SEXUAL MISCONDUCT CHARGES PROMPT AGGRESSIVE ACTION BY AIR FORCE

FROM:  AMERICAN FORCES PRESS SERVICE 

Aggressive Action' Follows Sexual Misconduct Charges

By Karen Parrish

WASHINGTON, June 28, 2012 - The Air Force has charged six basic training instructors with a range of alleged sexual misconduct offenses involving trainees and is investigating similar allegations against six other instructors, the senior officer in charge of Air Force training said today.

Gen. Edward Rice Jr., commander of Air Education and Training Command, told Pentagon reporters all of the instructors had worked training newly recruited airmen at Joint Base San Antonio-Lackland, Texas. All of the instructors charged or under investigation are men, and all 31 of the potentially victimized recruits are women, the general said. None of the instructors is still in contact with trainees, he added.

It's important to note, Rice said, that most of the men are still under investigation or in the military trial process, and all are presumed innocent until and unless proven guilty beyond a reasonable doubt.

"We are leaving no stone unturned. I'm not minimizing this investigation; in fact I'm being as aggressive as I can. And we won't stop ... [until] we've done as thorough a job as we possibly can," he said.

Rice said he was "extremely disappointed ... that this would happen in an environment that we very much want to be a safe and secure environment for any young person who comes in."

The general said the investigation suggests the misconduct dates back to fall of 2009, and allegations surfaced between June and November of 2011. Some allegations involve relations between instructors and trainees that occurred after the trainees had completed basic training and were no longer under the instructors' direct supervision, he noted.

Whether the alleged incidents happened while trainees were in basic training or in the later technical training phase, Rice said, "personal relationships of any kind between trainees and instructors are strictly prohibited by our regulations and our instructions."

Rice said while all unresolved allegations are under thorough legal investigation, he also has appointed Air Force Maj. Gen. Margaret H. Woodward to conduct a parallel review of AETC's response to the charges and to recommend possible further actions.

Woodward is not assigned to the training command, Rice noted. She is the acting director of operational planning, policy and strategy for the Air Force's deputy chief of staff for operations, plans and requirements, according to her official biography.

"I felt that it was important to get not just an internal look at this, but also an external look," he said. "I believe it's possible for us not to see things because we've been so close to it over the past year. This is an extra step to see if there's anything that we've missed."

Rice said he has put several measures in place to safeguard and educate trainees. All trainees reporting to Lackland now receive briefings within their first 72 hours on base from the training group commander, a legal representative, a sexual assault coordinator and a chaplain, he said.

The briefings explain their rights and responsibilities to report misconduct, the general said.

Rice added trainees have daily access to a number of comment boxes on the base they can use, either by name or anonymously, to register concerns.

"The training group commander reads every urgent [comment] sheet from a trainee within 24 hours ... and any allegation of sexual misconduct results in immediate action," he said.

Any instructor who is the subject of an allegation is suspended from duty and forbidden contact with trainees pending investigation, Rice added.

Rice said the command took the "nearly unprecedented" step of suspending training for a day to survey all recruits then in training. His staff also has surveyed former trainees who were in basic training during past instances of alleged misconduct, he added.

His staff has worked to contact any trainee who has reported instructor abuse to "offer them the fullest array of support that we can," the general said.

The general noted 98 to 99 percent of all trainees surveyed rated their training experience as positive. Lackland trains about 35,000 new airmen –- 22 percent of whom are women -- every year in an eight-and-a-half-week basic training program that begins a new class weekly, he said. Of 500 training instructors, 11 percent are women, Rice added.

"The vast majority of these [military training instructors] are great Americans who live up to the high standards we demand of those who are entrusted with the critically important and sensitive mission of turning ordinary citizens into airmen," the general said.

The screening process for instructor selection is rigorous, involving a thorough records review and both written and interview-based psychological evaluations, he said. Rice added one of the things he is considering is whether to make that selection process even more rigorous.

"The best line of defense is for the training instructors, in fact, to police themselves," he said. The general noted that all but one of the misconduct allegations came from instructors stepping forward to report information they had overheard from fellow trainers.

The first instructor sexual misconduct case involved Staff Sgt. Luis Walker. A trainee accused Walker in June 2011 of sexually assaulting her, according to Air Force reports.

Walker was relieved of duty and will appear in court July 16 to face a general court-martial on 28 charges, according to Air Force news releases. Charges include rape, adultery, obstruction of justice, attempted aggravated sexual contact, multiple counts of aggravated sexual assault, violating a training group instruction and violating a lawful order regarding unprofessional relationships with trainees.

Since Walker's alleged crimes and misconduct became public, the Air Force has begun investigating 11 other basic military training instructors for alleged violations involving trainees in basic or technical training.

One former instructor, then-Staff Sgt. Peter Vega-Maldonado, pleaded guilty earlier this month to charges of an improper relationship with a trainee and violation of a no-contact order. He was sentenced to 90 days confinement, forfeiture of $500 pay per month for four months, 30 days hard labor and reduction in rank to airman. In testimony against other accused instructors and after receiving testimonial immunity, Vega-Maldonado admitted to improper sexual conduct with several other women.

Nine of the 12 instructors alleged to have engaged in improper relationships with trainees came from one unit, Rice said: the 331st Training Squadron. The officer who commanded that unit from 2009 to earlier this month was relieved of command, Rice said.

Air Force officials announced special court-martial charges yesterday against two of the instructors, Master Sgt. Jamey Crawford and Tech. Sgt. Christopher Smith. Rice told reporters today both are assigned to the 331st Training Squadron.

Crawford's charges allege he wrongfully conducted a sexual relationship with a trainee, wrongfully provided alcohol to and consumed alcohol with the trainee, and committed adultery.

Smith allegedly wrongfully sought to develop and conduct a personal and intimate relationship with a trainee, wrongfully made sexual advances toward a trainee and wrongfully carried on a personal social relationship with a second trainee. Smith also is charged with obstruction of justice.

Two others instructors, Staff Sgt. Craig LeBlanc and Staff Sgt. Kwinton Estacio, faced an Article 32 hearing June 1. An Article 32 hearing is similar to a preliminary hearing in civilian law. No case can proceed to a general court-martial unless a command first conducts an Article 32 investigation.

TEXAS RESIDENT CONVICTED OF ATTEMPT TO USE WMD

FROM:  U.S. DEPARTMENT OF JUSTICE
Wednesday, June 27, 2012
Texas Resident Convicted on Charge of Attempted Use of Weapon of Mass Destruction Khalid Aldawsari Purchased Bomb Materials and Researched U.S. Targets
Khalid Ali-M Aldawsari, 22, a citizen of Saudi Arabia and resident of Lubbock, Texas, was convicted by a federal jury today on an indictment charging one count of attempted use of a weapon of mass destruction in connection with his purchase of chemicals and equipment necessary to make an improvised explosive device (IED) and his research of potential U.S. targets, including persons and infrastructure.

The verdict, which was reached in the Northern District of Texas, was announced by Sarah R. Saldaña , U.S. Attorney for the Northern District of Texas; Lisa Monaco, Assistant Attorney General for National Security; and Diego G. Rodriguez, Special Agent in Charge of the FBI Dallas Field Division.

Sentencing has been scheduled for October 9, 2012, in Amarillo.   Aldawsari, who was lawfully admitted into the United States in 2008 on a student visa and was enrolled at South Plains College near Lubbock, faces a maximum sentence of life in prison and a $250,000 fine.  He was arrested on Feb. 23, 2011 on a criminal complaint and later charged in a March 9, 2011 federal indictment with attempting to use a weapon of mass destruction.

According to court documents and evidence presented during trial, at the time of his arrest last year, Aldawsari had been researching online how to construct an IED using several chemicals as ingredients.   He had also acquired or taken a substantial step toward acquiring most of the ingredients and equipment necessary to construct an IED and he had conducted online research of several potential U.S. targets, the affidavit alleges.   In addition, he had allegedly described his desire for violent jihad and martyrdom in blog postings and a personal journal.

“While many people are responsible for thwarting Aldawsari’s threat and bringing him to justice, we owe a debt of gratitude to all the members of the North Texas Joint Terrorism Task Force, and especially to the hundreds of hard-working and dedicated FBI agents, analysts, linguists and others,” said U.S. Attorney Saldaña.   “Their efforts, coupled with the hard work and excellent cooperation from the Lubbock Police Department and the Texas Tech Police Department, are the reason we were able to stop this defendant from carrying out a catastrophic act of terrorism.”

 “As this trial demonstrated, Aldawsari purchased ingredients to construct an explosive device and was actively researching potential targets in the United States.   Thanks to the efforts of many agents, analysts and prosecutors, this plot was thwarted before it could advance further,” said Assistant Attorney General Monaco. “This case serves as another reminder of the need for continued vigilance both at home and abroad.”

“ Today’s guilty verdict shows how individuals in the United States with the intent to do harm can acquire the knowledge and materials necessary to carry out an attack,” said SAC Rodriguez. “Our success in locating and preventing Mr. Aldawsari from carrying out an attack is a result of cooperation within the law enforcement and intelligence communities, particularly, the North Texas Joint Terrorism Task Force, the Texas Tech Police Department, the Lubbock Police Department, and the Lubbock County Sheriff’s Office, but also a demonstration of information sharing across FBI divisions, as well as assistance from the community.   I want to thank the dedicated agents, officers and analysts, the computer forensics team and linguists that worked diligently on this investigation as well as prosecutors serving in the U.S. Attorney’s Office in the Northern District.”

The government presented evidence that on Feb. 1, 2011, a chemical supplier reported to the FBI a suspicious attempted purchase of concentrated phenol by a man identifying himself as Khalid Aldawsari.   Phenol is a toxic chemical with legitimate uses, but can also be used to make the explosive trinitrophenol, also known as T.N.P., or picric acid.   Ingredients typically used with phenol to make picric acid, or T.N.P., are concentrated sulfuric and nitric acids.

Aldawsari attempted to have the phenol order shipped to a freight company so it could be held for him there, but the freight company told Aldawsari that the order had been returned to the supplier and called the police.   Later, Aldawsari falsely told the supplier he was associated with a university and wanted the phenol for “off-campus, personal research.”   Frustrated by questions being asked over his phenol order, Aldawsari cancelled his order, placed an order with another company, and later emailed himself instructions for producing phenol.  In December 2010, he had successfully purchased concentrated nitric and sulfuric acids.

Aldawsari used various email accounts in researching explosives and targets, and often sent emails to himself as part of this process. He emailed himself a recipe for picric acid, which was described in the email as a “military explosive” and also emailed himself instructions on how to convert a cell phone into a remote detonator and how to prepare a booby-trapped vehicle using household items.   Aldawsari also purchased many other items, including a Hazmat suit, a soldering iron kit, glass beakers and flasks, a stun gun, clocks and a battery tester.

Excerpts from a journal found at Aldawsari’s residence indicated that he had been planning to commit a terrorist attack in the United States for years.  One entry describes how Aldawsari sought and obtained a particular scholarship because it allowed him to come directly to the United States and helped him financially, which he said “will help tremendously in providing me with the support I need for Jihad.”   The entry continues: “And now, after mastering the English language, learning how to build explosives and continuous planning to target the infidel Americans, it is time for Jihad.”

In another entry, Aldawsari wrote that he was near to reaching his goal and near to getting weapons to use against infidels and their helpers.   He also listed a “synopsis of important steps” that included obtaining a forged U.S. birth certificate; renting a car; using different driver’s licenses for each car rented; putting bombs in cars and taking them to different places during rush hour; and leaving the city for a safe place.

Aldawsari conducted research on various targets and e-mailed himself information on these locations and people. One of the documents he sent himself, with the subject line listed as “Targets,” contained the names and home addresses of three American citizens who had previously served in the U.S. military and had been stationed for a time at Abu Ghraib prison in Iraq.  In others, Aldawsari sent himself the names of 12 reservoir dams in Colorado and California and listed two categories of targets: hydroelectric dams and nuclear power plants.   He also sent himself an email titled “Tyrant’s House,” in which he listed the Dallas address for former President George W. Bush.  Aldawsari also conducted research that indicated he considered using infant dolls to conceal explosives and the possible targeting of a nightclub with an explosive concealed in a backpack.

This case was investigated by the FBI’s Dallas Joint Terrorism Task Force, with assistance from the Lubbock Police Department and the Texas Tech Police Department. The prosecution is being handled by Assistant U.S. Attorneys Jeffrey R. Haag, Denise Williams, James T. Jacks and Matthew J. Kacsmaryk and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division.

SGT. & ASSOCIATE CONVICTED OF BRIBERY/MONEY LAUNDERING DURING OPERATION IRAQI FREEDOM

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, June 26, 2012
Army Sergeant and Associate Convicted on All Counts for Roles in Bribery and Money Laundering Scheme Related to Defense Contracts to Support Iraq WarTo Date, 19 Individuals Have Pleaded Guilty or Been Convicted at Trial in Ongoing Corruption Investigation

WASHINGTON – A federal jury in Elkins, W. Va., convicted Richard Evick, a U.S. Army Sergeant First Class and Non-Commissioned Officer in charge of contracting at a U.S. military base in Kuwait, and his associate, Crystal Martin, of all counts with which they were charged in connection with a bribery and money laundering scheme related to defense contracts awarded in support of Operation Iraqi Freedom, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney William J. Ihlenfeld II for the Northern District of West Virginia.

Evick was found guilty yesterday of one count of bribery conspiracy, two counts of bribery, one count of money laundering conspiracy, six counts of money laundering and one count of obstructing an agency proceeding.  Martin was found guilty of one count of bribery conspiracy, one count of money laundering conspiracy and four counts of money laundering.

“As the highest ranking enlisted officer in the U.S. Army’s contracting office at Camp Arifjan in Kuwait, Mr. Evick had a special duty to strike deals in the best interests of the American people,” said Assistant Attorney General Breuer.  “Instead, he steered business to dirty contractors in exchange for tens of thousands of dollars in cash and other items.  Mr. Evick, Ms. Martin and their co-conspirators defrauded the government they had sworn to serve.  To date, our investigation has led to the convictions of 19 individuals, and we will continue aggressively to pursue corruption and procurement fraud wherever we find it.”

“The investigation and prosecution of public corruption cases continues to be a top priority for the Department of Justice in West Virginia and throughout the country,” said U.S. Attorney Ihlenfeld.  “Fortunately the vast majority of our public officials are honest and trustworthy, but those who are not will be held accountable.”

Evick served as the U.S. Army’s Non-Commission Officer in charge of contracting at Camp Arifjan between 2005 and 2006.  In that capacity, Evick had the authority to arrange for the award of valuable contracts to supply the U.S. military with bottled water and catering services, maintain Army barracks and install security barriers, among other things.

Evidence presented at trial demonstrated that Evick and his co-conspirators manipulated the contracting process in several ways, including disclosing confidential information about the U.S. military’s plans to procure goods and services and accepting fake bids.  In this manner, Evick and two of his fellow contacting officials, former Army Majors James Momon and Chris Murray, steered nearly $24 million worth of contracting business to certain contractors.  In exchange, these contractors paid Evick more than $170,000 in bribes, a free New Year’s Eve trip to Dubai and parties.

Among the persons who paid Evick these bribes was Wajdi Birjas, a civilian U.S. government employee at Camp Arifjan who had a secret interest in a military contractor operating in Kuwait.  Birjas testified that he provided phony bids to Evick from purportedly independent contractors who were, in reality, controlled by the same individuals.  The evidence showed that Evick used these bids to create the false impression that the contracts were awarded according to Army contracting rules providing for a competitive bidding process.  Birjas also testified that he had a hidden safe at his villa where Momon stored more than $800,000 in bribe money and which Evick used to exchange a large amount of Kuwaiti currency for U.S. dollars.

According to the evidence, Evick gave much of his bribe money to Martin, who had a concession from the Army and Air force Exchange Service to sell merchandise at Camp Arifjan, which was primarily a cash business.  Evick and Martin then transferred tens of thousands of dollars worth of Evick’s bribe money to the U.S. into the hands of Evick’s wife and his girlfriend.  The evidence showed that, in order to conceal the fact that this was bribe money, Evick and Martin converted the money into Western Union wires, money orders, cashiers checks and personal checks.  Evick and Martin also smuggled cash into the U.S. on their persons, Martin often taking military transport flights to avoid customs screening.  Evick used his bribe money, among other things, to purchase and construct a residence on three and one half acres in Parsons, W. Va., and to buy a pickup truck.

The evidence showed that Evick and Martin also participated in a scheme to smuggle $250,000 of bribe money belonging to Momon into the U.S.  Momon testified about a summer 2006 meeting at Kuwait international airport with Evick and Martin, at which Martin described how she was laundering Evick’s bribe money and offered to provide the same service for Momon.  According to evidence presented at trial, Evick offered to bury Momon’s money on Evick’s West Virginia property.  When law enforcement agents interviewed Evick several months later about corruption at Camp Arifjan, Evick falsely stated that he did not know the contractor from whom evidence showed he had received a $150,000 bribe, among other things.

“Contingency contracting provides an opportunity for honest contractors to excel but still runs the inherent risk of fraudulent activity that plagues all government contracting,” said Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service.  “While our service members and defense civilians expect the best from their supporting contracts, we root out the worst and, working alongside our law enforcement partners, continue to aggressively bring those who defraud our nation’s warfighters to justice.”
“We are very pleased with the guilty verdicts in this case,” said Frank Robey, the director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.  “It is a warning to anyone, in or out of uniform, who attempts to defraud the Army or the government that we will investigate credible allegations and bring those responsible to justice.  Our agents have done a remarkable job investigating this case along with our fellow law enforcement partners and the DOJ.”

“The fact that a jury convicted these two individuals on all 11 counts stands as a powerful reminder that  those who break the public trust to engage in bribery and money laundering with funds meant for the reconstruction of Iraq will face the full force of the law,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR).  “SIGIR and those who work with us will continue work on those cases still open against those involved in illegal acts.”

Evick and Martin face a maximum sentence of five years in prison for bribery conspiracy, 20 years in prison for money laundering conspiracy and 20 years in prison for each count of money laundering.  Evick also faces a maximum of 15 years in prison for each count of bribery, five years for obstructing an agency proceeding and the forfeiture of the proceeds of his bribe scheme, which includes his West Virginia residence.  They also face maximum fines of $250,000 per count.  They will be sentenced by Chief U.S. District Judge John Preston Bailey.  Their sentencing date has not yet been scheduled.

The case against Evick and Martin arose from a corruption probe focusing on the contracting office at Camp Arifjan, a U.S. military base in Kuwait.  As a result of this investigation, 19 individuals, including Evick and Martin, have pleaded guilty or been found guilty at trial for their roles in the scheme.  Momon pleaded guilty in August 2009 to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution, and he is awaiting sentencing.  Murray pleaded guilty in January 2009 for his role in the scheme and was sentenced in December 2009 to 57 months in prison.  Birjas pleaded guilty in September 2010 and he is awaiting sentencing.

The case is being prosecuted by Trial Attorneys Peter C. Sprung and Eric G. Olshan of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Andrew R. Cogar of the U.S. Attorney’s Office for the Northern District of West Virginia.  The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, Internal Revenue Service-Criminal Investigation, the FBI and SIGIR.

D.C. ATTORNEY AND TWO PRIVATE EYES FOUND GUILTY OF FABRICATING EVIDENCE

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 22, 2012
Veteran D.C. Defense Attorney Charles F. Daum and Two Investigators Found Guilty of Obstruction of Justice Charges

Veteran District of Columbia defense attorney Charles F. Daum, 66, of Arnold, Md., was found guilty today of one count of conspiracy to obstruct justice, three counts of obstruction of justice and two counts of subornation of perjury, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Chief Cathy L. Lanier of the Washington, D.C., Metropolitan Police Department; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Daum’s co-defendants, private investigators Daaiyah Pasha, 62, of Washington, D.C., and Iman Pasha, 32, of Springfield, Va., were also found guilty today on one count of conspiracy to obstruct justice.

After a six-week bench trial, Senior U.S District Judge Gladys Kessler of the U.S. District Court for the District of Columbia issued her verdict today.   Daum was acquitted on one charge of witness tampering.

The charges resulted from Daum’s representation of Delante White, who was indicted in March 2008 by the U.S. Attorney’s Office for the District of Columbia on federal drug trafficking charges following the execution of a search warrant on Feb. 23, 2008.

“In his zeal to defend his client, Mr. Daum betrayed his profession and obstructed justice,” said Assistant Attorney General Breuer.  “He and his co-conspirators fabricated evidence to submit in his client’s criminal trial, and he further suborned perjury from two defense witnesses.  It’s astounding that a lawyer could commit these crimes, which undermine the integrity of our criminal justice system.  The court found Mr. Daum guilty beyond a reasonable doubt, and he now faces prison time as a result.”

Judge Kessler found beyond a reasonable doubt that Daum, after entering his notice of appearance in the White case, devised a plan to obtain and produce false evidence designed to convince the jury that the drugs seized by the police on Feb. 23, 2008, did not belong to White.  Daum enlisted the help of Daaiyah and Iman Pasha, whom Daum had hired as investigators, and others to help carry out his scheme.   Following Daum’s directions, the co-conspirators obtained duplicates of several items that were seized as evidence during the execution of the search warrant, including a digital scale, a razor blade, plates, an Adidas shoe box and a pair of Gucci boots.   Once those items were obtained, Daaiyah and Iman Pasha made arrangements to take staged photographs of another individual depicted with the items, while apparently “cutting” “rock cocaine” in order to make it appear as though the seized drugs actually belonged to the other individual.   Daum later submitted the staged photographs, as well as other fabricated items, as evidence during White’s criminal trial.

Judge Kessler also found that Daum solicited and presented the perjured testimony of two witnesses, to further obstruct and impede the administration of justice.

The defendants face a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge.   Daum faces an additional maximum penalty of 10 years in prison and a $250,000 fine for each count of obstruction.   Daum also faces a maximum penalty of five years in prison and a $250,000 fine for each charge of subornation of perjury.   Sentencing is scheduled for Nov. 19, 2012.

The case was prosecuted by Trial Attorneys Donnell Turner, Darrin L. McCullough and Tritia Yuen of the Narcotic and Dangerous Drug Section in the Justice Department’s Criminal Division.  The case was investigated by the Washington, D.C., Metropolitan Police Department, the FBI’s Washington Field Office and the U.S. Attorney’s Office for the District of Columbia.

FORMER STATE DEPARTMENT EMPLOYEE GETS PRISON TIME FOR ASSAULTING WIFE

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 22, 2012
Former State Department Employee Sentenced to 12 Months in Prison for Assaulting His Wife with a Dangerous Weapon
Michael Makalou, 41, a former State Department employee, was sentenced today to 12 months in prison for assaulting his wife with a dangerous weapon with intent to do bodily harm, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.

Makalou was sentenced today by U.S. District Judge James C. Cacheris in the Eastern District of Virginia.   Makalou was indicted in October 2011 and was found guilty on Feb. 8, 2012, following a two-day bench trial.

According to court documents, Makalou resided with his wife and children in Dakar, Senegal, and worked as a political officer at the U.S. Embassy in Dakar.  A s determined by the court in its finding of guilt, on Aug. 13, 2011, Makalou attacked his wife.   Without provocation, Makalou repeatedly punched, choked, kicked and dragged his wife in their home, ultimately striking her in the head with a large plastic dollhouse weighing approximately 10 pounds, causing his wife to lose consciousness.   This assault lasted approximately 6 hours.   The victim suffered multiple injuries, including contusions, lacerations and a concussion.

The case was prosecuted by Trial Attorney Sarah Chang of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Rebeca H. Bellows of the Eastern District of Virginia.   The case was investigated by the Bureau of Diplomatic Security of the U.S. Department of State.

SEC ACCUSES MASSACHUSETTS RESIDENT WITH SELLING FICTITIOUS FACEBOOK IPO INVESTMENTS

FROM:  SECURITIES AND EXCHANGE COMMISSION
June 20, 2012
The Securities and Exchange Commission announced today that it has charged Gary J. Martel, a resident of Chelsea, Massachusetts, with defrauding investors. The Commission’s complaint, filed in federal district court on June 19, 2012, alleges that, from at least 2006 to the present, Martel, who conducted business under multiple names including Martel Financial Group and MFG Funding, defrauded at least 12 investors in Massachusetts, Vermont and Florida of at least $1.6 million, and likely obtained significantly more from other investors. Today, with Martel’s consent, a federal judge entered an order freezing Martel’s assets and prohibiting him from continuing to violate the antifraud provisions of the federal securities laws.

According to the complaint, Martel told investors, many of whom were retirees looking for a safe investment earning reliable income, that he would place their money in “pass-through bonds” or other purported fixed income or pooled investment products, which he assured investors were safe. The complaint alleges that Martel gave investors purported account statements showing interest earned and sometimes made small distributions of supposed interest, which encouraged investors to give Martel more money to invest. Martel also allegedly offered other fraudulent investments. In March 2012, according to the complaint, Martel solicited investments in a Facebook investment pool, claiming it would allow small investors to “own a piece” of the Facebook IPO. In fact, however, the complaint alleges that the investments Martel offered were fictitious and/or no longer exist, and that he transferred funds out of the bank account where investor funds were deposited to bank accounts he maintained for his businesses.

The Commission’s complaint alleges that Martel violated Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In its action, the Commission seeks the entry of a permanent injunction against Martel, disgorgement of ill-gotten gains plus pre-judgment interest thereon, and the imposition of civil monetary penalties. In addition to freezing Martel’s assets and prohibiting him from violations of antifraud provisions of the federal securities laws, the order entered by the court today further prohibits Martel from soliciting, accepting, or depositing any money from investors and from altering or destroying any relevant documents and also requires him to provide an accounting of their assets and uses of investor funds.

The Commission appreciates the assistance of Secretary of the Commonwealth of Massachusetts William F. Galvin and the Massachusetts Securities Division, which notified the Commission of Martel’s conduct and investor losses and last week filed an action against Martel based on the same conduct.

AN ALLEGED PONZI SCHEME MAY HAVE BEEN IN STARS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C., June 21, 2012 – The Securities and Exchange Commission today charged that a former broker in Orlando, Fla., defrauded investors in an astrology-based Ponzi scheme.

The SEC alleges that Gurudeo “Buddy” Persaud lured family, friends, and others into investing in his firm, White Elephant Trading Company LLC, by falsely guaranteeing their money would be safe and yield lofty returns ranging from 6 to 18 percent. Persaud told investors he would invest in the debt, stock, futures, and real estate markets, but did not reveal that his trading strategy was based on his belief that markets are affected by gravitational forces.

According to the SEC’s complaint filed in U.S. District Court for the Middle District of Florida, Persaud used investors’ money to make payments to other investors, the hallmark of a Ponzi scheme. Persaud also lost $400,000 of investor funds through his trading and diverted at least $415,000 to pay for his personal expenses, the SEC alleged. The same month Persaud began receiving investor money, he started using some of that money for his personal expenses. The SEC said that Persaud created phony account statements to hide his trading losses and give investors a false sense of security.

“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcement action was in the stars.”

Persaud was a registered representative at a Florida-based broker-dealer but separately operated the now-inactive White Elephant, starting in mid-2007. In all, Persaud raised more than $1 million from at least 14 investors between July 2007 and January 2010.
The SEC alleges that in making trading decisions, Persaud chiefly relied on an Internet service that provided directional market forecasts based on lunar cycles and gravitational pull. Persaud’s strategy was premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market. For example, Persaud believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities.

The SEC’s complaint seeks disgorgement of ill-gotten gains, financial penalties, and injunctive relief against Persaud to enjoin him from future violations of the federal securities laws.

The SEC’s investigation was conducted in the Miami Regional Office by Senior Counsel Rachel K. Paulose and Accountant Karaz S. Zaki under the supervision of Assistant Regional Director Elisha L. Frank, with assistance from examiners Anson Kwong and Brian H. Dyer, Examination Manager George Franceschini, Assistant Regional Director Nicholas A. Monaco, and Associate Regional Director John C. Mattimore. Amie Riggle Berlin will lead the SEC’s litigation.

CLINIC OWNER PLEADS GUILTY IN PSYCHOTHERAPY MEDICARE FRAUD SCHEME

FROM:  U.S. DEPARTMENT OF JUSTICE
Wednesday, June 20, 2012
Detroit-Area Clinic Owner Pleads Guilty to $16 Million Psychotherapy Fraud Scheme
WASHINGTON – Detroit-area resident Louisa Thompson pleaded guilty today for her role in a $16 million fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Thompson, 63, pleaded guilty today before U.S. District Judge Nancy D. Edmunds in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  At sentencing, scheduled for Oct. 18, 2012, Thompson faces a maximum penalty of 10 years in prison and a $250,000 fine.

According to the plea documents, in approximately January 2006, Thompson began billing Medicare for psychotherapy services through two companies, TGW Medical Inc. and Caldwell Thompson Manor Inc.  The services billed by Thompson at TGW and Caldwell Thompson were never performed or were performed by unlicensed staff who were not authorized to perform services reimbursed by Medicare.  The unlicensed staff members also fabricated therapy notes for patients that were never seen and billed Medicare using document templates created by Thompson.

According to court documents, Thompson also received payments from the owner of P&C Adult Day Care Inc., a psychotherapy clinic.  Those payments to Thompson were, in part, for the use of Thompson’s provider number by P&C.  Thompson also admitted signing therapy documents for P&C patients she never saw or treated.  P&C, like TGW and Caldwell Thompson, billed for psychotherapy services that were either not performed or performed by unlicensed staff.  Caldwell Thompson and P&C shared Medicare beneficiaries and/or beneficiary information.

Thompson admitted to submitting or causing to be submitted approximately $15.9 million in fraudulent psychotherapy claims on behalf of TGW, Caldwell Thompson and P&C.  Medicare paid approximately $4.9 million of those claims.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG), Chicago Regional Office.

The case is being prosecuted by Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section and Assistant U.S. Attorney for the Eastern District of Michigan Philip A. Ross.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 individuals and organizations that collectively have billed the Medicare program for more than $4 billion.  In addition, HHS’s 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.

MESQUITE CHARCOAL DISTRIBUTOR PLEADS GUILTY IN BID-RIGGING CONSPIRACY

FROM:  U.S. DEPARTMENT OF JUSTICE ANTITURST DIVISION
WASHINGTON — The owner of a southern California-based mesquite charcoal distributor pleaded guilty for his role in a customer allocation and bid-rigging conspiracy for the sale of mesquite charcoal, the Department of Justice announced today.

According to a one-count felony charge filed on May 7, 2012, in the U.S. District Court in San Francisco, William W. Lord, the owner of Carpinteria, Calif. -based Chef's Choice Mesquite Charcoal, participated in a conspiracy with competitors to refrain from competing for each other's customers and to submit noncompetitive bids for the sale of mesquite charcoal. According to the plea agreement, Lord has agreed to cooperate with the department's ongoing investigation.

"Today's charge demonstrates the Antitrust Division's commitment to prosecute bid-rigging conspiracies that involve products used in the everyday lives of consumers and businesses' daily operations," said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice's Antitrust Division.

Chef's Choice distributes and sells mesquite charcoal throughout the United States. Mesquite charcoal, which is typically used by restaurants and individuals to grill meat, fish and poultry, is primarily produced in Mexico and then sold to distributors in the United States for eventual resale to restaurants and consumers.

According to court documents, the charged conspiracy began as early as January 2000 and lasted until about September 2010. Lord and his competitors, a Los Angeles-area mesquite charcoal distributor and a San Francisco-area mesquite charcoal distributor, entered into an agreement to refrain from competing for the sale of mesquite charcoal to each other's customers. The purpose of this agreement was to ensure that Lord and his competitors would not have to reduce mesquite charcoal prices in the face of competition in order to retain their customers. Lord and his competitors carried out the conspiracy in various ways, including: refraining from submitting bids for the sale of mesquite charcoal to each other's customers; submitting intentionally noncompetitive bids to each other's customers; and communicating with each other regarding what price to bid and then submitting agreed-upon, noncompetitive bids to each other's customers.

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

U.S. DEPARTMENT OF JUSTICE WARNS ABOUT DIETARY SUPPLEMENTS

FROM:  U.S. DEPARTMENT OF JUSTICE
Keeping Tabs On Supplements
June 20th, 2012 Posted by Tracy Russo
The following post appears courtesy of the Consumer Protection Branch of the Civil Division
The dietary supplement industry has grown exponentially in recent decades, expanding from a niche health market into a major industry offering purported solutions for all types of ailments.

In 1994, Congress struck a balance between the dietary supplement industry and the public interest by enacting a law that generally treated dietary supplements as food rather than medicine. That means, for example, dietary supplements are generally not required to go through pre-market approval like pharmaceuticals.  

In 2007, the Food and Drug Administration (FDA) recognized that stronger regulations for the manufacturing of dietary supplements were needed.  Important new requirements have been introduced, in an effort to ensure that dietary supplements contain what they claim to contain.

In the last few years, the Consumer Protection Branch of the Civil Division, the FDA, and the Federal Trade Commission have collaborated in a number of actions designed to protect consumers.   When its inspections reveal serious deficiencies in a dietary supplement firm’s labeling, manufacturing, or advertising, the FDA typically sends the firm a warning letter giving the firm a certain amount of time to rectify the violations, and may work with the firm to recall products with potential risks.  You can find out about these actions and protect yourself by signing up for FDA recall alerts and by checking the FDA and FTC websites for warning letters issued to firms whose dietary supplements you may have purchased.

If the firm does not remedy the violations, the matter may be referred to the Justice Department for civil or criminal prosecution.  In one recent case, the Consumer Protection Branch filed a civil suit against a Paterson, NJ-based supplement maker that had a serious rodent infestation, manufacturing problems that resulted in allergen cross-contamination, and various labeling errors.  One of the firm’s products—which had been labeled to be dairy-free but in fact contained milk—even caused a life-threatening anaphylactic reaction in a consumer with a severe milk allergy.

Flouting a court-ordered shut down, the manufacturers simply opened up shop in a new location.  Ultimately, the Justice Department secured a criminal conviction and the firm was ordered to pay $1 million in fines.  Perhaps more significantly, the three principals of the firm were given lengthy prison terms: 40 months for the president and 34 months for the production and quality assurance managers.

Violations in the dietary supplement industry will not be tolerated.  Consumers turn to these products for their health and sense of well-being.  Consumers rely on the labels of dietary supplements to tell them about the effectiveness of the supplements and the allergens in the product.  Consumers should be able to trust that the companies that produce dietary supplements make sure their products are free from harmful impurities and manufactured under sanitary conditions.

$22 MILLION MEDICARE FRAUD SCHEME LANDS BUSINESS OWNER AND EMPLOYEE IN PRISON

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, June 19, 2012
Owner and Employee of Miami Home Health Company Sentenced to Prison in $22 Million Medicare Fraud Scheme

WASHINGTON – The owner and an employee of a Miami home health care agency were sentenced today to 108 months and 46 months in prison, respectively, for their participation in a $22 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

U.S. District Judge Patricia A. Seitz in Miami sentenced Marietha Morales, 38, to 108 months in prison and Eduardo Saborit-Dominguez, 48, to 46 months in prison.  Both defendants were each sentenced to three years of supervised release.  In addition, Morales was ordered to pay $14 million in restitution and Dominugez was ordered to pay $2 million in restitution, jointly and severally with each other.

Last year, Morales pleaded guilty to one count of conspiracy to commit health care fraud, and Dominguez pleaded guilty to one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.

Morales was the president and Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.

According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services.  Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.  Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws.  Morales used these prescriptions, POCs and medical certifications to fraudulently bill Medicare for home health care services, which Morales knew was in violation of federal criminal laws.

According to plea documents, nurses and office staff at Prime Home Health falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services.  Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services.  Morales knew that these files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.

From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare.  Medicare actually paid approximately $14 million on those claims.

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; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
           
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 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

DOCTOR CONVICTED FOR ROLE IN MEDICARE AND INSURANCE FRAUD

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 15, 2012
Brooklyn Doctor Convicted for Role in Medicare and Private Insurance Fraud Scheme
WASHINGTON – A Brooklyn board-certified colorectal surgeon, who owned and operated a New York medical clinic, was convicted for his role in a fraud scheme that billed Medicare and numerous private insurance companies for surgeries and other complex medical procedures that were never performed, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced today.

On Wednesday, June 13, 2012, after a two-week trial in federal court in Brooklyn, a jury found Boris Sachakov, M.D., 43, guilty of one count of health care fraud and five counts of health care false statements.

The trial evidence showed that from January 2008 to January 2010, Sachakov, who owned and operated a clinic called Colon and Rectal Care of New York P.C., defrauded Medicare and private insurance companies by billing for surgeries and medical services that he never provided.  According to trial testimony, several private insurance companies began investigating Sachakov after receiving complaints from patients that Sachakov had submitted claims for surgeries, including hemorrhoidectomies, that he never performed.  

At trial, 11 of Dr. Sachakov’s patients testified that they had not received the surgeries and other medical services for which Sachakov had billed their insurance companies.  The evidence presented at trial showed that the medical records Dr. Sachakov created and maintained on these patients, including letters to the patient’s referring doctors, did not support the extensive billings he submitted.  After Dr. Sachakov was confronted by two insurance companies about complaints of billings for surgeries that did not happen, the evidence at trial showed that Dr. Sachakov sent letters to his patients, asking them to falsely certify in writing that they had received the phony surgeries.

The indictment alleged that Sachakov submitted and caused the submission of over $22.6 million in false and fraudulent claims to Medicare and private insurance companies, and received more than $9 million on those claims.

At sentencing, scheduled for Sept. 24, 2012, Sachakov faces a maximum penalty of 35 years in prison and an $18 million fine.

The charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office; and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).

The case is being prosecuted by Trial Attorney Sarah M. Hall and Assistant Chief William Pericak of the Criminal Division’s Fraud Section.   The case was investigated by the FBI, HHS, the New York State Office of Medicaid Inspector General and the New York State Department of Financial Services, Criminal Investigative Division.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.   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 their inception in March 2007, strike force operations in nine districts have charged 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 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.

ALLEGED CREDIT CARD INFORMATION TRAFFICKER VISITS THE U.S.

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 15, 2012
Alleged International Credit Card Trafficker “Badb” Extradited from France to the United States
WASHINGTON – Vladislav Anatolievich Horohorin, aka “BadB” of Moscow, an alleged international credit card trafficker thought to be one of the most prolific sellers of stolen credit card data, has been extradited from France to the United States to face criminal charges filed in the District of Columbia and in the Northern District of Georgia.

The extradition was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. for the District of Columbia, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, U.S. Secret Service (USSS) Assistant Director for Investigations David J. O’Connor, and Special Agent in Charge Brian D. Lamkin of the FBI’s Atlanta Field Office.

Horohorin, 27, made his first appearance before U.S. District Judge Ellen Segal Huvelle in the District of Columbia yesterday.  He was extradited to the United States on June 6, 2012, and was arraigned before U.S. Magistrate Judge Alan Kay in the District of Columbia on June 7, 2012.  He was ordered detained pending trial.

“According to the indictment, Mr. Horohorin was one of the most notorious credit card traffickers in the world, transacting in stolen credit information across the globe,” said Assistant Attorney General Breuer.  “Due to our strong relationships with our international law enforcement partners, we secured his extradition to the United States, where he now faces multiple criminal counts in two separate indictments.  We will continue to do everything we can to bring cybercriminals to justice, including those who operate beyond our borders.”

“Our indictment alleges that this young man used his technological savvy to profit by selling stolen credit card information over the Internet on a massive scale,” said U.S. Attorney Machen.  “We are pleased that he has been extradited to the United States to face these criminal charges in a District of Columbia courtroom.  This prosecution demonstrates that those who try to rip off Americans from behind a computer screen across an ocean will not escape American justice.”

“The Secret Service is committed to identifying and apprehending those individuals that continue to attack American financial institutions and we will continue to work through our international and domestic law enforcement partners in order to accomplish this,” said USSS Assistant Director O’Connor.

“International cyber criminals who target American citizens and businesses often believe they are untouchable because they are overseas,” said U.S. Attorney Yates.  “But as this case demonstrates, we will work relentlessly with our law enforcement partners around the world to charge, find and bring those criminals to justice.”

“Horohorin’s extradition to the United States demonstrates the FBI’s expertise in conducting long-term investigations into complex criminal computer intrusions, resulting in bringing the most egregious cyber criminals to justice, even from foreign shores,” said Special Agent in Charge Lamkin.  “The combined efforts of law enforcement agencies to include our international partners around the world will ensure this trend continues.”
Horohorin was indicted by a federal grand jury in the District of Columbia in November 2009 on charges of access device fraud and aggravated identity theft.  In a separate investigation, a federal grand jury in the Northern District of Georgia returned a superseding indictment against Horohorin in August 2010, charging him with conspiracy to commit wire fraud, wire fraud and access device fraud.  In August 2010, French law enforcement authorities, working with the U.S. Secret Service, identified Horohorin in Nice, France, and arrested him as he was attempting to board a flight to return to Moscow.

According to the indictment filed in the District of Columbia, Horohorin was the subject of an undercover investigation by USSS agents.  Horohorin, who is a citizen of Israel, Russia and Ukraine, allegedly used online criminal forums such as “CarderPlanet” and “carder.su” to sell stolen credit card information, known as “dumps,” to online purchasers around the world.  According to the indictment, Horohorin, using the online name “BadB,” advertised the availability of stolen credit card information through these web forums and directed purchasers to create accounts at “dumps.name,” a fully-automated dumps vending website operated by Horohorin and hosted outside the United States.  The website was designed to assist in the exchange of funds for the stolen credit card information.  Horohorin allegedly directed buyers to fund their “dumps.name” account using funds transferred by services including “Webmoney,” an online currency service hosted in Russia.  The purchaser would then access the “dumps.name” website and select the desired stolen credit card data.  Using an online undercover identity, USSS agents negotiated the sale of numerous stolen credit card dumps.

According to the indictment filed in the Northern District of Georgia, Horohorin was one of the lead cashers in an elaborate scheme in which 44 counterfeit payroll debit cards were used to withdraw more than $9 million from over 2,100 ATMs in at least 280 cities worldwide in a span of less than 12 hours.  Computer hackers broke into a credit card processor located in the Atlanta area, stole debit card account numbers, and raised the balances and withdrawal limits on those accounts while distributing the account numbers and PIN codes to lead cashers, like Hororhorin, around the world.

Horohorin faces a maximum penalty of 10 years in prison for each count of access device fraud, 20 years in prison for each count of conspiracy to commit wire fraud and wire fraud and a statutory consecutive penalty of two years in prison for the aggravated identity theft count.

The charges in the indictments are merely allegations and a defendant is presumed innocent until proven guilty.

The District of Columbia case is being prosecuted by Trial Attorneys Carol Sipperly, Ethan Arenson and Corbin Weiss of the Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division.  Weiss also serves as a Special Assistant U.S. Attorney for the District of Columbia.  The District of Columbia case is being investigated by USSS.  Key assistance was provided by the French Police Nationale Aux Frontiers and the Netherlands Police Agency National Crime Squad High Tech Crime Unit.  The FBI Atlanta field office provided information helpful to the investigation.
The Northern District of Georgia case is being prosecuted by Assistant U.S. Attorneys Nick Oldham and Lawrence R. Sommerfeld and Trial Attorney Sipperly of CCIPS.  The Atlanta case is being investigated by the FBI.  Assistance was provided by numerous law enforcement partners.  U.S. Secret Service provided information helpful to the investigation.

The Office of International Affairs in the Justice Department’s Criminal Division provided invaluable assistance.

U.S. RESIDENT FOUND GUILTY IN TERRORISM CASE

FROM:  U.S. DEPARTMENT OF JUSTICE
Thursday, June 14, 2012
North Carolina Resident Found Guilty of Terrorism Violations
Today in federal court in the Eastern District of North Carolina, a jury found Anes Subasic, 35, guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons abroad, announced Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina; Lisa Monaco, Assistant Attorney General for National Security; M. Chris Briese, Special Agent-in-Charge of the FBI, Charlotte Division; and John F. Khin, Special Agent-in-Charge, Southeast Field Office, Defense Criminal Investigative Service (DCIS).

Subasic was charged along with seven other defendants in a federal indictment returned on July 22, 2009.   In a separate trial in September 2011, Subasic was found guilty of two counts of unlawful procurement of citizenship.

“We must be ever vigilant in our prosecution of those who seek to visit terror on our way of life,” stated U.S. Attorney Walker.   “This prosecution demonstrates that commitment.”

  “Anes Subasic is the seventh individual to be convicted in connection with this multi-year conspiracy to kill persons abroad and provide material support to terrorism. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said Assistant Attorney General Monaco.

“Subasic was part of a group of terrorists; some viewed their own country as the enemy.  This verdict is the culmination of years of hard work by our Raleigh-Durham Joint Terrorism Task Force, which is composed of our vital law enforcement partners. The JTTF will continue its relentless effort to thwart terrorism in North Carolina,” said FBI Special Agent in Charge Briese.

“The Defense Criminal Investigative Service is proud to have worked jointly with the Raleigh FBI JTTF in the investigation of Anes Subasic and others indicted of terrorism-related charges,” stated DCIS Special Agent in Charge Khin.   “Subasic was part of a conspiracy to commit violent acts against U.S. service members and others abroad.   The DCIS remains steadfast in its commitment to protect the warfighter and to thwart efforts of individuals like Subasic.”  
 
According to the superseding indictment, from roughly November 2006 through at least July 2009, Subasic and the other defendants conspired to provide material support and resources to terrorists, including currency, training, transportation and personnel.   Subasic also conspired to murder, kidnap, maim and injure persons abroad during this period.   The object of the conspiracy, according to the indictment, was to advance violent jihad, including supporting and participating in terrorist activities abroad and committing acts of murder, kidnapping or maiming persons abroad.

The defendants allegedly offered training in weapons and financing, and helped arrange overseas travel and contacts so others could wage violent jihad overseas.

The defendants raised money to support training efforts, disguised the destination of such monies from the donors, and obtained assault weapons to develop skills with the weapons.  Some defendants also allegedly radicalized others to believe that violent jihad was a personal religious obligation.

In February, 2011, Daniel Boyd, the leader, pleaded guilty to conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim, and injure persons in a foreign country and is currently awaiting sentencing.   Boyd’s two sons, Zakariya and Dylan Boyd, have also pleaded guilty.   Zakariya Boyd pleaded guilty on June 27, 2011, to conspiring to provide material support to terrorists, and was sentenced to 108 months in prison. Dylan Boyd pleaded guilty on Sept. 14, 2011, to aiding and abetting a conspiracy to provide material support to terrorists and received a 96-month prison sentence.

On Oct. 13, 2011, following a 17-day trial, a jury found Hysen Sherifi, Mohammad Omar Aly Hassan and Ziyad Yaghi guilty.   Sherifi was found guilty of conspiring to provide material support to terrorists; conspiring to murder, kidnap, maim and injure persons in a foreign country; two counts of possessing a firearm in furtherance of a crime of violence; and conspiring to kill a federal officer or employee and was sentenced to 540 months in prison.   Hassan and Yaghi were found guilty of conspiring to provide material support to terrorists and conspiring to murder, kidnap, maim and injure persons in a foreign country.  Hassan received a 180-month prison term and Yaghi received 380 months in prison.  

At sentencing, Subasic faces up to 15 years in prison, followed by up to three years supervised release for conspiring to provide material support to terrorists, and up to a term of life in prison followed by up to five years of supervised release for conspiring to murder, kidnap, maim, and injure persons in a foreign country.

The investigation was conducted by the FBI Raleigh-Durham Joint Terrorism Task Force, which includes the FBI, the DCIS, the North Carolina Alcohol Law Enforcement, the Raleigh Police Department, the Durham Police Department and the North Carolina Information Sharing and Analysis Center.

The prosecution was handled by Assistant U.S. Attorney John Bowler of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney Jason Kellhofer of the Counterterrorism Section in the Justice Department’s National Security Division.

FORMER POLICE OFFICER ARRESTED FOR STEALING FROM MOTORISTS

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, June 12, 2012
Former Fort Deposit, Alabama, Police Officer Arrested for Stealing Money from Motorists and Obstructing Justice
Former Fort Deposit, Ala., Police Officer Carlos Tyson Bennett was arrested today on charges of stealing money from motorists on Interstate 65 in central Alabama and subsequently trying to conceal his criminal activity, announced the Justice Department.

Bennett, 36, of Greenville, Ala., was charged in an eight-count indictment returned by a federal grand jury in the Middle District of Alabama and unsealed today.   He is charged with one count of conspiracy against rights, four counts of deprivation of rights under color of law, and three counts of obstruction of justice.

The indictment alleges that between April 2009 and July 1, 2009, Bennett conspired with a fellow officer to stop vehicles under the guise of legitimate law enforcement activity and to steal cash from drivers and passengers in violation of their constitutional right to be free from unreasonable seizures of property.   The indictment further alleges four specific thefts in which Bennett, aided and abetted by the other officer, stole between $100 and $200 per victim.   In addition, Bennett is charged with obstructing justice on three separate occasions.   According to the indictment, Bennett also provided a fabricated story to a law enforcement official and sought to prevent the communication of information relating to these offenses to law enforcement officers.

If convicted, Bennett could face a maximum sentence of 10 years in prison and a fine of $250,000 on the conspiracy charge; one year in prison and a fine of $100,000 on each of the deprivation of rights charges; and 20 years in prison and a fine of $250,000 on each of the obstruction charges.

This case is being investigated by the Alabama Bureau of Investigation; the Butler County, Ala., Sheriff’s Office; and the Lowndes County, Ala., Sheriff’s Office.   The case is being prosecuted by Assistant U.S. Attorney Monica Stump for the Middle District of Alabama 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.

AFGHAN NARCO-TERRORIST SENTENCED TO LIFE IN PRISON

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, June 12, 2012
Haji Bagcho Sentenced to Life in Prison on Drug Trafficking and Narco-Terrorism Charges Afghan National Responsible for Almost 20 Percent of World’s Heroin Production
WASHINGTON – An Afghan national with ties to the Taliban was sentenced to life in prison today for conspiring to distribute heroin to the United States and for using drug proceeds to fund, arm and supply the Taliban, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
 
Haji Bagcho, an Afghan national and large scale drug trafficker, was sentenced by U.S. District Judge Ellen S. Huvelle in the District of Columbia.   In addition to his prison term, Bagcho was ordered to forfeit $254,203,032 in drug proceeds along with his property in Afghanistan.

 “Haji Bagcho led a massive drug production and trafficking operation that supplied heroin in more than 20 countries, including the United States,” said Assistant Attorney General Breuer.  “In 2006 alone, he conducted heroin transactions worth more than $250 million.   Bagcho used the profits of his narcotics trafficking operation to support high-level Taliban commanders in Afghanistan.   Today’s life sentence is an appropriate punishment for one of the most notorious heroin traffickers in the world.”

“This is DEA at its finest, working in close collaboration with our Afghan partners to end the long reign of this Afghan drug lord whose drug proceeds financed terror,” said DEA Administrator Leonhart.   “One of the world’s most prolific drug traffickers who helped fund the Taliban will spend his remaining days behind bars in a U.S. prison due to the relentless efforts of DEA, our Afghan counterparts and our prosecuting partners.”  

Bagcho was convicted by a jury on March 13, 2012, after a three week trial, of one count of conspiracy to distribute one kilogram or more of heroin, knowing and intending that it would be unlawfully imported into the United States; one count of distribution of one kilogram or more of heroin knowing and intending that it would be unlawfully imported into the United States; and one count of narco-terrorism.   The trial, before Judge Huvelle, was only the second under the narco-terrorism statute since its enactment in 2006.

Bagcho was charged in a superseding indictment on Jan. 28, 2010, after his arrest and extradition to the United States from Afghanistan in May 2009.

The DEA, in cooperation with their Afghan counterparts, conducted the investigation, which revealed that Bagcho was one of the largest heroin traffickers in the world and manufactured the drug in clandestine laboratories along Afghanistan’s border region with Pakistan.   According to information presented at trial, Bagcho, who had been operating his heroin business since at least the 1990s, sent the drug to more than 20 countries, including the United States.   Proceeds from his heroin trafficking were then used to support high-level members of the Taliban in furtherance of their insurgency in Afghanistan.

With the help of cooperating witnesses, evidence showed that the DEA purchased heroin directly from Bagcho’s organization on two occasions, which Bagcho understood was destined for the United States.   They also conducted several searches of residences belonging to Bagcho and his associates, recovering evidence consistent with drug trafficking.   During one search, ledgers belonging to the defendant were found and were later introduced at trial.   One ledger, cataloguing Bagcho’s activities during 2006 alone, reflected heroin transactions totaling more than 123,000 kilograms, worth more than $250 million.   Based on heroin production statistics compiled by the United Nations Office of Drugs and Crime for 2006, the defendant’s trafficking accounted for approximately 20 percent of the total amount of heroin produced worldwide that year.

Over several years, evidence at trial established that Bagcho used a portion of his drug proceeds to provide cash, weapons and other supplies to the former Taliban governor of Nangarhar Province and two Taliban commanders responsible for insurgent activity in eastern Afghanistan, so that they could continue their “jihad” against western troops and the Afghan government.

The case was prosecuted by Trial Attorneys Matthew Stiglitz and Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section.   The case was investigated by the DEA Special Operations Division in the United States, with assistance from the DEA’s Foreign Deployed Advisory Support Team and Kabul Country Office in Afghanistan, the U.S. Embassy in Kabul, and in close cooperation with Afghan law enforcement.   The Criminal Division’s Office of International Affairs and Asset Forfeiture and Money Laundering Section provided invaluable support.

EDUCATION OFFICIAL SENTENCED IN SCHOOL BUS PARTS/SERVICES KICKBACK SCHEME

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 8, 2012
American Samoa Department of Education Official Sentenced to 35 Months in Prison for Witness Tampering and Obstruction of Justice
WASHINGTON – Paul Solofa, the former chief financial officer for the Department of Education for the government of the U.S. Territory of American Samoa was sentenced today to 35 months in prison following his conviction earlier this year for his efforts to obstruct a federal grand jury and law enforcement investigation into a bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

The sentence was imposed by U.S. District Court Judge Reggie B. Walton in the District of Columbia.  After a four-day trial in January 2012, a federal jury in the District of Columbia found Solofa, 50, guilty of one count of witness tampering and one count of obstruction of justice.

According to evidence presented at trial, in approximately early 2008, federal authorities began conducting an investigation into allegations of cash bribes and kickbacks paid by vendors to officials of the American Samoa Government in connection with the government’s purchase of school bus parts and services.

According to the trial evidence, Solofa met on April 3, 2009, with a school bus parts vendor who told Solofa that the FBI was interested in interviewing the vendor regarding the bus parts investigation.  Solofa, in a recorded meeting, allegedly told the vendor that, “They cannot do anything with cash.  Nothing.  They cannot do anything with cash.  They cannot track down you on cash.  Because even if you say you gave me cash I'll tell them ‘no.’  They cannot take your word on cash.  Because that’s hearsay.  So you know, but the best thing for you to do is ‘nope, I never give them any cash, I never’ – because that will open up the whole operation . . . You get what I am saying.  All you do is just tell them ‘no, yes, no, yes,’ period.”

In addition, according to the evidence presented at trial, Solofa met on April 14, 2009, with the same bus parts vendor, who told Solofa that a grand jury subpoena requiring production of specific documents and records, some of which related to Solofa and to the bus parts kickback scheme, would be issued shortly.  After discussing how to respond, Solofa told the vendor that, as for documents he did not want to produce, “[t]he only way to do it with those copies is burn it.  That way, they won’t see it, and you won’t worry that they might see it, you know. . . .  Just burn it, and nobody has a copy.”

The head of the School Bus Division for the American Samoa Department of Education, Gustav Nauer, 47, was also convicted for his role in the bribery scheme.  On June 4, 2012, Nauer was sentenced to 25 months in prison.

This case was prosecuted by Principal Deputy Chief Raymond N. Hulser and Trial Attorney Tim Kelly of the Public Integrity Section in the Justice Department’s Criminal Division.  The case was investigated by the FBI; the Office of the Inspector General for the U.S. Department of Education; and the Office of the Inspector General for the U.S. Department of the Interior.

MINNESOTA BUSINESS OWNER PLEADS GUILTY TO TAX CRIMES

FROM:  U.S. JUSTICE DEPARTMENT
Monday, June 11, 2012
Minnesota Business Owner Pleads Guilty to Federal Excise Tax Crimes and Tax Fraud
Jason W. Leas, a resident of Crookston, Minn., and co-founder of Best Used Trucks of Minnesota Inc., pleaded guilty today to one count of failing to pay federal excise taxes, one count of failing to file a federal excise tax return and one count of filing a false individual federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced. Leas was charged by information filed on May 29, 2012.  He entered his plea of guilty before U.S. District Court Senior Judge Richard H. Kyle in Duluth, Minn.

As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks, which is located in Crookston, was a farm truck dealership that bought and sold used trucks, new trailers, new grain boxes and other heavy farm equipment, primarily to farmers throughout the Red River Valley of Minnesota and North Dakota.  Beginning in 2004 and continuing through 2007, Leas and Best Used Trucks purchased and imported new end dump trailers, grain boxes, and gravel boxes from a Canadian manufacturer, which subjected the company to federal excise taxes upon selling them afterward.   Leas admitted that he knew of his responsibility for paying the 12 percent federal excise tax on the sale of these trailers and related equipment, and his responsibility to file federal excise tax returns.  Leas pleaded guilty to failing to file an IRS Form 720, Quarterly Federal Excise Tax Return for the third quarter of 2005, and failing to pay federal excise taxes of $9,636 for the first quarter of 2006.  Leas admitted that he failed to pay over at least $80,088 in total federal excise taxes for ten quarters from 2004 through 2006.

Leas also pleaded guilty to willfully filing a false individual federal income tax return for the tax year 2007, which failed to report at least $120,151 in additional income with an additional tax due and owing of at least $36,872.  The plea agreement alleged that from 2004 to 2007 Leas controlled two checking accounts in the name of Best Used Trucks of Minnesota. Leas used one of these accounts to both divert corporate receipts from Best Used Trucks, and to buy and sell equipment that was not part of Best Used Trucks’s ordinary business sales.   Leas failed to report this income on his personal tax returns for four years, resulting in a total tax loss of at least $73,361.

“To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share of taxes, whether it is in the form of income taxes or excise taxes,” said Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation Division, St. Paul Field Office.  “The IRS-Criminal Investigation Division, together with the Department of Justice, will continue to investigate and prosecute those who violate our tax system.”

Leas is facing a potential maximum penalty of five years in prison for all three charges; three years for willfully filing a false income tax return, and one year each for the failure to file and failure to pay charges.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked Special Agents and Revenue Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Thomas W. Flynn and Dennis R. Kihm, who prosecuted the case.

FORMER COMPANY OFFICIAL PLEADS GUILTY TO OFFERING BRIBES TO FOREIGN OFFICIALS

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 15, 2012
Former Vice President at California Valve Company Pleads Guilty to Foreign Bribery Offense
WASHINGTON – David Edmonds, the former vice president of worldwide customer service at Rancho Santa Margarita, Calif.-based valve company Control Components Inc. (CCI), pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division, the U.S. Attorney’s Office for the Central District of California and the FBI’s Washington Field Office.

Edmonds, who resides in San Clemente, Calif., pleaded guilty today before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count superseding information charging him with making a corrupt payment to a foreign government official in Greece in violation of the FCPA.  According to court documents, CCI designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.

At sentencing, Edmonds, 59, faces up to 15 months in prison.  Sentencing is scheduled for Nov. 19, 2012.

Edmonds is the seventh former CCI executive to plead guilty to FCPA charges in connection with the company’s bribery scheme:

On May 29, 2012, Paul Cosgrove, CCI’s former head of worldwide sales, pleaded guilty to one count of making a corrupt payment to a foreign government official.
On April 17, 2012, Stuart Carson, CCI’s former president, and Hong “Rose” Carson, CCI’s former director of sales for China and Taiwan, each pleaded guilty to one count of making a corrupt payment to a foreign government official.

On April 28, 2011, Flavio Ricotti, CCI’s former vice president of sales for Europe, Africa, and the Middle East, pleaded guilty to one count of conspiring to violate the FCPA.
On Feb. 3, 2009, Richard Morlok, the former CCI finance director, pleaded guilty to one count of conspiracy to violate the FCPA.

On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for CCI, pleaded guilty to one count of conspiracy to violate the FCPA.

Stuart and Rose Carson, Cosgrove, Covino, Morlok and Ricotti are scheduled to be sentenced later this year.  FCPA charges brought in April 2009 against Han Yong Kim, the former president of CCI’s Korean office, are pending.  An indictment merely contains allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

On July 31, 2009, CCI pleaded guilty to a three-count criminal information charging the company with conspiracy to violate the FCPA and the Travel Act, and two substantive violations of the FCPA.  CCI was ordered to pay an $18.2 million criminal fine, placed on organizational probation for three years, and ordered to create and implement a compliance program and retain an independent compliance monitor for three years.  CCI admitted that from 2003 through 2007, it made corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to those corrupt payments.

The case is being prosecuted by Deputy Chief Charles G. La Bella and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Douglas McCormick and Gregory Staples of the U.S. Attorney’s Office for the Central District of California.  The case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.

TRYING TO HIDE WIFE'S INCOME NETS "BISHOP" 53 MONTHS IN PRISON

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 8, 2012
Former Alabama Resident Sentenced to 53 Months in Prison for Tax EvasionTried to Hide Wife’s Income from Irs as Phony Loans

William Paul, a self-described “bishop,” was sentenced yesterday to 53 months in federal prison for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Paul was convicted on Dec. 1, 2011, after a four-day jury trial, of four counts of evasion of his wife’s 2004 through 2007 individual income taxes and of one count of failing to file a tax return. On Nov. 16, 2011, his wife, Donna Paul, a board-certified physician, pleaded guilty to one count of tax evasion and one count of filing a false individual income tax return. She was also sentenced yesterday to three years of probation, including six months of home confinement and 200 hours of community service. U.S. District Judge Mark E. Fuller also ordered the Pauls to pay $85,396 in restitution to the IRS. Both William Paul and Donna Paul are former residents of Montgomery, Ala.

According to evidence introduced at trial and documents filed with Donna Paul’s plea agreement, Donna and William Paul owned and operated a medical practice in Montgomery, which was registered as a non-profit organization. The Pauls attempted to evade the assessment and payment of Donna Paul’s income by falsely characterizing her income as loans, by making false statements to IRS employees, and by deliberately causing the non-profit organizations to not file tax returns.

Evidence at trial further showed that Donna Paul did not timely file federal individual income tax returns for the years 2004 through 2007. On April 5, 2011, the day special agents from IRS-Criminal Investigation arrested her, Donna Paul filed four false individual income tax returns for tax years 2004 through 2007. She testified at trial that none of these tax returns included money she earned from her medical practice.

Based on testimony at trial, William Paul had not filed a federal income tax return since the 1980s. Donna Paul also testified that William Paul ran the business side of the medical practice, initially called “Rheumatology Specialists of Central Alabama,” then “Rheumatology Specialists Arthritis and Osteoporosis Center,” then “Children and Adult Arthritis and Osteoporosis Center.”

Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked special agents of IRS-Criminal Investigation, who investigated the case, Tax Division Trial Attorneys Justin Gelfand and Michael Boteler, who prosecuted the case, and George L. Beck Jr., U.S. Attorney for the Middle District of Alabama, and his entire office for their assistance in the prosecution.

U.S. TREASURY TRIES TO HURT NARCOTICS KINGPINS

FROM:  U.S. DEPARTMENT OF TREASURY
Sanctions directed against a Son and Wife of Chapo Guzman Loera
WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced the designation of two key Sinaloa Cartel operatives, Maria Alejandrina Salazar Hernandez  and Jesus Alfredo Guzman Salazar, a wife and son of drug lord Joaquin “Chapo” Guzman Loera, respectively.  Today’s action, pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), prohibits U.S. persons from conducting financial or commercial transactions with these two individuals, and also freezes any assets they may have under U.S. jurisdiction.

“Today marks the sixth time in the past year that OFAC has targeted and exposed operatives of the Chapo Guzman organization,” said OFAC Director Adam J. Szubin.  “This action builds on Treasury’s aggressive efforts, alongside its law enforcement partners, to target individuals who facilitate Chapo Guzman’s drug trafficking operations and to pursue the eventual dismantlement of his organization, which is culpable in untold violence.”

OFAC is designating Jesus Alfredo Guzman Salazar and Maria Alejandrina Salazar Hernandez for their roles in the operations of Guzman Loera’s drug trafficking organization and the Sinaloa Cartel.  Jesus Alfredo Guzman Salazar, along with his father Joaquin “Chapo” Guzman Loera, was indicted on multiple drug trafficking charges in the U.S. District Court for the Northern District of Illinois in August 2009.  Maria Alejandrina Salazar Hernandez provides material support to the drug trafficking activities of her husband Guzman Loera and the Sinaloa Cartel.

Guzman Loera and the Sinaloa Cartel were identified by the President as significant foreign narcotics traffickers pursuant to the Kingpin Act in 2001 and 2009, respectively.
Today’s action would not have been possible without the key support of the Drug Enforcement Administration as well as that of the ICE Homeland Security Investigations directorate.

Internationally, OFAC has designated more than 1,100 businesses and individuals linked to 97 drug kingpins since June 2000.  Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties.  Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million.  Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

NEVADA LOBBYIST AND LAWYER INDICTED REGARDING CAMPAIGN CONTRIBUTIONS AND LYING TO INVESTIGATORS

FROM:  U.S. DEPARTMENT OF JUSTICE
Wednesday, June 6, 2012
Nevada Lobbyist Harvey Whittemore Indicted for Making Unlawful Campaign Contributions and Lying to Investigators
WASHINGTON – Nevada lobbyist and lawyer Harvey Whittemore was indicted today in the District of Nevada by a federal grand jury on charges that he made unlawful campaign contributions to an elected member of Congress, caused false statements to be made to the Federal Election Commission (FEC) and lied to the FBI, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Daniel G. Bogden, U.S. Attorney for the District of Nevada.

F. Harvey Whittemore, 55, of Reno, Nevada, was charged with one count of making excessive campaign contributions, one count of making contributions in the name of others and two counts of making a false statement to a federal agency.  Whittemore is scheduled to appear before a U.S. Magistrate Judge in Reno, Nevada, on June 7, 2012, at 3:00 p.m. PDT for arraignment.  If convicted, Whittemore faces up to five years in prison and a $250,000 fine on each count.

“Mr. Whittemore allegedly used his family members and employees as conduits to make illegal contributions to the campaign committee of an elected member of Congress,” said Assistant Attorney General Breuer.  “Furthermore, according to today’s indictment, he attempted to conceal his crimes by lying to the FBI.  Our campaign finance laws establish maximum limits on individual contributions, and failure to adhere to those rules jeopardizes the integrity of our elections.  We will continue to pursue those who engage in such conduct.”

“We remain committed to investigating and prosecuting illegal behavior that jeopardizes the integrity of our elections and corrupts our political process,” said U.S. Attorney Bogden. “Campaign finance laws exist to protect that process and criminal violations of those laws will be vigorously prosecuted by this office.”
Under federal law, it is illegal to contribute to a federal political campaign using a conduit in order to hide the identity of the true contributor.  Federal law also sets limits on the amount that an individual can contribute to a campaign.  In 2007, the maximum individual contribution was $2,300 for a primary election and $2,300 for a general election; thus, the maximum for one candidate was $4,600.

The indictment states that Whittemore was the chief executive of Company A.  On about Feb. 21, 2007, Whittemore allegedly met with an elected member of Congress (identified in the indictment as Federal Elected Official 1), and agreed to try to collect $150,000 in contributions for the elected official’s campaign committee by March 31, 2007, which marked the end of a legally required quarterly reporting period.  Aware of the strict limits on individual federal campaign contributions, Whittemore allegedly devised a scheme and plan whereby he used family members, employees of Company A, and their respective spouses, as prohibited conduits through which to funnel his own money to the federal elected official’s campaign committee under the guise of lawful campaign contributions.  This scheme allowed Whittemore to make an individual campaign donation to the federal elected official in excess of the limits established by federal law.  Whittemore allegedly concealed the scheme from the FEC, the elected official and the elected official’s campaign committee.

In March 2007, Whittemore allegedly solicited the employees, family members and their respective spouses to make the maximum campaign donations to the federal elected official and reimbursed the contributors with personal checks and wire transfers.  The indictment alleges that Whittemore attempted to conceal some of the reimbursements he made to the contributors by telling the employees that they were bonuses.  Whittemore also allegedly paid the contributors additional money on top of the reimbursements.  If a conduit contributed $4,600, Whittemore reimbursed the individual $5,000; likewise if a couple contributed $9,200, he paid the couple $10,000.

On about March 28, 2007, Whittemore allegedly caused a Company A employee to transmit $138,000 in contributions to the federal elected official’s campaign committee, the vast majority of which were conduit contributions that Whittemore had personally funded in order to satisfy his pledge to the federal elected official.  On April 15, 2007, the campaign committee then unknowingly filed false reports with the FEC stating that the conduits had made the contributions, when in fact, Whittemore had made them.
On about Feb. 9, 2012, Whittemore allegedly made false statements during an interview with FBI agents by claiming that he never made a request for campaign contributions; never asked employees of company A to contribute to the elected official’s campaign; never provided payments to anyone with the expectation that they would serve as reimbursements for campaign contributions; never spoke to any candidate about raising money for the candidate; and never gave money to family members to make political contributions.

The case is being investigated by the FBI and is being prosecuted by First Assistant U.S. Attorney Steven W. Myhre, Assistant U.S. Attorney Sue Fahami and Trial Attorney Eric G. Olshan of the Public Integrity Section in the Justice Department’s Criminal Division.

An indictment contains only charges and is not evidence of guilt.  The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.