the investment banks that sold those securities. Contrary to these representations, from 2004 to 2007, the government alleges, S&P was so concerned with the possibility of losing market share and profits that it limited, adjusted and delayed updates to the ratings criteria and analytical models it used to assess the credit risks posed by RMBS and CDOs. According to the complaint, S&P weakened those criteria and models from what S&P’s own analysts believed was necessary to make them more accurate. The complaint also alleges that, from at least March to October 2007, and because of this same desire to increase market share and profits, S&P issued inflated ratings on hundreds of billions of dollars’ worth of CDOs. At the time, according to the allegations in the complaint, S&P knew that the quality of non-prime RMBS was severely impaired, and that the ratings on those mortgage bonds would not hold. The government alleges that S&P failed to account for this impairment in the CDO ratings it was assigning on a daily basis. As a result, nearly every CDO rated by S&P during this time period failed, causing investors to lose billions of dollars.

The underlying federal investigation, code-named “Alchemy,” that led to the filing of this complaint was initiated in November 2009 in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov

Due to public interest in this case, the Department of Justice is releasing documents that may not be in an accessible format. If you have a disability and the format of any material on the site interferes with your ability to access some information, please email the Department of Justice webmaster at webmaster@usdoj.gov or contact Adora Andy at 202.514.2007. To enable us to respond in a manner that will be of most help to you, please indicate the nature of the accessibility problem, your preferred format (electronic format (ASCII, etc.), standard print, large print, etc.), the web address of the requested material, and your full contact information so we can reach you if questions arise while fulfilling your request.

Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader.

Related Materials:

Standard & Poor's Complaint
Attorney General Eric Holder Speaks at the Press Conference Announcing Lawsuit Against S&P
Acting Associate Attorney General Tony West Speaks at the Press Conference Announcing Lawsuit Against S&P
Principal Deputy Assistant Attorney General for the Civil Division Stuart F. Delery Speaks at the Press Conference Announcing Lawsuit Against S&P

William W. Lowery IV, 44, of Tappahannock, Va., pleaded guilty today to trafficking in illegally-harvested striped bass, in violation of the Lacey Act, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. 

Among other things, the Lacey Act makes it unlawful for any person to import, export, transport, sell, receive, acquire or purchase any fish and wildlife taken, possessed, transported or sold in violation of any law or regulation of the United States, or to attempt to do so.  Under the Lacey Act, it is a “sale” of fish or wildlife for any person, for money or other consideration, to offer or provide guiding, outfitting, or other services.

Lowery was indicted on Nov. 8, 2012, by a federal grand jury on one count each of violating the Lacey Act and Destruction of Evidence.  Lowery faces a maximum penalty of one year in prison, a $100,000 fine, and one-year of supervised release.  He is scheduled to be sentenced on May 9, 2013. 

As part of his plea agreement, Lowery has agreed to serve 30 days in jail, pay a $5,000 fine and $1,300 in restitution to the National Oceanic and Atmospheric Administration (NOAA) for the illegally-harvested striped bass, and surrender his captain’s license for life.  As part of his plea agreement, Lowery has also agreed that he will not engage in the charter fishing industry in any capacity during the term of his supervised release. 

In a statement of facts filed with his plea agreement, Lowery admitted that on Jan. 15, 2010, he took a charter fishing trip into the Exclusive Economic Zone (EEZ) to fish for striped bass, knowing that it was illegal to fish for striped bass in the EEZ. When Lowery’s boat, the Anna Lynn was approached by law enforcement, Lowery attempted to flee.  When the Anna Lynn was caught, law enforcement officers observed a plastic trash barrel with 13 Striped Bass floating in the water near the Anna Lynn. The trash barrel had been thrown overboard from the Anna Lynn during the pursuit, and the striped bass contained within the trash barrel had been harvested by fishermen aboard the Anna Lynn within the EEZ.

This case was investigated by the National Oceanic and Atmospheric Administration, Fisheries, Office for Law Enforcement, and the U.S. Coast Guard with assistance from the Federal Communications Commission Enforcement Bureau, Norfolk, Va. Office. Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Stephen W. Haynie from the Eastern District of Virginia are prosecuting the case on behalf of the United States.

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the investiture of a new assistant chief immigration judge. Chief Immigration Judge Brian M. O’Leary presided over the investiture during a ceremony held at EOIR’s headquarters on Feb. 1, 2013.

After a thorough application process, Attorney General Eric Holder appointed Abigail M. Price to her new position. “We are pleased to welcome Ms. Price as our newest assistant chief immigration judge,” said O’Leary. “She will be responsible for the continuing development and implementation of the Office of the Chief Immigration Judge’s emphasis on providing immigration proceedings for all respondents that are fundamentally fair and timely. We are proud to be able to place in this important role someone with Judge Price’s strong background in working with vulnerable populations.”

Biographical information follows.

Abigail M. Price, Assistant Chief Immigration Judge

Abigail M. Price was appointed as an assistant chief immigration judge in January 2013, with responsibility for continuing the development and implementation of EOIR policy concerning vulnerable populations. She received a bachelor of arts degree in 1982 from Wheaton College, in Norton, Mass.; a juris doctorate in 1988 from Case Western Reserve University School of Law in Cleveland, Ohio; and a master of laws degree in 1989 from New York University School of Law. From April 2012 to December 2012, Judge Price served as a consultant to Catholic Relief Services in Baltimore, Md. From April 2011 to December 2011, she was a consultant for the International Rescue Committee (IRC) in New York. From April 2009 to April 2011, Judge Price served as deputy and national legal services director for Kids in Need of Defense in Washington, D.C. From 2001 to 2009, she worked for the IRC, as national director of immigration programs, and as global advisor on the prevention of exploitation. From 2000 to 2001, Judge Price was a resettlement expert for the Office of the United Nations High Commissioner for Refugees, Department of International Protection, Resettlement Section, in Geneva, Switzerland. From 1996 to 2000, she served as immigration policy advisor for the National Catholic Conference of Bishops/United States Catholic Conference, Migration and Refugee Services, in Washington, D.C. From 1994 to 1996, Judge Price served as the Washington representative for Church World Service, Immigration and Refugee Program, National Council of Churches USA, in New York. From 1993 to 1994, she was supervising attorney for Haitian Legal Services. From June 1992 to December 1992, Judge Price served as supervising attorney for the Haitian Refugee Program for Catholic Legal Immigration Network, Inc. From 1990 to 1992, she served as supervising attorney for the Diocese of Brooklyn, Catholic Migration Office, in New York. Judge Price is a member of the Connecticut Bar.

- 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.

Six individuals have been sentenced to federal prison by U.S. District Judge William P. Dimitrouleas for filing false claims for tax refunds, announced Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and Jose A. Gonzalez, Special Agent in Charge, IRS-Criminal Investigation (IRS-CI), Miami Office.

On Jan. 28, 2013, Penny Jones of Rigby, Idaho, was sentenced to 144 months in prison. Jones had pleaded guilty, without the benefit of a plea agreement, to conspiracy to defraud the United States and 41 counts of filing false claims for tax returns. On that same day, John Michael Smith Jr. of Hidden Hills, Calif., was sentenced to 36 months in prison. Smith pleaded guilty to filing a false claim for a tax refund. According to court documents related to the plea, Smith had sought over $208,000, an amount to which he knew he was not entitled.

Defendants Michael D. Beiter, Jr. formerly of Coral Springs, Fla., David Clum, Jr., of Whites Creek, Tenn., Dale Peters, of San Mateo, Calif., and Christopher Marrero, of Davie, Fla., were all sentenced on Feb. 1, 2013. All four were convicted, following a four-week trial in October 2012, of conspiracy to defraud the United States with respect to claims and multiple counts of filing false claims for tax refunds.

Beiter was sentenced to 300 months in prison, which is to be served consecutively to a ten year sentence he is currently serving for promoting a separate tax fraud scheme. Clum was sentenced to 293 months in prison. Peters was sentenced to 144 months in prison. Marrero was sentenced to 180 months in prison.

“Taxpayers should be wary of deals that appear too good to be true,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “Instigators of these tax scams take money from these taxpayers, who may end up paying substantial penalties to the IRS. Sentences like the ones handed down in this case show that peddlers of these bogus tax schemes face significant jail time for their crimes.”

U.S. Attorney Wifredo A. Ferrer stated, “Tax refund scams are the latest crime du jour. For a $750 fee, complicit clients across the United States expected the defendants to submit false returns to the IRS on their behalf, claiming exorbitant fraudulent refunds, to be shared with the defendants. Instead of receiving enormous refunds, however, the defendants were sentenced to substantial jail time and the clients received substantial civil penalties and were subject to aggressive collection efforts by the IRS. As this case demonstrates, we will continue to crack down on fraudsters and will not let them line their pockets with our tax dollars.”

“The defendants who perpetrated this scheme systematically defrauded the government and the taxpaying public,” said Richard Weber, Chief IRS Criminal Investigation. “At the IRS, protecting taxpayer money is a matter we take very seriously.  IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”

The evidence at trial showed that Jones, Beiter, Clum, Peters and others operated a scheme to defraud the IRS out of tax refunds. The false return scheme operated under the name PMDD Services LLC, and, later, Forever Grace LLC. The false return scheme was nationwide, causing the filing of tax returns for at least 180 clients from 30 different states, requesting more than $160 million in fraudulent tax refunds. The defendants and clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years. The tax returns falsely reported the amount of their personal debt obligations as both income and as federal tax withholding. The fictitious income and withholding was reported to the IRS on Forms 1099-OID.

According to the evidence at trial, the tax returns prepared as part of the scheme fraudulently claimed refunds in amounts specifically intended to allow the clients to pay off their mortgages, credit cards, student loans, and other personal debts. Clients paid $750 to have the defendants prepare a tax return reporting this fictitious “OID” income, and clients agreed to share 10 percent of their tax refund with defendants. The trial evidence also showed that defendant Beiter and Clum held seminars in Florida and Tennessee, respectively, in which they recruited potential clients.

The evidence at trial further established that most clients of the scheme did not receive the enormous refunds requested, but instead received substantial civil penalties. Those who did receive refunds were typically subject to collection efforts by the IRS.

In addition, the evidence showed that defendants Beiter, Clum and Marrero recruited clients for the scheme. Clum also filed false “OID” tax returns himself. Peters was PMDD Services’ information technology specialist, writing software and implementing computerized procedures to automate the process of preparing the fraudulent tax returns.

Separate from the 1099-OID scheme, Marrero was convicted of filing three false tax returns at three separate IRS offices on the same day. Each return requested a refund in excess of $80,000 based on non-existing gambling income and associated tax withholding.

Previously, in a related case, a client of the scheme, Philip Butcher, formerly of Rogers, Ark., pleaded guilty to filing a false claim for a tax refund. Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totaling $1,456,696.

These cases were investigated by Special Agents of IRS-Criminal Investigation. Assistant U.S. Attorney Bertha Mitrani and Tax Division Trial Attorneys Jonathan Marx and Jed Silversmith prosecuted the cases.

Related Materials:

United States v. Yanko Rodriguez, et al.
Complaint for Permanent Injunction and Other Relief (PDF)

The United States filed two lawsuits to shut down three tax preparers in Prince George’s County, Md., the Justice Department announced today. The civil injunction complaints were filed in U.S. District Court in Greenbelt, Md. One suit names Tonya Hubbard and her Lanham, Md.-based tax preparation business, Universal Tax Service LLC, as defendants. The other suit was filed against Hubbard’s ex-husband, Marvin Binion Sr., and his son, Marvin Binion II. The complaint alleges that the son owns and operates Marvin Binion’s Universal Tax & Immigration Service in Hyattsville, Md.

The government complaints allege that the defendants prepare fraudulent tax returns for customers containing bogus deductions for items like charitable contributions, unreimbursed employee business expenses, and other miscellaneous expenses. According to the suit Binion Sr., pleaded guilty in 2007 to filing 13 false federal income tax returns and was later convicted of making false declarations to a federal court in connection with that criminal tax case. The suit alleges that Binion Sr. was released from prison in May 2012.

The lawsuits allege that Hubbard, Universal Tax Service LLC and the Binions violate federal law by not signing the returns they prepare for customers and by not placing IRS preparer tax identification numbers on the returns. All tax preparers are required to place an IRS-issued tax preparer identification number on every federal income tax return they prepare for a customer.

According to the complaints the defendants prepare customer returns using Turbo Tax software, place the returns in postage paid, pre-addressed envelopes and instruct customers to sign and mail the returns to the IRS on their own. The suits allege that defendants do this to hide from the IRS their role in preparing the returns.

The government alleges that Hubbard, Binion Sr. and Binion II generally charge customers a tax return preparation fee of $300 and that the Binions may have earned as much as $30,000 per day preparing fraudulent returns.

The Internal Revenue Service has listed tax preparer fraud as one of the “Dirty Dozen” tax scams . The Justice Department has obtained injunctions against hundreds of tax return preparers and tax-fraud promoters in the past ten years. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Marvin L. Binion Sr., etc.
Binion Complaint for Permanent Injunction (PDF)
Hubbard Complaint for Permanent Injunction (PDF)

The Department of Justice’s National Indian Country Training Initiative (NICTI) partnered with the National Strangulation Training Institute to deliver the first-ever national Indian Country training on the investigation and prosecution of non-fatal strangulation and suffocation offenses.  The training, held from Jan. 29 – Feb. 1, 2013, drew attendance from over 50 federal and tribal participants, representing 17 tribes, U.S. Attorney’s Offices, the FBI and the Bureau of Indian Affairs. Students included prosecutors, law enforcement, advocates, paramedics and sexual assault nurse examiners.
 
The training, held at the National Advocacy Center in Columbia, S.C., provided an in-depth examination of the mechanics of strangulation and suffocation from a medical, legal and law enforcement perspective. In addition to substantive information on strangulation and suffocation, students received information on how to effectively train others in their community about the investigation and prosecution of strangulation crimes and how to serve as an expert witness on the issue in court.

 “Strangulation has been identified as one of the most lethal forms of domestic violence and sexual assault. Expert training in this area is critical as external signs of strangulation are absent in over half of all victims. Death can occur without any external marks at all,” said Leslie A. Hagen, National Indian Country Training Coordinator.
 
“If we can prevent even one homicide by early prosecution of an abuser when he strangles his partner and she survives, all our work will be worth it,” said Gael Strack, the Project Director of the National Strangulation Training Institute and CEO of the National Family Justice Center Alliance.

“When men choke women, those men might as well be raising their right hand and saying ‘I am a killer’ to everyone that is paying attention,” said Casey Gwinn, President of the National Family Justice Center Alliance and faculty at this week’s training. “After 20 years of research and practice, it is clear that men who choke women are the same men who are likely to later kill those women, kill children, and kill police officers.” 
 
Facts about strangulation:

• Strangulation is more common than professionals have realized. Recent studies have now shown that 34 percent of abused pregnant women report being “choked” (Bullock, 2006); 47 percent of female domestic violence victims reported being “choked” (Block, 2000) and most experts believe the rate is higher given the minimization by victims and the lack of education. 

• Victims of multiple strangulation “who had experienced more than one strangulation attack, on separate occasions, by the same abuser, reported neck and throat injuries, neurologic disorders and psychological disorders with increased frequency”. (Smith,  2001)

• Almost half of all domestic violence homicide victims had experienced at least one episode of non-fatal strangulation prior to a lethal violent incident (Glass, Sage, 2008).  Victims of prior non-fatal strangulation are 800 percent more likely of later becoming a homicide victim. (Glass, et al, 2008).

• Strangulation is more serious than professionals have realized. Loss of consciousness can occur within 5 to 10 seconds and death within 4 to 5 minutes. (Watch, 2009; Hawley, McClane, 2001). The seriousness of the internal injuries may take a few hours to be appreciated and delayed death can occur days later. (Hawley, McClane, 2001).

• Because most strangulation victims do not have visible injuries, strangulation cases may be minimized or trivialized by law enforcement, medical and mental health professionals. 

Several family members were sentenced Friday in the Middle District of Alabama for their involvement in a $1.9 million dollar stolen identity refund fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced. Barbara Murry, Veronica Temple and Yolanda Moses each received a sentence of 57 months in prison and ordered to pay restitution in the amount of $1,908,659. Douglas Murry received a sentence of 24 months in prison and was ordered to pay restitution in the amount of $142,038. Almetta Johnson received a sentence of eight months home detention. Lee Moses, Jeffrey Temple and Courtney Johnson each received a sentence of probation.

On April 25, 2012, Barbara Murry, Douglas Murry, Yolanda Moses, Lee Moses, Veronica Temple, Jeffrey Temple, Almetta Johnson and Courtney Johnson were charged in a multi-count indictment by a federal grand jury on a variety of charges relating to an identity theft and tax fraud scheme. According to court documents, between January 2006 and April 2012, the defendants and their co-conspirators directed over 900 false tax refunds claiming in excess of $1.9 million to several bank accounts controlled by the defendants and their co-conspirators. The conspiracy consisted of two parts. First, the defendants received false tax refunds into their bank accounts and provided a portion of the funds to the third-party preparers. None of the defendants obtained the identities or prepared the tax returns in this part of the conspiracy.

According to court documents, the second part of the conspiracy centered on B & B Weaving Shop and B & B Tax Service. Barbara Murry owned and operated B & B Weaving Shop, located in Montgomery, Ala. B& B Weaving Shop was located in the same building as B & B Tax Service. Barbara Murry’s daughters, Yolanda Moses and Veronica Temple, ran B & B Tax Service. Veronica Temple and her sister, Yolanda Moses, obtained stolen identities from multiple sources. Veronica Temple, Yolanda Moses, and others filed false tax returns from both B & B Tax Service and their homes and directed the tax refunds to numerous bank accounts controlled by the defendants and their co-conspirators. Veronica Temple, Yolanda Moses, and Barbara Murry recruited individuals, including Douglas Murry, to open bank accounts in furtherance of the scheme. Many of the identity victims were 16 and 17 year-old minors.

“The Justice Department will investigate and prosecute stolen identity refund fraud crimes, whether they are committed by a single thief, or a ring of thieves,” said Assistant Attorney General Kathryn Keneally. “The prison sentences handed down today demonstrate that such invasions of personal privacy and theft of public monies will not be tolerated.”

“Individuals who commit identity theft and refund fraud of this magnitude deserve to be punished to the fullest extent of the law,” said Richard Weber, Chief IRS Criminal Investigation.  “These individuals demonstrated a blatant disregard of the integrity of the United States tax system and caused immeasurable hardship to innocent victims. IRS Criminal Investigation remains committed to the pursuit of identity theft and, together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”

Assistant Attorney General Keneally commended the efforts of special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Jason H. Poole and Michael Boteler, and Assistant U.S. Attorney Jared Morris, who prosecuted the case.

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

Larreka Jackson pleaded guilty today in the Middle District of Alabama to her role in a multi-million dollar conspiracy to use stolen identities to obtain tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.

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

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

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

The company that operates Path, an online social networking application, agreed to pay an $800,000 penalty to settle charges that it violated the Federal Trade Commission (FTC) Act and the Children’s Online Privacy Protection Rule, the Justice Department announced today.

In a complaint filed on Jan. 31, 2013, the United States alleged that San Francisco-based Path Inc. violated the Children’s Online Privacy Protection Rule by collecting personal information from children under the age of 13 without obtaining parental consent. According to the complaint, in over 3,000 instances, Path collected personal information from the address books in children’s mobile devices, including the names, addresses, phone numbers and email addresses of the child’s contacts. Path also collected personal information from children during the registration process and by allowing them to post content online.

“The rules established by the Children’s Online Privacy Protection Act play an important role in keeping kids safe online,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “Companies that market to children must respect their privacy by getting parental consent before collecting any personal information, and the Justice Department will work with the FTC to ensure that they do.”

According to the complaint, Path also violated the FTC Act by failing to disclose to consumers that it was automatically collecting information from users’ address books on their mobile devices. Path’s privacy policy and “Add Friends” feature led consumers to believe that this information would be collected only with the user’s consent.

Along with the civil penalty, Path agreed to an injunction barring future violations of the FTC Act and the Children’s Online Privacy Protection Rule. Path further agreed that it would delete all information previously collected from children under age 13, implement a comprehensive privacy program, and submit to regular assessments by an independent third party.

The FTC, which oversees the Children’s Online Privacy Protection Rule, referred the case to the Justice Department. The lawsuit, United States v. Path Inc., was filed in the Northern District of California.

Principal Deputy Assistant Attorney General Delery thanked the FTC for investigating this matter and referring it to the department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.

A Maryland man was found guilty by a federal jury yesterday and sentenced today to serve 30 years in prison for his participation in a global online child pornography conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joseph H. Hogsett of the Southern District of Indiana.

Following a four-day trial, Roger Lee Loughry Sr., 57, of Baltimore, was found guilty yesterday by a federal jury in the Southern District of Indiana of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography and two counts of distributing child pornography, in connection with his role as an administrator of an online child pornography bulletin board. 

Loughry was sentenced today by U.S. District Court Judge Sarah Baker in the Southern District of Indiana.  In addition to his prison term, Loughry was sentenced to serve lifetime supervised release.

Evidence presented at trial revealed that Loughry had been an active member of a child pornography bulletin board since November 2005 and had participated in numerous administrative functions on the online board during his membership, including adding new members to the board.  In addition, evidence introduced at trial established that Loughry’s home was searched in September 2008, at which time computers and computer media were seized.  Trial evidence showed that upon review of the seized materials, investigators discovered images and videos depicting minors engaging in sexually explicit conduct. 

 The charges against Loughry were a result of “Operation Nest Egg,” a joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, the U.S. Postal Inspection Service (USPIS) and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).  Operation Nest Egg, launched in February 2008, targeted 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.

 Loughry had previously been tried and convicted of the same charges in April 2010.  On Oct. 11, 2011, his convictions were reversed and the case was remanded for a new trial. 

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 case was prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana and CEOS Trial Attorneys Keith Becker and Amy Larson.  The investigation was conducted jointly by CEOS’ High Technology Investigative Unit, USPIS and ICE, with assistance provided by the Indiana Internet Crimes Against Children Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.

The United States has asked a federal court to shut down a tax-preparation office in Riverview, Fla., the Justice Department announced today. The civil injunction suit, filed in U.S. District Court in Tampa, Fla., alleges that Tyree Middleton, of Palmetto, Fla., operates Middleton Financial Group and Middleton Financial Professional Tax & Accounting Inc. in Riverview and intentionally prepares and files fraudulent federal income tax returns to obtain improper tax refunds.

According to the complaint, Middleton induces potential customers to “get excited” about their tax refunds, asserting that if they “file today,” they will “smile today,” when Middleton has reason to know that his customers are not entitled to the refunds he claims on their behalf. The lawsuit further alleges that Middleton repeatedly prepared federal tax returns that falsely claimed first-time home buyer credits, underreported income, claimed false business deductions, and claimed false education and earned-income credits.

The complaint further alleges that Middleton stole identities so that he could file income tax returns falsely claiming refunds, and have the refunds deposited into his bank account. According to the complaint Middleton prepared income tax returns for two deceased persons, falsely claiming the same items on each return.

The Internal Revenue Service lists return-preparer fraud and identify theft as two of its “Dirty Dozen” tax scams .

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

Related Materials:

United States v. Tyree Middleton, etc.
Complaint and Request for Injunctive Relief
 

The Justice Department today announced a settlement with the city of Lomita, Calif., resolving allegations that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied the Islamic Center of the South Bay’s application to build a new mosque on its property. The settlement, which still must be approved by the U.S. District Court in Los Angeles, is in the form of an agreed order and resolves a lawsuit filed today by the United States against the city.

The case arose from the Lomita City Council’s 2010 denial of an application by the Islamic Center to take down the aging, separate structures on its property, which it has been using for worship and various other religious activities since 1985, and construct a single building that would serve its needs. The government’s complaint, which was filed with the court along with the agreed order resolving the lawsuit, alleges that the structures currently being used by the Islamic Center are insufficient to enable the community to come together for worship and fellowship or to perform religious rituals properly. The lawsuit alleges that the city’s denial of the Islamic Center’s application to construct a new center in place of these inadequate facilities imposed a substantial burden on the religious exercise of the Islamic Center and its members.

“Religious freedom is among our most fundamental rights, and there are few aspects of that right more basic than the ability of a religious community to come together for worship and fellowship in a decent and appropriate setting on its own property,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “With RLUIPA, Congress has sought to ensure that this basic right is protected from encroachment by unjustified local zoning actions.”

“The right to religious freedom includes the ability to build places of worship and to assemble at those places,” said U.S. Attorney André Birotte Jr. “This settlement will ensure that worshippers at the Islamic Center will be able to exercise their rights and enjoy the cherished freedoms in our Constitution.”

As part of this settlement, which incorporates portions of a related agreement between the city and the Islamic Center, the city has agreed to consider a renewed application by the Islamic Center on an expedited schedule. The city also agreed that its leaders and employees who make land-use decisions will attend training on the requirements of RLUIPA. In addition, the city periodically will report to the Justice Department.

RLUIPA prohibits land use decisions that discriminate based on religion or impose substantial and unjustified burdens on religious exercise. Persons who believe their rights under RLUIPA have been violated may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. More information about RLUIPA, including a report on the first 10 years of its enforcement, may be found at www.justice.gov/crt/about/hce/rluipaexplain.php .

Related Materials:

Lomita Proposed Agreed Order
Lomita Complaint

A Kansas City, Kan., federal court permanently barred an Instant Tax Service franchisee, A&S Tax Services LLC, from further operating or preparing federal tax returns for others, the Justice Department announced today. Instant Tax Service is a national tax-preparation chain operated by ITS Financial LLC, based in Dayton, Ohio. An Ohio federal court entered a preliminary injunction against ITS Financial LLC and its owner last November.

In the Kansas case, the owner of A&S Tax Services, Semere Tsehaye of St. Louis was also permanently enjoined from engaging in certain abusive practices. Both A&S Tax Services and Tsehaye consented to the civil injunction order without admitting the allegations against them. The order, signed by Judge John W. Lungstrum of the U.S. District Court for the District of Kansas, also provides that A&S Tax Services will pay $100,000 in civil tax penalties.

According to the government complaint , the defendants operated Instant Tax Service offices at multiple locations in the Kansas City metropolitan area. The defendants allegedly instructed A&S Tax Services employees at Instant Tax Service offices to engage in systemic and pervasive tax fraud, including routinely preparing tax forms falsely claiming education and dependent-care credits, reporting items pertaining to phony companies, and reporting fictitious income and expenses in order to fraudulently inflate the Earned Income Tax Credit.

Last year, Judge Lungstrum permanently enjoined Tsehaye’s brother, Ahferom Goitom, from preparing federal tax returns.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department’s website .

Related Materials:

United States v. Semere Tsehaye, et al.
Stipulated Order for Permanent Injunction Other Relief Against Semere Tsehaye and A & S Tax Services, LLC
 

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

Ben Christian Dillon, aka “Tuff,” 40, of Houston, and James Marshall Meldrum, aka “Dirty,” 40, of Dallas, each pleaded guilty today before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity.

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

Dillon and Meldrum admitted to being ABT gang members and engaging in multiple acts in support of the criminal enterprise.  Dillon admitted to trafficking in methamphetamine, acting as an enforcer to collect drug debts owed to the ABT enterprise, committing acts of arson for the gang and attempting to kill a fellow ABT gang member who had been marked for death by senior ABT officials. Meldrum admitted to trafficking in methamphetamine and severely beating a subordinate gang member. 

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

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

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

At sentencing, Dillon and Meldrum each face a maximum penalty of life in prison. Dillon’s sentencing hearing is scheduled for April 24, 2013, and Meldrum’s sentencing hearing is scheduled for Sept. 26, 2013.

Dillon and Meldrum are two of 34 defendants charged in October 2012 with conducting racketeering activity through the ABT criminal enterprise, among other charges.
 
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Fort Worth, Texas, Police Department; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Montgomery County District Attorney’s Office; Atascosa County District Attorney’s Office; and the Kaufman County, Texas, District Attorney’s Office.

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

After a 14-day trial, Mohamed Osman Mohamud, 21, a naturalized U.S. citizen from Somalia and resident of Corvallis, Ore., was convicted today by a federal jury in the District of Oregon of attempting to use a weapon of mass destruction (explosives) in connection with a plot to detonate a vehicle bomb at an annual Christmas tree lighting ceremony in Portland.

At sentencing, Mohamud faces a maximum statutory sentence of life in prison.  Mohamud was arrested on Nov. 26, 2010, after he attempted to detonate what he believed to be an explosives-laden van that was parked near the tree lighting ceremony in Portland.  The arrest was the culmination of a long-term undercover operation, during which Mohamud was monitored closely for months as his bomb plot developed.  The device was in fact inert; and the public was never in danger from the device.

“When an individual concocts a plan to commit mass violence – and is determined to follow through – law enforcement has an obligation to take action to protect the public.  Today’s verdict shows that they will be held to account,” said Lisa Monaco, Assistant Attorney General for National Security. “I applaud all those who worked so diligently to thwart this plot and ensure no one was harmed.”

“This trial provided a rare glimpse into the techniques Al Qaeda employs to radicalize home-grown extremists. With the verdict today, the jury has held this defendant accountable,” said Amanda Marshall, U.S. Attorney for the District of Oregon.   “I thank the dedicated professionals in the law enforcement and intelligence communities who were responsible for this successful outcome.  I look forward to our continued work with Muslim Communities in Oregon who are committed to ensuring that all young people are safe from extremists who seek to radicalize others to engage in violence.” 

“The verdict returned in the Mohamed Mohamud case highlights the difficult, but important, work that FBI employees do every day.  Whether an employee is an undercover agent or analyst or technician – each has a role to play in keeping our community safe while at the same time respecting the freedoms that make this country strong. Indeed, in this country everyone has a right to live, work and worship freely and without fear. FBI employees – in Oregon and around the world – find strength in preserving and protecting these core values,” said Gregory Fowler, Special Agent in Charge of the FBI Portland Division.

According to court documents and evidence presented by the government at trial, in February 2009, Mohamud began communicating via e-mail with Samir Khan, a now-deceased al-Qaeda terrorist who published Jihad Recollections, an online magazine that advocated violent jihad, and who also published Inspire, the official magazine of al-Qaeda in the Arabian Peninsula.  Between February and August 2009, Mohamed exchanged approximately 150 emails with Khan.  Mohamud wrote several articles for Jihad Recollections that were published under assumed names.

In August 2009, according to evidence presented at trial, Mohamud was in email contact with Amro Al-Ali, a Saudi national who was in Yemen at the time and is today in custody in Saudi Arabia for terrorism offenses.  Al-Ali sent Mohamud detailed emails designed to facilitate Mohamud’s travel to Yemen to train for violent jihad.  In December 2009, while Al-Ali was in the northwest frontier province of Pakistan, Mohamud and Al-Ali discussed the possibility of Mohamud traveling to Pakistan to join Al-Ali in terrorist activities. Mohamud responded to Al-Ali in an email: “yes, that would be wonderful, just tell me what I need to do.”  Al-Ali referred Mohamud to a second associate overseas and provided Mohamud with a name and email address to facilitate the process.

In the following months, Mohamud made several unsuccessful attempts to contact Al-Ali’s associate.  Ultimately, an FBI undercover operative contacted Mohamud via email under the guise of being an associate of Al-Ali’s. Mohamud and the FBI undercover operative agreed to meet in Portland in July 2010.  At the meeting, Mohamud told the FBI undercover operative he had written articles that were published in Jihad Recollections.  Mohamud also said that he wanted to become “operational.” Asked what he meant by “operational,” Mohamud said he wanted to put an explosion together, but needed help.

According to evidence presented at trial, at a meeting in August 2010, Mohamud told undercover FBI operatives he had been thinking of committing violent jihad since the age of 15.  Mohamud then told the undercover FBI operatives that he had identified a potential target for a bomb: the annual Christmas tree lighting ceremony in Portland’s Pioneer Courthouse Square on Nov. 26, 2010.  The undercover FBI operatives cautioned Mohamud several times about the seriousness of this plan, noting there would be many people at the event, including children, and emphasized that Mohamud could abandon his attack plans at any time with no shame.  Mohamud indicated the deaths would be justified and that he would not mind carrying out a suicide attack on the crowd.

According to evidence presented at trial, in the ensuing months Mohamud continued to express his interest in carrying out the attack and worked on logistics.  On Nov. 4, 2010, Mohamud and the undercover FBI operatives traveled to a remote location in Lincoln County, Ore., where they detonated a bomb concealed in a backpack as a trial run for the upcoming attack.  During the drive back to Corvallis, Mohamud was asked if he was capable of looking at all the bodies of those who would be killed during the explosion.  In response, Mohamud noted, “I want whoever is attending that event to be, to leave either dead or injured.” Mohamud later recorded a video of himself, with the assistance of the undercover FBI operatives, in which he read a statement that offered his rationale for his bomb attack. 

On Nov. 18, 2010, undercover FBI operatives picked up Mohamud to travel to Portland to finalize the details of the attack.  On Nov. 26, 2010, just hours before the planned attack, Mohamud examined the 1,800 pound bomb in the van and remarked that it was “beautiful.”  Later that day, Mohamud was arrested after he attempted to remotely detonate the inert vehicle bomb parked near the Christmas tree lighting ceremony

This case was investigated by the FBI, with assistance from the Oregon State Police, the Corvallis Police Department, the Lincoln County Sheriff’s Office and the Portland Police Bureau.  The prosecution is being handled by Assistant U.S. Attorneys Ethan D. Knight and Pamala Holsinger from the U.S. Attorney’s Office for the District of Oregon.  Trial Attorney Jolie F. Zimmerman, from the Counterterrorism Section of the Justice Department’s National Security Division, is assisting.

Ricky Lee Greenwood, of Portland, Ore., was indicted late last night on nine counts of wire fraud, nine counts of filing false claims for tax refunds, and eight counts of aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. Greenwood made his initial appearance in court Wednesday in Portland.

According to the 26-count indictment, Greenwood electronically filed at least 66 false tax returns with fictitious wage and false dependent information, requesting at least $300,000 in fraudulent refunds. Greenwood is alleged to have obtained the names and Social Security numbers of unemployed individuals in order to file fraudulent tax returns in their names. According to the indictment, Greenwood also obtained the Social Security numbers of children and claimed them on the tax returns of unrelated individuals to maximize refundable credits – such as the Earned Income Tax Credit and the Additional Child Tax Credit – and further inflate the fraudulent refunds. In addition, according to the indictment, Greenwood had the fraudulent refunds delivered to him or deposited into accounts that he controlled.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Greenwood faces a maximum sentence of 5 years in prison for each false claims count, up to 20 years in prison for each wire fraud count, and a mandatory 2-year sentence on the aggravated identity theft counts. If convicted, he could be subject to fines, mandatory restitution and a money judgment.

This case was investigated by the IRS Criminal Investigation Stolen Identity Refund Fraud Task Force. Trial Attorneys Leslie A. Goemaat and Todd P. Kostyshak of the Justice Department’s Tax Division and Assistant U.S. Attorney Claire Fay are prosecuting the case.

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

The Justice Department announced today that, as part of its Barrier-Free Health Care Initiative, it has reached a settlement with the Fayetteville Pain Center under the Americans with Disabilities Act (ADA).  The settlement resolves allegations that the Fayetteville Pain Center violated the ADA by refusing to treat a woman because she has HIV.

The complainant, a woman with HIV who was suffering from back pain as a result of a car accident, visited the Fayetteville Pain Center in Fayetteville, N.C., seeking treatment.  According to the complaint, the woman was unable to obtain medical treatment because the doctor at the Fayetteville Pain Center refused to treat a person with HIV.  The ADA requires public accommodations such as doctors’ offices, medical clinics, hospitals, and other health care providers, to provide people with disabilities, including those with HIV, equal access to goods, services, and facilities.

Under the settlement, the Fayetteville Pain Center must pay $10,000 to the complainant and $5,000 to the United States in civil penalties, train its staff on the ADA, and develop and implement an anti-discrimination policy.

“All people deserve equal access to medical treatment.  People with HIV and other disabilities must not be denied health care because of their disabilities.  Medical professionals, perhaps more than anyone, should understand that the universal precautions they use when treating all patients mean no one should be excluded from treatment based on HIV,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “This type of discrimination will not be tolerated.”

The U.S. Attorney in Eastern North Carolina, Thomas G. Walker, emphasized that “this settlement should also send a message to all health care providers in Eastern North Carolina that a disability cannot be a factor in determining accessibility to care and treatment.”

This settlement is part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorneys’ offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities.  The initiative was announced on the anniversary of the ADA in July 2012 and 40 U.S. Attorneys’ offices are participating.  The division expects the initiative to address access to health care for people with HIV and hearing disabilities, as well as physical access to medical facilities.  In 2012, the division and U.S. Attorneys reached two settlement agreements regarding access to medical care for people with HIV and four settlements regarding access to medical care for people with hearing disabilities. 

For more information on the ADA and HIV visit www.ada.gov/aids.  Those interested in finding out more information about these settlements or the obligations of public accommodations under the ADA, including how it protects people with HIV in accessing medical care, may 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.

The Justice Department announced today that it has reached an agreement with Houston Community College (HCC) resolving allegations that the college violated the anti-discrimination provision of the Immigration and Nationality Act (INA).  HCC employs approximately 6,000 employees across 20 campuses and is one of the largest community colleges in the country.
 
The Justice Department’s investigation began after an individual filed a charge alleging that she was discriminated against in the hiring process.  The department’s investigation revealed that for at least the last two years, HCC has engaged in a pattern or practice of discrimination by requiring non-U.S. citizens to provide specific documentation establishing their work authority, while not making similar demands from U.S. citizens.  The department did not find that the individual that filed the charge was herself a victim of the discriminatory practice.
 
Under the terms of the agreement, HCC will pay $83,600 in civil penalties and agreed to abandon its prior department-based employment eligibility verification process in favor of a centralized verification process. HCC also agreed to create a $20,000 back pay fund to compensate potential victims who lost wages as a result of the discriminatory practices, to undergo Justice Department training on the anti-discrimination provision of the INA and to be subject to monitoring of its employment eligibility verification practices for a period of two years.   The case was handled by Trial Attorney Liza Zamd and settled prior to the Justice Department filing a complaint in this matter.
 
“Employers cannot create higher hurdles for non-U.S. citizens in the employment process, including the employment eligibility verification process, than those required of U.S. citizens or those required by law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “We commend HCC for restructuring its hiring processes to ensure that it will no longer be treating new-hires differently 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.

Related Materials:

HCC Settlement Agreement

WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today challenging Anheuser-Busch InBev’s (ABI) proposed acquisition of total ownership and control of Grupo Modelo.  The department said that the $20.1 billion transaction would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States, resulting in consumers paying more for beer and having fewer new products from which to choose. 

Americans spent at least $80 billion on beer last year.  According to the department, ABI’s Bud Light is the best selling beer in the United States and Modelo’s Corona Extra is the best-selling import.  Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers, the department said.

The department’s lawsuit, filed in the U.S. District Court for the District of Columbia, seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.

“ The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers.  This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”   

ABI and Modelo–the largest and third largest beer firms, respectively–together control about 46 percent of annual sales in the United States.  MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales.  Beer is generally grouped into four distinct segments by industry participants–sub-premium, premium, premium plus and high-end.  The sub-premium segment includes: Busch (owned by ABI); and Keystone (owned by MillerCoors).  The premium segment includes:  Bud Light; Coors Light; and MillerLite.  The premium plus segment includes:  Michelob (owned by ABI); and Modelo Especial (owned by Modelo).  The high-end segment includes: imports such as Corona (owned by Modelo) and Heineken; and a variety of craft beers.

According to the department’s complaint, the U.S. beer market is already highly concentrated, and prices are increased by strategic interactions among the largest brewers, including ABI and MillerCoors.  ABI generally acts as the price leader, implementing annual price increases in the sub-premium, premium and premium plus segments of the U.S. beer industry.  MillerCoors and other brewers have typically joined the ABI price increases, while Modelo has not.  By pricing aggressively, Modelo–through its importer, Crown Imports–puts pressure on ABI to maintain or lower prices, especially in certain parts of the country.  As a result, Modelo has become a particularly important competitor in the U.S. market. 

The complaint quotes internal company documents demonstrating both ABI’s determination to maintain its upward price leadership in the U.S. beer industry and Modelo’s present-day position as a significant competitive threat to ABI:  

• ABI has implemented a “conduct plan,” whereby ABI hopes to establish “the highest level of [price] followership” by its large rivals by being as “consistent,” “simple” and “transparent” as possible;

• ABI believes that its conduct plan provides the highest possibility of “sustaining a price increase” and “ensuring competition does not believe they can take share through pricing”;

• By contrast, Modelo’s pricing strategy in the United States is known as the “momentum plan” and aims to narrow the “price gap” between Modelo’s imports and domestic premium beers, such as ABI’s Bud Light, stealing market share from ABI by enticing consumers to “trade up” to Modelo beer; and

• ABI executives acknowledge that Modelo has “put increasing pressure” on ABI competitively, and that Modelo’s strategy is at odds with ABI’s well-established practice of leading prices upward with the expectation that its competitors will follow.

The complaint also discusses ABI’s efforts to target Corona.  ABI considered Corona to be a significant threat, and launched Bud Light Lime in 2008 to compete with Corona.  ABI went as far as to mimic Corona’s distinctive clear bottle.   Ultimately, instead of trying to compete head-to-head with its own product, Bud Light Lime, ABI is thwarting competition by buying Modelo.

The department alleges that ABI’s acquisition of total ownership and control of Modelo would eliminate the existing competition between ABI and Modelo, further concentrating the beer industry, enhancing ABI’s market power and facilitating coordinated pricing between ABI and the remaining large players.  Consumers would, as a result, see higher prices and less innovation.

The department’s complaint also alleges that ABI and Modelo efforts to remedy the anticompetitive aspects of their transaction are inadequate.  The complaint states that ABI has agreed to sell Modelo’s existing 50 percent interest in Crown to its Crown joint venture partner, Constellation.  ABI would also enter into an exclusive agreement to supply Constellation with Modelo beer to import into the United States, although ABI can terminate this supply agreement after 10 years and would retain the Modelo brands and its brewing and bottling facilities.

“The companies’ attempt to fix this anticompetitive deal through t he sale of Modelo’s existing interest in Crown and a temporary supply agreement is not sufficient to prevent consumer harm from ABI’s acquisition of its competitor, Modelo,” said Baer.

The complaint states that the combined effect of the proposed acquisition of Modelo and the proposed fix is to eliminate from the marketplace a sophisticated brewing firm with a long history of success and replace it with an importer which will own no brands or brewing facilities and be totally dependent on ABI for its supply of Corona and other Modelo brands.  The documents in the case show that as Crown’s CEO wrote to his employees after the acquisition was announced:  “our #1 competitor will now be our supplier…it is not currently or will not, going forward, be ‘business as usual.’”  The department’s complaint said that not only will competition be harmed by the loss of Modelo as a competitor, but by removing an independent brewer–Modelo–from the market, strategically coordinated pricing will become easier in the future.

ABI is a Belgian corporation with its principal place of business in Leuven, Belgium.  In 2011, ABI had revenues of approximately $39 billion.  ABI currently has a 43 percent voting interest and a 50.35 percent economic interest in Modelo.  ABI has stated in its annual reports filed with the Securities and Exchange Commission that it does not have voting or other effective control of Modelo.  Through the proposed acquisition, ABI would acquire control of, and the remaining economic interest in Modelo.

Modelo is a Mexican corporation with its principal place of business in Mexico City.  In 2011, Modelo had revenues of approximately $7 billion.

Jesus Enrique Rejon Aguilar, aka “Mamito” and “Caballero,” a high ranking member of the “Los Zetas” drug cartel, pleaded guilty today to conspiracy to import multi-ton quantities of cocaine and marijuana into the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA). 

Rejon Aguilar, 36, pleaded guilty before U.S. District Judge Barbara J. Rothstein in the District of Columbia.  Rejon Aguilar was extradited to the United States in September 2012 and was ordered detained in federal custody pending trial.

On Nov. 4, 2010, Rejon Aguilar and 19 co-defendants were charged in a superseding indictment with conspiracy to manufacture and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana for importation into the United States.  The indictment charges that between 2000 and 2010, members of Los Zetas, including Rejon Aguilar, engaged in a conspiracy with members of the Gulf Cartel in an arrangement referred to as the “Company” to import drugs into the United States.  Rejon Aguilar was an original member of Los Zetas and held a high ranking position with the Company.

 “As a leader of the Company’s drug trafficking operation, Rejon Aguilar ensured that mass quantities of cocaine and marijuana were brought into the United States for distribution,” said Assistant Attorney General Breuer.  “The Justice Department is committed to working with its law enforcement partners to bring cartel members and associates to justice for their crimes.”

“As an original and high-ranking member of the Los Zetas cartel, Jesus Enrique Rejon Aguilar was responsible for funneling massive amounts of marijuana and cocaine into the United States while using violence to intimidate anyone that stood in his way,” said DEA Administrator Leonhart.  “Rejon Aguilar’s plea today was possible only with the strength and power of international law enforcement cooperation.  DEA, along with our Mexican counterparts, are committed to bringing violent criminals like Rejon Aguilar, to justice.”

According to the indictment, the Company transported shipments of cocaine and marijuana by motor vehicles from Mexico to cities in Texas for distribution to other cities within the United States.  The indictment alleges that Rejon Aguilar, his co-defendants and others organized, directed and carried out various acts of violence to retaliate against and to intimidate anyone who interfered with, or who were perceived to potentially interfere with, the cocaine and marijuana trafficking activities of the Company.

On April 15, 2009, under the Foreign Narcotics Kingpin Designation Act, the President identified Los Zetas as a Significant Foreign Narcotics Trafficker.  On March 24, 2010, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) named Rejon Aguilar as a Significant Foreign Narcotics Trafficker.  On July 25, 2011, an executive order was issued that blocks the transfer, payment or export of property belonging to certain transnational criminal organizations, including Los Zetas.

The department expressed its gratitude and appreciation to the government of Mexico for its assistance in this matter.  

 At sentencing, Rejon Aguilar faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 
 
The case is being prosecuted by trial attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section.  The Criminal Division’s Office of International Affairs provided significant assistance in the extradition.  The investigation in this case was led by the DEA’s Houston Field Division and the DEA Bilateral Investigation Unit.

U.S. District Court Judge Lesley Wells entered a consent decree of permanent injunction against Ben Venue Laboratories Inc., a Bedford, Ohio-based drug manufacturer, the Justice Department announced today.  The permanent injunction was also entered against George P. Doyle, president and chief executive officer, Kimberly A. Kellermann, vice president of operations, and Douglas A. Rich, vice president of quality operations, for Ben Venue. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.

Ben Venue manufactures numerous generic sterile injectable drug products, including cancer medications. As set forth in the complaint filed by the United States on January 22, FDA conducted an inspection of defendants’ facility from Nov. 7 to Dec. 2, 2011, and documented 10 deviations from current good manufacturing practices. According to the complaint, the FDA found, among other things, that the company failed to create and follow appropriate procedures to prevent contamination of drugs which were purported to be sterile. The FDA also found that the company failed to properly clean and maintain its equipment to ensure the safety and quality of the drugs it manufactured. In addition, the FDA determined that the company failed to conduct adequate investigations of drugs that did not meet their specifications.

Compliance with current good manufacturing practices requirements assures that drugs meet the safety requirements of the law and have the identity and strength and meet the quality and purity characteristics that they purport to or are represented to possess. FDA regulations, which establish minimum current good manufacturing practices applicable to human drugs, require manufacturers to control all aspects of the processes and procedures by which drugs are manufactured in order to prevent the production of unsafe and ineffective products.

According to the complaint, t he deviations observed by FDA during the November - December 2011 inspection were similar to deviations observed by FDA during its many previous inspections of Ben Venue’s facility. During FDA’s May 2011 inspection, FDA documented 48 deviations from current good manufacturing practices including an inadequate quality control unit, inadequate and untimely investigations, inadequately designed aseptic processing areas, poor employee aseptic practices, failure to prevent microbial contamination of drug products purporting to be sterile and failure to determine the root cause for microbial contaminants.

As described in the complaint, FDA’s long inspection and regulatory history of Ben Venue, including 35 inspections since 1997, and approximately 40 recalls since February 2002 associated with drugs manufactured at the Ben Venue facility (including 10 recalls in 2011 and 10 recalls in 2012), reflects a continuing pattern of significant deviations from current good manufacturing practices with its drugs. Some recalls involved drugs contaminated with glass and other particulates. Additional recalls were based on the company’s inability to assure the drug’s sterility. Of the roughly 40 recalls, nine were classified by FDA as “Class I,” meaning that FDA determined that there was “a reasonable probability that the use of . . . a violative product will cause serious adverse health consequences or death.”

The consent decree entered resolves the complaint by requiring Ben Venue to take a wide range of actions to correct its violations and ensure that they do not happen again.  The injunction establishes a series of steps which must occur before Ben Venue can fully resume operations, including the retention of an expert to inspect the company’s facility, the development and then implementation of a remediation plan, and an inspection by FDA to confirm that the company’s manufacturing processes are fully compliant with the law.

“This consent decree restricts Ben Venue from manufacturing and distributing certain drugs until the company fully complies with the law,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division.  “As this case demonstrates, the Department of Justice and FDA will work together to protect the health and safety of Americans by making sure that those who produce and distribute prescription drugs follow the law.”    

“This resolution comes following nearly three dozen inspections which revealed inadequate quality control, including contaminated drugs, and led to approximately 40 recalls on products from this facility alone,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “The Justice Department and the Food and Drug Administration will continue to place its highest priority on protecting consumers.”

Under the decree, Ben Venue may continue to manufacture and distribute a subset of their drugs (listed on Attachment A to the decree), which FDA has determined are currently in shortage (domestically or abroad) or are vulnerable to shortage. However, prior to distribution of each batch of these drugs, the company’s expert must conduct a batch-by-batch review and certify that no deviations occurred during the manufacture of the drug that would adversely affect the safety or quality of the batch.

Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice.  Jeffrey Steger, Assistant Director of the Consumer Protection Branch of the Justice Department and Michele Svonkin, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.

Delane F. Alston, a resident of Rocky Mount, N.C., pleaded guilty today before Judge Terrence W. Boyle to two counts of aiding and assisting in the preparation of false federal income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. Alston’s sentencing hearing is scheduled for May 6, 2013.

According to the charging documents, Alston worked as a return preparer at P&A Tax Services, a tax return preparation business, between 2007 through 2011. Alston initially prepared returns at a P&A Tax Services office located in Rocky Mount, but she later transferred to the Spring Hope, N.C., office. Alston was the manager of the Spring Hope office in 2008, 2009 and 2011. At the hearing, Alston pleaded guilty to preparing false 2008-2010 tax returns for P&A Tax Services clients that contained false and fraudulent claims for tax refunds. Alston generated the refunds by reporting false information on client tax returns, including false dependent information and false deductions.

Alston is subject to a maximum potential sentence of three years in prison and a fine of up to $250,000 for each count of conviction.

This case was investigated by IRS-Criminal Investigation. Trial Attorney Adam Hulbig of the Justice Department’s Tax Division is prosecuting the case.

Willie C. Grant, a tax return preparer from Macon, Ga., was sentenced to 60 months in prison by for filing false claims for tax refunds, theft of government money and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced today. U.S. District Court Chief Judge C. Ashley Royal also ordered Grant to pay over $200,000 in restitution to the IRS.

According to court documents, from 2003 through 2008, Grant owned and operated a tax return preparation business, Grant Income Tax Bookkeeping and Check Cash (GIT) out of his home in Macon. During this time period, Grant filed false federal income tax returns in the names of deceased individuals and used many of his former clients’ names and Social Security numbers to file wholly fraudulent returns without their knowledge or consent. Grant directed the IRS to either electronically deposit refunds into his personal or business bank accounts or issue paper refund Treasury checks which he cashed or deposited into bank accounts he controlled. Grant spent the proceeds of his false refund scheme on personal items including expensive cars and personal living expenses. Grant admitted that that he abused his position of private trust as a professional paid tax preparer in committing these crimes.

“Honest taxpayers are doubly harmed when they entrust return preparers with their information, who turn out to be thieves who steal that information to enrich themselves by making fraudulent refund claims,” said Assistant Attorney General Kathryn Keneally. “The Justice Department will investigate and prosecute stolen identity refund fraud in all of its various forms.”

“When Mr. Grant stole these identities and defrauded the IRS, he victimized not only the people whose names and social security numbers he used, but every tax paying citizen in the United States.  My office, with the continued cooperation of our law enforcement partners, will make sure that people like Mr. Grant are held to account for their fraud,” said Michael Moore, U.S. Attorney for the Middle District of Georgia.

“Mr. Grant used a foundation of fraud and deceit in order to cheat the government and victimize innocent taxpayers and is now being held accountable for his egregious behavior,” said Richard Weber, Chief IRS Criminal Investigation. “As a paid tax preparer, Grant held a position of trust in the eyes of his clients. He violated that trust and caused immeasurable harm to innocent victims. IRS Criminal Investigation has made investigating refund fraud and identity theft a top priority and we will vigorously pursue those who undermine the integrity of those individuals whose identities were stolen, as well as the U.S. tax system.”

Assistant Attorney General Keneally commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Charles M. Edgar, Jr. and Justin K. Gelfand, who prosecuted the case.

Ryan Lohr, 26, a former correctional officer at the Roxbury Correctional Institution (RCI) in Hagerstown, Md., pleaded guilty today to conspiring to obstruct justice and destroy evidence from a March 9, 2008, assault of an inmate by RCI officers.

According to court documents filed in connection with his guilty plea, Lohr opened the door to inmate K.D.’s cell to allow other correctional officers to assault K.D. in retaliation for a prior incident involving K.D. and another officer. Lohr watched RCI officers use their fists and feet to strike K.D., who was restrained at the time of the assault. After Lohr learned that there would be an investigation into this beating, he met with other RCI officers and agreed to cover up the assault. Lohr directed others to clean up blood in K.D.’s cell, and watched a supervisor use what appeared to be a magnetic device in an effort to destroy surveillance video footage. A supervisor also told Lohr not to write a report about inmate K.D. and his injuries.

Lohr further admitted in court documents that he lied to RCI investigators and the Maryland State Police, when these agencies asked him about K.D.’s injuries. Lohr also told RCI officers to provide investigators with false information.

“Mr. Lohr admitted that he opened the door so that other correctional officers could assault an inmate, watched other correctional officers assault the restrained inmate, and conspired with others to cover up the assault,” said Assistant Attorney General Thomas E. Perez.  “The U.S. Constitution protects inmates and the Justice Department will continue to vigorously prosecute correctional officers who use their official position to assault inmates or to cover up crimes committed by their fellow officers.”

Lohr faces a maximum penalty of 5 years in prison and a fine of $250,000. Sentencing is set for June 18, before U.S. District Judge James K. Bredar.

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

A federal court in Indianapolis has barred David Ray Franklin and his company, Instant Refund Tax Service (IRTS) – which does business as Instant Tax Service—from preparing tax returns and from operating a tax-preparation business, the Justice Department announced today.  Instant Tax Service is a national tax-preparation chain operated by ITS Financial LLC, based in Dayton, Ohio.  A federal court entered a preliminary injunction against the Ohio firm and its owner last November.

The Indiana preliminary injunction order, which remains in effect pending final resolution of the civil lawsuit, was signed by Judge Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana.  The court also permanently barred an alleged IRTS manager, William Brown, from preparing federal tax returns for others.  The defendants consented to the court orders without admitting the allegations against them. 

The government complaint in the case alleges that Franklin owned and operated 22 Instant Tax Service locations that prepared and filed over 10,000 federal tax returns in 2010 and 2011 combined.  Brown allegedly worked for Franklin and managed one of Franklin’s busiest Instant Tax Service offices.  The United States accused Franklin’s offices and Brown of preparing false and fraudulent income tax returns for customers, fabricating income for phony businesses to obtain larger tax credits, forging forms W-2, filing returns improperly based on paycheck stubs rather than W-2 wage statements, claiming false education tax credits and reporting false filing status.  The complaint also alleged that Franklin’s offices filed tax returns without authorization and sold false and deceptive loan products to Instant Tax Service customers.

The case is one of five similar civil actions that the Justice Department brought against Instant Tax Service franchises and the corporate franchisor, ITS Financial, which claims to be the fourth-largest tax-preparation firm in the nation. The trial on the government’s request in the Ohio case to permanently shut down the Instant Tax Service franchisor is scheduled for May.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. More information about those cases is available on the Justice Department website.

Related Materials:

United States v. David Ray Franklin, et al.
Stipulated Order for Permanent Injunction Against William Brown
Agreed Preliminary Injunction Order Against David Franklin and Instant Refund Tax Service, Inc.
 

Christopher B. Berg of Portola Valley, Calif., entered a plea of guilty today before the U.S. District Court in San Jose, Calif., to an information charging him with willful failure to file the required report of foreign bank account (FBAR) for an account he controlled at UBS in Switzerland in the year 2005.

According to the information, in 1999, Berg began working as a consultant. In 2000, Berg met with Beda Singenberger, a Swiss financial consultant, and a vice president of banking at UBS in San Francisco regarding setting up a bank account at UBS in Switzerland to shelter a portion of his consulting income from taxation. Beginning in 2001 and continuing through 2005, funds representing $642,069 in compensation earned by Berg from consulting services were deposited by wire transfer to UBS accounts. Berg used the money in these accounts at UBS in Switzerland to purchase a vehicle, to obtain cash while in Europe, and to pay the balance on a Eurocard he used while traveling in Europe. Berg did not disclose the existence of his accounts at UBS in Switzerland to his certified public accountant, and did not disclose the income earned by these accounts or the consulting income deposited to the accounts. The tax harm associated with Berg?s conduct is $270,757.

"Individuals who shirk their civic duty and evade taxes by hiding their income and assets in offshore accounts are making a very poor choice," said Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division. "They risk criminal prosecution and jail, still owe the taxes due and may lose most of those assets to severe civil penalties.?"

?Those who hide their assets and income in offshore accounts should realize that there is no safe haven from the IRS,? said Richard Weber, Chief Internal Revenue Service Criminal Investigation. ?Mr. Berg admitted he disregarded his legal responsibility to file the required report of a foreign bank account and report all his income and interest. He now faces substantial monetary penalties and the risk of incarceration. Combating offshore tax evasion continues to be one of the IRS? top priorities.?

United States citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file an FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.

Sentencing has been scheduled for July 8, 2013. Berg faces a maximum penalty of five years in prison and a fine of up to $250,000.

The case was investigated by IRS - Criminal Investigation and prosecuted by trial attorneys from the Tax Division.

The Justice Department announced today that Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division will leave the department on March 1, 2013.

“Lanny has led one of the most successful and aggressive Criminal Divisions in the history of the Department of Justice, accomplishing record penalties in corruption cases at home and abroad and dismantling major organized crime and health care fraud networks around the country while also protecting the integrity of our banking systems and fighting financial fraud,” said Attorney General Eric Holder.  “Throughout his tenure, Lanny has demonstrated an unwavering commitment to the mission of this Department and I want to thank him for his dedication and exceptional service.”

 “Serving as Assistant Attorney General for the Criminal Division has been the greatest privilege of my professional life,” said Assistant Attorney General Breuer.  “From my first day on this job, nearly four years ago, I have loved it, and I am so proud of what the Criminal Division has accomplished over the past four years.  I have had no higher honor than to work alongside the talented and dedicated men and women of the Criminal Division, and I will forever be grateful for the opportunity to serve the American people together with them.”

 Assistant Attorney General Breuer was unanimously confirmed by the U.S. Senate on April 20, 2009, and is the longest-serving head of the Criminal Division in recent history.
 
 Under the leadership of Assistant Attorney General Breuer, the Criminal Division has taken significant steps to fight corruption at home and abroad, including by developing the innovative Kleptocracy Asset Recovery Initiative to identify and forfeit the proceeds of foreign official corruption – ensuring that corrupt officials from other countries are prevented from hiding their ill-gotten gains in the United States.  The Criminal Division has also substantially increased enforcement of the Foreign Corrupt Practices Act (FCPA), convicting three dozen individuals for FCPA-related offenses – a record number – and entering into more than 40 corporate resolutions involving eight of the top 10 largest FCPA penalties in history.  The Criminal Division also partnered with the Securities and Exchange Commission to publish groundbreaking guidance on FCPA enforcement.

 Assistant Attorney General Breuer was asked by the Attorney General to oversee the Deepwater Horizon Task Force – created to investigate conduct leading up to, and following, the Deepwater Horizon explosion on April 20, 2010.  The Task Force reached the largest criminal resolution in U.S. history with BP.  On Jan. 29, 2013, BP was ordered to pay $4 billion in criminal fines and penalties after previously having agreed to plead guilty to 11 felony manslaughter charges, environmental crimes and obstruction of congress.  The Criminal Division brought charges against four individuals in connection with the explosion and its aftermath as part of the ongoing investigation.  Additionally, Assistant Attorney General Breuer has overseen efforts to combat fraud arising from the oil spill, as well as to detect and deter fraud in the wake of natural disasters such as Hurricane Sandy, through the Disaster Fraud Task Force.

Protecting the integrity of the banking system and fighting financial fraud have been hallmarks of the Criminal Division during Assistant Attorney General Breuer’s tenure.  The division’s aggressive, ongoing investigation into manipulation of the London Interbank Offered Rate by global financial institutions has thus far led to nearly $2 billion in criminal penalties, as well as a guilty plea by a UBS subsidiary and charges against individuals.  Assistant Attorney General Breuer also spearheaded the development of the division’s Money Laundering and Bank Integrity Unit to pursue financial institutions and individuals who violate money laundering statutes and the Bank Secrecy Act.  Along with U.S. Attorney partners, the groundbreaking unit already has secured approximately $3.1 billion in criminal forfeitures from major financial institutions – including the largest forfeiture ever by a bank. 

 The Criminal Division has also prosecuted, together with U.S. Attorneys’ Offices, numerous significant perpetrators of financial fraud, including Lee Bentley Farkas, former chairman of Taylor, Bean & Whitaker, who perpetrated an approximately $3 billion bank fraud; and R. Allen Stanford, former chairman of Stanford International Bank, who perpetrated a $7 billion investment fraud scheme.  Both were convicted at trial and are serving 30 and 110 years in prison, respectively.

 Assistant Attorney General Breuer has also focused on combating healthcare fraud, helping to expand the Medicare Fraud Strike Force from two to nine cities and to carry out the two largest Medicare fraud takedowns in history, one involving 111 defendants charged and the other involving $452 million in alleged fraudulent billings.

 The Criminal Division under Assistant Attorney General Breuer’s leadership, working alongside its partners at U.S. Attorneys’ Offices, has pursued innovative cybercrime and intellectual property crime prosecutions.  Those prosecutions include the indictment of Megaupload and its leadership for intellectual property infringement in one of the largest criminal copyright cases brought by the United States.

 During Assistant Attorney General Breuer’s tenure, the Criminal Division has made great strides in the fight against violent crime along the southwest border and across the country.  Among other successes, the division, along with several U.S. Attorneys’ Offices, brought charges against 127 members and associates of La Cosa Nostra in the largest traditional organized crime takedown in U.S. history.  The Criminal Division and U.S. Attorney partners also have brought prosecutions against 35 Barrio Azteca gang members and associates – including those allegedly responsible for the death of a U.S. Consular official and others in Juarez, Mexico, on March 13, 2010; individuals allegedly responsible for the murder of ICE Special Agent Jaime Zapata; and dozens of members and associates of the Aryan Brotherhood of Texas, including the gang’s top “generals.”  Assistant Attorney General Breuer has traveled frequently to Mexico to develop close relationships with Mexican counterparts and created new prosecutorial units dedicated to targeting Mexican cartels and seizing their assets.  In 2012, the Criminal Division secured 115 extraditions from Mexico, a record for a calendar year.

Along with these new or expanded teams and initiatives, Assistant Attorney General Breuer has taken significant steps to reform the Criminal Division to meet the needs of the modern law enforcement climate, including creating the Organized Crime and Gang Section and the Human Rights and Special Prosecutions Section, and hiring hundreds of talented prosecutors and several new Section Chiefs into the division.

In his role as head of the Criminal Division, Assistant Attorney General Breuer has engaged on issues of criminal law policy throughout the United States and around the world, delivering dozens of keynote and special addresses across the country as well as in Russia, the Ukraine, the United Kingdom, Romania, Sweden, Liechtenstein, Spain and at the World Bank and United Nations.

 Prior to joining the Justice Department, Assistant Attorney General Breuer was a partner in the law firm of Covington and Burling LLP.  He earlier served as special counsel to President William Jefferson Clinton, and began his legal career as an Assistant District Attorney in Manhattan.  He is a graduate of Columbia College and Columbia Law School.

Two Iraqi citizens living in Bowling Green, Ky., who admitted using improvised explosive devices (IEDs) against U.S. soldiers in Iraq and who attempted to send weapons and money to Al-Qaeda in Iraq (AQI) for the purpose of killing U.S. soldiers, were sentenced today to serve federal prison terms by Senior Judge Thomas B. Russell in U.S. District Court for the Western District of Kentucky.

The sentences was announced Lisa Monaco, Assistant Attorney General for National Security; David J. Hale, U.S. Attorney for the Western District of Kentucky; and Perrye K. Turner, Special Agent in Charge of the FBI Louisville Division. 

Mohanad Shareef Hammadi, 25, a former resident of Iraq, was sentenced to life in federal prison, and Waad Ramadan Alwan, 31, a former resident of Iraq, was sentenced to 40 years in federal prison, followed by a life term of supervised release. Both defendants had pleaded guilty to federal terrorism charges.
        
“These two former Iraqi insurgents participated in terrorist activities overseas and attempted to continue providing material support to terrorists while they lived here in the United States. With today’s sentences, both men are being held accountable,” said Assistant Attorney General Monaco. “I thank the dedicated professionals in the law enforcement and intelligence communities who were responsible for this successful outcome.”

“These are experienced terrorists who willingly and enthusiastically participated in what they believed were insurgent support operations designed to harm American soldiers in Iraq,” stated U.S. Attorney Hale. “The serious crimes of both men merit lengthy punishment, and only the value of Alwan’s immediate and extensive cooperation with law enforcement justifies our recommendation of a reduced sentence for him.  Bringing these men to justice is the result of a comprehensive law enforcement effort.  The FBI agents of the Louisville Division, along with the federal and local law enforcement members of the Joint Terrorism Task Forces here in Kentucky, including the Bowling Green Police Department, and our many other partners, are to be commended.”

“Protecting the United States from terrorist attacks remains the FBI's top priority,” said FBI Special Agent in Charge Turner. “Using our growing suite of investigative and intelligence capabilities, FBI agents and analysts assigned to our Bowling Green office were able to neutralize a potential threat.  Our local Joint Terrorism Task Force, comprised of FBI Agents and other local, state and federal agencies from across the Commonwealth, remains committed to dismantling extremist networks and cutting off financing and other forms of support provided by terrorist sympathizers, whether they are operating in Kentucky or worldwide.”
 
“Today, the sentencing of Alwan and Hammadi represents the culmination of the extensive, effective and focused efforts of the U.S. Attorney's Office and the Kentucky Division of the FBI for their roles in the investigation and prosecution of these would-be terrorists.  I want to thank U.S. Attorney David Hale, the Kentucky Division of the FBI and the members of the FBI Bowling Green local office for their individual and collective efforts in bringing Alwan and Hammadi to justice for their crimes against the people of Kentucky and the United States,” stated Chief Doug Hawkins, Bowling Green Police Department. 

Alwan, whose fingerprints were found on an unexploded IED found in Iraq, pleaded guilty earlier in the case on Dec. 16, 2011, to all counts of a 23-count federal indictment.  He pleaded guilty to conspiring to kill U.S. nationals abroad; conspiring to use a weapon of mass destruction (explosives) against U.S. nationals abroad; distributing information on the manufacture and use of IEDs; attempting to provide material support to terrorists and to AQI and conspiring to transfer, possess and export Stinger missiles. 

Hammadi pleaded guilty on Aug. 21, 2012, to a 12-count superseding indictment.  Charges against him included attempting to provide material support to terrorists and to AQI; conspiring to transfer, possess and export Stinger missiles; and making a false statement in an immigration application.  At today’s sentencing, at the request of the United States, Alwan received a reduced sentence due to his cooperation with federal law enforcement.  The United States asked for no reduction of Hammadi’s sentence. 

According to information presented by the United States in connection with today’s sentencings, Hammadi and Alwan both admitted, in FBI interviews that followed waiver of their Miranda rights, to participation in the purported material support operations in Kentucky, and both provided the FBI details of their prior involvement in insurgent activities while living in Iraq.  Both men believed their activities in Kentucky were supporting AQI.  Alwan admitted participating in IED attacks against U.S. soldiers in Iraq, and Hammadi admitted to participating in 10 to 11 IED attacks as well as shooting at a U.S. soldier in an observation tower.  
 
Court documents filed in this case reveal that the Bowling Green office of the FBI’s Louisville Division initiated an investigation of Alwan in which they used a confidential human source (CHS).  The CHS met with Alwan and recorded their meetings and conversations beginning in August 2010.   The CHS represented to Alwan that he was working with a group to ship money and weapons to Mujahadeen in Iraq.  From September 2010 through May 2011, Alwan participated in ten separate operations to send weapons and money that he believed were destined for terrorists in Iraq.  Between October 2010 and January 2011, Alwan drew diagrams of multiple types of IEDs and instructed the CHS how to make them.  In January 2011, Alwan recruited Hammadi, a fellow Iraqi national living in Bowling Green, to assist in these material support operations.  Beginning in January 2011 and continuing until his arrest in late May 2011, Hammadi participated with Alwan in helping load money and weapons that he believed were destined for terrorists in Iraq.

Documents filed by the United States describe in detail the material support activities of the men in Bowling Green.  Without Hammadi present, Alwan loaded money and weapons he believed were being sent to Iraq on five occasions from September 2010 through February 2011, handling five rocket-propelled grenade launchers, five machine guns, two sniper rifles, two cases of C4 explosive and what he believed to be $375,000.  After Hammadi joined Alwan in January 2011, the two men loaded money and weapons together on five occasions from January to May 2011.  Together, on these five occasions, they loaded five rocket-propelled grenade launchers, five machine guns, five cases of C4 explosive, two sniper rifles, one box of 12 hand grenades, two Stinger surface-to-air missile launchers and what they believed to be a total of $565,000.  Alwan and Hammadi were recorded by video during these operations. 

In speaking with the CHS, Alwan spoke of his efforts to kill U.S. soldiers in Iraq, stating “lunch and dinner would be an American.”  Hammadi told the CHS that he had experience in Iraq with “Strelas” (a Russian made, portable, shoulder-fired surface-to-air missile launcher) and discussed shipping “Strelas” in future operations.

According to the charging documents, Hammadi entered the United States in July 2009, and, after first residing in Las Vegas, moved to Bowling Green.  Hammadi and Alwan were arrested on May 25, 2011, in Bowling Green on criminal complaints.  Both defendants were closely monitored by federal law enforcement authorities in the months leading up to their arrests.  Neither was charged with plotting attacks within the United States.  All of the weapons, including Stinger missiles, had been rendered inert before being handled by Hammadi and Alwan.  The weapons and money handled by the men in the United States were never provided to AQI, but instead were carefully controlled by law enforcement as part of the undercover operation.

This case was investigated by the Louisville Division of the FBI.  Assisting in the investigation were members of the Louisville and Lexington Joint Terrorism Task Forces, U.S. Immigration and Customs Enforcement, U.S. Marshals Service, U.S. Department of Defense, U.S. Citizenship and Immigration Services and the Bowling Green Police Department.

The prosecution was handled by Assistant U.S. Attorneys Michael Bennett and Bryan Calhoun from the U.S. Attorney’s Office for the Western District of Kentucky and Trial Attorney Larry Schneider from the Counterterrorism Section of the Justice Department’s National Security Division.

WASHINGTON – Following a two-week trial, a federal jury in Puerto Rico today convicted a former executive of a Florida-based coastal water freight transportation company for his participation in a conspiracy to fix rates and surcharges for water transportation of freight between the continental United States and Puerto Rico, the Department of Justice announced.

Frank Peake, the former president of Sea Star Line LLC, was found guilty today in the U.S. District Court for the District of Puerto Rico, of participating in a conspiracy to fix rates and surcharges for water transportation of freight between the continental United States and Puerto Rico from at least as early as late 2005, until at least April 2008.

“The coastal shipping price-fixing conspiracy affected the price of nearly every product that was shipped to and from Puerto Rico during the conspiracy,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. “This successful prosecution shows that the division will hold accountable high-level executives who perpetuate these crimes.”

Sea Star pleaded guilty on Dec. 20, 2011, and was sentenced by Judge Daniel R. Dominguez to pay a $14.2 million criminal fine for its role in the conspiracy from as early as May 2002, until at least April 2008. Sea Star 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.

According to evidence presented at trial, Sea Star, Peake and co-conspirators carried out the conspiracy by agreeing during meetings and communications to allocate customers of Puerto Rico freight services and to rig bids and fix the rates and surcharges to be charged to purchasers of water transportation of freight between the continental United States and Puerto Rico. The department said the conspirators also engaged in meetings for the purpose of monitoring and enforcing adherence to the agreed-upon rates and sold Puerto Rico freight services at collusive and noncompetitive rates.

Including today’s jury conviction, as a result of this ongoing investigation, three companies and six individuals have pleaded guilty or been convicted at trial. The five individuals and three companies that have been sentenced have been ordered to serve a total of more than 11 years in prison and to pay more than $46 million in criminal fines.

Peake was convicted of 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.

Today’s conviction arose from 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 J acksonville 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.

A federal grand jury today indicted a former Town Creek, Ala., police officer for violating an individual’s civil rights during the course of an arrest, announced Assistant Attorney General for the Civil Rights Division Thomas E. Perez, U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.

The indictment charges Brandon Shane Mundy, 32, of Oxford, Ala., with striking a man with a dangerous weapon and causing bodily injury during the man’s November 2009 arrest in a northern Alabama town. Mundy’s action deprived the man, identified as J.T., of the constitutional right to be free from the use of unreasonable force by someone acting under the color of law, according to the indictment.

If convicted, Mundy could face a maximum sentence of 10 years in prison and a $250,000 fine. An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The FBI is investigating the case, and is being prosecuted by Assistant U.S. Attorney Elizabeth Holt and Justice Department Civil Rights Division Trial Attorney Daniel H. Weiss.

A Dominican national was sentenced today to 63 months in prison for his leading role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Gentry Smith, Acting Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.

Rafael Joaquin Beltre-Beltre, 36, formerly of Caguas, Puerto Rico, was sentenced by U.S. District Judge Gustavo A. Gelpí, in the District of Puerto Rico.  In addition to Beltre-Beltre’s prison term, Judge Gelpí ordered him to forfeit $424,793 in illegal proceeds and ordered the removal of Beltre-Beltre from the United States to the Dominican Republic after the completion of his sentence.  On Sept. 4, 2012, Beltre-Beltre pleaded guilty in Puerto Rico to one count of conspiracy to commit identification fraud, one count of conspiracy to commit alien smuggling for financial gain and one count of international money laundering.

Beltre-Beltre was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on March 22, 2012.  To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 25 defendants have pleaded guilty.

Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents.  Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set.  The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls.  The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.

Court documents allege that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation.  Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses.  Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.

Beltre-Beltre admitted that he operated as a Savarona supplier and was a leader and organizer in the conspiracy.  He also admitted that he and his co-conspirators sold personal identifying information pertaining to real Puerto Rican U.S. citizens, including minors, and that he knew some of the identities would be used to commit tax fraud and some would be used to fraudulently apply for U.S. passports.  According to court documents, in June 2011, an unauthorized alien in Arlington, Va., applied for a U.S. passport using legitimate Puerto Rico identity documents that had been supplied by Beltre-Beltre.  Law enforcement agents uncovered the fraudulent application and prevented the issuance of the U.S. passport.

On Jan. 11, 2012, Beltre-Beltre was arrested and found to be in possession of over 100 legitimate identity documents in other people’s names, in addition to four legitimate but blank Puerto Rico birth certificates.  Beltre-Beltre admitted that at the time of his arrest he possessed a firearm with an obliterated serial number in relation to his identity trafficking and alien smuggling operation.  Beltre-Beltre is the 12th defendant to be sentenced in this case.

The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico.  The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance.  The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.

The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Acting Assistant Deputy Chief Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico.  The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.

Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html.  Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline.  Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft.  Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html;  www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.

BP Exploration and Production Inc. pleaded guilty today to 14 criminal counts for its illegal conduct leading to and after the 2010 Deepwater Horizon disaster, and was sentenced to pay $4 billion in criminal fines and penalties, the largest criminal resolution in U.S. history, Attorney General Holder announced today. 

“Today’s guilty plea and sentencing represent a significant step forward in the Justice Department’s ongoing efforts to seek justice on behalf of those affected by one of the worst environmental disasters in American history,” said Attorney General Holder.  “I’m pleased to note that more than half of this landmark resolution – which totals $4 billion in penalties and fines, and represents the single largest criminal resolution ever – will help to provide direct support to Gulf Coast residents as communities throughout the region continue to recover and rebuild.”

“The Deepwater Horizon explosion was a national tragedy that resulted in the senseless deaths of 11 people and immense environmental damage,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  “Through the tenacious work of the Task Force, BP has received just punishment for its crimes leading up to and following the explosion.  The Justice Department will keep a watchful eye on BP’s compliance with the plea agreement’s terms, including the requirements of full cooperation with the department’s ongoing criminal investigation, implementation of enhanced safety protocols and adherence to the recommendations of two newly installed monitors.  Should BP fail to comply, we will act swiftly and firmly.”

 BP’s guilty plea was accepted, and the sentence was imposed, by U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana.  During the guilty plea and sentencing proceeding, Judge Vance found, among other things, that the consequential fines imposed under the plea agreement far exceed any imposed in U.S. history, and are structured so that BP will feel the full brunt of the penalties.  She also noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other stringent, special conditions of probation so that BP’s future conduct will be closely watched.  

BP pleaded guilty to each count charged in an information filed in U.S. District Court in the Eastern District of Louisiana, including 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts.  In its guilty plea today, BP admitted that, on April 20, 2010, the two highest-ranking BP supervisors onboard the Deepwater Horizon, known as BP’s “Well Site Leaders” or “company men,” negligently caused the deaths of 11 men and the resulting oil spill.  The company also admitted that on that evening, the two well site leaders observed clear indications that the Macondo well was not secure and that oil and gas were flowing into the well, but chose not to take obvious and appropriate steps to prevent the blowout.  Additionally, BP admitted that as a result of the Well Site Leaders’ conduct, control of the Macondo well was lost, resulting in catastrophe. 

BP also admitted during its guilty plea that the company, through a senior executive, obstructed an inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was ongoing.  BP also admitted that the senior executive withheld documents, provided false and misleading information in response to the U.S. House of Representatives’ request for flow-rate information, manipulated internal estimates to understate the amount of oil flowing from the well and withheld data that contradicted BP’s public estimate of 5,000 barrels of oil per day.  At the same time that the senior executive was preparing his manipulated estimates, BP admitted, the company’s internal engineering response teams were using sophisticated methods that generated significantly higher estimates.  The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels per day were leaking into the Gulf during the relevant time, contrary to BP’s representations to Congress.

According to the sentence imposed by Judge Vance pursuant to the plea agreement, more than $2 billion dollars will directly benefit the Gulf region.  By order of the court, approximately $2.4 billion of the $4.0 billion criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill.  This portion of the criminal recovery is also to be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill.  An additional $350 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.

BP was also sentenced to five years of probation – the maximum term of probation permitted under law.  The company is also required, according to the order entered by the court pursuant to the plea agreement, to retain a process safety and risk management monitor and an independent auditor, who will oversee BP’s process safety, risk management and drilling equipment maintenance with respect to deepwater drilling in the Gulf of Mexico.  BP is also required to retain an ethics monitor to improve its code of conduct to ensure BP’s future candor with the U.S. government.

The charges and allegations pending against individuals in related cases are merely accusations, and those individuals are considered innocent unless and until proven guilty.

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

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

A federal grand jury in Montgomery, Ala., returned an indictment charging LaQuanta Clayton with aggravated identity theft and theft of government money, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the indictment, Clayton used stolen identity information to facilitate the theft of federal tax refunds. As alleged, Clayton used the stolen identity information to open bank accounts at the bank where she was working and then stole federal tax refunds that were deposited into the bank accounts.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Clayton faces a maximum potential sentence of 10 years in prison for each of the 15 theft of government money counts and a mandatory two-year sentence for the aggravated identity theft counts. She is also subject to fines and mandatory restitution if convicted.

This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr. and Michael Boteler of the Justice Department’s Tax Division are prosecuting the case.

A federal grand jury in Montgomery, Ala., returned an indictment charging Scottie Alice Johnson with a conspiracy to commit theft of public funds and to defraud the Internal Revenue Service (IRS) and with theft of public funds, the Justice Department and the IRS announced today.

According to the indictment, between 2006 and 2012, Johnson conspired with others to defraud the IRS and commit theft of public funds. Co-conspirators filed false federal income tax returns with stolen identities and had refunds directly deposited into several bank accounts, including bank accounts in the name of Scottie Alice Johnson and another individual. The bank accounts associated with the conspiracy received at least $1.3 million in false tax refunds.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Johnson faces five years in prison for the conspiracy count and 10 years in prison for each theft of public funds count. Johnson is also subject to fines, mandatory restitution and forfeiture.

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

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

Chequ li a Motley, a resident of Montgomery, Ala., was indicted by a federal grand jury for her involvement in a conspiracy to use stolen identities to file fraudulent tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. Motley was indicted on various charges, including conspiracy, five counts of wire fraud and five counts of aggravated identity theft.

According to the indictment, Motley worked for an Alabama state government agency and had access to individuals’ personal identifying information as part of her job. She stole identities and sold them to several co-conspirators, the indictment alleges. Those co-conspirators used the stolen identities to file false tax returns that fraudulently requested tax refunds from the IRS.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Motley faces a maximum potential sentence of 10 years in prison for the conspiracy charge, up to 20 years in prison for each wire fraud charge and a mandatory two-year sentence for the aggravated identity theft counts. She will also be subject to fines and mandatory restitution if convicted.  

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

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

A federal grand jury in Montgomery, Ala., returned an indictment charging Lea’Tice Phillips for conspiring to file false tax returns using stolen identities, the Justice Department and the Internal Revenue Service (IRS) announced today. The 37 count indictment charges Phillips with conspiracy to file false claims, wire fraud, computer fraud and aggravated identity theft.

According to the court documents, Phillips worked for an Alabama state agency and had access to state databases which contained means of identification of individuals.  Between October 2009 and April 2012, Phillips conspired with Antoinette Djonret and others to file false tax returns using stolen identities. On multiple occasions, Phillips accessed a state database to obtain means of identification. Phillips used her state email to send means of identification to Djonret. Djonret and others used those means of identification to file false tax returns. Djonret and her co-conspirators filed most of the tax returns from her residence in Montgomery. Djonret and her co-conspirators used an elaborate network of individuals to launder the tax refunds. They recruited individuals to purchase prepaid debit cards and to provide the cards to Djonret and her co-conspirators. The fraudulent tax refunds were directed to the prepaid debit cards. Djonret and her co-conspirators would then use the prepaid debit cards to obtain the proceeds. Some of the prepaid debit cards were in the name of Lea’Tice Phillips. In total, Djonret filed over 1,000 false tax returns that claimed over $1.7 million in fraudulent tax refunds. 

On Aug. 9, 2012, a federal grand jury in Montgomery returned a superseding indictment charging Antoinette Djonret, Angelique Djonret, Tabitha Stinson, Melba Wilson, Chantresa Hayes and Corey Means for their roles in the same conspiracy.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the Phillips faces 10 years imprisonment for the conspiracy to file false claims, 20 years for each wire fraud count, 10 years imprisonment for each computer fraud count and a mandatory two-year sentence for the aggravated identity theft counts.  She is also subject to fines, mandatory restitution and forfeiture.     

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

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

An Orange County, Va., man was sentenced today to serve 168 months in prison following his March 2011 guilty plea to child pornography charges that originated in three different federal districts.

The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Timothy J. Heaphy of the Western District of Virginia, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

Anthony C. Jeffries was sentenced by Senior U.S. District Judge Norman K. Moon in the Western District of Virginia.  On March 28, 2011, Jeffries pleaded guilty to one count of distributing child pornography and one count of possessing child pornography on charges contained in an indictment filed in the Western District of Virginia and two separate one-count criminal informations originally filed in the Eastern District of Virginia and the Southern District of Florida, each charging him with distributing child pornography.  Jeffries was sentenced to 168 months in prison for each count of distributing child pornography and 120 months in prison for possessing child pornography.  The prison sentences for each count will be served concurrently.  In addition to his prison term, Jeffries was sentenced to serve lifetime supervised release.

According to information presented in court, Jeffries assisted in running an online forum from his Orange County home that was dedicated to posting pictures and chatting about young girls. The defendant was responsible for one-fourth of the images available on the forum.

In February 2010, undercover FBI agents working in Richmond, Va., and Miami logged onto a peer-to-peer file sharing network and downloaded numerous images of child pornography from Jeffries.  In June 2010, a search warrant was obtained and computer equipment was seized from the defendant’s Virginia home.  A forensic examination of that equipment revealed thousands of image files, including images of young children engaged in sexual acts with adults.

The investigation of the case was conducted by the Orange County Sheriff’s Office, the FBI, the Charlottesville, Va., Police Department, the University of Virginia Police Department and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).  Assistant U.S. Attorney Nancy Healey and Trial Attorney Darcy Katzin with the Criminal Division’s CEOS are prosecuting the case for the Western District of Virginia. Elizabeth Wu is prosecuting the case for the Eastern District of Virginia.

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.

U.S. District Judge David M. Lawson, of the Eastern District of Michigan, entered a consent decree of permanent injunction against Ann Arbor, Michigan-based Green Hope LLC, dba Rosewood Products, and its president, Phil G. Ye, the Justice Department announced today.

The company manufactures and sells ready-to-eat organic tofu and soy milk products to businesses in Michigan and Minnesota, including organic supermarket chains. As alleged in the complaint filed against the company and Ye, numerous Food and Drug Administration (FDA) inspections since 2009 found persistent violations at the company’s manufacturing facility involving insanitary conditions. FDA’s inspections found that Green Hope did not store food properly, did not address employee cleanliness issues, permitted waste water to come into contact with tofu during processing and failed to clean all food-contact surfaces and equipment. These violations raised the possibility of contamination of the company’s food products.

The consent decree orders Green Hope and Ye to take a wide range of actions to correct the violations and ensure that they do not happen again. Among other actions, Green Hope must develop and implement sanitation control programs; provide FDA the opportunity to inspect the facilities to assure Green Hope’s compliance with the consent decree, the Food, Drug and Cosmetic Act, and applicable regulations; and receive written authorization from FDA to resume operations. Green Hope must also make structural repairs to its facility necessary to protect against contamination of raw ingredients, in-process and finished articles of food, containers and packaging materials.

“This company has a long history of not complying with federal statutes and regulations intended to protect the public health,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “Consumers expect, and deserve, that their food be safe to eat, and the Department of Justice will continue to take enforcement action against food manufacturers whose conduct can endanger public safety.” 

This case was litigated by Dan Baeza of the Consumer Protection Branch in the Department of Justice’s Civil Division in conjunction with Assistant U.S. Attorney Peter A. Caplan of the U.S. Attorney’s Office for the Eastern District of Michigan and Christopher Fanelli of the FDA’s Office of Chief Counsel. The case was investigated by the FDA’s Detroit District Office.

The FDA Warning Letter against Green Hope can be found at: www.fda.gov/ICECI/EnforcementActions/WarningLetters/2011/ucm254923.htm

Steven Kern of Marine City, Mich., pleaded guilty today before U.S. District Court Judge Arthur J. Tarnow in the Eastern District of Michigan to eight counts of filing false corporate tax returns and eight counts of failing to file his individual tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.

According to filed court documents and court proceedings, Kern operated the Kern Chiropractic Center from Marine City and diverted cash and check payments from the business for his own personal use. The indictment alleges that Kern failed to file individual tax returns for tax years 2003 to 2010, despite earning more $1.2 million in gross income during that time period. According to filed court documents and court proceedings, Kern told IRS-Criminal Investigation Special Agents he believed signing and filing a completed tax return was a violation of his constitutional rights. 

Each count of filing a false corporate tax return carries a maximum penalty of three years in prison and a $250,000 fine. Each count of failing to file an individual tax return carries a maximum penalty of twelve months imprisonment and a fine of up to $100,000.  Kern is scheduled to be sentenced on April 30, 2013. 

The case is being prosecuted by Trial Attorneys Mark McDonald and Jeff Bender of the Justice Department’s Tax Division.  The investigation was conducted by IRS Criminal Investigation.

Miami-area resident Nichole Eckert, former therapist at the mental health care company American Therapeutic Corporation (ATC), was sentenced today to serve 48 months in prison for participating in a $205 million Medicare fraud scheme.

The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent-in-Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the Health and Human Services’ Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
 
Eckert, 35, was sentenced by U.S. District Judge Patricia A. Seitz in the Southern District of Florida.  In addition to the prison term, Judge Seitz sentenced Eckert to serve three years of supervised release and ordered her to pay more than $72 million in restitution, jointly and severally with her co-defendants.

On Nov. 15, 2012, a federal jury in the Southern District of Florida found Eckert guilty of one count of conspiracy to commit health care fraud after a 16-day trial.  She has been in federal custody since her conviction.
 
Evidence at trial demonstrated that the defendant and her co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando.  A PHP is a form of intensive treatment for severe mental illness. The defendant and her co-conspirators also used a related company, American Sleep Institute, to submit fraudulent Medicare claims.

Evidence at trial revealed that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC. These patients attended ATC, where they were ineligible for the treatment ATC billed to Medicare and where they did not receive the treatment that was billed to Medicare.  After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the patient kickbacks.

Eckert was a therapist at ATC’s Ft. Lauderdale, Fla., center from September 2005 to September 2007, and returned to ATC as a therapist from late 2009 to October 2010, when ATC closed its doors as a result of federal charges.  Evidence at trial revealed that Eckert fabricated therapist notes and other documents for patient files and submissions, and taught others to fabricate them, to make it appear both that ATC patients were qualified for PHP treatment and that they were receiving the intensive, individualized treatment PHP is supposed to be.  ATC used those patient files to substantiate false and fraudulent claims to Medicare.  Included in these submissions were claims for patients who were in the late stages of diseases causing permanent cognitive memory loss and patients who had substance abuse issues and were living in halfway houses.  These patients were ineligible for PHP treatments, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.

ATC and related company Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.  Dozens of individuals have been convicted at trial or pleaded guilty for their participation in the scheme.

Evidence at trial showed that the ATC scheme resulted in a total of $205 million in fraudulent Medicare billings.   

The cases were prosecuted by Senior Trial Attorney Jennifer L. Saulino and Trial Attorney Laura M.K. Cordova of the Justice Department Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

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. 

The Justice Department filed suit today asking the U.S. District Court for the Middle District of Florida to permanently bar Torrey Burden from preparing federal tax returns for others. The civil injunction suit alleges that Burden prepares returns through A&L Financial Solutions in St. Petersburg, Fla.

According to the complaint, Burden prepares tax returns using false information in order to reduce his customers’ tax liabilities. Specifically, the government alleges that Burden claims false or overstated deductions and claims tax credits that his customers were not eligible to claim. The Internal Revenue Service (IRS) has examined 80 returns prepared by Burden and found that 92.5 percent resulted in additional taxes owed. As alleged in the complaint, the IRS projects that the tax loss from the returns prepared by Burden could exceed $1,000,000.

Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Torrey Burden, et al.
Complaint (PDF)
 

The Justice Department has reached an agreement with the city of Memphis, Tenn., under the Americans with Disabilities Act (ADA) to improve physical accessibility for people with disabilities at Liberty Bowl Memorial Stadium, home of the AutoZone Liberty Bowl, Memphis Tigers and Southern Heritage Classic football games.

“Today’s agreement marks a new chapter for historic Liberty Bowl Memorial Stadium, which will permit all spectators, with and without disabilities, to attend college football games – both regular season and bowl games -- at the stadium,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

Under the settlement agreement, Memphis will install a total of 282 wheelchair spaces and an equal number of companion seats around the stadium at Row 25, and in the upper concourses on the home and away sides of the Liberty Bowl. The agreement requires installation of additional wheelchair spaces in seating areas renovated in the future, such as the suites and press boxes. The 282 wheelchair spaces will be dispersed vertically and horizontally throughout the Liberty Bowl, and will provide people in wheelchairs with lines of sight over standing spectators that are comparable to those offered to individuals without disabilities.

In addition, Memphis will ensure ADA compliance for concession stands, gates, elevators, suites and press boxes, ramps, and restrooms throughout the Liberty Bowl. Memphis will retain an architect to certify that the city has corrected each ADA violation. Memphis must report its progress to the United States.

Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The Department will actively monitor the city’s compliance with the agreement, which will remain in effect for three years.

More information about the Civil Rights Division and the laws it enforces is available at the website www.justice.gov/crt .  More information about the ADA and today’s agreement with the City of Memphis can be accessed at the ADA website at www.ada.gov or by calling the toll-free ADA information line at 800-514-0301 or 800-514-0383 (TTY).

Related Materials:

Liberty Bowl Settlement Agreement

BALTIMORE --Immigration Judge Phillip T. Williams 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 Jan. 25, 2013. The Baltimore District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Janet Reno appointed Judge Williams in March 1995. Judge Williams received a bachelor of arts degree in 1978 from Temple University, a master of arts degree in 1981 from Howard University, and a juris doctorate in 1986 from Howard University School of Law. From 1997 to 2008, he was an assistant chief immigration judge. From 1995 to 1997, he served as an immigration judge in New York. From 1987 to 1995, Judge Williams was an attorney with Maggio & Kattar in Washington, D.C. From 1984 to 1986, he worked as a District of Columbia pre-trial services officer. Judge Williams is a member of the District of Columbia and Pennsylvania 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.

PNC Bank N.A. has agreed to pay the United States $7.1 million to settle claims under the False Claims Act that it failed to engage in prudent underwriting practices in connection with the issuance of loans guaranteed by the Small Business Administration (SBA), the Justice Department announced today. PNC has also agreed to take corrective action to prevent similar occurrences in the future. PNC is a national banking association located in Pittsburgh.

The SBA Act allows banks to partner with the SBA to make loans to qualified small businesses. Participants in the SBA’s Preferred Lenders Program, like PNC, have authority to make and close these loans without obtaining the prior approval of the SBA. SBA guaranteed 75 percent of the balance of the loans in question. Banks are required to exercise prudent lending standards when making loans under the Preferred Lenders Program.

In 2005, under the Preferred Lender Program, PNC issued 64 SBA-guaranteed loans for the purchase of 98 Uni-Marts stores located primarily in the mid-Atlantic region. The United States alleges that in connection with these loans, PNC relied upon unaudited financial statements without further verifying whether the information contained in the financial statements was accurate. Of the 64 SBA-guaranteed loans issued by PNC, 36 have defaulted, triggering SBA’s obligations to pay PNC 75 percent of the balance of the defaulted loans. In May 2008, Uni-Marts filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.

“Banks that are SBA preferred lenders have a duty to prudently guard the public funds they commit to borrowers,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “The government will pursue vigorously lenders that fail to adequately safeguard public funds due to deficient lending standards.”

Principal Deputy Assistant Attorney General Delery thanked the Justice Department’s Civil Division, the SBA Office of General Counsel and the SBA Office of Inspector General for the collaboration that resulted in the settlement announced today. The claims settled by this agreement are allegations only; there has been no determination of liability.

The former program director and two former marketers for Miami-based mental health care company American Therapeutic Corporation (ATC) have been sentenced to prison for  their roles in a $205 million Medicare fraud and kickback scheme in which patients were forced to attend inappropriate treatment programs.

The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent-in-Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the Health and Human Services’ Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

Miami-area residents Lydia Ward, 47, a former program director, and Hilario Morris, 47, a former marketer, were sentenced today by U.S. District Judge Patricia A. Seitz in Miami federal court to 99 months and 60 months in prison, respectively.  In addition to the prison term, Judge Seitz sentenced Ward and Morris each to serve three years of supervised release and ordered them to pay more than $34.1 million and $82.2 million in restitution, respectively, jointly and severally with their co-defendants.

Ward was convicted on Nov. 15, 2012, by a federal jury of conspiracy to commit health care fraud.  Morris was convicted on June 1, 2012, by a federal jury of conspiracy to pay illegal health care kickbacks.  Ward and Morris have been in federal custody since their convictions.

Former marketer Sandra Jimenez, 39, also from the Miami area, was sentenced to 36 months in prison yesterday, Jan. 24, 2013.  In addition to the prison term, Judge Seitz sentenced Jimenez to serve three years of supervised release and ordered her to pay $20.5 million in restitution, jointly and severally with her co-defendants.

On Jan. 17, 2012, Jimenez pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.

In pleading guilty, Jimenez admitted that she served as a marketer for ATC and American Sleep Institute (ASI).  ATC, a Florida corporation headquartered in Miami, operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Jimenez also admitted that she and co-conspirators used related company ASI to submit fraudulent Medicare claims. 

Additionally, Jimenez admitted she participated in a separate Medicare fraud scheme through Priority Home Health, a Miami home health agency that submitted fraudulent claims to Medicare for home health services. Jimenez and her co-conspirators recruited Medicare beneficiaries to Priority Home Health who did not qualify for the services.

According to the plea agreement, Jimenez’s participation in the ATC fraud and the Priority Home Health fraud resulted in $46 million in fraudulent billings to Medicare.

Evidence at Ward’s and Morris’ trials demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC and ASI, and that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC. 

According to the evidence, Morris was a marketer for ATC from September 2004 through October 2010, when ATC closed its doors due to the federal case.  In that capacity, Morris acted as a liaison, maintaining relationships between ATC and those who were selling their patients to ATC.  Morris would physically pay the kickbacks throughout North Miami and Florida’s Broward County.  These patients, who attended ATC, were ineligible for the services billed to Medicare and did not receive them.  After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the kickbacks for patients.

Evidence at trial revealed that Ward was a program director at ATC’s Ft. Lauderdale, Fla., center from November 2008 until ATC’s closing in October 2010.  The evidence showed Ward helped doctors at ATC sign patient files without reading them or seeing the patients, and that Ward and others would assist the owners of ATC in fabricating doctor notes, therapist notes and other documents to make it falsely appear in ATC’s patient files that patients were qualified for the individualized, specialized treatment.  Included in these false and fraudulent submissions to Medicare were claims for patients who were in the late stages of diseases causing permanent cognitive memory loss and patients who had substance abuse issues and were living in halfway houses.  These patients were ineligible for PHP treatments, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.

ATC executives Lawrence Duran, Marianella Valera and Judith Negron were previously sentenced to 50 years, 35 years and 35 years in prison, respectively, for their roles in the fraud scheme. The 50- and 35-year sentences represent the longest federal sentences for health care fraud ordered to date in the United States.

ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.  Dozens of individuals have been convicted at trial or pleaded guilty for their participation in the scheme, including doctors Mark Willner and Alberto Ayala, who were each sentenced to 10 years in prison.

Evidence at trial showed that the ATC scheme resulted in a total of $205 million in fraudulent Medicare billings.   

The cases were prosecuted by Senior Trial Attorney Jennifer L. Saulino and Trial Attorney Laura M.K. Cordova of the Justice Department Criminal Division’s Fraud Section and James V. Hayes, Assistant U.S. Attorney in the Southern District of Florida.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

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.