District Not Recorded

Manuel Ernesto Ortiz-Barraza, an independent financial consultant, was extradited to the United States today for his alleged role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of over $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Texas Robert Pitman and Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank.

Ortiz-Barraza, 56, was charged in an indictment unsealed on Oct. 19, 2011, in the Western District of Texas with one count of conspiracy to commit wire and bank fraud, three counts of wire fraud and one count of bank fraud for his alleged role in a scheme with several others to defraud the Ex-Im Bank.  Based on a provisional arrest warrant, Mexican authorities arrested Ortiz-Barraza in Mexico on Feb. 13, 2012, and he has been awaiting extradition to the United States, a process which was recently finalized by the Mexican courts.

According to the U.S. indictment and court documents, Ortiz-Barraza and his co-conspirators allegedly conspired to obtain Ex-Im Bank guaranteed loans through banks by creating false loan applications, false financial statements and other documents purportedly for the purchase and export of U.S. goods into Mexico.  Ortiz-Barraza and his co-conspirators allegedly falsified shipping records to support their claims of doing legitimate business and did not ship the goods that were guaranteed by the Ex-Im Bank.  After the loan proceeds were received, Ortiz-Barraza and his co-conspirators allegedly split the loan proceeds among themselves.  As a result of the alleged fraud, the conspirators’ loans defaulted, causing the Ex-Im Bank to pay claims to lending banks on a loss of over $2.5 million.

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

The Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing.  The Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.

The case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Division.  The case was investigated by the Ex-Im Bank Office of Inspector General, Homeland Security Investigations in El Paso, under the leadership of Acting Special Agent in Charge Dennis Ulrich; Internal Revenue Service-Criminal Investigation in Washington, D.C., under the leadership of Special Agent in Charge Rick A. Raven; and the U.S. Postal Inspection Service in Washington, D.C., under the leadership of Inspector in Charge Daniel S. Cortez.  Substantial assistance was provided by the U.S. Marshals Service and the Criminal Division’s Office of International Affairs in Washington, D.C.  The Department of Justice is particularly grateful to the government of Mexico for their assistance in this matter. 

A federal judge in Cleveland today sentenced William R. Herder of Bellville, Ohio, to 20 months in prison for tax crimes, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, U.S. Attorney for the Northern District of Ohio Stephen M. Dettelbach and Special Agent in Charge, Internal Revenue Service (IRS) - Criminal Investigation, Cincinnati Field Office, Darryl K. Williams announced. U.S. District Judge Donald C. Nugent also ordered Herder to pay restitution to the IRS of $149,238 plus interest and penalties.

Herder pleaded guilty in October 2012 to corruptly endeavoring to obstruct the administration of the tax laws and currency structuring. According to documents filed in the case, Herder, an independent insurance salesman for Aflac Inc., failed to file timely and accurate income tax returns for the years 2000-2009 despite earning substantial insurance commissions and receiving warnings and notices from the IRS. Herder filed returns for the years 2010 and 2011 on which he reported that he owed taxes to the government, but failed to pay the almost $50,000 in taxes that he owed for those years.

According to the plea agreement and indictment filed in this case, to prevent the IRS from collecting his unpaid taxes, Herder attempted to conceal his assets and income. In 2004, Herder formed two entities in Nevada – one for the purpose of hiding his automobiles and another for the purpose of hiding his insurance business. Herder also began converting his insurance commission checks to cash and paying his expenses in cash to prevent the IRS from collecting his taxes from his bank account.

The plea agreement and indictment filed in this case also stated that Herder submitted numerous obstructive letters and documents to the IRS, Aflac and his credit union in an effort to prevent the IRS from assessing and collecting his taxes. In these letters, Herder falsely claimed, among other things, that the tax laws were not applicable to him. In 2005, Herder attempted to pay his taxes with a fake financial instrument called an “International Bill of Exchange.”

Last year, William R. Herder’s father, William A. Herder, was found guilty at trial of tax evasion, corruptly endeavoring to obstruct the administration of the tax laws and five counts of failing to file tax returns and was sentenced to 37 months in prison. William A. Herder also sold insurance for Aflac Inc. as an independent contractor. Another insurance salesman, Thomas Mitchell, the uncle of William R. Herder, also pleaded guilty to failing to file a tax return in 2012. William R. Herder has admitted in court papers that he, his father and his uncle participated in a tax defier “program” promoted by convicted felon Joseph Flickinger.

Assistant Attorney General Keneally commended the efforts of Special Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan, who prosecuted the case.

Connie M. Knight, 46, previously of Belle Chasse, La., pleaded guilty in federal court in New Orleans today to three felony criminal charges and one misdemeanor criminal charge for creating false identification documents an impersonating a federal official, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division, and Dana Boente, U.S. Attorney for the Eastern District of Louisiana. 

According to the plea agreement, in the wake of the Deepwater Horizon oil spill, Knight impersonated a high-ranking Occupational Safety and Health Administration (OSHA) hazardous waste safety instructor and inspector in order to collect money from individuals who hoped to work on the cleanup effort that followed the spill.  The plea agreement describes Knight’s methods, which included creating a false federal identification badge declaring that she was an “OSHA Master Level V Instructor and Inspector.”  In reality, OSHA has no such designation.  Knight also created false federal identification badges for her employees, who believed that they were working for OSHA.  The employees were residents of Southeast Asian fishing communities in Southern Louisiana, and provided Knight a way to access those communities.

From the time of the spill through the end of 2010, many fisheries were closed and Gulf fishermen were seeking other means of employment.  Knight held fake OSHA training seminars and assured attendees that they would receive lucrative employment working on the Deepwater Horizon oil spill cleanup once they paid for and completed her course.  Knight did not, however, actually have any connection to the cleanup effort. 

Court documents also describe the training seminars themselves.  Knight required each attendee to pay between $150 and $400 cash to enter a class. She claimed her classes satisfied the various safety requirements that all individuals were to complete in order to be employed at a Deepwater Horizon hazardous waste cleanup site.  Knight’s classes lasted as little as two hours, while the legitimate certifications would take at least six days of classroom training and three days of on-site training. Though many of her attendees were Vietnamese, Laotian or Cambodian, Knight spoke only English at the classes, and all materials were in English.  At least some attendees later gained access to hazardous waste cleanup sites based on the fraudulent certifications created by Knight.

Producing fraudulent federal identification documents carries a maximum sentence of 15 years in prison and a fine of $250,000. Possessing a fraudulent federal identification document carries a maximum sentence of one year in prison and a fine of $100,000.  The two counts of falsely impersonating a federal employee each carry a maximum sentence of three years in prison and a fine of $250,000.

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

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

The owners of three Miami-area assisted living facilities and an affiliated psychologist were sentenced to prison today in connection with a health care fraud scheme, involving now-defunct Miami-area health provider Health Care Solutions Network Inc. (HCSN), in which Medicare was billed for mental health treatments that were unnecessary or not provided.

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

U.S. District Judge Cecilia M. Altonaga sentenced Serena Joslin, 32, of Looneyville, W.Va., to 63 months in prison, following her previous guilty plea to conspiracy to commit health care fraud.  Raymond Rivero, 55, Daniel Martinez, 46, and Ivon Perez, 50, all of Miami, were each sentenced to 28 months in prison.  All three had previously pleaded guilty to conspiracy to violate the anti-kickback statute.

According to court documents, HCSN operated community mental health centers both in Miami and North Carolina, including partial hospitalization programs (PHP) – a form of intensive treatment for severe mental illness.  HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not provided. 

In Miami, HCSN obtained beneficiaries by paying kickbacks to owners and operators of assisted living facilities (ALF) or by otherwise recruiting them from the facilities and from nursing homes.  Rivero, Martinez and Perez admitted during their guilty pleas to referring Medicare beneficiaries to HCSN in exchange for cash bribes.  Rivero, former owner of Miami-based God Is First ALF; Martinez, former owner of Homestead, Fla.-based Mi Renacer ALF; and Perez, former owner of Homestead-based Kayleen and Denis Care Corp., are no longer permitted to operate such facilities as a condition of their guilty pleas.

According to court documents, ALF residents referred to HCSN by Rivero, Martinez and Perez were not qualified to be placed in PHP and were only selected because they had Medicare or state of Florida Medicaid benefits.  In some cases, ALF patients suffered from dementia, Alzheimer’s disease or mental retardation, or were otherwise unable to benefit from mental health services.

According to court documents, Joslin, a licensed psychologist, was hired by HCSN in North Carolina in April of 2010 as a clinical coordinator and later promoted to clinical director. In those roles, she conspired with other HCSN employees to fabricate medical documents to substantiate alleged PHP treatment that was medically unnecessary and, in many instances, not even provided to the beneficiaries.  Joslin admitted that many of the HCSN patients were unqualified for the PHP program because they suffered from conditions such as mental retardation and dementia, and that she directed therapists to fabricate medical records to support HCSN’s fraudulent billing to the Medicare program.  Joslin was also required to surrender her North Carolina license to provide mental health treatment as part of her plea agreement.

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

In addition to the prison terms, Judge Altonaga sentenced Joslin, Rivero, Martinez and Perez each to serve three years of supervised release, and ordered them to pay $4,464,728; $90,896; $76,358; and $89,245 in restitution, respectively.

The cases are being prosecuted by Special Trial Attorney William Parente and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section.  The cases were investigated by the FBI and HHS-OIG and were 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. 

A former co-owner of a U.S. civilian contractor company was sentenced today in San Antonio to serve 30 months in prison for falsifying official documents in connection with Iraq reconstruction government contracts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas.

Jill Ann Charpia, 33, formerly of San Antonio and currently of Colorado, was sentenced today by U.S. District Judge Orlando L. Garcia in the Western District of Texas.  In addition to her prison term, Charpia was sentenced to serve three years of supervised release and ordered to pay $920,000 plus interest in restitution to the United States. 

According to court documents, from 2008 through 2009, Charpia was the co-owner of Sourcing Specialist LLC, a privately owned company that contracted with the U.S. government to provide services in Iraq.  In September 2008, she contracted to provide a turn-key housing facility located outside Iraq’s International Zone to facilitate the introduction of multi-national firms desiring to develop business opportunities in Iraq.  That same month, Charpia signed and submitted to the Department of Defense (DOD) Joint Contracting Command Iraq/Afghanistan, for payment through the contract, a false invoice in the amount of $1,270,075 purportedly for mobilization costs.  She followed up with two invoices, one representing that she had paid $700,000 for the rental of two villas in Baghdad, and the other representing that she had paid $570,075 on the purchase of three armored vehicles from an Iraqi company.  In October 2008, as a result of her false and fraudulent statements, DOD caused $1,270,075 to be wired to Charpia’s bank account.  Charpia admitted that she fabricated both invoices and forged the signatures on the documents.  She also admitted that she did not purchase any armored vehicles and paid only half the submitted cost for the villas. 

This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Judith A. Patton of the Western District of Texas.  The case is being investigated by SIGIR, Internal Revenue Service-Criminal Investigation and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.

David Coleman Headley, a U.S. citizen partly of Pakistani descent, was sentenced today to 35 years in prison for a dozen federal terrorism crimes relating to his role in planning the November 2008 terrorist attacks in Mumbai, India, and a subsequent proposed attack on a newspaper in Denmark. Headley pleaded guilty in March 2010 to all 12 counts that were brought against him following his arrest in October 2009 as he was about to leave the country. Immediately after his arrest, Headley began cooperating with authorities.

Headley, 52, was ordered to serve 35 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber. There is no federal parole and defendants must serve at least 85 percent of their sentence. “Mr. Headley is a terrorist,” Judge Leinenweber said in imposing the sentence.

“There is little question that life imprisonment would be an appropriate punishment for Headley’s incredibly serious crimes but for the significant value provided by his immediate and extensive cooperation,” the government argued in seeking a sentence of 30 to 35 years.

In pleading guilty and later testifying for the government at the trial of a co-defendant, Headley admitted that he attended training camps in Pakistan operated by Lashkar e Tayyiba, a terrorist organization operating in that country, on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from three members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks in 2008 that killed approximately 164 people, including six Americans, and wounded hundreds more. Headley’s plea agreement in March 2010 stated that he “has provided substantial assistance to the criminal investigation, and also has provided information of significant intelligence value.”

In consideration of Headley’s past cooperation and anticipated future cooperation, which would include debriefings for the purpose of gathering intelligence and national security information, as well as testifying in any foreign judicial proceedings held in the United States by way of deposition, video-conferencing or letters rogatory, the Attorney General of the United States authorized the U.S. Attorney’s Office in Chicago not to seek the death penalty.

“Today’s sentence is an important milestone in our continuing efforts to hold accountable those responsible for the Mumbai terrorist attacks and to achieve justice for the victims. Our investigations into Mumbai attacks and the Denmark terror plot are ongoing and active. I thank the many agents, analysts and prosecutors responsible for this investigation and prosecution,” said Lisa Monaco, Assistant Attorney General for National Security.

Headley was convicted of conspiracy to bomb public places in India; conspiracy to murder and maim persons in India; six counts of aiding and abetting the murder of U.S. citizens in India; conspiracy to provide material support to terrorism in India; conspiracy to murder and maim persons in Denmark; conspiracy to provide material support to terrorism in Denmark; and conspiracy to provide material support to Lashkar.

According to Headley’s guilty plea and testimony, he attended the following training camps operated by Lashkar: a three-week course starting in February 2002 that provided indoctrination on the merits of waging jihad; a three-week course starting in August 2002 that provided training in the use of weapons and grenades; a three-month course starting in April 2003 that taught close combat tactics, the use of weapons and grenades, and survival skills; a three-week course starting in August 2003 that taught counter-surveillance skills; and a three-month course starting in December 2003 that provided combat and tactical training.

Mumbai Terror Attacks

After receiving instructions in late 2005 to conduct surveillance in India, Headley changed his given name from Daood Gilani in February 2006 in Philadelphia to facilitate his activities on behalf of Lashkar by portraying himself in India as an American who was neither Muslim nor Pakistani. In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities.

Headley eventually made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time making videotapes of various potential targets, including those attacked in November 2008. Before each trip, Lashkar members and associates instructed Headley regarding specific locations where he was to conduct surveillance. After each trip, Headley traveled to Pakistan to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance videos.

Before the April 2008 surveillance trip, Headley and co-conspirators in Pakistan discussed potential landing sites in Mumbai for a team of attackers who would arrive by sea. Headley returned to Mumbai with a global positioning system device and took boat trips around the Mumbai harbor and entered various locations into the device.

Between Nov. 26 and 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley had scouted in advance, killing approximately 164 victims and wounding hundreds more.

The six Americans killed during the siege were Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr and Aryeh Leibish Teitelbaum.

In March 2009, Headley made a sixth trip to India to conduct additional surveillance, including of the National Defense College in Delhi, and of Chabad Houses in several cities.

Denmark Terror Plot

Regarding the Denmark terror plot, Headley admitted and testified that in early November 2008, he was instructed by a Lashkar member in Pakistan, to conduct surveillance of the Copenhagen and Aarhus offices of the Danish newspaper Morgenavisen Jyllands-Posten in preparation for an attack in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. After this meeting, Headley informed co-defendant Abdur Rehman Hashim Syed (Abdur Rehman), also known as “Pasha,” of his assignment. Abdur Rehman told Headley words to the effect that if Lashkar did not go through with the attack, Abdur Rehman knew someone who would. Although not identified by name at the time, Headley later learned this individual was co-defendant Ilyas Kashmiri. Abdur Rehman previously told Headley that he was working with Kashmiri and that Kashmiri was in direct contact with a senior leader of Al Qaeda

While in Chicago in late December 2008 and early January 2009, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. In January 2009, at Lashkar’s direction, Headley traveled from Chicago to Copenhagen to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and scouted and videotaped the surrounding areas.

In late January 2009, Headley met separately with Abdur Rehman and a Lashkar member in Pakistan, discussed the planned attack on the newspaper, and provided them with videos of his surveillance. About the same time, Abdur Rehman provided Headley a video produced by the media wing of Al Qaeda in approximately August 2008, which claimed credit for the June 2008 attack on the Danish embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the offending cartoons.

In February 2009, Headley and Abdur Rehman met with Kashmiri in the Waziristan region of Pakistan, where they discussed the video surveillance and ways to carry out the attack. Kashmiri told Headley that he could provide manpower for the operation and that Lashkar’s participation was not necessary. In March 2009, a Lashkar member advised Headley that Lashkar put the newspaper attack on hold because of pressure resulting from the Mumbai attacks. In May 2009, Headley and Abdur Rehman again met with Kashmiri in Waziristan. Kashmiri told Headley to meet with a European contact who could provide Headley with money, weapons and manpower for the Denmark attack, and relate Kashmiri’s instructions that this should be a suicide attack and the attackers should prepare martyrdom videos beforehand. Kashmiri also stated that the attackers should behead captives and throw their heads on to the street in Copenhagen to heighten the response from Danish authorities, and added that the “elders,” whom Headley understood to be Al Qaeda leadership, wanted the attack to happen as soon as possible.

In late July and early August 2009, Headley traveled from Chicago to various places in Europe, and met with and attempted to obtain assistance from Kashmiri’s contacts and, while in Copenhagen, he made approximately 13 additional surveillance videos. When he returned to the United States on Aug. 5, 2009, Headley falsely told a U.S. Customs and Border Protection inspector in Atlanta that he had visited Europe for business reasons. On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri.

One of Headley’s co-defendants, Tahawwur Rana, 52, of Chicago, was sentenced last week to 14 years in prison for conspiracy to provide material support to the Denmark terror plot and providing material support to Lashkar. Headley testified for the government at Rana’s trial in June 2011.

The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks. The investigation was conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the FBI, with assistance from FBI offices in Los Angeles, Philadelphia and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

A federal grand jury in Salt Lake City returned an indictment Wednesday afternoon charging Gerrit Timmerman III, 70, of Midvale, Utah, and Carol Sing, 73, of Henderson, Nevada, with one count of conspiracy to defraud the United States. The indictment was announced by Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division and U.S. Attorney for the District of Utah David B. Barlow.

According to the indictment, from April 23, 2004, through March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing corporations sole as a part of a scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that so-called “corporations sole” were exempt from United States income tax laws, had no obligation to file tax returns, and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole. During the life of the conspiracy, Timmerman and Sing were responsible for the creation of approximately 90 corporations sole; at the time their corporation soles were created, these clients had outstanding federal income tax assessments totaling at least $5,000,000.

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Timmerman and Sing each face a maximum of five years in prison and a fine of up to $250,000.

The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Michael Romano and Dennis Kihm.

Stephen Thomas of York, Penn., was sentenced today in U.S. District Court for the District of Columbia for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Judge Amy Berman Jackson sentenced Thomas to 18 months in prison and ordered him to pay $154,362 in restitution to the IRS.

On Sept. 11, 2012, Thomas pleaded guilty to attempting to evade his 2006 federal income taxes. According to court records, between 2002 and 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the initials ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. In or about 2005 and 2006, Thomas, through ECG, contracted to provide such services to two companies in Maine.

As part of his guilty plea, Thomas admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG. Thomas further admitted that he engaged in a series of affirmative acts of evasion during 2005 through 2007, including concealing his income by moving earnings from the Maine companies into bank accounts in the name of his wife, withdrawing cash on a weekly basis which totaled more than $400,000, using cashier’s checks, and titling his primary residence in the name of his wife. Thomas further admitted that he failed to report at least $573,785 of income and that his tax evasion during 2005 through 2007 resulted in a tax loss to the IRS of at least $154,362.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of a special agent of IRS-Criminal Investigation and an investigator from Department of Labor, Employee Benefits Security Administration, who investigated the case, and Trial Attorneys Jessica Moran and Jeffrey Bender of the Justice Department’s Tax Division, who prosecuted the case.

WASHINGTON – A former resident of New Jersey was sentenced today to serve 42 months in prison for her 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.

Martina Montero-de-Ortiz, 52, formerly of Elizabeth, N.J., was sentenced by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico.  In addition to Montero-de-Ortiz’s prison term, Judge Gelpí ordered her to forfeit $33,250 in illegal proceeds and ordered the removal of Montero-de-Ortiz from the United States to the Dominican Republic after the completion of her sentence.

 On Aug. 15, 2012, Montero-de-Ortiz pleaded guilty in Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit alien smuggling for financial gain.

Montero-de-Ortiz 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.

Montero-de-Ortiz admitted that she trafficked the identities of Puerto Rican U.S. citizens and corresponding identity documents in New Jersey.  Montero-de-Ortiz is the 11th defendant to be sentenced in this case.

Another defendant involved in the scheme, Vidal Contreras-Galicia, 30, formerly of Ft. Wayne, Ind., pleaded guilty yesterday before U.S. District Judge Gelpi to one count of conspiracy to commit identification fraud.  As part of his plea agreement, Contreras-Galicia agreed to forfeit $3,000 in illegal proceeds as well as deportation to Mexico after serving his sentence.  According to court documents, Contreras-Galicia admitted that he trafficked the identities of Puerto Rican U.S. citizens and corresponding identity documents in Indiana and that he used a Puerto Rican identity himself to commit financial fraud.  At sentencing, Contreras-Galicia faces a maximum sentence of 15 years in prison and a maximum fine of $250,000.

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.

A former Miami HIV infusion clinic director was sentenced today to serve 70 months in prison for his role in a $26.2 million HIV infusion fraud scheme, announced Assistant Attorney General Lanny Breuer of the Criminal Division, U.S. Wifredo A. Ferrer of the Southern District of Florida, Acting Special Agent in Charge  Michael B. Steinbach of the FBI’s Miami Field Office and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
 
Enrique Gonzalez, 67, formerly of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida.  In addition to his prison term, Judge Altonaga sentenced Gonzalez to serve three years of supervised release and ordered him to pay $17,590,896 in restitution to HHS.

On Nov. 13, 2012, Gonzalez pleaded guilty to one count of conspiracy to defraud the United States, to cause the submission of false claims, and to pay health care kickbacks, and one count of conspiracy to commit health care fraud.

Gonzalez admitted that between August 2002 and March 2004, he conspired with co-defendant Ronald Harris, a Miami physician, and alleged co-conspirators to operate Physicians Med-Care and Physicians Health (together the “Physicians Clinics”), two Miami HIV infusion clinics.  According to court documents, the Physicians Clinics were owned and controlled by alleged co-conspirators Carlos Benitez and his brother Luis Benitez.  The Physicians Clinics purported to specialize in treating patients with HIV, but were operated for the sole purpose of committing Medicare fraud, according to court documents.  Gonzalez was a director of Physicians Med-Care and, at the direction of his co-conspirators, was responsible for the finances of the Physicians Clinics.
 
Gonzalez admitted that he agreed with his co-conspirators to handle the finances for the Physicians Clinics, moving the money paid by the Medicare program out of the Physicians Clinics’ accounts and into accounts owned and controlled by his co-conspirators.  According to court documents, Harris signed blank checks that Gonzalez used to transfer funds to various Benitez-owned entities and others, as directed by his co-conspirators.  In addition, Gonzalez agreed to provide cash to various co-conspirators at the Physicians Clinics to be used to pay bribes and kickbacks to the Medicare beneficiaries in return for those beneficiaries allowing the Physicians Clinics to bill the Medicare program for HIV infusion services that were not medically necessary and often not provided.

Gonzalez admitted that during his association with Physicians Med-Care, the clinic billed the Medicare program approximately $24.5 million in HIV infusion therapy claims, for which the clinic received $16.7 million in payments.  Gonzalez also admitted that during his time with Physicians Health, the clinic billed Medicare approximately $1.7 million and received approximately $800,000 in payment from the Medicare program for fraudulent services. 

Gonzalez was a fugitive from justice from the time of his indictment in 2008, until he was located and detained in Peru in late 2011.  Gonzalez was extradited to the United States in July of 2012.  Gonzalez’ daughter, Carmen Gonzalez, was indicted in a related case and is currently a fugitive. 

Co-defendant Harris pleaded guilty on Aug. 26, 2008, to one count of conspiracy to defraud the United States, to cause the submission of false claims and to pay health care kickbacks; one count of conspiracy to commit health care fraud; and three counts of submitting false claims to the Medicare program.  Harris pleaded guilty in connection with his role as the medical director for the Physicians Clinics.  On Nov. 4, 2008, Harris was sentenced to serve 84 months in prison for his role in the scheme. 

Carlos and Luis Benitez and Thomas McKenzie were charged separately with health care fraud and money laundering crimes in an indictment unsealed on June 11, 2008.  According to the separate indictment, the defendants provided the money and staff necessary to open the Physicians Clinics, the Medicare patients that the clinics needed to bill the Medicare program and transportation for the HIV patients who visited the clinics.  Carlos and Luis Benitez and McKenzie were charged for their role in committing approximately $109 million in HIV infusion fraud and money laundering through the Physicians Clinics and nine other HIV infusion clinics. 

On Sept. 18, 2008, McKenzie pleaded guilty to one count of conspiracy to commit health care fraud and one count of submitting false claims to the Medicare program, and admitted to his role in a $119 million HIV infusion fraud scheme.  On Dec. 18, 2008, McKenzie was sentenced to serve 14 years in prison.

Carlos and Luis Benitez are also fugitives.  Anyone with information regarding the whereabouts of the fugitives is urged to contact HHS-OIG fugitive reporting phone line at 888-476-4453. 
 
The defendants who have not been convicted are presumed innocent unless and until proven guilty.

The Physicians Med-Care and Physicians Health case is being prosecuted by Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and the DHS Office of Inspector General.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  The Department also thanks the Peruvian National Police Interpol Unit for their assistance.

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.

Linda Weston, her daughter and three co-defendants are charged in a 193-count indictment, unsealed today, with racketeering, murder in aid of racketeering, hate crimes, sex trafficking, forced labor, theft, fraud and other crimes. The indictment alleges that Weston and her associates carried out a racketeering enterprise that targeted victims with mental disabilities as part of a scheme to steal disability payments from the victims and the Social Security system. As part of the scheme, Weston persuaded each victim to make her the designated recipient of their Social Security disability payments in exchange for the promise of a comfortable place to live. Once appointed as the designated recipient of disability payments, Weston, aided by the co-defendants, subjected the victims to subhuman conditions of captivity.

According to the indictment, the defendants beat the victims, kept them captive in locked closets, basements and attics, deprived them of adequate food and medical care, and moved them between Philadelphia, Pennsylvania, Texas, Virginia and Florida in order to further the scheme and evade law enforcement. According to the indictment, some of the victims endured this abuse for years, until Oct. 15, 2011, when Philadelphia Police Department officers rescued them from the sub-basement of an apartment building in the city’s Tacony section.

Today’s indictment was announced at a press conference by U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger, FBI Acting Special Agent-in-Charge John Brosnan, Special Agent-in-Charge Michael McGill with the Social Security Administration’s Office of Inspector General and Philadelphia Police Commissioner Charles Ramsey.

Along with Weston and her daughter Jean McIntosh, the indictment charges Weston’s paramour, Gregory Thomas Sr., Eddie Wright and Nicklaus Woodard. According to the indictment, the defendants used isolation, intimidation, threats of violence and violence to control the victims with mental disabilities and each defendant had a role in the racketeering enterprise:

?? Linda Weston was the leader and organizer of the enterprise that operated from at least the fall of 2001 through October of 2011. She enticed all of the victims into coming to live with the enterprise and controlled all aspects of their captivity.

?? Jean McIntosh was also a leader of the enterprise who acted as her mother’s right hand woman. She assisted in confining, controlling, disciplining, housing and transporting the victims.

?? Gregory Thomas Sr. assisted in obtaining, confining, controlling, housing and transporting the victims. He installed locks on the doors and windows of every residence where the victims were kept to prevent them from escaping.

?? Eddie Wright assisted in confining, controlling, housing and transporting the victims.

?? Nicklaus Woodard assisted in confining, controlling and disciplining the victims.

The indictment charges that in confining the victims, the defendants practiced what is described as “abusive control and confinement techniques” in which the defendants:

·          Confined the victims to locked basements, rooms, closets, attics and apartments;

·          Sedated the victims by putting drugs in the food and drink served to them by Weston and others, at Weston’s direction;

·          Subdued the victims by serving them a low calorie, high starch diet consisting exclusively of Ramen noodles, beans and stew and generally limited them to, at most, one meal a day;

·          Punished the victims by slapping, punching, kicking, stabbing, burning and hitting them with closed hands, belts, sticks, bats and hammers or other objects, including the butt of a pistol, when the victims tried to escape, stole food or otherwise protested their confinement and treatment.

The indictment alleges that Weston’s use of these techniques caused the deaths of two of the victims. For example, in 2002, Weston met M.L. and lured her to come live with the family. M.L. was forced to cook, clean, wash clothes and babysit without compensation. M.L. was beaten when she tried to escape or when she begged for food and was not provided with any medical attention for her injuries. When Weston moved the enterprise to Virginia in 2008, M.L. died of bacterial meningitis and starvation. Weston allegedly ordered other members of the household to move M.L.’s body to a bedroom and stage the scene before calling law enforcement and the next day the family left for Philadelphia. In addition, in April 2005, Weston and Thomas allegedly targeted victim D.S. who they saw standing on a street corner. They brought D.S. to the WF home at 2211 Glenview Avenue in Philadelphia. D.S. was kept in the basement with the other victims, fed a substandard diet, and not allowed to use the bathroom. On June 26, 2005, D.S. was found dead in the basement. Weston allegedly ordered other members of the household to move D.S.’s body to a bedroom and stage an accidental overdose before calling law enforcement.

The indictment also alleges that Weston forced two female captives to engage in prostitution while the enterprise operated in Killeen, Texas, and West Palm Beach, Fla.

The defendants are charged in four counts of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act. The Shepard-Byrd Act criminalizes certain acts of physical violence causing bodily injury motivated by any person's actual or perceived disability, race, color, national origin, religion, sexual orientation, gender or gender identity.

“The allegations in this indictment describe a scheme to physically abuse and subjugate persons with disabilities for purposes of de-humanizing them, stealing their money, and unlawfully obtaining their labor,” said Assistant Attorney General Thomas E. Perez of the Department of Justice’s Civil Rights Division.  “The laws against violently assaulting individuals because of their disabilities and those that prohibit human trafficking were designed to combat conduct aimed at vulnerable members of society, such as the alleged victims in this case.” 

“Those with physical and mental disabilities are among the most vulnerable in our society. As with everyone else, they deserve to be treated with respect, not violence,” said U.S. Attorney Memeger. “Linda Weston and others, in fact, decided to prey on these victims specifically because of their disabilities and they did so through violence, fear and intimidation for the purpose of stealing social security payments that were meant for the victims’ long-term care. ‘Shocking’ does not begin to describe the criminal allegations in this case where the victims were tied-up and confined like zoo animals and treated like property akin to slaves. Hopefully, today’s announcement of a 196-count indictment will help begin the process of restoring the victims’ faith in humanity.”

“Today’s indictment represents just one more step towards closure and healing, not only for the victims of this heinous hate crime, but for the community as a whole,” said Special Agent-in-Charge John Brosnan. “The FBI, along with the U.S. Attorney’s Office, the Philadelphia Police Department and the Social Security Administration Office of Inspector General remain committed to protecting each and every citizen's civil rights, and will aggressively investigate any violation of those rights, bringing the perpetrators to justice.”

"The Office of the Inspector General investigates many cases involving the misuse of Social Security benefits by representative payees, but thankfully, we've never seen a case involving this level of cruelty and inhumanity to our most vulnerable beneficiaries," said Special Agent-in-Charge Michael McGill. "We're pleased to see justice served, and grateful to the U.S. Attorney and our investigative partners for their unflagging support in this investigation."

If convicted of all charges, each of the defendants faces a statutory maximum sentence of life in prison with advisory guideline sentencing ranges that involve substantial terms of imprisonment. Weston also faces mandatory restitution in the amount of approximately $212,000, fines, and special assessments.

An indictment is merely an accusation; all defendants are presumed innocent until proven guilty.

The case was investigated by the FBI, the Social Security Administration Office of Inspector General, the Internal Revenue Service Criminal Investigation, the Philadelphia Police Department, with assistance from the Bureau of Alcohol, Tobacco, Firearms, and Explosives, West Palm Beach Field Office.  It is being prosecuted by Department of Justice Civil Rights Division Trial Attorney Betsy Biffl and Assistant U.S. Attorneys Richard P. Barrett and Faithe Moore Taylor.  The case was originally charged by the Philadelphia District Attorney’s Office.

Joseph McDaniels, 43, of Shoreline, Wash., was sentenced today in U.S. District Court for interstate transportation of a 22 year old woman for purposes of prostitution. Judge James L. Robart sentenced McDaniels to 10 years in prison followed by three years of supervised release. Requirements during the supervised release include registration under the Sex Offender Registration and Notification Act, sexual deviancy evaluation and treatment, restrictions and monitoring of his use of computers and restrictions on contact with minors.

On Sept. 28, 2012 McDaniels pleaded guilty to interstate transportation for prostitution. The indictment alleged that between August 2011 and April 2012, McDaniels compelled the woman to engage in commercial sex acts through force, fraud and coercion and that McDaniels transported her between Washington state and Oregon for purposes of prostitution.

According to court filings, McDaniels is a registered sex offender and had completed serving a 15-year sentence for a series of robberies in the mid-1990’s when he was released from state prison in early 2011. Only a few months later, McDaniels met and recruited the woman, preying upon her youth and drug addiction to coerce her into engaging in acts of prostitution.

According to court documents, McDaniels advertised the woman on Backpage.com, transported her to prostitution dates, took all of her money and supplied her with drugs. He threatened to harm her and her family, and in December 2011, McDaniels was arrested and later convicted in state court for assaulting the woman. He was arrested again in May 2012 after he had taken her to Portland, Ore., for prostitution, and then attempted to have the woman withdraw a state-issued no contact order against him.

“The exploitation and sexual abuse of a vulnerable young woman is intolerable and the Justice Department will continue to prosecute and seek justice for victims of such abhorrent crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

“We will continue our battle against human trafficking in western Washington,” said U.S. Attorney for the District of Washington Jenny A. Durkan. “We are fortunate to have committed local, state and federal officers working together to find and stop sexual predators like the defendant. Today the court ensured that other young women will not be exploited by him.”

This case was investigated by the Kent Police Department, Auburn Police Department, and the FBI’s Innocence Lost Task Force, and prosecuted by Assistant U.S. Attorney Ye-Ting Woo and Trial Attorney Daniel H. Weiss of the Civil Rights Division’s Human Trafficking Prosecution Unit.

The FBI’s Innocence Lost Task Force provides a rapid and effective investigative response to reported federal crimes involving the victimization of children. The task force strives to reduce the vulnerability of children to acts of sexual exploitation and abuse and strengthens the capabilities of federal, state and local law enforcement through training programs and investigative assistance.

Billy James Hammett, 28, and Perry Sylvester Jackson, 27, were arrested today in Yuba County, Calif., on federal hate crime charges for their racially motivated attack on an African American woman and white man in Marysville, Calif., on April 18, 2011. A third defendant, Anthony Merrell Tyler, 32, has turned himself in to authorities in Sacramento, Calif.

The defendants were charged in a three-count indictment returned by a federal grand jury in the Eastern District of California and unsealed today. They are charged with one count of conspiracy and two counts of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act. The Shepard-Byrd Act criminalizes certain acts of physical violence causing bodily injury motivated by any person’s actual or perceived race, color, national origin, religion, sexual orientation, gender, gender identity or disability.

The indictment alleges that when an African American woman accompanied by a white male drove into the parking lot of a convenience store, Jackson shouted a racial epithet at the male. Hammett then approached the driver’s side of the car, using a racial epithet to refer to the African American driver, while Jackson and Tyler attacked from the other side of the car. The indictment further alleges that Hammett and Jackson punched and kicked the African American woman driver and white male passenger and that Tyler smashed the car windshield with a crowbar and used racial epithets again.

If convicted, the defendants could face a maximum sentence of five years in prison and a fine of $250,000 on the conspiracy charge, and 10 years in prison and a fine of $250,000 on each of the two hate-crime charges.

This case is being investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney R. Steven Lapham for the Eastern District of California and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.

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

Former Fort Deposit, Ala., police officer Carlos Tyson Bennett, 37, was sentenced today by U.S. District Judge Mark Fuller to 37 months in prison, two years of supervised release and ordered to pay $500 in restitution. Bennett was sentenced for stealing money from motorists during traffic stops, with another former Fort Deposit police officer, Jessie Alan Fuller, on Interstate 65 in 2009.

Bennett pleaded guilty on Aug. 29, 2012, to one count of conspiracy against rights and four counts of deprivation of rights under color of law. During his plea, Bennett admitted that he and Fuller conspired to pull over vehicles under the guise of legitimate law enforcement activity and to steal cash from drivers and passengers in violation of their Fourth Amendment rights. Bennett acknowledged that he and Fuller worked together, acting with each other’s knowledge and cooperation and typically sharing the stolen money. In May and June 2009, Bennett committed four specific thefts, taking between $100 and $200 per victim. Bennett further acknowledged that he and Fuller tried to cover up their conspiracy when authorities began to investigate.

Fuller previously pleaded guilty to conspiracy and one count of deprivation of rights under color of law. He was sentenced to 37 months in prison on Aug. 28, 2012.

“This defendant betrayed the public trust when he took advantage of his position of authority to steal from those he pledged to serve,” said Thomas E. Perez, Assistant Attorney General for Civil Rights Division. “The Department of Justice is committed to prosecuting those who abuse their authority and violate the Constitution.”

“Police officers are here to protect public, not exploit the public,” stated U.S. Attorney George L. Beck Jr.  “When law enforcement officers take advantage of people they are supposed to be serving, they must be punished.  This case shows that my office will continue to do everything under law to protect public from criminals, even when the criminal is a law enforcement officer.” 

This case was investigated by the Alabama Bureau of Investigation; the Butler County, Ala., Sheriff’s Office; and the Lowndes County, Ala., Sheriff’s Office. The case was prosecuted by Assistant U.S. Attorney Gray Borden for the Middle District of Alabama and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.

The United States has asked a federal court in Florence, S.C., to permanently bar Susann Allen of Darlington County, S.C., and Rachel D. Watson of Florence County, S.C., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Allen and Watson have prepared federal income tax returns at a number of businesses in South Carolina including, most recently, Fludd’s Express Tax Service and Gold Valley Pawn. The complaint alleges that they have prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

The government complaint alleges that Allen and Watson prepared returns that unlawfully claim the Earned Income Tax Credit by reporting fictitious Schedule C businesses or business income or fictitious dependents. The complaint also alleges that Allen and Watson fabricated or inflated deductions. According to the complaint, the Internal Revenue Service has examined 32 returns prepared by Watson and six prepared by Allen and found that every single one overstated their client’s refund. The total excessive refund of those returns is alleged to be greater than $100,000. Altogether, the government complaint alleges that Allen’s and Watson’s activities may have resulted in millions of dollars of loss to the United States.

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. Susann Allen, et al.
Complaint (PDF)

WASHINGTON – A former Texas state parole officer pleaded guilty today in Dallas for taking bribes from one of her assigned parolees in exchange for not reporting his parole violations, announced Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division.

 
Nichelle Derricks, 37, of Cedar Hill, Texas, pleaded guilty to one count of honest services wire fraud before U.S. Magistrate Judge Renee Harris Toliver of the Northern District of Texas, who then recommends U.S. District Judge Ed Kinkeade accept the plea.

 
According to court documents, while serving as a Texas Department of Criminal Justice (TDCJ) parole officer, Derricks and one of her assigned parolees developed an improper relationship in which Derricks secretly used her official position with TDCJ to enrich herself and others by soliciting and receiving cash payments, gifts, furniture, household goods and items, food and beverages and other things of value from the parolee in exchange for favorable official action benefitting the parolee. The scheme, according to court documents, was conducted without the authorization, knowledge or approval of TDCJ and contrary to TDCJ procedures and requirements.

 
As part of her plea, Derricks admitted she repeatedly failed to report the parolee for violating the terms of his parole, including, among other things, failing to report him for traveling outside Texas without prior, written approval and for engaging in prohibited financial transactions.

 
Derricks faces a maximum potential penalty of 20 years in prison and a $250,000 fine on the honest services wire fraud charge. She is scheduled to be sentenced on April 24, 2013.

 
The case is being prosecuted by Trial Attorneys Edward P. Sullivan and Jeffrey E. Tsai of the Justice Department Criminal Division’s Public Integrity Section. The case was investigated by the FBI Dallas Field Office, with assistance from the U.S. Secret Service and the TDCJ Office of Inspector General.

James M. Davis, 64, formerly of Baldwyn, Miss., the former chief financial officer of Stanford International Bank (SIB) and Houston-based Stanford Financial Group, was sentenced today to five years in prison for his role in helping Robert Allen Stanford perpetrate a fraud scheme involving SIB, and for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation into SIB.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Ronald T. Hosko of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration (DOL EBSA) Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber, of Internal Revenue Service-Criminal Investigation (IRS-CI).

The prison sentence was imposed by U.S. District Judge David Hittner of the Southern District of Texas, who also sentenced Davis to serve three years of supervised release. As part of Davis’ sentence, the court also imposed a personal money judgment of $1 billion, which is an ongoing obligation for Davis to pay back criminal proceeds.

During the sentencing proceeding, Judge Hittner noted that Davis began cooperating with the government in early 2009, shortly after SIB’s collapse. Judge Hittner also noted that over the following three years, Davis provided substantial assistance to the authorities in the investigation and prosecution of others, including testifying at Stanford’s trial; testifying during the trial of Gilbert T. Lopez Jr. and Mark J. Kuhrt, Stanford’s former chief accounting officer and global controller, respectively; and preparing to testify against Laura Pendergest-Holt, Stanford’s chief investment officer. Holt eventually pleaded guilty; Stanford, Lopez and Kuhrt were convicted at trial. Stanford and Holt are currently serving 110 years and three years in prison, respectively. Lopez and Kuhrt are in federal custody and await sentencing, scheduled for Feb. 14, 2013.

As part of his 2009 guilty plea, Davis admitted that he was aware of Stanford’s misuse of SIB’s assets, kept the misuse hidden from the public and from almost all of Stanford’s other employees and worked to prevent the misuse from being discovered. In addition, Davis acknowledged that in January 2009, when the SEC sought testimony and documents related to SIB’s entire investment portfolio, he conspired with others in an effort to impede the SEC’s investigation and help SIB continue operating.

The investigation was conducted by the FBI, USPIS, IRS-CI and DOL EBSA. The case against Davis is being prosecuted by Deputy Chief Jeffrey Goldberg, Deputy Chief William Stellmach and Trial Attorney Andrew Warren of the Justice Department Criminal Division’s Fraud Section, and by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas. The Justice Department also thanks the SEC for their assistance and cooperation in this matter.

WASHINGTON– A two-count superseding indictment was unsealed today in the Northern District of Florida charging a Florida resident with providing campaign contributions in the names of others and causing a presidential campaign committee to make a false statement to the Federal Election Commission (FEC), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Robert O. Davis, Acting U.S. Attorney for the Northern District of Florida.

Jay Odom, 56, of Destin, Fla., was charged in federal court in the Northern District of Florida with one count of providing campaign contributions in the name of another and one count of causing another to make false statements to the FEC.

The indictment alleges that in 2007, Odom directly or indirectly used personal funds aggregating more than $10,000 to reimburse individual contributions to the authorized campaign committee of a presidential candidate.  As a result, Odom allegedly caused the authorized campaign committee of that presidential candidate to file reports with the FEC that falsely stated that certain individuals had made federal campaign contributions when in fact each contribution was made by Odom.  According to the indictment, Odom was aware of the maximum donation that could be made by an individual to the campaign, and he knowingly devised a scheme to funnel his own money through the names of others in order to conceal from the FEC the true source and amount of the campaign contribution.

The charge of causing another person to make a false statement to the FEC carries a maximum sentence of five years in prison.  The charge of providing campaign contributions in the name of another carries a maximum sentence of two years in prison. 

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

The superseding indictment results from an investigation by the FBI.  This case is being prosecuted by Assistant U.S. Attorney Randall J. Hensel and Trial Attorney Brian K. Kidd of the Criminal Division’s Public Integrity Section.

BALTIMORE --Immigration Judge John F. Gossart, Jr. 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. 18, 2013. The Baltimore District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General William French Smith appointed Judge Gossart in October 1982. Judge Gossart received a bachelor of science degree in 1967 from the University of Maryland and a juris doctorate in 1974 from the University of Baltimore School of Law. From 1975 through 1982, he served in various positions at the former Immigration and Naturalization Service, including general attorney, trial attorney, and deputy assistant commissioner for naturalization. Since 1997, Judge Gossart has served as an adjunct professor of immigration law at the University of Baltimore School of Law; has been a faculty member at the National Judicial College; and has guest lectured at numerous law schools and for the Maryland Institute for Continuing Professional Education of Lawyers. From 1967 to 1969, he served in the U.S. Army. Judge Gossart is a member of the Maryland State and District of Columbia Bars.

- EOIR -

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

A federal grand jury in Philadelphia unsealed an indictment yesterday charging Kyle Novitsky, 45, and Judith Aloe, 52, both of North Miami Beach, Fla., with making false odometer statements, securities fraud and conspiracy to commit these offenses, the Justice Department announced today. According to the indictment, as early as 2004, and through at least 2010, the defendants devised a scheme to defraud buyers of used motor vehicles by misrepresenting the mileage of approximately 247 vehicles they sold.

As part of the scheme, the indictment charges that Novitsky and Aloe purchased high-mileage, used motor vehicles in Florida, California and elsewhere from a national vehicle leasing company. The defendants are charged with conspiring to alter the odometers in these vehicles to reflect false, lower mileage. The indictment alleges that Novitsky and Aloe then fraudulently altered the motor vehicle titles and sales documentation associated with these vehicles to reflect the false, lower mileage. As a result, the commonwealth of Pennsylvania issued motor vehicle titles reflecting this false, low er mileage, which the defendants knew to be untrue.

Novitsky and Aloe subsequently sold the motor vehicles at wholesale automobile auctions in Manheim, Pa., and elsewhere, and provided to the buyers Pennsylvania titles bearing the lower false mileage. The indictment alleges that in some instances, the true mileage of the vehicle was greater than 100,000 miles more than what the title indicated, and as a result of selling the vehicles with false, lower mileages, the defendants received higher sales prices for the vehicles they sold.

“Mileage information is important for consumers to assess the value and safety of the vehicles they purchase,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “Automobile purchases are one of the biggest investments consumers make, and false odometer statements can cause the buyers of these vehicles to lose thousands of dollars of their hard-earned money. In these difficult economic times, we take seriously our obligation to prosecute those who engage in this serious form of fraud.”

The charges in the indictment are only allegations, and the defendants are presumed innocent unless and until proven guilty. Principal Deputy Assistant Attorney General Delery thanked the Office of Odometer Fraud Investigation at the National Highway Traffic Safety Administration, U.S. Department of Transportation, for their assistance in investigating and prosecuting this case

A Texas federal judge convicted the owner of two Texas-based durable medical equipment companies today on multiple health care fraud charges following a five-day bench trial, announced Assistant Attorney General Lanny A. Breuer of the Justice Department?s Criminal Division.
 
Hugh Marion Willet, 69, of Fort Worth, Texas, was found guilty by U.S. District Judge Jane J. Boyle in the Northern District of Texas on all seven counts of the June 2012 second superseding indictment: one count of conspiracy to commit health care fraud and six counts of health care fraud stemming from a durable medical equipment (DME) fraud scheme.  Willett?s wife, Jean Willett, previously pleaded guilty to the same charges and was sentenced in September 2012 to serve 50 months in prison.  
            
The evidence at trial showed that between 2006 and 2010, the Willets co-owned and operated JS&H Orthopedic Supply LLC and Texas Orthotic and Prosthetic Systems Inc., which claimed to provide orthotics and other DME to beneficiaries of Medicare and private insurance benefit programs including Aetna, Blue Cross Blue Shield and CIGNA.  
 
Evidence presented in court proved that both of these companies intentionally submitted claims to Medicare and other insurers for products that were materially different from and more expensive than what was actually provided, and that Hugh Marion Willett was a knowing and willing participant in the fraud.     
 
At sentencing, currently scheduled for April 18, 2013, Hugh Marion Willett faces a maximum potential penalty of 10 years in prison and a $250,000 fine on each count. 
 
The case is being prosecuted by Fraud Section Trial Attorney Ben O?Neil and Deputy Chief Sam Sheldon of the Justice Department?s Criminal Division.  The case was investigated by the FBI and the Department of Health and Human Services Office of Inspector General (HHS-OIG) and brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division?s Fraud Section.
 
Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

WASHINGTON – A former minister pleaded guilty today in North Carolina to engaging in illicit sexual conduct in Haiti, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of North Carolina Anne M. Tompkins and Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas. 

Larry Michael Bollinger, 67, of Gastonia, N.C., pleaded guilty before U.S. District Judge David S. Cayer in the Western District of North Carolina to two counts of engaging in illicit sexual conduct in a foreign place.  Bollinger was charged in an indictment filed on May 15, 2012.

According to filed court documents and court proceedings, Bollinger was a former Lutheran minister who performed missionary work in Haiti.   Court records show that Bollinger regularly travelled to Haiti and served as the Haiti director for a Lutheran charity.  Bollinger admitted that from about August 2009 to October 2009, he sexually molested four Haitian females, between the ages of 11 and 16.  According to court records, one of the victims said that Bollinger offered to give her food and money in exchange for sexual acts.   

Bollinger has been in federal custody since he was charged in May 2012.   Each count of engaging in illicit sexual conduct in a foreign place carries a maximum penalty of 30 years in prison and a $250,000 fine.  A sentencing date for Bollinger has not been set yet. 

The case is being prosecuted by Assistant U.S. Attorney Kimlani M. Ford of  the Western District of North Carolina and Trial Attorney Michael W. Grant of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).  The investigation was conducted by ICE-HSI. 

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.

A federal court has permanently barred Nafeesah H. Hines and Rodney N. Chestnut from promoting an alleged tax fraud scheme, as well as preparing tax returns for anyone other than themselves, the Justice Department announced today.  The civil injunction orders, to which Hines and Chestnut consented without admitting the allegations against them, were entered by Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York.         

According to the government complaint in the case, Hines and Chestnut promoted and personally participated in a scheme based on the frivolous “redemption” theory, which promoters falsely claim allows taxpayers to obtain funds from supposed secret Treasury accounts.  The government alleged that Hines and Chestnut used Internal Revenue Service (IRS) forms, including Forms 1099-OID and 1099-A, to report large amounts of fictitious income tax withholding to claim large tax refunds on customer tax returns prepared by Chestnut or prepared by the customers with Chestnut’s help.      

Chestnut, the government alleges, is a former captain with the New York City Corrections Department and promoted the scheme to former co-workers.  Hines, who the complaint alleges is a U.S. Food and Drug Administration employee, prepared or filed false 1099 forms with the IRS, both for Chestnut’s customers as well as for other people, according to the lawsuit. The complaint alleges that Hines prepared or filed more than 3,000 fraudulent IRS forms that falsely reported over $54 million of purportedly withheld income taxes.        

Claiming bogus tax refunds based on false 1099 Forms is one of the IRS’s “Dirty Dozen” tax scams . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Nafeesah H. Hines, et al.
Chestnut Injunction
Hines Injunction

The Justice Department announced today that a federal court has permanently barred Cash Management Systems, a Virginia corporation, from promoting two tax schemes that allegedly involve disguising wages as tool-reimbursement or tool-rental payments. Also subject to the civil injunction order were Cash Mangement’s marketing arm, Xell Enterprises, incorporated in Kansas; its principals, Bruce Lemay and Richard Herson Mills; and Allen Davison, of Overland Park, Kan. According to the government complaint, Davison provided legal opinion letters regarding the schemes and served on Cash Management’s board of directors.

Judge Eric F. Melgren of the U.S. District Court for the District of Kansas entered the permanent injunction, which the defendants consented to without admitting to the allegations against them. Davison was enjoined from promoting other tax schemes in 2010.

The complaint alleges that defendants promoted and implemented two fraudulent tax schemes to employers and employees in the automotive, construction and trucking industries across the United States. In the first, employers allegedly re-characterize a portion of employees’ wages as purported reimbursements for tools in order to evade federal income and employment taxes. The second plan allegedly involves re-characterizing a portion of wages as purported tool rental payments. The suit alleges that both plans are specifically designed and promoted as ways to reduce reported income and employment taxes.

The government asserts in its complaint that from 2004 through 2010 the schemes cost the U.S. Treasury an estimated $17 million.

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

Related Materials:

United States v. Cash Management Systems, Inc., et al.
Complaint for Permanent Injunction and Other Relief
Amended Stipulated Order for Permanent Injunction

Assistant Attorney General Ignacia S. Moreno announced today the publication of the Environment and Natural Resources Division’s (ENRD) Fiscal Year 2012 Accomplishments Report.  The full report, which details the division’s work across the nation during FY2012, is posted at www.justice.gov/enrd/Current_topics.html. 

Outstanding Enforcement Results

 Through its civil and criminal environmental enforcement actions, ENRD achieved dramatic reductions in emissions and discharges of harmful pollutants to America’s air, water and land.  In 2012, the division secured more than $397 million in civil and stipulated penalties, cost recoveries, natural resource damages and other civil monetary relief, including almost $133 million recovered for the Superfund.  The division obtained over $6.9 billion in corrective measures through court orders and settlements and concluded 47 criminal cases against 83 defendants, resulting in nearly 21 years in confinement and over $38 million in criminal fines, restitution, community service funds and special assessments.  These outstanding results continue the division’s success in obtaining record-setting results over the past four years.  During this time, the division has also advanced environmental justice, incorporating this important priority in a meaningful and enduring way into the work of the division.  

“The extraordinary work reflected in this report is due to the dedication, expertise and professionalism of the division staff,” said Assistant Attorney General Moreno. “I am extremely proud of our achievements over the past year.  They have resulted in immeasurable benefits for human health and the environment for all of the American people, who should all enjoy the benefits of a fair and even-handed application of environmental and natural resources laws. Together with our colleagues at client agencies and state, local and tribal governments, the Department of Justice will continue to vigorously enforce the federal civil and criminal environmental and natural resources laws that protect our air, land and water from pollution and that preserve our natural resources for the use and enjoyment of generations to come.”

Holding Those Responsible for the Deepwater Horizon Oil Spill Accountable

ENRD’s top civil and criminal enforcement priority is to bring to justice those responsible for the April 20, 2010 Deepwater Horizon explosion, fire and oil spill. Under a consent decree lodged on Jan. 3, 2013, Transocean pleaded guilty to violating the Clean Water Act and agreed to pay $1.4 billion in civil and criminal fines and penalties, including a record-setting $1 billion to resolve Clean Water Act civil claims. On Feb. 17, 2012, the Department of Justice announced an agreement with MOEX, which will pay $70 million in civil penalties to resolve alleged violations of the Clean Water Act and will spend at least $20 million to facilitate land acquisition projects in several Gulf States that will preserve and protect in perpetuity habitat and resources important to water quality.

Landmark Decisions Reducing Greenhouse Gases

ENRD’s responsibilities include defending lawsuits brought against the federal government challenging agency actions and programs.  In a landmark example of its defensive work, the division, with agency counsel, successfully defended rulemakings under the Clean Air Act that reduce the emission of greenhouse gases that contribute to global warming. In June 2012, in one of the most significant environmental regulatory decisions of the past decade, a unanimous panel of the D.C. Circuit in Coalition for Responsible Regulation v. EPA upheld EPA’s greenhouse gas-related regulatory actions against all challenges.  
 
Successfully Defending the Country’s Energy Agenda

The Obama Administration’s energy policy includes the responsible development of additional fossil fuels and renewable energy sources.  In 2012, the division successfully defended challenges to permits and rights-of-way put in place to promote the development of renewable energy projects on western public lands.  ENRD is defending more than 20 cases involving solar, wind and transmission projects located in California, Oregon, Tennessee, Delaware, Massachusetts and Vermont, and has successfully defeated motions for injunctive relief in California, Tennessee and Delaware to allow responsible energy development to proceed consistent with the permitting requirements of the issuing agencies.
 
Promoting National Security and Military Preparedness

Increasingly, the division is responsible for defending agency actions that support the national security of the United States.  For example, in fiscal year 2012, the division successfully defended against challenges to critical Department of Defense training programs that ensure military preparedness, various agency projects to secure the nation’s borders and waters, and U.S. development of all forms of domestic energy to reduce our dependence on foreign oil.  

Historic Results Protecting Tribal Rights and Resources and Addressing Tribal Claims

In 2012, the division achieved historic results for Indian tribes and resolved decades-long and costly litigation over tribal claims regarding the government’s management of trust funds and trust resources.  In the past year, the United States settled cases with 62 tribes, agreeing to pay about $1.25 billion in total to resolve the tribes’ claims. The division will continue, through its cases, to vigilantly protect tribal sovereignty, safeguard tribal lands and resources, and honor tribal treaty rights.

One of the Best Places to Work in the Federal Government

At the same time that the division has achieved outstanding results in its cases, in each of the last three years, the Partnership for the Public Service (PPS) has ranked ENRD as one of the “Best Places to Work in the Federal Government.”  ENRD’s overall ranking has been in the top five for each of the past three years, including two #1 rankings.  The division has also continued to make great strides in promoting diversity and a better quality of life for all its employees.

A Pakistani native who operated a Chicago-based immigration business was sentenced today to 14 years in prison for conspiracy to provide material support to a terrorist plot in Denmark and providing material support to Lashkar e Tayyiba, a terrorist organization operating in Pakistan that was responsible for the November 2008 attacks in Mumbai, India.  The defendant, Tahawwur Hussain Rana, was convicted of the charges on June 9, 2011, following a three-week trial in U.S. District Court in Chicago. 
 
Rana, 52, a Canadian citizen, was ordered to serve 14 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber.  “This certainly was a dastardly plot,” Judge Leinenweber said in imposing the sentence.
 
Rana was convicted of conspiracy to provide material support to a plot from October 2008 to October 2009 to commit murder in Denmark, including a horrific plan to behead employees of Morgenavisen Jyllands-Posten, a Danish newspaper, and throw their heads on to the street in Copenhagen, as well as providing material support, from late 2005 to October 2009, to Lashkar, a militant jihadist organization operating in Pakistan.  Lashkar planned and carried out the November 2008 attacks in Mumbai that killed more than 160 people, including six Americans, before initially planning the terrorist attack in Denmark in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed.  Rana was acquitted of conspiracy to provide material support to the Mumbai attacks.

 “This serious prison sentence should go a long way towards convincing would-be terrorists that they can’t hide behind the scenes, lend support to the violent aims of terrorist organizations, and escape detection and punishment,” said Gary S. Shapiro, Acting U.S. Attorney for the Northern District of Illinois.
 
“Today’s sentence demonstrates that, just as vigorously as we pursue terrorists and their organizations, we will also pursue those who facilitate their violent plots from a safe distance.  As established at trial, Tahawwur Rana provided critical support to David Headley and other terrorists from his base in the United States, knowing they were plotting attacks overseas.  I thank the many agents, analysts and prosecutors who helped bring about today’s result,” said Lisa Monaco, Assistant Attorney General for National Security.
 
“It is my hope that the judge’s decision today sends a message to those who plot attacks and those who provide the support to make the plots possible, both here and abroad, that you will be held accountable for your actions.  Our mission, detecting and preventing terrorist acts and eliminating the enabling support provided by terrorist sympathizers, remains our top priority,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the FBI.
 
Rana is one of two defendants to be convicted, among a total of eight defendants who have been indicted, in this case since late 2009.  Co-defendant David Coleman Headley, 52, pleaded guilty in March 2010 to 12 terrorism charges, including aiding and abetting the murders of the six Americans in Mumbai.  Headley, who is scheduled to be sentenced next Thursday, has cooperated with the government since he was arrested in October 2009, and testified as a government witness at Rana’s trial.  He is facing a maximum of life in prison
 
The evidence at Rana’s trial showed that he knew he was assisting a terrorist organization and murderers, knew their violent goals, and readily agreed to play an essential role in achieving their aims.  The government contended that Rana knew the objective of his co-conspirators was to retaliate against and influence the Danish government for its perceived role in the publication of the Prophet Mohammed cartoons, and he knew that the goal of Lashkar was to retaliate against and influence the Indian and Danish governments and intended that the support he provided – enabling Headley’s activities – would be used toward that purpose.
 
In a post-arrest statement in October 2009, Rana admitted knowing that Lashkar was a terrorist organization and that Headley had attended training camps that Lashkar operated in Pakistan.  Headley testified that he attended the training camps on five separate occasions between 2002 and 2005.  In late 2005, Headley received instructions from members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks three years later that killed more than 160 people and wounded hundreds more.
 
In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities.  Headley testified that he traveled to Chicago and advised Rana, his long-time friend since the time they attended high school together in Pakistan, of his assignment to scout potential targets in India.  Headley obtained approval from Rana, who owned First World Immigration Services in Chicago and elsewhere, to open a First World office in Mumbai as cover for his activities.  Rana directed an individual associated with First World to prepare documents supporting Headley’s cover story, and advised Headley how to obtain a visa for travel to India, according to Headley’s testimony, as well as emails and other documents that corroborated his account.
Between Nov. 26-28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, some of which Headley had scouted in advance.

Regarding the Denmark terror plot, Headley testified that in the fall of 2008, he met with a Lashkar member in Karachi, Pakistan, and was instructed to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus.

In late 2008 and early 2009, after reviewing with Rana how he had performed surveillance of the targets attacked in Mumbai, Headley testified that he advised Rana of the planned attack in Denmark and his intended travel there to conduct surveillance of the newspaper’s facilities.  Headley obtained Rana’s approval and assistance to identify himself as a representative of First World and gain access to the newspaper’s offices by falsely expressing interest in placing advertising for First World in the newspaper.  Headley and Rana caused business cards to be made that identified Headley as a representative of the Immigration Law Center, the business name of First World, according to the evidence at trial.
 
The trial evidence also included transcripts of recorded conversations, including those in September 2009, when Headley and Rana spoke about reports that a co-defendant, Ilyas Kashmiri, an alleged Pakistani terrorist leader, had been killed and the implications of his possible death for the plan to attack the newspaper.  In other conversations, Rana told Headley that the attackers involved in the Mumbai attacks should receive Pakistan’s highest posthumous military honors.  In the late summer of 2009, Rana and Headley agreed that funds that had been provided to Rana could be used to fund Headley’s work in Denmark, and the evidence showed that Rana, pretended to be Headley in sending an email to the Danish newspaper. 
 
The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.  Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks.  The investigation has been conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the Federal Bureau of Investigation, with assistance from FBI offices in Los Angeles, New York and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

Six Detroit-area residents and one Chicago-area resident were arrested today by federal agents on charges arising from the ongoing investigation into an alleged $22 million home health care fraud scheme.  The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; Special Agent in Charge Lamont Pugh III of the Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office; and Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office.

According to the 18-count indictment returned Jan. 15, 2013, and unsealed today, the seven individuals allegedly participated in a Medicare fraud scheme operating out of four Oakland County, Mich., home health agencies claiming to provide in-home health services: Royal Home Health Care Inc., Prestige Home Health Services Inc., Platinum Home Health Services Inc. and Empirical Home Health Care Inc.  The indictment alleges Medicare paid the agencies approximately $22 million for fraudulently reported services since August 2008. 
 
In addition to the arrests, law enforcement agents suspended Medicare payments to four health care companies associated with the alleged scheme.   

Muhammad Aamir, 42; Usman Butt, 39; Hemal Bhagat, 31; Syed Shah, 50; Tariq Tahir, 46; and Raquel Ellington, 56, of the Detroit area; and Tayyab Aziz, 43, from the Chicago area, each are charged with conspiracy to commit health care fraud.  All but Aziz are also charged with health care fraud and with conspiracy to violate the Anti-Kickback Statute.  Butt, Bhagat, Shah and Aziz are additionally charged with conspiracy to commit money laundering.

According to the indictment, Aamir and Butt owned and operated Prestige; Butt, Bhagat and Shah owned and operated Royal; and Aamir owned and operated Platinum and Empirical – all of which allegedly claimed to provide home health therapy services to Medicare beneficiaries that were unnecessary and/or were never performed.  The indictment alleges Tahir and Ellington recruited Medicare beneficiaries, paying them kickbacks for their Medicare information and signatures on documents that detailed physical therapy and/or skilled nursing services that were either never rendered or not medically necessary.  Aamir, Butt, Bhagat, Shah, Tahir and Ellington are also charged with conspiring to pay kickbacks to Tahir and Ellington for their recruiting work.  Butt, Bhagat, Shah and Aziz allegedly conspired to launder the proceeds of the scheme.

The charges of health care fraud conspiracy and health care fraud each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.  The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum potential penalty of five years in prison and a $25,000 fine.  The charge of conspiracy to commit money laundering carries a maximum potential penalty of 20 years in prison and a $500,000 fine.
 
An indictment is merely a charge and defendants are presumed innocent unless nad until proven guilty.

The case is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.  The investigation is conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, and IRS-CI, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

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

Related Materials:

Aamir, Muhammed et al. (Prestige) Indictment

The United States has asked a federal court in Jacksonville, Fla., to stop Thomas G. Bandzul from preparing tax returns for others, the Justice Department announced today. According to the government complaint, Bandzul has repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that Bandzul concocts bogus or inflated deductions, business expenses, education credits and charitable contributions, which he falsely reports on his customers’ federal income tax returns.

The suit alleges that the Internal Revenue Service (IRS) has examined over 250 tax returns prepared by Bandzul and found that over 90 percent of tax returns understated the taxpayer’s liability. According to the complaint, the total harm to the U.S. Treasury caused by Bandzul’s misconduct could exceed $17 million.

The suit further alleges that, in some instances, Bandzul filed returns that claimed a refund larger than what Bandzul had disclosed to the taxpayer. Once the refund was paid, Bandzul retained the additional amount without the taxpayer’s knowledge.

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

Related Materials:

United States v. Thomas G. Bandzul
Complaint for Permanent Injunction

A former special agent of the Department of Homeland Security’s Office of Inspector General (DHS-OIG) pleaded guilty today in a Southern District of Texas federal court to participating in a scheme to falsify records and to obstruct an internal field office inspection, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

Wayne Ball, 40, of McAllen, Texas, entered his guilty plea before U.S. District Judge Randy Crane to one count of conspiracy to falsify records in federal investigations and to obstruct an agency proceeding.

DHS-OIG is the principal component within DHS with the responsibility to investigate alleged criminal activity by DHS employees, including corruption affecting the integrity of U.S. borders.  According to court documents, Ball served as a special agent with DHS-OIG at its McAllen Field Office from January 2009 to November 2012.

According to court documents, in September 2011, DHS-OIG conducted an internal inspection of the field office to evaluate whether its internal investigative standards and policies were being followed.  Beginning in August 2011, Ball and at least two other DHS-OIG employees, identified in court documents as “Supervisor A” and “Special Agent A,” allegedly engaged in a scheme to falsify documents in investigative case files. The scheme’s purpose was to conceal lapses – including significant periods of inactivity in pending criminal investigations over periods of months or years – from personnel conducting the inspection and DHS-OIG headquarters, including by falsifying investigative activity which had not taken place, according to court documents.

According to court documents, a criminal investigation was initiated by DHS-OIG in March 2010 into allegations that a Customs and Border Protection officer was assisting the unlawful smuggling of undocumented aliens and narcotics into the United States.  Special Agent A allegedly drafted false memoranda of activity (MOAs), at Supervisor A’s direction, to fill gaps of inactivity in the investigation, to which Special Agent A was assigned.  With the intention of filling gaps that had occurred when Special Agent A was either not present at the office to investigate cases or was not employed by DHS-OIG at all, Special Agent A allegedly attributed the investigative activity to Ball, who signed and backdated the false MOAs.  Supervisor A also allegedly signed and backdated the documents, which were placed in the investigation’s case file in advance of the internal inspection.

The charge of conspiracy carries a maximum potential penalty of five years in prison and a $250,000 fine.  Ball is scheduled to be sentenced on April 16, 2013.

The case is being prosecuted by Trial Attorneys Timothy J. Kelly and Eric L. Gibson of the Criminal Division’s Public Integrity Section.  The case is being investigated by agents of the FBI, San Antonio Division.

A federal grand jury in Macon, Ga., returned an indictment charging Kimberly Michelle Banks, a resident of Cordele, Ga., with crimes involving the use of stolen identities on false federal income tax returns in order to obtain refunds to which Banks was not entitled.

According to the six-count indictment, which charges her with aggravated identity theft and wire fraud, Banks illegally obtained stolen identity information and used this information to prepare false tax returns claiming refunds. She then electronically submitted these returns to the Internal Revenue Service and had the refunds deposited onto prepaid debit cards.

An indictment is merely a formal charge by the grand jury. The defendant is presumed innocent unless and until proven guilty in a U.S. District Court.

The case is being prosecuted by Trial Attorneys Alexander R. Effendi and Justin K. Gelfand of the Justice Department’s Tax Division and Michael Solis of the U.S. Attorney’s Office for the Middle District of Georgia. The case was investigated with the assistance of the IRS.

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

WASHINGTON –In a settlement with the United States on behalf of the U.S. Environmental Protection Agency, automotive electronics manufacturer Edge Products LLC (Edge) has agreed to pay a $500,000 civil penalty for manufacturing and selling electronic devices that allowed owners of model year 2007 and later diesel pickup trucks to remove emission controls from their vehicles. Diesel trucks that are not equipped with emission controls known as “diesel particulate filters” emit excess particulate matter (PM). When running, trucks without these types of controls leave behind a trail of dark, black smoke. PM is associated with a number of health problems, including respiratory and cardiovascular disease, chronic bronchitis, decreased lung function, and an increased risk of lung cancer. 

The company, located in Ogden, Utah, sold more than 9,000 of these electronic devices nationwide, resulting in an estimated 158 tons of excess PM emissions released into the atmosphere. This is equivalent to the emissions from 422 new long-haul semi trucks operating for a period of 29 years.  

“The Department of Justice will continue to vigilantly protect America’s health and environment through the enforcement of the Clean Air Act standards governing emissions from vehicles and engines,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement holds Edge Products accountable for selling devices that allow consumers to disable the emission controls on their vehicles by requiring the company to pay a penalty, buy back the devices, and perform a project to offset the air pollution resulting from the Clean Air Act violations.”

“Our goal is to have these illegal devices removed and proper emission controls installed,” said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. “Allowing black smoke to billow conspicuously from the tailpipes of diesel pickup trucks is a practice that directly harms public health.”

Diesel particulate filters remove approximately 90% of the particulate matter emissions from a truck’s exhaust.  If the filter is removed, the truck will generally not operate properly as the filter is monitored by the truck’s computer.  However, the electronic devices sold by Edge allowed individuals to reprogram the truck’s computer so that the truck would continue to operate even after the filter had been removed. 

Although Edge stopped selling the illegal devices in mid-2011, the consent decree requires Edge to offer to buy back the devices from anyone who possesses one.  In order to sell the device back to Edge, the truck from which the device came must be returned to its original factory programming.  Edge is also required to spend at least $157,600 to implement an emission mitigation project to offset the excess PM emissions that it caused.  Edge will use the additional funds to offer rebates to individuals who own old wood-burning stoves and who wish to replace them with cleaner burning appliances such as new pellet stoves or EPA-certified wood stoves.

The civil penalty of $500,000 is based on the United States’ determination that Edge has a limited ability to pay a penalty in this matter.

The consent decree resolves allegations in a complaint, filed today, that Edge violated the Clean Air Act by manufacturing and selling motor vehicle parts or components whose effect is to bypass, defeat, or render inoperative a motor vehicles emission control device.  

For more information about this case, please visit: http://www.epa.gov/enforcement/air/cases/edgeproducts.html

Mary and Christian Young and Octavious Reeves were indicted by a federal grand jury in the Middle District of Alabama on a variety of charges stemming from an identity theft and tax fraud conspiracy, the Justice Department and the Internal Revenue Service (IRS) announced today. The alleged conspirators were charged in a 31-count indictment that was returned on Dec. 18, 2012, and unsealed today.

Mary and Christian Young and Octavious Reeves, all of Elmore County, Ala., were charged with conspiring to defraud the United States, along with access device fraud and aggravated identity theft. Mary Young was also charged with several counts of wire fraud. According to the indictment, the defendants’ conspiracy lasted from January 2012 through June 2012 and involved using stolen identities to file tax returns claiming fraudulent refunds.

The indictment further alleges that Mary Young obtained the names and Social Security numbers of individuals that were then used to electronically file false tax returns. Mary Young would direct the false tax refunds to bank accounts linked to prepaid debit cards. Mary and Christian Young and Octavious Reeves would then use the prepaid debit cards to withdraw cash or pay for personal items.

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Mary Young faces face a maximum potential sentence of 328 years in prison, Christian Young faces a maximum of 27 years in prison, and Octavious Reeves faces a maximum of 78 years in prison.

IRS-Criminal Investigation agents investigated this case, and Justice Department Tax Division trial attorneys Charles M. Edgar Jr. and Michael Boteler are prosecuting the case.

WASHINGTON – Ira Isaacs was sentenced today to serve 48 months in prison for engaging in the business of producing and selling obscene videos and distributing obscene videos, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Los Angeles Police Department Chief Charlie Beck.

Isaacs, 61, of Los Angeles, was sentenced by U.S. District Court Judge George H. King in the Central District of California.  In addition to his prison term, Isaacs was sentenced to three years of supervised release and ordered to pay a $10,000 fine.

On April 27, 2012, Isaacs was convicted by a federal jury in Los Angeles on all counts of a superseding indictment filed in April 2011.

Evidence presented at trial established that beginning in or about 1999 and continuing until at least 2011, Isaacs, doing business under the name L.A. Media, operated numerous websites, through which he advertised and sold obscene videos that he acquired from other people.  The obscene videos included a video approximately two hours in length of a female engaging in sex acts involving human bodily waste and a video one hour and 37 minutes in length of a female engaged in sex acts with animals.

The evidence presented at trial also established that in approximately 2004, Isaacs began operating under the name Stolen Car Films, and made obscene videos in which he instructed women to engage in sexual activity involving human bodily waste.  He subsequently advertised and sold the videos through his various websites.

The case is being prosecuted by Trial Attorney Michael W. Grant and Deputy Chief Damon King of the Criminal Division’s Child Exploitation and Obscenity Section, with the assistance of Trial Attorney Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section.  The investigation was conducted by the FBI and Los Angeles Police Department.

WASHINGTON – Amorette Hough and Denrica Gloria Medina, two members of the East Side Los Guada Bloods, were sentenced today in Phoenix to serve 33 months in prison and 27 months in prison, respectively, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John S. Leonardo of the District of Arizona. 

Hough, 25, and Medina, 25, both of Scottsdale, Ariz., were sentenced by U.S. District Judge Frederick J. Martone in the District of Arizona.  In addition to their prison terms, both defendants were sentenced to three years of supervised release after the completion of the prison sentence

On Oct. 16, 2012, Hough pleaded guilty to violent crime in aid of racketeering.  On Sept. 26, 2012, Medina pleaded guilty to violent crime in aid of racketeering.  Both guilty pleas were for the July 2009 attack of a member of the Salt River Pima Maricopa Indian Community.

Hough and Medina admitted to being members of the violent street gang known as East Side Los Guada Bloods, or East Side Bloods, which operates on the Salt River Pima Maricopa Indian Community in Scottsdale.  According to a second superseding indictment filed on March 28, 2012, East Side Bloods members have warred with rival gang members on the reservation and participated in acts of violence including murder, attempted murder, drug distribution, armed robberies, threatening and intimidating witnesses, and firearms trafficking since the gang’s inception in the 1990s.  The war that East Side Bloods maintained with rival gangs formed the basis for the July 2009 attack of a member of the Salt River Pima Maricopa Indian Community.

 As part of their pleas in this case, Hough and Medina admitted that they were each part of the East Side Bloods gang that was present on July 26, 2009, at the home of a known East Side Bloods associate.  The East Side Bloods gang members that were present were wearing red and burgundy – the colors of the East Side Bloods.  Hough and Medina both admitted that they knew the victim was the mother of a rival gang member.  Hough admitted that the victim came to the gathering, but did not get out of her vehicle after she arrived.  After other East Side Blood members at the party realized the victim was in the vehicle, Hough assisted in forcibly removing the victim from the vehicle.  According to court documents, Hough, Medina and others hit and kicked the victim to the point of unconsciousness.  Hough and Medina also admitted that they continued to hit and kick the victim after the victim lost consciousness.  Hough and Medina admitted that the reason for the assault was retaliation for the victim’s son purportedly committing a violent act against other East Side Blood family members. The victim suffered multiple facial fractures, a fractured left orbital socket and brain injury with swelling.

Co-defendants Denean Medina, Timothy Reyes and Christopher John Mack have pleaded guilty and await sentencing.

Co-defendants Martinez Francisco Jr., Delola Graycene Medina and Rudy Chavarria Jr. are awaiting trial, which is scheduled to begin on April 9, 2013, before U.S. District Court Judge Frederick J. Martone in Phoenix.

 Denecio Francisco, 26, of Mesa, Ariz., was charged yesterday in a third superseding indictment for his role in the racketeering conspiracy.

 This case is being prosecuted by Trial Attorney Leshia M. Lee-Dixon and Hans Miller of the Organized Crime and Gang Section, and Assistant U.S. Attorney Keith Vercauteren.   This case was investigated by the Arizona Department of Public Safety GITTEM Task Force, Mesa, Ariz., Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Salt River Pima Maricopa Police Department.

WASHINGTON – The Department of Justice announced today that it will not challenge a proposal by the Greater New York Hospital Association (GNYHA) to offer a gainsharing program to member hospitals in New York.  The department said that the proposed program should not adversely affect competition because hospitals will not exchange any confidential information and because each hospital will independently determine physician gainsharing amounts.  According to GNYHA, gainsharing programs are designed to encourage physicians to take into account their use of hospital resources in their decision-making process.  The department said that under the program, physicians could receive a share of the savings generated from reducing costs for treating commercial health-insurance and Medicaid and Medicare managed-care patients if the physicians meet hospital-specific quality standards. 

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

In issuing the letter, Assistant Attorney General Baer said, “Based on GNYHA’s representations, the proposed information sharing program is unlikely to facilitate collusion or otherwise raise competitive concerns.”

GNYHA is a trade association of hospitals and continuing care facilities in New York and several nearby states.  GNYHA proposes to make available a voluntary gainsharing program to the approximately 100 hospitals that are its New York members.

Using publicly available and historical patient discharge data, an independent contractor of GNYHA will calculate a state-wide best practice norm for certain groups of treatments or procedures.  The contractor will then use the data to measure the performance of individual physicians practicing at the participating hospitals relative to the best practice norm.  

Each participating hospital will individually determine whether and how to use the performance data to determine physician gainsharing payments.  Each hospital’s payment amounts to physicians will be limited by a cap that each participating hospital must independently establish.  The cap must comply with all applicable fraud and abuse regulations.  GNYHA reserves the right to exclude any hospital from the program if GNYHA believes that the hospital’s proposed cap does not comply with those laws and regulations. 

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

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

Ronald E. Burrell, former chief executive officer (CEO) of Caremerica Inc., and Michael R. Elliott, former chief financial officer (CFO) of Caremerica Inc., were sentenced today in Wilmington, N.C., the Justice Department and Internal Revenue Service (IRS) announced.  Judge James C. Fox sentenced both Burrell and Elliott to 60 months imprisonment and ordered them each to pay restitution of over $4.8 million. 

Burrell, a resident of Wilmington, N.C., pleaded guilty to conspiracy to defraud the IRS on Jan. 3, 2012, and Elliott, a resident of Loris, S.C., pleaded guilty to conspiracy to defraud the IRS on July 18, 2012.

According to the charging documents, Burrell and Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North and South Carolina. The ALFs were managed by Caremerica Inc., a Leland, N.C.-based company that Burrell and Elliott also owned and operated.  Burrell was the president and CEO for Caremerica, the Caremerica ALFs and other related companies.  Elliott, formerly a certified public accountant, served as the CFO and tax return preparer for the Caremerica companies.  Burrell and Elliott were the corporate officers responsible for ensuring that the Caremerica companies collected, reported and paid over federal employment taxes to the IRS.  However, with Burrell and Elliott at the helm, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006.  Among other things, Burrell and Elliott filed, or caused to be filed, false IRS forms that reported full payment of the employment taxes due, when in fact only a small fraction of the taxes, or none at all, were paid. 

Charging documents further allege that in 2003, Burrell and Elliott acquired majority ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs.  In April 2005, Burrell and Elliott sold PPS to a subsidiary of Omnicare Inc.  At the closing, Burrell and Elliott received $1.6 million and $1.4 million, respectively.  The PPS sale proceeds were disbursed at a time when the IRS was attempting to collect unpaid employment taxes from the Caremerica companies, as well as from Burrell personally.  To prevent the IRS from discovering their PPS proceeds, Burrell and Elliott took active steps to conceal them.  Among other things, Burrell formed a nominee company in his wife’s name through which he funneled a portion of his PPS sale proceeds in order to avoid IRS collection action.  As a result of his concealment efforts, Burrell deceived the IRS into accepting a $29,000 settlement on a $300,000 personal tax liability and opened another assisted living facility with the PPS proceeds.  Elliott directed his $1.4 million share to be wired into the bank account of his then-girlfriend.  Burrell and Elliott then filed false 2005 federal income tax returns that failed to report the PPS proceeds.  Elliott and Burrell also obstructed justice by making false statements under oath in bankruptcy proceedings and in IRS disclosure forms.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of the IRS - Criminal Investigation special agents who investigated the case, and Tax Division Trial Attorneys Adam Hulbig and Todd Ellinwood, who prosecuted the case.

WASHINGTON – Two Brazilian nationals pleaded guilty today in Miami to smuggling undocumented migrants to the United States for profit, announced 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 and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

Juliana Rose Tome-Froes, 36, and her husband, Fabio Rodrigues Froes, 49, pleaded guilty before U.S. District Court Judge Federico A. Moreno in the Southern District of Florida to six counts and two counts, respectively, of bringing and attempting to bring aliens to the United States for commercial advantage and private financial gain. 

According to plea documents, from at least October 2008 until approximately September 2010, the defendants organized, operated and managed a human smuggling network that spanned from Brazil to France, England, The Bahamas and the United States.  The defendants met with undocumented migrants and negotiated forms of payment to be smuggled into the United States.  Before the undocumented migrants departed Brazil, the defendants instructed them to act like tourists and explained that the itinerary through Europe would support a tourist cover story.  In exchange for approximately $16,000, Tome-Froes, with assistance from Froes, arranged air transportation from Brazil to Paris, then London and Nassau, Bahamas.  Tome-Froes arranged the undocumented migrants’ lodging in Paris and Nassau, and then instructed them to fly to Freeport, Bahamas, where they waited for a boat to transport them to the United States.  For the final leg into the United States, Tome-Froes coordinated with various individuals in South Florida to pilot a small boat to Freeport, which picked up the undocumented migrants and transported them to the United States.

At sentencing, scheduled for March 21, 2013, Juliana Tome-Froes faces a maximum penalty of 15 years in prison and a $250,000 fine, and Fabio Froes faces a maximum penalty of 10 years in prison and a $250,000 fine.

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

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

WASHINGTON – A Peruvian national and a Bahamian national pleaded guilty to smuggling undocumented migrants to the United States for private financial gain, 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 and U.S. Immigration and Customs Enforcement (ICE) Director John Morton announced today.
 
Jessie Katherine Gonzales Urquizo, 37, a Peruvian national, and Irene Mildred Janette Burrows, 66, a Bahamian national, pleaded guilty on Jan. 11, 2013, before U.S. District Court Judge Kenneth A. Marra in the Southern District of Florida.  Urquizo pleaded guilty to three counts and Burrows pleaded guilty to two counts, respectively, of bringing and attempting to bring aliens to the United States for commercial advantage and private financial gain. 
 
According to plea documents, Urquizo and her mother-in-law, Burrows, facilitated the illegal smuggling of Brazilian nationals into the United States by working for a known alien smuggler in Brazil.  Urquizo and Burrows provided lodging and transportation to undocumented migrants waiting on a boat to take them to the United States and charged between approximately $100 and $125 per day.  According to court documents, Urquizo and Burrows received instructions from Brazil-based smugglers on when and where to deliver certain undocumented migrants to waiting boats for passage to the United States.     
 
Urquizo and Burrows admitted that they brought undocumented migrants, all of whom are Brazilian nationals, to the United States for financial gain.  Urquizo admitted to taking payment for lodging the undocumented migrants at various hotels and stash houses, including a nursing home operated by Burrows, her co-defendant and mother-in-law.  Urquizo further admitted that she arranged for food to be taken to the undocumented migrants, transported the undocumented migrants to a waiting boat upon instructions from a known human smuggler in Brazil and demanded payment for her services.  For her part, Burrows admitted to working with Urquizo, taking payment for lodging undocumented migrants at her nursing home and providing transportation.
 
At sentencing, scheduled for March 22, 2013, Urquizo faces a maximum penalty of 15 years in prison and a $250,000 fine, and Burrows faces a maximum penalty of 10 years in prison and a $250,000 fine.
 
The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section, and Assistant U.S. Attorney Alexandra Hui of the Southern District of Florida.

WASHINGTON – A Pennsylvania man pleaded guilty today for coercing and enticing a minor and possessing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia. 

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

At sentencing, Herschell faces a minimum sentence of 10 years in prison and a maximum sentence of life in prison on the coercion and enticement charge, and a maximum of 10 years in prison on the child pornography possession charge.  Herschell also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.  Sentencing has been scheduled for May 28, 2013.  Judge Cercone deferred acceptance of the plea agreement until Herschell’s sentencing hearing.

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

This case was 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.

Community State Bank of St. Charles, Mich., will open a loan production office in an African-American neighborhood in Saginaw, Mich., invest $165,000 in majority African-American areas in and around Saginaw and take other steps as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race, the Justice Department announced today.

The settlement, which remains subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Eastern District of Michigan. The complaint alleges that Community State Bank violated the Fair Housing Act and the Equal Credit Opportunity Act (EOCA), which prohibit financial institutions from discriminating on the basis of race in their lending practices. The lawsuit alleges that Community State Bank between 2006 and 2009 served the credit needs of the residents of predominantly white neighborhoods in the Saginaw and Flint metropolitan areas to a significantly greater extent than it served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because the Saginaw area has long had highly-segregated residential housing patterns, especially for African-Americans.

“The complaint filed today shows that the practice of drawing lending areas with boundaries that exclude borrowers in predominately minority neighborhoods is not just a shameful historical practice,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are pleased that Community State Bank will improve access to responsible and affordable credit to qualified borrowers in Saginaw’s minority neighborhoods.”

Barbara McQuade, the U.S. Attorney for the Eastern District of Michigan added:  “Today’s settlement will bring badly needed resources to Saginaw and the surrounding areas.  It will broaden opportunities for home ownership and home improvement for families who live in neighborhoods where credit has been unlawfully limited.  We appreciate the bank’s cooperation in resolving this case.”

The lawsuit originated from a referral by the Federal Deposit Insurance Corporation (FDIC) to the Justice Department’s Civil Rights Division. Community State Bank is regulated by the FDIC.

Under the settlement, Community will invest $75,000 in a special financing program to increase the amount of credit the bank extends to majority African-American neighborhoods in and around Saginaw, $75,000 in partnerships with organizations that provides credit, financial, homeownership, and/or foreclosure prevention services to the residents of these neighborhoods, and $15,000 in outreach that promotes its products and services to potential customers in these neighborhoods. Community also will open a loan production office in a majority African-American neighborhood of Saginaw and conduct fair lending training for its employees. The agreement also prohibits Community from discriminating on the basis of race in any aspect of a credit transaction.

The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 23 lending matters under the Fair Housing Act, the ECOA and the Servicemembers Civil Relief Act.  The settlements in these matters provide for a minimum of $660 million in monetary relief for impacted communities and more than 300,000 individual borrowers. The attorney general’s annual reports to Congress subject to the ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .

This settlement was accomplished as part of the Financial Fraud Enforcement Task Force’s (FFETF) Non-Discrimination Working Group which focuses on discrimination in the housing and finance markets and is co-chaired by Assistant Attorney General for the Civil Rights Division Tom Perez. The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Michigan and the FDIC are members of the FFETF, an interagency initiative, established by President Obama in 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force’s efforts, visit www.StopFraud.gov .

Additional information about fair lending enforcement by the Justice Department can be obtained from the Justice Department’s website at www.justice.gov/fairhousing .

Related Materials:

Community Complaint
Community Consent Order

WASHINGTON – A Utah man was convicted late yesterday by a federal jury in Salt Lake City of possessing, receiving and distributing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.

Michael Loren Dunn, 43, of Park City, Utah, was convicted of one count each of possession, receipt and distribution of child pornography.  U.S. District Judge Robert J. Shelby presided over the week-long trial.

 According to evidence presented at trial, Dunn, who works in the computer industry, received and shared child pornography, and encrypted the files so that they could only be accessed by him.  Evidence of child pornography was recovered from three different computers and two external hard drives owned by Dunn.  Evidence also showed that the overwhelming majority of files the defendant searched for contained terms indicative of child pornography content.

Judge Shelby set sentencing in the case for April 8, 2013.  Dunn faces up to 10 years in federal prison for his conviction on possession of child pornography. The potential maximum penalties for the receipt of child pornography and distribution of child pornography counts are 20 years per count with mandatory minimum five-year sentences for each count.

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

The case was investigated by special agents of the FBI and prosecuted by Assistant U.S. Attorneys Mark K. Vincent and Carol A. Dain of the District of Utah, and Trial Attorney Jeffrey H. Zeeman of CEOS.

Today, Matthew E. Davidson, a former corrections officer of the Alabama Department of Corrections, pleaded guilty in U.S. District Court in Montgomery, Ala., to two counts of violating the civil rights of a former inmate at Ventress Correctional Facility in Clayton, Ala., and to one count of conspiring with other corrections officers to obstruct justice by covering up the incident.

Davidson was charged by a grand jury on March 8, 2012, with two counts of felony civil rights violations, four counts of obstruction of justice-related violations and one count of making false statements . These charges stem from an incident that occurred at the Ventress prison on Aug. 4, 2010, when an inmate, 24-year-old Rocrast Mack, was severely beaten, suffered significant injuries and died the following day in a Montgomery hospital.

According to court documents, Davidson admitted that he tackled Mack on the prison yard and punched Mack in the head and upper torso area several times. After this beating on the prison yard, Davidson and former corrections officer Scottie Glenn, who pleaded guilty to similar charges in November 2011, escorted Mack in handcuffs to an office at the prison, knowing that Mack would be beaten again.

According to court documents, Davidson admitted that once the officers were inside the office, they were instructed by a supervisor to remove the handcuffs. After Davidson removed the handcuffs, the supervisor repeatedly stomped on, kicked, hit and struck Mack with a baton. Davidson also admitted that another officer struck Mack with a baton. Mack was severely injured as a result of this beating and was taken to the health care unit in the prison. Once there, Mack was pulled off the examination table by his handcuffs and repeatedly stomped on by the supervisor. Davidson further admitted that he and the other officers obeyed directions from the supervisor to lie in written reports and lie to investigators to cover up the beatings.

Davidson faces a maximum penalty of 20 years in prison on the civil rights violations and a maximum penalty of 20 years in prison on the obstruction of justice related violation when he is sentenced before U.S. District Court Judge Myron H. Thompson.

“Mr. Davidson admitted that he participated in, and attempted to cover up, the brutal and ultimately fatal assaults of Rocrast Mack,” said Assistant Attorney General Perez.  “The Justice Department will continue to vigorously prosecute corrections officers who violate the constitutional rights of inmates, and who then use their official position to try to cover up their crimes.”

On March 8, 2012, former corrections officers Michael Smith and Joseph Sanders were also charged with felony civil rights violations, obstruction of justice-related violations and false statements violations. Their trial is scheduled to begin on June 10, 2013. Assistant Attorney General Perez and U.S. Attorney Beck emphasized that an indictment is merely an accusation, and the defendants are presumed innocent until proven guilty.

This case is being prosecuted by Trial Attorney Patricia Sumner of the U.S. Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.

A federal court has permanently barred Pete Escalante Gutierrez and Jeanette Gutierrez from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which the Gutierrezes consented without admitting the allegations against them, was signed yesterday by Judge Orlando L. Garcia of the U.S. District Court for the Western District of Texas. The injunction permits their companies, FCRE Inc., Fast Cash Refund Express Electronic Tax Service LLC, Fast Cash Refund Express and Fast Cash Express Electronic Services, to continue to operate, though the Gutierrezes must sell their interests in these businesses and take no role other than administrative matters until they are sold. While the companies operate, they are permanently barred from promoting any false tax schemes and from advising or encouraging taxpayers to attempt to evade their correct federal tax liabilities. Each of the businesses and the Gutierrezes must turn over the names of the people for whom they prepared tax returns or claimed tax refunds since Jan. 1, 2012.

The government’s complaint alleged that Pete and Jeannette Gutierrez, through their companies, which have offices in San Antonio, prepared federal tax returns for customers that claimed false and exaggerated personal deductions, business deductions, educational and energy tax credits, and other tax credits to which their clients were not entitled, in order to unlawfully understate tax liabilities. As alleged in the complaint, the amount of tax loss resulting from these improper tax preparation activities likely exceeds $3 million for the years 2006 through 2010.

The IRS lists 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 decade. Information about these cases is available on the Justice Department website.

Related Materials:

United States v. FCRE, Inc., et al.
Complaint for Permanent Injunction and Other Relief (PDF)
Stipulated Order of Permanent Injunction (PDF)
 

WASHINGTON – A federal grand jury in Nevada today returned an indictment against 11 individuals for their alleged roles in a scheme to fraudulently take control of homeowners’ associations in the Las Vegas area.  The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Acting FBI Special Agent in Charge William C. Woerner of the Las Vegas Field Office, Sheriff Douglas C. Gillespie of the Las Vegas Metropolitan Police Department and Richard Weber, Chief of IRS-Criminal Investigation (IRS-CI).

The charged defendants, all from the Las Vegas area, include: Jose Luis Alvarez, 45; Rodolfo Alvarez-Rodriguez, 44; Ricky Anderson, 49; David Ball, 44; Leon Benzer, 46; Edith Gillespie, 51; Keith Gregory, 59; Maria Limon, 45; Barry Levinson, 45; Charles McChesney, 47; and Salvatore Ruvolo, 84.  Each is indicted on one count of conspiracy to commit mail and wire fraud.  Most of the defendants are also variously charged with individual counts of mail fraud and/or wire fraud.  Limon is additionally charged with making a false statement to law enforcement.

According to court documents, the fraud scheme operated from approximately August 2003 through February 2009 to direct construction defect litigation and repairs at condominium complexes to a particular, conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC).

In order to accomplish the scheme, according to the indictment, Benzer and co-conspirators identified homeowners’ associations (HOAs) that could potentially bring construction defect cases.  They then allegedly enlisted real estate agents to identify condominium units within the HOA communities for purchase.    

According to court documents, Benzer and others, including Gillespie, then enlisted “straw purchasers” to use their names and credit to purchase condos in the complexes.  The indictment alleges that Alvarez, Alvarez-Rodriguez, Anderson, Ball, Gillespie, Limon, McChesney and Ruvolo acted as straw purchasers.  On at least 37 occasions, Benzer and certain co-conspirators allegedly provided the down payments and monthly payments on behalf of the straw purchasers, including HOA dues and mortgage payments, and various false and misleading statements were made to secure financing for the properties.  To manage the properties, Benzer and others allegedly conspired to open at least five bank accounts through which they moved more than $8 million.  Eventually, 33 of the 37 units went into foreclosure.

According to court documents, on several occasions and at the direction of Benzer, co-conspirators transferred a partial interest in particular condominiums to other co-conspirators to make them look like homeowners who could stand for election to the HOA board of directors, which many of these individuals and the straw purchasers agreed to do.   To ensure conspirators won the elections, according to the indictment, the defendants employed deceitful tactics, such as submitting fake and forged ballots, some of which were sent through the U.S. mail.  Co-conspirators also hired complicit attorneys to run the HOA board elections as “special election masters,” to preside over the HOA board elections and supervise the counting of ballots. 

Once elected, according to the indictment, the conspiring board members met with Benzer and other co-conspirators in order to manipulate board votes and process, including the selection of property managers, contractors, general counsel and attorneys to represent the HOA – including Benzer’s construction company and the conspiring law firm.  Gregory and Levinson, both attorneys licensed in Nevada, allegedly agreed to become the general counsel for the Vistana and Sunset Cliffs; and Park Avenue and Pebble Creek complexes, respectively.

Limon, Benzer and others also allegedly agreed to open a property management company in order to provide services at Chateau Nouveau and other condo complexes in furtherance of the scheme.  According to the indictment, Limon falsely told law enforcement officials she did not communicate with Benzer about this and did not know he funded and controlled her company.

At the conclusion of the scheme, millions of dollars of Vistana’s construction defect settlement proceeds were transferred to Benzer and SLC, according to the indictment.
According to court documents, the defendants were each given cash or things of value from Benzer and others for their alleged roles in the conspiracy.

The maximum potential penalty for each count of conspiracy to commit mail fraud and wire fraud, mail fraud, or wire fraud is 30 years in prison and a $1 million fine.  The maximum potential penalty for making a false official statement is five years in prison and a $250,000 fine.

The charges and allegations against the indicted defendants are merely accusations, and the defendants are considered innocent unless and until proven guilty.  Twenty-six other individuals have entered guilty pleas in this case and await sentencing.  The investigation is ongoing.

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

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.

Related Materials:

Benzer Indictment

WASHINGTON – The owner and president of Evans Real Estate Group LLC was sentenced today to 168 months in prison for defrauding investors in real estate funds that invested in the acquisition, renovation and continued operation of existing apartment complexes in Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

Thomas B. Evans, 48, of Centennial, Colo. – a property manager and organizer of real estate investment funds – was sentenced today by U.S. District Judge Christine M. Arguello in Denver.  In addition to his prison term, Evans was sentenced to serve five years of supervised release and ordered to pay $12,339,038.53 in restitution.

On Jan. 20, 2012, Evans pleaded guilty to one count of conspiracy to commit mail and wire fraud.  According to plea documents, from at least April 2005 until April 2007, Evans and a co-conspirator engaged in a scheme to defraud investors in the Garden Stone Apartments LP; Ventana Apartments LP; and Aspen Chase Investments LP real estate investment funds, which invested in existing apartment complexes in Austin, Dallas and San Antonio, Texas.  The complexes were to be sold for a profit when renovation was complete.

 According to court documents, Evans and a co-conspirator misappropriated project funds; prepared monthly false financial statements for the projects that were sent to investors, banks and other lending institutions; prepared quarterly letters to investors misrepresenting the progress of apartment renovations and occupancy rates; and prepared falsified rent rolls to banks and lending institutions.  When a receiver assumed operation of the properties in April 2007, Evans and his co-conspirator provided access to their electronic accounting system without informing the receiver that the system contained falsified information.  Investors in Evans’ real estate ventures lost over $12 million.

 The case is being prosecuted by Trial Attorney Fred Medick of the Criminal Division’s Fraud Section and investigated by the U.S. Postal Inspection Service.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.

Masood Chotani, a CPA and tax return preparer from Los Angeles County, Calif., pleaded guilty today to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.

On June 23, 2010, Chotani was indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals.

According to the indictment and the plea agreement, in 2002 and 2003, Chotani misappropriated employer identification information from his client files and provided the information to his co-conspirator, Haroon Amin. Amin and another co-conspirator, Ather Ali, used the stolen employer data, as well as deceased people’s Social Security numbers and other identification information obtained from the Internet, to prepare and file fraudulent returns. These returns had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned wages from those employers from which income tax had been withheld.

Chotani admitted that he was a knowing participant in this scheme. He also admitted filing similar false returns himself, in his parents’ names, also using employer identification information misappropriated from his files.

According to documents filed in two related cases, the scheme resulted in the filing of over 250 false returns claiming an aggregate of more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali, and their co-conspirators. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.

Amin pleaded guilty to conspiracy to defraud the United States on Jan. 25, 2010, and is serving a 30-month prison term. Ali subsequently pleaded guilty to the same crimeon Feb. 12, 2010, and is serving a 37-month prison term.

Judge S. James Otero scheduled Chotani’s sentencing for April 22, 2013. Chotani faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000. In addition, under the plea agreement, Chotani has agreed to pay restitution to the IRS for the losses arising from the tax fraud scheme.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of agents from the IRS Criminal Investigation Division in Laguna Niguel, Calif., as well as Assistant U.S. Attorney Charles E. Pell and Tax Division Trial Attorneys Joseph A. Rillotta and Ignacio Perez de la Cruz, who are prosecuting the case.

More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .

WASHINGTON – A Los Angeles check cashing store, its head manager and its designated anti-money laundering compliance officer were sentenced today in the Central District of California for failing to follow reporting and anti-money laundering requirements for over $8 million in transactions in violation of the Bank Secrecy Act (BSA), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Central District of California André Birotte Jr; Assistant Director in Charge Bill L. Lewis of the FBI Los Angeles Division; Chief of the Internal Revenue Service Criminal Investigation (IRS-CI) Richard Weber; and Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles region.

G&A Check Cashing, its manager, Karen Gasparian, and its compliance officer, Humberto Sanchez, were sentenced today by Judge John F. Walter in the Central District of California.  Judge Walter sentenced Gasparian to serve 60 months in prison and two years of supervised release.  Sanchez was sentenced to serve eight months in prison and two years of supervised release.  And G&A was ordered to pay a fine of $962,932 and sentenced to two years probation.  In addition, Gasparian and G&A were ordered to forfeit $240,733 related to the funds going through G&A for which currency transaction reports (CTRs) should have been filed.

“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer.  “They knew they were required to report transactions over $10,000, but deliberately failed to do so.  As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”

On Oct. 2, 2012, G&A, a financial institution located in Los Angeles, pleaded guilty to one count of conspiring to fail to file CTRs and one count of failing to have an effective anti-money laundering program.  On Sept. 20, 2012, Gasparian, 31, of Canyon Country, Calif., pleaded guilty to the same charges.  On Oct. 2, 2012, Sanchez, 51, of Alhambra, Calif., pleaded guilty to one count of failing to have an effective anti-money laundering program (AML).

The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses.  Check cashers enable people to cash checks without having to go to a bank or maintain a bank account.  A check casher will typically charge a fee for this service.

Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction.  CTRs are important law enforcement tools for uncovering criminal activity.

The BSA also requires financial institutions, including check cashing businesses, to maintain an effective AML program.  The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering.  Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.

In failing to have an effective anti-money laundering program, G&A, Gasparian and Sanchez failed to, among other things, create or retain required records, verify customer identification and file required reports such as CTRs.  As a result, G&A and Gasparian engaged in multiple transactions involving $8,024,446, in which required CTRs were not filed.

As court documents filed in this case indicate, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes, precisely because they often fail to file required reports and to have effective anti-money laundering programs.  According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.

“IRS-CI will take all necessary steps to identify, investigate and prosecute those who attempt to avoid their reporting obligations under the law,” said IRS-CI Chief Weber.  “This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.”

“Check cashing businesses and other financial institutions that enable healthcare fraud will pay a heavy price,” said HHS-OIG Special Agent in Charge Ferry.  “We will use sophisticated computer analytics as well as traditional investigative techniques to bring these criminals to justice.”

 On Nov. 7, 2012, Aaron Krkasharyan, 48, of Los Angeles, pleaded guilty in a related case for making false statements to federal law enforcement officials investigating BSA violations at G&A.  On Jan. 7, 2013, Judge Walter sentenced Krkasharyan to three years probation, which included a six-month term in a residential reentry center, and a $10,000 fine.

The indictment filed in this case was one of four indictments, unsealed on June 14, 2012, that charged several individuals and check cashing businesses in Los Angeles, Brooklyn, N.Y., and Philadelphia with failing to file CTRs or falsely filing CTRs as well as failing to have effective AML programs. 

In another Los Angeles case included in this widespread prosecution, AAA Cash Advance and its manager, Diana Brigitt, pleaded guilty on Sept. 19, 2012, in the Central District of California to various BSA violations.  Brigitt pleaded guilty to eight counts of failing to file CTRs and one count of failing to maintain an effective anti-money laundering program.  AAA pleaded guilty to one count of failing to maintain an effective AML program.  On Oct. 15, 2012, AAA was sentenced to a statutory maximum term of five years probation and was also ordered to pay a fine.  At sentencing, AAA also agreed to shut down its business permanently once its fine was paid.  At sentencing, Brigitt faces a statutory maximum sentence of 45 years in prison and a fine of $2.25 million. 

The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Kevin Mosley and Matthew Klecka of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), AFMLS Forfeiture Unit Acting Assistant Deputy Chief Jeannette Gunderson and Trial Attorney Anand Sithian and Assistant U.S. Attorney David L. Kirman of the Central District of California. The department acknowledges the invaluable assistance of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

The cases are being investigated by agents from the FBI, IRS-CI and HHS-OIG.

WASHINGTON – The Department of Justice today settled a civil complaint against Richard A. Retta, of Rockville, Md, in the U.S. District Court for the District of Columbia, for violations of the Freedom of Access to Clinic Entrances (FACE) Act.  The settlement permanently enjoins Retta from going inside the gated area in front of the entrance to the Planned Parenthood of Metropolitan Washington facility (PPMW) in Washington, D.C., and, during certain hours, from going within an additional 18.5 feet by six feet “buffer zone” directly outside the PPMW gate.  Retta is further enjoined from violating, or directing or instructing others to violate, the FACE Act. 

 
The complaint filed by the United States alleged that, on Jan. 8, 2011, inside the gated area in front of PPMW, Retta physically obstructed a patient attempting to enter PPMW and interfered with the rights of two volunteer escorts who were assisting the patient.  The FACE Act prohibits the physical obstruction of any person providing or obtaining reproductive health services with the intent to intimidate or interfere with that person.

 
Early in the case, the court rejected the defendant’s motion to dismiss the lawsuit and held that, under FACE, the complaint need only allege that the defendant believed the individuals to be obtaining or providing reproductive health services, not that they were actually seeking or providing such services.  This important ruling protects patient privacy, patients’ companions and volunteer escorts.

“While people have a First Amendment right to communicate their views and offer information, they do not have the right to prevent access to health care facilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “Individuals who seek to obtain or provide reproductive health services should be able to do so without physical interference by those who disagree with them.”   

This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Aaron Zisser and Michelle Leung.

WASHINGTON – The Justice Department today announced that property manager Rudy Ferrante agreed to a $15,000 civil judgment against him, to resolve allegations that he sexually harassed female tenants in Portland, Maine.  The department’s complaint alleged that Ferrante subjected his female tenants to unwanted sexual comments and touching, granted tangible housing benefits in exchange for sexual favors and took adverse actions against female tenants when they refused his sexual advances.

The consent order, which is subject to approval by the U.S. District Court for the District of Maine, imposes a $15,000 civil penalty against Ferrante.  In addition, the consent order enjoins him from further acts of discrimination, requires him to undergo fair housing training and requires that he provide a copy of the order to his employees and any property owner on whose behalf he manages units.

“The women involved in this case were subjected to intimidating and severe acts of sexual harassment in their homes, where they have a right to feel safe,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “This order sends the message that the Civil Rights Division does not tolerate such conduct and will enforce the right to equal access to housing when it learns of violations of the Fair Housing Act.”

The department began investigating Ferrante after Pine Tree Legal Assistance, a Portland-based legal aid organization, notified the department of sexual harassment complaints it had received about Ferrante.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  Individuals who believe that they may have been victims of housing discrimination should call the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, email fairhousing@usdoj.gov or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.

FALLS CHURCH, Va. – Attorney General Eric H. Holder, Jr., has announced the appointment of Chuck Adkins-Blanch as Vice Chairman of the Board of Immigration Appeals (BIA), effective January 13, 2013.

Mr. Adkins-Blanch received a bachelor of arts degree in 1984 from Grinnell College and a juris doctorate in 1990 from the National Law Center, George Washington University. He has served as a BIA member since 2008. From 2004 to 2008, he served as an immigration judge at the Headquarters Immigration Court and, from 1995 to 2004, Mr. Adkins-Blanch served in EOIR’s Office of the General Counsel, as general counsel from 2000 to 2004, as acting general counsel from 1999 to 2000, and as an associate general counsel from 1995 to 1999. From 1990 to 1995, he worked for the BIA as an attorney advisor entering on duty through the Attorney General’s Honors Program. From 1989 to 1990, he clerked in private practice with the firm of Maggio & Kattar, specializing in immigration and nationality law. Mr. Adkins-Blanch is a member of the District of Columbia and Virginia State 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.