COUNTERFEIT TOY SMUGGLERS PLEAD GUILTY

FROM:  U.S. JUSTICE DEPARTMENT

Wednesday, August 27, 2014

Two Individuals Plead Guilty to Importing and Selling Hazardous and Counterfeit Toys in New York

Two New York residents pleaded guilty today in connection with importing more than 100,000 counterfeit and hazardous children’s toys from China for sale in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Special Agent in Charge James T. Hayes Jr. of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York, Director Robert E. Perez of Customs and Border Protection (CBP) New York Field Operations, Chairman Elliot F. Kaye of the Consumer Product Safety Commission (CPSC) and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

“In a criminal twist on a toy story, the defendants made millions importing dangerous, knock-off toys that put children in harm’s way,” said Assistant Attorney General Caldwell. “The defendants used a continuously shifting series of corporate entities in an effort to stay one step ahead of law enforcement. But their game has now come to an end. The Department of Justice is committed to stopping those who would smuggle hazardous, counterfeit goods into the United States.”

“For eight years, the defendants lined their pockets while putting at risk the health of our children by smuggling dangerous and copyright-infringing toys into the United States,” said U.S. Attorney Lynch. “Today’s guilty pleas signify the end of this dangerous pipeline from China. We will continue to be vigilant and prosecute those who would smuggle dangerous and unlawful items into our country and neighborhoods.”

“The United States has some of the strongest toy standards and lowest lead limits in the world, specifically to keep children safe,” said CPSC Chairman Kaye. “We have no more important mission than protecting children. For that reason, the CPSC will continue to work with our federal partners to enforce toy safety requirements at the ports and in the marketplace.”

“The defendants in this case endangered thousands of American children by manufacturing for sale counterfeit toys made with unsafe amounts of lead and other hazardous chemicals,” said Special Agent in Charge Hayes Jr. “HSI focuses its efforts to protect intellectual property, first and foremost, on those counterfeit goods that present health and safety hazards to consumers.”

Chenglan Hu, 52, and Hua Fei Zhang, 53, of Bayside, New York, pleaded guilty in connection with importing children’s toys with copyright-infringing images and counterfeit trademarks of popular children’s characters, as well as unsafe lead levels, small parts that presented risks of choking or ingestion, easily-accessible battery compartments, and other potential hazards. Hu and Zhang were the last of nine defendants to plead guilty in this investigation; Guan Jun Zhang, Jun Wu Zhang, and five corporations – Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc. – previously pleaded guilty to Consumer Product Safety Act (CPSA) and trademark counterfeiting charges. In pleading guilty to trafficking in hazardous consumer goods in violation of CPSA, Hu and Zhang also agreed to forfeit $700,000 and more than 120,000 unsafe children’s toys. The government previously seized three luxury vehicles and six bank accounts, and filed lis pendens against two real properties owned by Zhang in Queens, New York.

According to court filings and facts presented at the plea hearings, from July 2005 through January 2013, Hu, Zhang, and the other individual defendants used the companies they owned to import and sell toys from China from a storefront and warehouse in Ridgewood, New York, and other locations in Brooklyn, New York and Queens, New York. According to the indictment, CBP seized toys imported by the defendants from shipping containers entering the United States from China on 33 separate occasions. Seventeen of the 33 seizures contained toys prohibited from import into the United States because of excessive lead content, excessive phthalate levels, small parts that presented risks of choking, aspiration or ingestion, and easily-accessible battery compartments. Sixteen of the 33 seizures contained toys bearing copyright-infringing images and counterfeit trademarks, including a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, and Pokémon, as well as those from movies such as “Cars,” “Toy Story” and “High School Musical.”

Hu, Zhang, and the other individual defendants changed their use of the companies, sometimes even forming new companies, and alternated their formal titles in order to conceal their continued importation and distribution of the hazardous and counterfeit toys.

Hu and Zhang pleaded guilty before U.S. Magistrate Judge James Orenstein of the Eastern District of New York. Sentencing will be announced at a later date.

The case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Task Force, with the assistance of CBP and CPSC. The case was prosecuted by Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Campos and Claire Kedeshian of the Eastern District of New York.

SALESMAN WHO REQUESTED $14 MILLION TAX REFUND INDICTED ON TAX CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 19, 2014

Connecticut Insurance Salesman Indicted on Tax Charges

A Newington, Connecticut, man was indicted last Thursday by a grand jury in the District of Connecticut for one count of corruptly interfering with the due administration of the internal revenue laws, two counts of filing false tax returns and five counts of willfully failing to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced.  

According to the indictment filed against him, which was unsealed today, Terry DiMartino corruptly endeavored to obstruct and impede the due administration of the internal revenue laws by, among other things, mailing and causing to be mailed to the IRS false tax returns, including a return requesting a false $14 million refund; submitting worthless bonds on a timely basis that purported to satisfy his tax liabilities; and using nominees to hide and conceal assets to prevent the IRS from collecting on his tax liabilities.  The indictment also alleges that DiMartino failed to file individual income tax returns on a timely basis for 2008 through 2012.

A trial date has not been scheduled.  If convicted, DiMartino would face a statutory maximum sentence of 14 years in prison as well as be subject to fines.

This case was investigated by IRS-Criminal Investigation.  It is being prosecuted by Trial Attorneys Jennifer Laraia, Erin Pulice and Jason Scheff of the Justice Department’s Tax Division.

An indictment merely alleges that a crime has been committed and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

FORMER RABOBANK LIBOR SUBMITTER PLEADS GUILTY FOR ROLE IN YEN LIBOR MANIPULATION SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, August 18, 2014

Former Rabobank LIBOR Submitter Pleads Guilty for Scheme to Manipulate Yen LIBOR

Defendant Is Second Former Rabobank Employee to Plead Guilty in LIBOR Rigging Scandal

A former Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) Japanese Yen London InterBank Offered Rate (LIBOR) submitter pleaded guilty today for his role in a conspiracy to commit wire and bank fraud by manipulating Rabobank’s Yen LIBOR submissions to benefit trading positions.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division and Acting Assistant Director in Charge Timothy A. Gallagher of the FBI’s Washington Field Office made the announcement.

Paul Robson, a citizen of the United Kingdom, appeared before United States District Judge Jed S. Rakoff in the Southern District of New York and pleaded guilty to count one of a 15-count indictment returned by a federal grand jury in the Southern District on April 28, 2014.   Sentencing is scheduled for June 9, 2017.

“ Paul Robson is the second employee at Rabobank, one of the world’s largest banks, to plead guilty to participating in a global fraud scheme,” said Assistant Attorney General Caldwell.  “The scope of the fraud was massive, but the scheme was simple.  By illegally influencing the LIBOR rates, Robson and his coconspirators rigged the markets to ensure that their trades made money.  Robson’s conviction demonstrates the Department of Justice’s continued resolve to hold individuals and institutions accountable for their involvement in fraud in the financial markets.”

“Today’s guilty plea demonstrates our continuing resolve to prosecute those who fraudulently manipulated the LIBOR rate for their own personal benefit and, in doing so, undermined free and fair markets,” said Deputy Assistant Attorney General Snyder.

“Fraudulently manipulating the LIBOR has far reaching effects on international financial markets and such criminal activity will not be tolerated,” said Acting Assistant Director in Charge Gallagher.   “The Washington Field Office has committed significant time and resources including the expertise of Special Agents, forensic accountants and analysts to investigate this case along with our Department of Justice colleagues.   While the crimes committed are complex, their expertise demonstrates our ability to bring justice to those that choose to commit these crimes.”

Robson, along with former Rabobank Yen LIBOR derivatives traders Paul Thompson, of Australia, and Tetsuya Motomura, of Japan, was charged with conspiracy to commit wire and bank fraud as well as substantive counts of wire fraud.   The indictment also alleges that the conspiracy involved numerous additional, unnamed individuals and entities.   Among those individuals and entities are:

·          Takayuki Yagami (described in the indictment as Trader-R), a Japanese national and former Rabobank trader who pleaded guilty on June 10, 2014, in the Southern District of New York to one count of conspiracy to commit wire and bank fraud for his involvement in the conspiracy alleged in the indictment; and

·          Lloyds Banking Group plc (LBG), a U.K.-based bank that, as part of a deferred prosecution agreement filed in the United States District Court for the District of Connecticut on July 28, 2014, admitted wrongdoing in connection with the alleged conspiracy’s overt acts, and agreed to pay an $86 million penalty.

According to court documents, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.   LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.   The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were valued at approximately $450 trillion.

At the time relevant to the charges, LIBOR was published by the British Bankers’ Association (BBA), a trade association based in London.   LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.   The published LIBOR “fix” for Yen LIBOR at a specific maturity is the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank.

Rabobank entered into a deferred prosecution agreement with the Department of Justice on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

According to court documents, Robson worked as a senior trader at Rabobank’s Money Markets and Short Term Forwards desk in London and also served as Rabobank’s primary submitter of Yen LIBOR to the BBA; Thompson was Rabobank’s head of Money Market and Derivatives Trading Northeast Asia and worked in Singapore; Motomura was a senior trader at Rabobank’s Tokyo desk who supervised money market and derivative traders; and Yagami worked as a senior trader at Rabobank’s Money Market/FX Forwards desks in Tokyo and elsewhere in Asia.

Robson’s main role in the conspiracy was to submit Yen LIBOR rates at the requests of traders, including Thompson, Motomura and Yagami, who entered into derivatives contracts containing Yen LIBOR as a price component .   T he profit and loss that flowed from those contracts was directly affected by the relevant Yen LIBOR on certain dates.   If the relevant Yen LIBOR moved in the direction favorable to the defendants’ positions, Rabobank and the defendants benefitted at the expense of the counterparties.   When LIBOR moved in the opposite direction, the defendants and Rabobank stood to lose money to their counterparties.

As alleged in court filings, from about May 2006 to at least January 2011, the four defendants, a Yen LIBOR submitter at LBG, and others agreed to make false and fraudulent Yen LIBOR submissions for the benefit of selected trading positions.   According to the allegations, sometimes Robson submitted rates at a specific level requested by a co-defendant or other traders, and at other times Robson made a higher or lower Yen LIBOR submission consistent with the direction requested by a co-defendant or other traders.

For example, according to court filings, on Sept. 21, 2007, Yagami asked Robson by email, “where do you think today’s libors are?   If you can I would like 1mth higher today.”   Robson responded, “bookies reckon .85,” to which Yagami replied, “I have some fixings in 1mth so would appreciate if you can put it higher mate.”   Robson answered, “no prob mate let me know your level.”   After Yagami asked for “0.90% for 1mth,” Robson confirmed, “sure no prob[ ] I’ll probably get a few phone calls but no worries mate… there’s bigger crooks in the market than us guys!”

Robson admitted that he accommodated the requests of his co-defendants and other traders.   For example, on Sept. 21, 2007, after Robson allegedly received a request from Yagami for a high one-month Yen LIBOR, Rabobank submitted a one-month Yen LIBOR rate of 0.90, which was seven basis points higher than the previous day and five basis points above where Robson said that “bookies” predicted it, and which moved Rabobank’s submission from the middle to the highest of the panel.

According to court documents, the defendants were also aware that they were making false or fraudulent Yen LIBOR submissions.   For example, on May 10, 2006, Robson admitted in an email to Yagami that “it must be pretty embarrasing to set such a low libor.   I was very embarrased to set my 6 mth – but wanted to help thomo [Thompson].   Tomorrow it will be more like 33 from me.”   At times, Robson referred to the submissions that he submitted on behalf of his co-defendants as “ridiculously high” and “obscenely high,” and acknowledged that his submissions would be so out of line with the other Yen LIBOR panel banks that he might receive a phone call about them from the BBA or Thomson Reuters.

On numerous occasions, Robson also passed along such requests to the LBG submitter, who altered LBG’s Yen LIBOR submission accordingly if doing so did not adversely affect selected trading positions at LBG.   Likewise, the LBG setter sent requests to Robson and he generally altered Rabobank’s Yen LIBOR to satisfy the requests.   For example, on July 28, 2006, Robson wrote to the LBG submitter: “morning skipper.....will be setting an obscenely high 1m again today...poss 38 just fyi.”   The LBG submitter responded: “(K)...oh dear..my poor customers....hehehe!! manual input libors again today then!!!!”   Both banks’ submissions on July 28 moved up one basis point, from 0.37 to 0.38.   As the LBG submitter explained, according to court documents filed in connection with Rabobank’s deferred prosecution agreement, to other LBG submitters, “We usually try and help each other out…but only if it suits.”

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

The investigation is being conducted by special agents, forensic accountants, and intelligence analysts in the FBI’s Washington Field Office.   The prosecution is being handled by Senior Litigation Counsel Carol L. Sipperly and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section, and Trial Attorney Michael T. Koenig of the Antitrust Division.   The Criminal Division’s Office of International Affairs has provided assistance in this matter.

The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad.   The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the LIBOR investigation.   The Securities and Exchange Commission also has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.     The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of Rabobank.   Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.

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.

CONSUMERS RECEIVING REFUND CHECKS FOR HARM DONE BY TAX RELIEF SCAMMERS

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Sends More Than $16 Million in Refunds to Consumers Harmed by Tax Relief Scam

The Federal Trade Commission is mailing refund checks totaling more than $16 million to 18,571 consumers who paid money to American Tax Relief, which bilked financially distressed consumers by falsely claiming it could reduce their tax debts. Under a settlement, the defendants turned over millions of dollars in assets the court had frozen, including bank accounts, jewelry, and a Ferrari. The relief defendants, who were the parents of one of the defendants, also turned over bank accounts, jewelry, a Beverly Hills residence, and a Los Angeles condominium.

Affected consumers will receive, on average, 16 percent of the amount they lost. Those who receive checks from the FTC’s refund administrator should cash them within 60 days of the mailing date. The FTC never requires consumers to pay money or to provide information before refund checks can be cashed.

FTC SENDS REFUNDS CHECKS TO CONSUMERS VICTIMIZED BY ALLEGED MORTGAGE RELIEF SCAMS

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Mails Refund Checks Totaling Approximately $800,000 to Consumers Victimized by Alleged Mortgage Relief Scams

The Federal Trade Commission, through an administrator, is mailing checks totaling approximately $800,000 to 1,305 consumers who fell prey to two related mortgage relief scams.

In one scheme, using the name Precision Law Center, the defendants allegedly made false promises to consumers that if they sued their lenders along with other homeowners in so-called “mass joinder” lawsuits, they could obtain favorable mortgage concessions from their lenders or stop the foreclosure process. In the other, using names such as FreeFedLoanMod.org, HouseHoldRelief.org, and MyHomeSupport.org, the defendants charged consumers for “forensic loan audits,” and allegedly misrepresented that they could use the results to force lenders to give them better mortgage terms.

 The checks must be cashed on or before October 7, 2014. The amount consumers will receive varies depending on how much they lost.  The FTC never requires consumers to pay money or provide information before redress checks can be cashed.

Consumers should carefully evaluate offers of help in lowering their mortgage payments or saving their homes from foreclosure. Consumers should also know that it is illegal for anyone to collect money up-front for loan modification or foreclosure rescue services. For more information see: Mortgage Relief Scams.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

FISH POACHERS PLEAD GUILTY TO ILLEGAL FISH HARVESTING CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, August 1, 2014

Two Maryland Fishermen Plead Guilty to Illegal Fish Harvesting Conspiracy in the Chesepeake Bay

Ship Captains Poached Hundreds of Thousands of Pounds of Striped Bass

Michael D. Hayden, 41, and William J. Lednum, 42, both of Tilghman Island, Maryland, pleaded guilty to conspiring to violate the Lacey Act and to defraud the United States through their illegal harvesting and sale of striped bass, announced Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division Sam Hirsch, U.S. Attorney for the District of Maryland Rod J. Rosenstein; Superintendent of the Maryland Natural Resources Police Colonel George F. Johnson IV and Regional Special Agent TWOin Charge for the U.S. Fish & Wildlife Service Honora Gordon.

“These defendants admitted to systematically plundering the Chesapeake Bay of an important and protected natural resource, and at the expense of the many honest fishermen who play by the rules,” said Acting Assistant Attorney General Hirsch. “The Justice Department is committed to enforcing environmental laws that protect our shared natural resources and sustain the vital marine life of the Chesapeake Bay for future generations.”

According to their plea agreements, Hayden and Lednum were “captains” on fishing vessels owned by them, William J. Lednum Fisheries d/b/a Michael D. Hayden Jr. and Michael D. Hayden, Jr., Inc.  The defendants also employed numerous “helpers” as part of this scheme, including co-defendant Kent Sadler.

From at least 2007 to 2011, Hayden and Lednum illegally harvested, possessed, falsely labeled and/or sold at least 185,925 pounds of striped bass.  They used illegally weighted and/or anchored gill nets, left the nets in the water overnight, and set the nets during times when the commercial striped bass gill-netting season was closed.  The defendants exceeded their maximum daily vessel limit of striped bass and either unloaded the surplus onto an anchored vessel or paid others a fee to check-in fish for them.  Hayden and Lednum falsified the permit allocation cards and daily catch records for their striped bass fishing trips to over-report the numbers of striped bass caught and under-report the weights.  This allowed them to request additional state tags under false pretenses and therefore harvest additional striped bass illegally.

Hayden and Lednum shipped and sold $498,293 worth of striped bass to wholesalers in New York, Pennsylvania, Delaware and Maryland.  None of the fish was properly reported at check-in stations or on the permit allocation cards of daily catch records submitted to the state of Maryland.   Maryland in turn submits such paperwork to numerous federal and interstate agencies responsible for setting harvest levels all along the eastern seaboard.

The investigation in this case started in February 2011 when the Maryland Department of Natural Resources found tens of thousands of pounds of striped bass snagged in illegal, anchored nets before the season officially reopened.  The conspirators were seen on the water in the vicinity of the illegal nets. The subsequent investigation unveiled a wider criminal enterprise to which Hayden and Lednum pleaded guilty today.  Co-defendant Kent Conley Sadler, 31, also of Tilghman Island, previously pleaded guilty to his participation in the conspiracy and is scheduled to be sentenced on Oct. 21, 2014.

Hayden and Lednum face a maximum sentence of five years in prison and a $250,000 fine.  The defendants have agreed to pay restitution to the state of Maryland of between $498,293 and $929,625.  The defendants have further agreed to forfeit the monetary equivalent of 80 percent of the value of the vessel primarily used during the conspiracy.  U.S. District Judge Richard D. Bennett scheduled sentencing for Hayden and Lednum on Nov. 4 and Nov. 5, 2014 respectively.

This case was investigated by investigators from the Maryland Department of Natural Resources and special agents with the United States Fish and Wildlife Service.   The case is being prosecuted by Assistant U.S. Attorney Michael Cunningham, of the District of Maryland, and Todd W. Gleason and Shennie Patel of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice.

FORMER MEDICAL SUPPLY COMPANY OWNER FOUND GUILTY IN $8.3 MILLION MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, August 1, 2014

Former Owner of Southern California Medical Supply Company Found Guilty for a 10-Year, $8.3 Million Medicare Fraud Scheme

On July 31, 2014, a federal jury in Los Angeles found that the former owner of a durable medical equipment (DME) supply company located in Carson, California, was guilty of health care fraud charges relating a 10-year scheme in which Medicare was fraudulently billed more than $8 million for DME that was not medically necessary.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s (IRS-CI) Los Angeles Field Office made the announcement.

Olufunke Ibiyemi Fadojutimi, 42, of Carson, California, is a registered nurse and the former owner of Lutemi Medical Supply.   He was found guilty after trial of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering.   Sentencing will be scheduled at a later date.

The trial evidence showed that between September 2003 and January 2013, Fadojutimi and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME, such as power wheelchairs, that the Medicare patients did not actually need.   Fadojutimi and others then used these prescriptions to bill Medicare for the power wheelchairs and other DME.   Approximately $8.3 million in false and fraudulent claims were submitted to Medicare, and Medicare paid almost $4.3 million on those claims.

The case is being investigated by HHS-OIG Los Angeles Region, the FBI and IRS-CI Los Angeles Field Office.   The case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section, and was previously prosecuted by the Fraud Section’s Jonathan T. Baum.

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 Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009, between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.

"DOOM" CONVICTED FOR FIREARMS AND NARCOTICS OFFENCES

FROM:  U.S. JUSTICE DEPARTMENT 

Drug Trafficker Convicted for Narcotics and Firearms Offenses

Kelvin L. Brown, aka “Doom,” 34, of Newport News, Virginia, was convicted a federal jury of participating in a drug conspiracy in the Newport News area, from the early 2000’s through September 2013.   Brown was also convicted of distribution of cocaine, possession with intent to distribute cocaine, two counts of possession of firearms in furtherance of a drug trafficking crime and felon in possession of a firearm.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office and Chief Richard W. Myers of the Newport News Police made the announcement after the verdict was accepted by U.S. District Judge Robert G. Doumar of the Eastern District of Virginia.

During trial, evidence was presented of various drug transactions and firearms possession by Brown and co-conspirators to protect the drug conspiracy and its proceeds, and threats made by Brown against a cooperating witness during the course of the case.   On Sept. 13, 2013, officers of the Newport News Police Department seized a firearm, a scale and cocaine in a barricaded apartment occupied by Brown.

This investigation was led by FBI and the Safe Streets Task Force, with assistance from the Newport News Police, the Virginia State Police and the Newport News Commonwealth Attorney’s Office.   This case was prosecuted by Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section and Managing Assistant U.S. Attorney Howard J. Zlotnick of the Eastern District of Virginia.

BLACK P-STONES GANG MEMBER SENTENCED TO PRISON FOR 30 YEARS FOR RACKETEERING AND FIREARMS CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, August 1, 2014

Black P-Stones Gang Member Sentenced to 30 Years in Prison on Racketeering Conspiracy and Firearms Charges

Marcellus Williams, aka “Math,” “P-Shooter” and “Manny,” 27, of Newport News, Virginia, was sentenced today to serve 30 years in prison, followed by five years of supervised release, for engaging in numerous gang-related crimes as a ranking member of the Black P-Stones, including shootings of rival gang members, robberies and drug dealing.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after sentence was imposed by U.S. District Judge Arenda Wright Allen.

According to a statement of facts filed with his plea agreement, Williams was a “First Superior” in the Black P-Stones, a violent street gang also referred to as the P-Stone Bloods and Cobra Stones.   The Black P-Stones operated primarily in the Beechmont, Courthouse Green and Woodview neighborhoods in the Denbigh area of Newport News, Virginia, and its members engaged in various criminal activities including murders, robberies, drug trafficking and obstruction of justice.   As a First Superior, Williams directed and participated in the gang’s criminal activities, including robberies, attempted murder and marijuana sales.

According to the statement of facts, on April 27, 2008, Williams and other Black P-Stones members participated in a broad-daylight shooting on Warwick Boulevard in Newport News targeting a rival gang member.   The rival was shot twice and injured in his mouth, neck and shoulder.

Additionally, on Dec. 10, 2008, Williams and other Black P-Stones members retaliated against a rival gang member who exhibited disrespect toward Williams’s girlfriend.   Approximately seven to eight bullets were fired at the rival gang member’s home in Williamsburg, Virginia, with bullets ripping through the living room and front door while two people were inside.

Further, on March 9, 2009, Williams and other Black P-Stones members shot at the home of a rival gang member in retaliation for a previous altercation.   The rival gang member and another individual were inside of the home during the shooting, and one bullet nearly struck one of the people inside.

Williams was charged in a superseding indictment on Dec. 9, 2013, and pleaded guilty on April 15, 2014, to one count of racketeering conspiracy and one count of possessing and discharging a firearm in furtherance of a crime of violence.

The investigation was led by the FBI’s Safe Streets Peninsula Task Force, with the assistance of the Newport News Police Department, James City County Police Department, and the Virginia State Police.   The case is being prosecuted by Trial Attorneys Louis A. Crisostomo and Marianne Shelvey of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Eric M. Hurt of the Eastern District of Virginia.

EXECUTIVE PLEADS GUILTY TO BID RIGGING AUTO PARTS, RECEIVES 13 MONTHS IN JAIL

FROM:  U.S. JUSTICE DEPARTMENT

Thursday, July 31, 2014

G.S. Electech Inc. Executive Pleads Guilty to Bid Rigging and Price Fixing on Automobile Parts Installed in U.S. Cars

Executive Sentenced to Serve 13 Months in Jail

An executive of Japanese auto parts maker G.S. Electech Inc. pleaded guilty and was sentenced today to serve 13 months in a U.S. prison for his role in an international conspiracy to rig bids and fix prices on auto parts used on antilock brake systems installed in U.S. cars, the Department of Justice announced.

Shingo Okuda, the former Engineering and Sales Division Manager for G.S. Electech, pleaded guilty today in the U.S. District Court for the Eastern District of Kentucky in Covington, to a one count charge of bid rigging and price fixing.

As part of his plea agreement, Okuda also agreed to cooperate with the department’s ongoing investigation and to pay a $20,000 criminal fine.

On Sept. 11, 2013, a federal grand jury in Covington, Kentucky, returned an indictment against Okuda, charging him with conspiring to rig bids and fix prices of speed sensor wire assemblies, which are installed in automobiles with an antilock brake system (ABS), sold to Toyota Motor Corp. and Toyota Motor Engineering and Manufacturing North America Inc., in the United States and elsewhere.

According to the indictment, Okuda and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate bids and fix prices of automotive parts submitted to Toyota.   The indictment charged Okuda with participating in the conspiracy beginning at least as early as January 2003 until at least February 2010.

“Today’s guilty plea is a victory for consumers, who deserve to know that the essential parts used in their automobiles are not subject to anticompetitive agreements,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.   “The Antitrust Division remains committed to holding executives accountable for behavior that undermines the competitive marketplace.”

G.S. Electech manufactures, assembles and sells a variety of automotive electrical parts, including speed sensor wire assemblies.   The speed sensor wire assemblies connect a sensor on each wheel to the ABS to instruct it when to engage.   On May 16, 2012, G.S. Electech pleaded guilty to the conspiracy and agreed to pay a $2.75 million criminal fine.

Okuda is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Including Okuda, 36 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry.   Okuda is the first individual in the investigation to plead guilty following an indictment.   Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of nearly $2.3 billion in fines.

DIRECTOR OF NURSING PLEADS GUILTY IN MIAMI FOR ROLE IN $7 MILLION HEALTH CARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT

Tuesday, July 29, 2014

Director of Nursing Pleads Guilty in Miami for Role in $7 Million Health Care Fraud Scheme

A former director of nursing pleaded guilty today in connection with a health care fraud scheme involving Anna Nursing Services Corp. (Anna Nursing), a defunct home health care company in Miami.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office, and Acting Special Agent in Charge Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.

Armando Buchillon, 42, of Hialeah, Florida, pleaded guilty before U.S. District Judge Joan A. Lenard in the Southern District of Florida to one count of conspiracy to commit health care fraud.   Sentencing is scheduled for Oct. 6, 2014, before Judge Lenard.

According to court documents, Buchillon was a director of nursing at Anna Nursing, a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries.   The owners and operators of Anna Nursing agreed to and actually did operate Anna Nursing for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

As part of the fraudulent scheme, Buchillon and his co-conspirators regularly falsified patient documentation in order to make it appear that beneficiaries qualified for and received home health care services, when, in fact, many of the beneficiaries did not actually qualify for or receive such services.   In addition, Buchillon paid kickbacks and bribes to patient recruiters, in return for the recruiters providing patients to Anna Nursing for home health care and therapy services that were medically unnecessary and/or were not provided.   Buchillon also worked as a patient recruiter for Anna Nursing and was paid kickbacks and bribes by the owner of Anna Nursing.   Buchillon and his co-conspirators caused the submission of false and fraudulent claims to Medicare on behalf of these beneficiaries.

From approximately October 2010 through approximately April 2013, Anna Nursing was paid by Medicare approximately $7 million for fraudulent claims for home health care services that were medically unnecessary and/or were not provided.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.   This case is being prosecuted by Trial Attorneys A. Brendan Stewart and Anne P. McNamara of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 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.