MAN RECEIVES PRISON SENTENCE FOR ROLE TO DEFRAUD THE U.S. EXPORT-IMPORT BANK

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 9, 2016

Miami Man Sentenced to 144 Months in Prison for Role in Multimillion-Dollar Scheme to Defraud Commercial Lenders and U.S. Export-Import Bank

A Miami man was sentenced today to 12 years in prison for his role in a scheme to defraud two commercial lenders and the Export-Import Bank of the United States (EXIM Bank) out of more than $11 million.

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 and Inspector General Michael McCarthy of EXIM Bank made the announcement.

Guillermo A. Sanchez-Badia, 61, was sentenced today by U.S. District Judge Joan A. Lenard of the Southern District of Florida, who also sentenced Sanchez-Badia to three years of supervised release and ordered him to forfeit $41,924,418 and pay $11,503,068 in restitution, joint with co-conspirators Isabel C. Sanchez and Gustavo Girol.  Sanchez-Badia pleaded guilty on March 21, 2016, to one count of conspiracy to commit wire fraud, one count of wire fraud and one count of conspiracy to commit money laundering.

Sanchez-Badia admitted that from 2007 through 2012, he and his co-conspirators utilized companies that they controlled to create fictitious invoices for sales of merchandise that never occurred.  These invoices were sold to two Miami-area commercial lenders in a process called “factoring,” which allowed the conspirators to receive cash for approximately 90 percent of the value of the merchandise listed on the fake invoices.  Sanchez-Badia admitted that, in order to continue the scheme, he and his co-conspirators created additional fictitious invoices, transferred the funds they received through numerous bank accounts under their control and, in a Ponzi-style scheme, used a portion of the new proceeds to pay off prior factored invoices.

Sanchez-Badia admitted that when the Miami lenders refused to extend further credit, he and his co-conspirators created false invoices and shipping documents to obtain a loan guaranteed by the EXIM.  Rather than acquiring, selling and shipping American manufactured goods as required for an EXIM guaranteed loan, Sanchez-Badia and his co-conspirators used the loan proceeds to pay off earlier factored invoices, thereby extending the scheme, and kept the balance of the loan proceeds for themselves, he admitted.  The factoring loans and the EXIM-guaranteed loan ultimately defaulted, causing losses of more than $9 million to the lenders and $2 million to the United States.

Five other individuals have been convicted for their roles in this scheme: Sanchez, 36, and Giral, 38, both of Miami, who await sentencing; and Freddy Moreno-Beltran, 43, of Bogota, Colombia.  Ricardo Beato, 62, of Miami, and Jorge Amad, 48, of Miramar, Florida, were separately charged, pleaded guilty and have been sentenced for their roles in the scheme.

The EXIM Office of Inspector General investigated the case.  Trial Attorney William Bowne and Senior Litigation Counsel Patrick Donley of the Criminal Division’s Fraud Section prosecuted the case.

LOBBYIST TO SERVE TIME FOR CRIME RELATED TO BRIBERY AND FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 8, 2016

Ohio Lobbyist Sentenced to 15 Months for Extortionate Role in Conduit Campaign Contribution Scheme

An Ohio lobbyist was sentenced today to 15 months for engaging in extortion in connection with a bribery and fraud scheme involving conduit contributions to the campaigns of elected officials.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Benjamin C. Glassman of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division made the announcement.

John P. Raphael, 61, of Columbus, Ohio, was sentenced by U.S. District Judge Michael H. Watson of the Southern District of Ohio.  Raphael pleaded guilty to a one-count information charging him with a violation of the Hobbs Act on Oct. 15, 2015.

According to the plea agreement, Raphael was a consultant and lobbyist based in Columbus.  From March 2005 to February 2013, a red light camera enforcement company engaged Raphael to seek and obtain lucrative contracts with the cities of Columbus and Cincinnati, he admitted.  During that time, according to admissions made in his plea, Raphael conveyed to the company specific solicitations for campaign contributions on behalf of elected officials in Columbus and Cincinnati, and repeatedly pressured and induced the company to make contributions by advising the company that it would lose its contracts if it did not.

Raphael admitted that as a result of his actions, the company made over $70,000 in campaign contributions, which were funneled through Raphael in his own name and in the names of his family members, friends and business associates.

Karen L. Finley, the former CEO of the red light camera vendor, previously pleaded guilty to conspiracy to commit federal programs bribery and honest services wire and mail fraud.

The FBI Cincinnati Division’s Columbus Resident Agency investigated the case with the assistance of IRS-Criminal Investigation and the Ohio Bureau of Criminal Investigation.  Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio are prosecuting the case.

TWO SENTENCED FOR ROLES IN FILING FALSE TAX RETURN CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 8, 2016

Mo Money Tax Return Preparers Sentenced to Prison for Conspiracy to Defraud the United States and Filing False Tax Returns

Two Memphis, Tennessee, area residents were sentenced to prison today for conspiring to defraud the United States and aiding and assisting in the preparation of false tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

Jeremy Blanchard, 35, and Erik Pittman, 35, both of Memphis, were sentenced to serve 70 and 33 months in prison, respectively, to be followed by three years and one year of supervised release, respectively.  Blanchard and Pittman previously pleaded guilty to one count of conspiracy to defraud the United States and one count of aiding and assisting in the preparation of false tax returns.  The defendants were ordered to pay $549,000 in restitution to the Internal Revenue Service (IRS).

“Mr. Blanchard and Mr. Pittman inflated the deductions and credits claimed on their clients’ income tax returns to line their own pockets at the expense of the U.S. Treasury,” said Acting Assistant Attorney General Ciraolo.  “Taxpayers seeking assistance with their returns should expect and are entitled to honest and accurate advice and representation.  When preparers seek to abuse our nation’s tax system for their own personal gain, the department stands ready with its law enforcement partners to investigate, prosecute and hold the offenders accountable for their criminal conduct to the fullest extent of the law.”

“While most tax return preparers provide excellent service to their clients, it only takes a few dishonest return preparers to give the industry a black eye,” said Special Agent in Charge Thomas Jankowski of the IRS-Criminal Investigation’s (CI) Washington, D.C., Field Office. “IRS-CI works year round to investigate dishonest return preparers and protect the American taxpayers’ money.  Return preparers must comply with the same tax obligations as the clients that they serve.  No one is above the law.”

According to court documents, Blanchard and Pittman were partners in a return preparation business, Mo Money Taxes, which operated three locations in the Richmond, Virginia, area.  Blanchard, Pittman and others prepared numerous false tax returns for their customers for the 2011 tax year.  Blanchard and Pittman admitted that they created and inflated fictitious and fraudulent tax credits, including the Earned Income Credit and the American Opportunity Credit, to claim tax refunds that customers were not entitled to receive.  Blanchard and Pittman admitted that their conduct caused a loss to the IRS of more than $250,000, but less than $550,000.

Another participant in this scheme, Corey Taylor, 25, of Richmond, was sentenced on March 22 to serve 20 months in prison for one count of conspiracy to defraud the United States and one count of aiding and assisting in the preparation of a false tax return.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-CI, the FBI and the U.S. Postal Inspection Service, who investigated the case, and Trial Attorneys Kevin F. Sweeney and Todd P. Kostyshak of the Tax Division and Assistant U.S. Attorney Stephen Miller of the Eastern District of Virginia, who prosecuted the case.

MAN GETS SENT TO PRISON FOR 12 YEARS RELATED TO ATTEMPT TO JOIN ISIL

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, June 7, 2016

California Man Sentenced to 12 Years in Prison for Attempting to Join ISIL

Nicholas Michael Teausant, 22, of Acampo, California, was sentenced today by U.S. District Judge John A. Mendez of the Eastern District of California to 12 years in prison for attempting to provide material support to Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California.

According to court documents, on March 17, 2014, Teausant was arrested traveling to Canada, near the border, with the intent of continuing to travel to Syria to join ISIL.  On March 26, 2014, Teausant was indicted on one count of attempting to provide material support or resources to a terrorist organization.  He pleaded guilty to the single count in the indictment without a plea agreement.  In addition to the prison term, Judge Mendez also sentenced Teausant to 25 years of supervised release.

“With this sentence, Nicholas Michael Teausant will be held accountable for attempting to travel overseas to join ISIL and to provide material support to the designated terrorist organization,” said Assistant Attorney General Carlin.  “The National Security Division’s highest priority is countering terrorist threats, and we will continue to work to stem the flow of foreign fighters abroad and bring to justice those who attempt to provide material support to designated foreign terrorist organizations.”

“Mr. Teausant was fixated on violence as documented by his social media posts, his pre-arrest statements, and the nature of the group he attempted to join,” said Acting U.S. Attorney Talbert.  “His conduct was misguided and unacceptable.  We appreciate the court’s thoughtful consideration of this case and its recognition of the seriousness of the offense.  With the assistance of our investigative partners, we will continue to vigorously prosecute those who seek to provide material support to terrorist organizations.”

This case was the result of an investigation by the FBI; the Modesto, California, Police Department; and the San Joaquin, California, Sheriff’s Office, who are members of the Modesto/Stockton Joint Terrorism Task Force, with significant assistance from U.S. Customs and Border Protection.  The case is being prosecuted by Assistant U.S. Attorneys Jean M. Hobler and Jason Hitt of the Eastern District of California and Trial Attorney Andrew Sigler of the National Security Division’s Counterterrorism Section.

ANOTHER EXEC INDICTED FOR PRICE FIXING AND BID RIGGING RELATED TO OCEAN FREIGHT

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, June 7, 2016

Fourth Ocean Shipping Executive Indicted for Price Fixing and Bid Rigging

An ocean freight executive has been indicted for his participation in a long-running conspiracy to restrain trade in international ocean shipments of roll-on, roll-off cargo to and from the Port of Baltimore and elsewhere in the United States, the Department of Justice announced today.

A grand jury in the District of Maryland returned the indictment.  Mauricio Javier Garrido Garcia (Garrido), an executive of Compañia Sudamericana de Vapores S.A. (CSAV) and resident of Chile, is charged with allocating customers and routes, rigging bids and fixing prices for international ocean shipments of roll-on, roll-off cargo, including cars, trucks and construction and agriculture equipment.  Garrido is accused of participating in the conspiracy from as early as 2000 until at least September 2012.  An indictment is a formal charging document, and the defendant is presumed innocent until proven guilty in a court of law.

Garrido is the eighth executive to be charged in the investigation to date.  Four individuals have already pleaded guilty and been sentenced to prison and three others have been indicted but remain fugitives from justice.  CSAV and two other companies have also pleaded guilty and paid over $136 million in criminal fines.

“This long-running conspiracy restrained trade in one of the main channels of international commerce – the oceans,” said Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Department of Justice’s Antitrust Division.  “Today’s indictment further demonstrates the division’s commitment to holding accountable ocean-shipping executives who participated in this scheme.”

“These charges brought today, and for the prior seven executives charged, outline a deceptive scheme to destabilize competition in the marketplace,” said Special Agent in Charge Kevin Perkins of the FBI’s Baltimore Division.  “Those who engage in this type of criminal activity with the intent on corrupting our economy will be identified and brought to justice.  To ensure we don’t erode the public’s trust in the competitive bidding process, the FBI will continue to work with the Antitrust Division to ensure the integrity of competition across all industries.”

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Division, with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.

DOJ ISSUES DRAFT GUIDANCE REGARDING FORENSIC SCIENCE LAB REPORTS AND TESTIMONY

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, June 3, 2016

Justice Department Issues Draft Guidance Regarding Expert Testimony and Lab Reports in Forensic Science

The Justice Department announced today the release of draft guidance documents governing the testimony and reports of the department’s forensic experts.  These documents, available for public comment through July 8, are designed to ensure that department forensic experts only make statements in the courtroom and in laboratory reports that are supported by sound science.

The drafting of these proposed documents arose out of the department’s ongoing, multi-year effort to strengthen the practice of forensic science.  Once finalized and adopted, these documents, known as the Uniform Language for Testimony and Reports, will apply to all department personnel who issue forensic reports or provide expert forensic testimony, including forensic experts at the FBI, Drug Enforcement Administration (DEA) and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

“Forensic science is a critical component of our criminal justice system, both for identifying the perpetrator of a crime and for clearing the innocent,” said Deputy Attorney General Sally Q. Yates.  “Once finalized and adopted, these guidance documents will clarify what scientific statements our forensic experts may – and may not – use when testifying in court and in drafting reports, in turn strengthening the integrity of our system overall.”

The proposed uniform language documents released today cover seven forensic science disciplines: body fluid testing (serology), drug and chemical analysis (general chemistry), fibers, foot prints/tire treads, glass, latent fingerprints and toxicology.  This summer, the department will release a second round of proposed documents for public comment, which will include draft guidance relating to DNA, explosive devices, hair analysis and handwriting.  The department expects to adopt final versions of these documents later this year.

Once finalized and adopted, the uniform language documents will only apply to department personnel, but the department decided to release the proposed documents for public comment in an effort to promote transparency and to solicit feedback from the broader forensic science community.  As today’s proposed documents make clear, the uniform language documents are not intended to serve as precedent for other forensic laboratories and do not imply that statements by other laboratories are incorrect, indefensible or erroneous.

MAN SENTENCED FOR TAX EVASION AND PILOTING PLANE WITHOUT A LICENSE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 2, 2016

North Carolina Man Sentenced for Tax Evasion and Serving as a Pilot without a License

A North Carolina man was sentenced yesterday to 21 months in prison for tax evasion and four counts of serving as a pilot without an airman’s certificate, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.

Paul Douglas Tharp, from 2012 through 2014, attempted to evade payment of an outstanding federal income tax debt by filing false documents, including false tax returns, with the Internal Revenue Service (IRS), according to court documents.  After Tharp failed to file tax returns for the years 2003 through 2006, the IRS assessed federal income taxes for those years.  In 2014, Tharp provided a false Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, signed under penalty of perjury, on which Tharp failed to report that he owned an airport and an investment firm and concealed his business bank accounts and rental income.  In 2012 and 2014, Tharp also filed tax returns for the 2011 through 2013 tax years on which he omitted significant income that he received from his airport and rental properties.

As part of his plea, Tharp also admitted that he served as a pilot without the required certification on four different occasions in 2012.  Tharp surrendered his pilot certificate on Aug. 2, 2012.  After that date, Tharp flew four flights in and out of Davidson County Airport in Lexington, North Carolina, without valid registration and while his pilot certificate was suspended.

In addition to his prison term, Tharp was ordered to pay restitution in the amount of $285,028.47 to the IRS.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina and Trial Attorney Nathan Brooks of the Tax Division, who are prosecuting this case.

FORMER DEUTSCHE BANK EMPLOYEES INDICTED FOR ROLES IN MANIPULATION OF INTEREST RATES

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 2, 2016

Two Former Deutsche Bank Employees Indicted on Fraud Charges in Connection with Long-Running Manipulation of Libor

Two former Deutsche Bank AG (Deutsche Bank) traders—the bank’s supervisor of the Pool Trading Desk in New York and a derivatives trader in London—were indicted for their alleged roles in a scheme to manipulate the U.S. Dollar (USD) London InterBank Offered Rate (LIBOR), a benchmark interest rate to which trillions of dollars in interest rate contracts were tied.

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 Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement after the indictment was unsealed today.

On May 31, a federal grand jury in the Southern District of New York returned a 10-count indictment charging Matthew Connolly, 51, of Basking Ridge, New Jersey, and Gavin Campbell Black, 46, of London, with one count of conspiracy to commit wire fraud and bank fraud and nine counts of wire fraud for their participation in a scheme to manipulate the USD LIBOR rate in a manner that benefited their own or Deutsche Bank’s financial positions in derivatives that were linked to those benchmarks.  Connolly was taken into custody today and is expected to make his initial appearance this afternoon.  The case has been assigned to Chief U.S. District Judge Colleen McMahon of the Southern District of New York.

Michael Curtler, 43, of London, a former Deutsche Bank derivatives trader and manager of the London Money Market Derivatives (MMD) Desk in London, pleaded guilty in October 2015 to one count of conspiracy to commit wire and bank fraud in connection with his role in the scheme.

“This indictment charges two senior traders with manipulating LIBOR to gain an illegal advantage in the market,” said Assistant Attorney General Caldwell.  “Millions of people around the world rely on LIBOR and other global financial benchmarks as accurate and honestly-reported rates.  Manipulation of these rates undermines the integrity of our financial system and the Justice Department will continue to hold accountable both the financial institutions and the individuals responsible for this conduct.”

“Healthy financial markets are crucial to a successful economy,” said Deputy Assistant Attorney General Snyder.  “By corrupting this important benchmark rate, the defendants undermined the integrity of financial markets here and around the world.  The department is committed to holding individuals accountable for the roles they play in committing complex financial crimes.”

“These federal charges outline the alleged criminal actions perpetrated by two banking insiders to manipulate the LIBOR interest rate, which is used to set interest rates for consumer loan products, including mortgages and credit cards,” said Assistant Director in Charge Abbate.  “This indictment comes as a result of the dedicated and tireless efforts of agents, analysts and prosecutors committed to holding accountable those who deliberately compromise the integrity of our financial markets for personal gain.”

According to the indictment, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the honest and unbiased rates those banks believed they would be charged if borrowing from other banks.  LIBOR was published by the British Bankers’ Association, a trade association based in London.  The published LIBOR “fix” for USD currency was the result of a calculation based upon submissions from a panel of 16 banks, including Deutsche Bank.

According to allegations in the indictment, Connolly was Deutsche Bank’s director of the Pool Trading Desk in New York, where he supervised traders who traded USD LIBOR-based derivative products.  Black was a director on Deutsche Bank’s MMD Desk in London, who also traded USD LIBOR-based derivative products.  In order to increase Deutsche Bank’s profits on derivatives contracts tied to the USD LIBOR, Connolly allegedly directed his subordinates, and Black allegedly asked Curtler and others at Deutsche Bank, to submit false and fraudulent LIBOR contributions consistent with the traders’ or the bank’s financial interests rather than the honest and unbiased costs of borrowing.

The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

In April 2015, Deutsche Bank entered into a deferred prosecution agreement to resolve wire fraud and antitrust charges and Deutsche Bank Group Services (UK) Limited pleaded guilty to one count of wire fraud, collectively agreeing to pay a $775 million fine, for the bank’s role in engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating USD LIBOR and other currencies submissions.

The Justice Department has previously announced resolutions with five other banks for their roles in manipulation of benchmark interest rates, including Barclays Bank PLC, UBS AG, The Royal Bank of Scotland plc, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. and Lloyds Banking Group plc.  The department has also charged 13 individuals as a result of this investigation.  Three of those individuals have pleaded guilty, two have been convicted at trial, and the charges against the others are pending.

Special agents, forensic accountants and intelligence analysts of the FBI’s Washington Field Office are conducting the investigation.  Senior Trial Attorney Carol L. Sipperly and Trial Attorneys Alison L. Anderson and Richard A. Powers of the Criminal Division’s Fraud Section and Trial Attorney Daniel M. Tracer of the Antitrust Division’s New York Office are prosecuting the case.  Fraud Section Deputy Chief Benjamin D. Singer and Assistant Chief Jennifer L. Saulino have also provided valuable assistance in this matter.

The investigation leading to this case has required, and has greatly benefited from, a diligent and wide-ranging assistance among various enforcement agencies both in the United States and abroad.  In particular, the department acknowledges and expresses its appreciation for this assistance from the Commodity Futures Trading Commission’s Division of Enforcement, the U.K. Financial Conduct Authority and the U.K. Serious Fraud Office.  More than 20 individuals have been charged by the U.K. Serious Fraud Office for their roles in engaging in benchmark rate manipulation.

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.

TWO IRS, SSA SCAMMERS SENT TO PRISON

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, May 31, 2016

Virginia Couple Sentenced to Prison in Tax Fraud Scheme

Defendants Submitted False Information to the IRS and Social Security Administration

Two Bedford, Virginia, residents were sentenced to prison today for criminal offenses arising out of a four-year scheme to defraud the Internal Revenue Service (IRS) and the Social Security Administration, announced Acting Assistant Attorney General Caroline D. Ciraolo and U.S. Attorney John P. Fishwick Jr. of the Western District of Virginia.

Edgar Foxx, 50, and Contina Foxx, 42, were sentenced to prison terms of 41 months and 30 months, respectively, by U.S. District Judge Norman K. Moon of the Western District of Virginia following their convictions by a Lynchburg, Virginia, jury for criminal tax offenses.  Judge Moon also ordered the defendants to pay $147,708 in restitution and serve three years of supervised release following their release from prison.

“Our nation’s tax system relies upon citizens to truthfully, accurately and timely report their income to the IRS,” said Acting Assistant Attorney General Ciraolo.  “When people like Mr. Foxx fail to file their income tax returns or file false tax returns and fail to pay the taxes they owe, and when individuals like Mrs. Foxx submit false information to government agencies in order to obtain benefits, they take advantage of, and plane an undue burden on, honest taxpayers who pay their fair share.  The Justice Department stands ready to prosecute these offenders and hold them accountable for their crimes.”

“Every year, millions of Americans file their taxes and fulfill their civic obligation,” said U.S. Attorney Fishwick.  “They must be able to do this knowing the process is safe and reliable.  When individuals fail to pay their obligations the entire system suffers.  We are proud to work with the Tax Division on holding accountable those who attempt to defraud the tax system.”

“Federal income tax compliance should be equally shared among all Americans,” said Special Agent in Charge Thomas Jankowski for IRS-Criminal Investigation’s (IRS-CI) Washington DC Field Office.  “IRS-CI will continue focusing investigative efforts on individuals who contribute to the tax gap and do not comply with the law.  Today’s sentencing is a reminder that there are detrimental consequences for this type of criminal behavior.”

Edgar and Contina Foxx were convicted on Nov. 6, 2015, following a four-day trial before Judge Moon. Edgar Foxx was convicted of filing a false 2008 income tax return, failing to file his 2009 through 2011 tax returns and theft of government money.  Contina Foxx was also convicted of theft of government money as well as providing a false statement for health care benefits.  According to evidence introduced at trial and witness testimony, the Foxxes, who are married to one another, owned and operated a metal recycling business between 2008 and 2012.  They gathered scrap metal materials including junk cars and old appliances and sold them to recycling facilities in Southwest Virginia and Tennessee.  During the 2008 through 2011 time period, the Foxxes received over $500,000 in payments from several metal recycling companies, and failed to report any of this income on their 2008 through 2011 individual income tax returns.  At the same time, Contina Foxx provided false information to the Social Security Administration by failing to disclose the income earned from the metal recycling business.  As a result, the Foxxes unlawfully received approximately $80,000 in Medicaid benefits between 2010 and 2012.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Fishwick commended special agents of IRS-Criminal Investigation, the Office of Inspector General for the Social Security Administration, the Office of Inspector General for the Department of Health and Human Services, the Bedford Department of Social Services and the Bedford County Sheriff’s Office, who investigated the case and Assistant U.S. Attorneys Patrick Hogeboom and Charlene Day of the Western District of Virginia and Trial Attorney Joseph M. Giannullo of the Tax Division, who prosecuted the case.