DOJ ANNOUNCES OVER $4 BILLION RETURNED TO VICTIMS BETWEEN 2002 AND 2015

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, April 22, 2015
Justice Department Returned Over $4 Billion to Victims of Crime Through the Asset Forfeiture Program Between 2002 and 2015

Marking National Crime Victims’ Rights Week this week, Attorney General Eric Holder and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division announced that the Justice Department’s Asset Forfeiture Program has returned more than $4 billion in civilly and criminally forfeited funds to crime victims since fiscal year 2002, with $723 million paid to over 150,000 crime victims in the last three years alone.  The funds were distributed through the victim compensation program managed by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS).

“The Justice Department’s victim compensation program is an integral part of the asset forfeiture program and our efforts to take the profits out of crime, to restore assets to their rightful owners, and to provide real and meaningful justice to the victims of wrongdoing,” said Attorney General Holder.  “The scale and scope of the returns made to victims under the program in recent years have been especially impressive.  And going forward, as we continue our ongoing review of our asset forfeiture practices, we are committed to taking all appropriate measures to use this tool fairly, effectively, and with the greatest possible benefit to the American people.”

“The return of forfeited funds to crime victims is a priority of the civil and criminal forfeiture actions brought under the Asset Forfeiture Program,” said Assistant Attorney General Caldwell.  “Success such as this would not be achievable without the efforts of prosecutors in the Criminal Division and U.S. Attorneys’ Offices around the country, as well as the many federal, state and local law enforcement agents contributing time and resources to these investigations.  Make no mistake: forfeiture not only takes the money out of crime, but it’s among our most powerful tools to make victims whole.”

AFMLS partners with U.S. Attorneys’ Offices, federal law enforcement agencies, federal regulatory agencies, court-appointed receivers, private claim administrators, and private class action attorneys to return forfeited assets to crime victims.

Recent noteworthy cases in which victims were compensated for their losses with forfeited assets include:

$62.2 Million to Victims of MoneyGram Fraud

United States v. MoneyGram International Inc. (Middle District of Pennsylvania)

On Nov. 9, 2012, MoneyGram International Inc., a global money services business, entered into a deferred prosecution agreement (DPA) with the Justice Department.  In doing so, MoneyGram admitted that corrupt MoneyGram agents across the country engaged in various consumer fraud schemes, including “grandparent” schemes in which a caller pretended to be the victim’s grandchild requesting money, and “advance fee” schemes requiring payment of fees to receive purported lottery winnings.  These schemes resulted in victims sending over $100 million via MoneyGram to the criminals, and that amount was administratively forfeited as part of the DPA by the U.S. Postal Inspection Service.  Over 22,000 victims who were fraudulently enticed to send money through corrupt agents have received a total of $62.2 million and been fully compensated for their losses.

$25.5 Million to Victims of Scott W. Rothstein

United States v. Scott W. Rothstein (Southern District of Florida)

From 2005 through 2009, attorney Scott W. Rothstein operated a massive Ponzi scheme through his now-defunct Fort Lauderdale law firm.  Over 400 victims attempted to invest more than $1 billion in purported confidential civil settlement agreements upon Rothstein’s promise of substantial future payouts.  In reality, the settlement agreements did not exist, but were part of an elaborate scam in which Rothstein either retained the funds or used them to pay earlier investors.  Prosecutors forfeited more than $28 million in bank accounts, real property, vehicles, jewelry and investment accounts as proceeds of the fraud.  Through a combination of the forfeiture proceeds, and other legal efforts, qualifying victims have received over $500 million in recoveries to date.

$14.6 Million to Victims of Allen Hilly

United States v. $7,599,358.09 (District of New Jersey)

In 2007, Allen Hilly was indicted on charges that he fraudulently obtained more than $18 million in federal tax and workers’ compensation withholdings.  When Hilly died before his case could proceed to trial, prosecutors initiated civil forfeiture proceedings to pursue the fraud proceeds.  As a result of the successful civil forfeiture, in 2014, over $14.6 million was returned to nine victims, including the Internal Revenue Service and the Illinois Department of Insurance, which paid out claims to injured employees who otherwise would not have received payments due to Hilly’s fraud.

$11.7 Million to the Centers for Medicare and Medicaid Services

United States v. One Helicopter and United States v. One Parcel (Southern District of Florida)

Brothers Luis, Carlos and Jose Benitez were indicted in May 2008 for their alleged involvement in a $110 million scheme to defraud Medicare through the use of 11 South Florida clinics they owned and operated.  According to papers filed in court, the Benitez Brothers filed false claims and caused others to pay kickbacks to Medicare recipients who fraudulently claimed they received HIV infusion services at the clinics in order to obtain Medicare benefits in excess of $84 million.  After being charged with health care fraud and money laundering, the brothers fled to Cuba and remain fugitives.  The department filed three civil forfeiture actions that, to date, have resulted in the recovery of property, including a helicopter, hotel, a water park, 30 vehicles, a car rental agency, houses, condos, and apartments.  Thus far, $11.7 million is available to return to Medicare as compensation for losses resulting from the fraud.

$10 Million to Victims of Traders International Return Network Fraud

United States v. David Merrick (Middle District of Florida)

Between 2008 and 2009, David Merrick operated a Panamanian-based corporation called Traders International Return Network (TIRN), which claimed to be a legitimate private investment club with offices located in Dubai, Kuala Lumpur, Malaysia and Switzerland.  Court filings detail how Merrick created shell corporations, disseminated false monthly dividend reports, and recruited investors through a website and in person.  Over 770 victims suffered $12 million in losses as a result of Merrick’s scheme.  Approximately $10 million in forfeited funds have been returned to date to the victims.

$9.2 Million to the City of Dixon, Illinois

United States v. Rita A. Crundwell (Northern District of Illinois); United States v. Have Faith in Money, et al. (Northern District of Illinois)

For over 20 years, Rita Crundwell used her position as comptroller for the City of Dixon, Illinois to embezzle more than $53 million from the city.  An investigation revealed that Crundwell used the embezzled funds to pay for numerous personal and business expenses, including the establishment of a large horse farming and showing operation.  Crundwell was convicted of wire fraud and forfeited over 500 assets, including more than 300 horses and associated show items.  The U.S. Marshals Service assumed responsibility for the care of the horses seized in 13 states, which included overseeing the births of more than 80 foals.  Ultimately, liquidation of the forfeited assets generated $9.2 million, which has been paid to the City of Dixon.

$8.8 Million to Victims of Zaveri Oil and Gas Fraud

United States v. Ashvin Zaveri (Western District of New York)

Ashvin Zaveri was charged with orchestrating a Ponzi scheme that enticed investors to invest in sham oil and natural gas explorations in Tennessee and Kentucky.   Due to his untimely death, the criminal case against Zaveri was dismissed.  However, the U.S. Attorney’s Office commenced a civil forfeiture action against the proceeds of Zaveri’s life insurance policy.  Approximately $8.8 million obtained through civil forfeiture was returned to more than 100 victims of the scheme.

$4.5 Million to Victims of Xybernaut Fraud

United States v. Zev Saltsman (Eastern District New York)

Xybernaut Corporation, headquartered in Northern Virginia, was a provider of wearable mobile computing hardware, software and services.  In October 2007, Xybernaut’s founders were indicted for securities fraud and money laundering in connection with a kickback scheme.  Hundreds of millions of Xybernaut shares were issued at below market prices to several purchasers in exchange for kickbacks paid to the founders.  Approximately $4.5 million in assets forfeited from various defendants has been distributed to over 12,000 victims.

$4.5 Million to South Dakota Health Care Provider

United States v. Gerald Lloyd Larson (District of South Dakota)

Gerald Larson was convicted of embezzling funds from his employer, a South Dakota health care provider.  During the course of his scheme, he embezzled almost $5 million.  Shortly after his conviction in January 2015, the U.S. Attorney for the District of South Dakota requested a transfer of approximately $4.5 million in forfeited assets to the Clerk of Court to compensate the victim.

Priceless Artifact Returned to Harvard

United States v. One Qing Dynasty Jadeite Lobed Censer & Cover (District of Massachusetts)

In 1979, an 18th Century Qing Dynasty jade incense holder was stolen from the Harvard Art Museums.  In 2009, the artifact resurfaced at a Hong Kong auction house, which ran a search in the Art Loss Register database and discovered that the jade censer being offered for sale matched the censer stolen from Harvard.  The Art Loss Register then notified U.S. Immigration and Customs Enforcement officials of the censer’s reappearance.  Thereafter, the U.S. Attorney’s Office commenced a civil forfeiture action and obtained a civil warrant to seize the artifact.  After successful civil proceedings, the United States returned the stolen artifact to the Harvard Art Museums in January 2014, over 30 years after the original theft.