FORMER U.S. LONDON EMBASSY-STAFF MEMBER CHARGED FOR ALLEGED HACKING, CYBERSTALKING

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 19, 2015

Former U.S. Government Employee Charged in Computer Hacking and Cyber Stalking Scheme

A former locally-employed staff member of the U.S. Embassy in London was charged with engaging in a hacking and cyberstalking scheme in which, using stolen passwords, he obtained sexually explicit photographs and other personal information from victims’ email and social media accounts, and threatened to share the photographs and personal information unless the victims ceded to certain demands.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John A. Horn of the Northern District of Georgia, Director Bill A. Miller of the U.S. Department of State’s Diplomatic Security Service and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division made the announcement.

Michael C. Ford, 36, was charged by indictment on Aug. 18, 2015, with nine counts of cyberstalking, seven counts of computer hacking to extort and one count of wire fraud.

“According to the indictment, Ford hacked into email accounts and extorted sexually explicit images from scores of victims,” said Assistant Attorney General Caldwell.  “As these allegations highlight, predators use the Internet to target innocent victims.  With the help of victims and our law enforcement partners, we will find those predators and hold them accountable.”

“Ford is alleged to have hacked into hundreds of email accounts and tormented women across the country, by threatening to humiliate them unless they provided him with sexually explicit photos and videos,” said U.S. Attorney John Horn.  “This sadistic conduct is all the more disturbing as Ford is alleged to have used the U.S. Embassy in London as a base for his cyberstalking campaign.”

“The Diplomatic Security Service is firmly committed to working with the Department of Justice and our other law enforcement partners to investigate allegations of crime and to bring those who commit these crimes to justice,” said Director Miller.  “When a public servant in a position of trust is alleged to have committed a federal felony such as cybercrime, we vigorously investigate such claims.”

“While the allegations in this case are disturbing, it does illustrate the willingness and commitment of the FBI and its federal partners to aggressively follow those allegations wherever they take us,” said Special Agent in Charge Johnson.  “The FBI will continue to provide significant resources and assets as we address complex cyber based investigations as seen here.”

According to allegations in the indictment, from January 2013 through May 2015, Ford, using various aliases that included “David Anderson” and “John Parsons,” engaged in a computer hacking and “sextortion” campaign to force numerous women to provide him with personal information and sexually explicit photographs and videos.  To do so, Ford allegedly posed as a member of the fictitious “account deletion team” for a well-known email service provider and sent notices to thousands of potential victims, including members of college sororities, warning them that their accounts would be deleted if they did not provide their passwords.

Using the passwords collected from this phishing scheme, Ford allegedly hacked into hundreds of email and social media accounts, stole sexually explicit photographs and personal identifying information (PII), and saved both the photographs and PII to his personal repository.

Ford then allegedly emailed the victims and threatened to release the photographs, which were attached to the emails, unless they obtained videos of “sexy girls” undressing in changing rooms at pools, gyms and clothing stores, and then sent the videos to him.

The indictment alleges that, when the victims either refused to comply or begged Ford to leave them alone, Ford responded with additional threats, including by reminding the victims that he knew where they lived.  On several occasions, Ford allegedly followed through with his threats by sending sexually explicit photographs to victims’ family members and friends.

During the pendency of the alleged scheme, Ford was a civilian employee at the U.S. Embassy in London, England.  He allegedly used his government-issued computer at the U.S. Embassy to conduct the phishing, hacking and cyberstalking activities.

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty.

The case is being investigated by the U.S. Department of State’s Diplomatic Security Service and the FBI.  The Criminal Division’s Office of International Affairs and the U.S. Embassy in London provided assistance.  The case is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section, Trial Attorney Jamie Perry of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Kamal Ghali of the Northern District of Georgia.

MISSISSIPPI FERTILIZER PLANT OPERATOR PLEADS GUILTY TO CLEAN WATER ACT CRIMINAL VIOLATION

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 19, 2015

Mississippi Phosphates Corp. Pleads Guilty to Clean Water Act Violation and Agrees to Transfer 320 Acres to Grand Bay National Estuary

Mississippi Phosphates Corp. (MPC), a Mississippi corporation which owned and operated a fertilizer manufacturing facility located on Bayou Casotte in Pascagoula, Mississippi, pleaded guilty today to a felony information charging the company with a criminal violation of the Clean Water Act, announced Principal Deputy Assistant Attorney General Sam Hirsch of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Gregory K. Davis for the Southern District of Mississippi.

As part of the guilty plea, MPC admitted discharging more than 38 million gallons of acidic wastewater in August 2013.  The discharge contained pollutants in amounts greatly exceeding MPC’s permit limits, resulting in the death of more than 47,000 fish and the closing of Bayou Casotte.  MPC also admitted that, in February 2014, MPC discharged oily wastewater from an open gate on a storm water culvert into Bayou Casotte, creating an oily sheen that extended approximately one mile down the bayou from MPC.

MPC entered its guilty plea before Chief Judge Louis Guirola Jr. of the U.S. District Court for the Southern District of Mississippi.  Because MPC is in bankruptcy and is obligated to assist in funding the estimated $120 million cleanup of its site, the court accepted the parties’ agreement for MPCto transfer 320 acres of property near to its Pascagoula plant to become a part of the Grand Bay National Estuarine Research Reserve, which is managed by the Mississippi Department of Marine Resources as part of the National Oceanic and Atmospheric Administration’s National Estuarine Research Reserve System.

“With this plea, Mississippi Phosphates has accepted responsibility for having discharged millions of gallons of industrial pollutants that killed tens of thousands of fish, damaged marine habitats and polluted recreational waterways,” said Principal Deputy Assistant Attorney General Hirsch.  “Mississippi Phosphates has acknowledged its misconduct and has been sentenced to transfer property it owns that is adjacent to the Grand Bay National Estuary, thus protecting and potentially rehabilitating a vital marine resource that this company’s pollutant discharges had severely damaged.”

“When operators break the law, they can harm natural resources and communities such as those around Bayou Casotte and neighboring waterways,” Acting Special Agent in Charge said Andy Castro of EPA’s criminal enforcement program in Mississippi.  “Over the years, state, local and federal governments have spent billions of dollars restoring the delicate Gulf Coast ecosystem.  Illegally discharged wastewater compromises that hard work.  EPA will continue to work with its law enforcement partners to hold companies fully accountable for their conduct, and to ensure they comply with laws that protect the public and from harm.”

As the felony information describes, when it was in full production, MPC manufactured diammonium phosphate fertilizers from phosphate rock which it received by ship and rail and from sulphur which was piped to its facility from a neighboring oil refinery.  In its production of fertilizer, MPC generated a variety of pollutants and hazardous wastes.  MPC has been regulated under a number of environmental statutes that govern the production, storage and release of a variety of air and water pollutants as well as hazardous wastes.  In the manufacturing process, strong acids and ammonia were produced.  If improperly discharged, acids and ammonia can be highly toxic to fish and to other forms of marine life.  MPC was obligated to comply with permits issued by the Mississippi Department of Environmental Quality (MDEQ) under the authority of the Environmental Protection Agency (EPA) as prescribed by the Clean Water Act.  These permits regulated the storage and discharge of MPC’s stormwater and wastewater, prescribing the circumstances under which they could be discharged into Bayou Casotte and limiting the concentration and quantity of the pollutants they could contain.

As detailed in the felony information, since January 2000, MPC has been cited by MDEQ in numerous notices for hundreds of violations of its Clean Water Act permit for discharging wastewater exceeding its pollutant limits.  MPC was also cited for its failure to maintain adequate wastewater storage capacity, its discharge of untreated wastewater from its sulfuric acid plant directly through MPC’s main outfall, its combined release of untreated and undertreated stormwater and process wastewater from other outfalls, and its failure to implement required remedial measures to prevent the pollutant discharges and environmental harm it has caused for decades.  An April 2005 discharge resulted in the release of more than 17 million gallons of highly acidic wastewater into waterways adjacent to its facility, including Bayou Casotte, Tillman Creek and Bangs Lake of the Grand Bay National Estuarine Research Reserve.  These waters are some of the most productive nurseries for aquatic species on the Gulf Coast.  MPC’s massive discharge of pollutants resulted in the death of thousands of fish and other forms of marine life as well as the destruction of marsh grass, trees and shrubs.  In the years following this environmental catastrophe, in spite of MDEQ’s orders and MPC’s remedial proposals, MPC never implemented the measures necessary to prevent the release of pollutants from its facility and the discharge of an even larger torrent of wastewater destroying even more marine life.

U.S. Attorney Davis praised the efforts of EPA’s Criminal Investigation Division, for its diligent work in the investigation of this matter.  Senior Trial Attorney Jeremy F. Korzenik of the Department of Justice’s Environmental Crimes Section and Assistant U.S. Attorney Gaines Cleveland are the prosecutors in charge of the case.

MAN CONVICTED FOR ATTEMPTING TO CREATE RADIATION WEAPON

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, August 21, 2015

Upstate New York Man Convicted for his Role in Attempting to Develop Lethal Radiation Device

Jury Finds Glendon Scott Crawford Guilty on All Counts Following a Five-Day Trial

A jury convicted Glendon Scott Crawford, 51, of Galway, New York, today after a five-day trial on all charges relating to his efforts to build a weapon of mass destruction.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Richard S. Hartunian of the Northern District of New York and Special Agent in Charge Andrew W. Vale of the FBI’s Albany, New York, Division made the announcement.

Crawford was convicted of attempting to produce and use a radiological dispersal device and conspiring to use a weapon of mass destruction, which carries a maximum sentence of life in prison.  Crawford was also convicted of distributing information relating to weapons of mass destruction, which carries a maximum sentence of 20 years in prison.  He also faces a $2 million fine on the attempting to produce and use a radiological dispersal device charge, and a fine of $250,000 on the other two charges.

Sentencing is scheduled for Dec. 15, 2015, before Chief U.S. District Judge Gary L. Sharpe of the Northern District of New York.

Crawford is the first person to be found guilty of attempting to construct a radiological dispersal device, a statute Congress passed in 2004.

“Glendon Scott Crawford, a self-professed member of the Ku Klux Klan, was convicted of offenses relating to his deadly plan to use a radiological dispersal device to target unsuspecting Muslim Americans with lethal doses of radiation,” said Assistant Attorney General Carlin.  “The National Security Division’s highest priority is counterterrorism, and we will continue to pursue justice against those who seek to perpetrate attacks on American soil.”

“Crawford is a terrorist motivated by bigotry and hate who would have used a weapon of mass destruction to kill innocent Muslim members of our community were it not for the good judgment of citizens who quickly alerted law enforcement to his diabolical plan and the outstanding work of the Albany FBI Joint Terrorism Task Force,” said U.S. Attorney Hartunian.  “This case illustrates how we must remain vigilant to protect our community from would-be terrorists.”

“Today’s verdict is a testament to the tremendous efforts of our Joint Terrorism Task Force in uncovering Crawford’s plot and the dedication of the U.S. Attorney’s Office in bringing justice to an individual who sought to inflict terror and harm on our innocent citizens,” said Special Agent in Charge Vale.  “This verdict is a victory for us all, but we must continue to remain observant; it is only with the assistance of our community members and law enforcement partners that we can be successful in thwarting these violent plots.”

In April 2012, the FBI received information that Crawford, who was employed as an industrial mechanic with General Electric in Schenectady, New York, had approached local Jewish organizations seeking people who might help him develop technology to be used against people whom he perceived to be enemies of Israel.  During a 14-month investigation, the Albany FBI Joint Terrorism Task Force learned that Crawford was attempting to solicit funds to purchase, and then weaponize, a commercially available X-ray machine so that it could be used to injure or kill others by exposing them to lethal doses of radiation.

During the investigation, Crawford, with help from co-conspirator Eric J. Feight, took steps to design, acquire the parts for, build and test a remote initiation device that could have activated the radiation machine, and acquired the X-ray machine that he planned to modify into a weapon of mass destruction.  The X-ray device that he planned to use had been modified so that Crawford could not have used it to hurt anyone.

Feight pleaded guilty on Jan. 22, 2014, to providing material support to terrorists.  He is scheduled to be sentenced on Sept. 17, 2015, by Chief Judge Sharpe and faces up to 15 years of imprisonment.

Crawford, a self-professed member of the Ku Klux Klan, wanted to use the device against Muslims, and he scouted mosques in Albany and Schenectady and an Islamic community center and school in Schenectady as possible targets.  Crawford also suggested the New York governor’s mansion as a potential target.

With undercover agents, Crawford discussed placing the radiological device within a van or truck, parking the vehicle near the entrance to the target location, and then remotely activating the device so that it would direct lethal doses of radiation at people coming in and out of the target location.

A central feature of Crawford’s completed X-ray device was that its targets would be exposed to dangerous and lethal doses of X-ray radiation without being aware of the exposure, the harmful effects of which would likely not be immediately apparent.

This case was investigated by the Albany FBI Joint Terrorism Task Force.  This case is being prosecuted by Assistant U.S. Attorneys Stephen Green and Richard Belliss of the Northern District of New York, and Trial Attorney Joseph Kaster of the National Security Division’s Counterterrorism Section.  The Justice Department’s Criminal Division also provided assistance

FORMER AMBULANCE COMPANY OWNER CONVICTED IN HEALTH CARE FRAUD CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 19, 2015

Ambulance Company Owner, Operator and Managers Found Guilty in Medicare Fraud Conspiracy

A federal jury in Los Angeles convicted the former owner, operator and managers of a Southern California ambulance company of health care fraud charges in connection with a Medicare fraud scheme of at least $2.4 million.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Acting Special Agent in Charge Steve Ryan of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.

Yaroslav Proshak, aka Steven Proshak, 47, of Valley Village, California; Emilia Zverev, 58, of Van Nuys, California; and Sharetta Michelle Wallace, 37, of Inglewood, California, each were convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud following a two-week trial.  Proshak’s sentencing is scheduled for Nov. 24, 2015, and Zverev’s and Wallace’s sentencing is scheduled for Nov. 30, 2015, all before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial.

Proshak owned and operated ProMed Medical Transportation, an ambulance transportation company in the greater Los Angeles area that provided non-emergency ambulance transportation services to Medicare beneficiaries, many of whom were dialysis patients.  Zverev was the billing manager, and Wallace supervised ProMed’s emergency medical technicians (EMTs).

The evidence at trial demonstrated that, between May 2008, and October 2010, the defendants conspired to bill Medicare for ambulance transportation services for individuals whom the defendants knew did not need such services.  In addition, the evidence showed that the defendants instructed EMTs who worked at ProMed to conceal the true medical conditions of patients they were transporting by altering requisite paperwork and creating fraudulent documents to justify the transportation services.

According to evidence admitted at trial, during the course of the conspiracy, ProMed submitted at least $2.4 million in false and fraudulent claims to Medicare for medically unnecessary transportation services.  Medicare paid at least $1.2 million of those claims.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case was investigated by the FBI and HHS-OIG.  The case was prosecuted by Trial Attorneys Blanca Quintero, Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,300 defendants who have collectively billed the Medicare program for more than $7 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

FLORIDA RESIDENT PLEADS GUILTY FOR ROLE IN $9 MILLION INVESTMENT FUND FRAUD

FROM:  U.S. JUSTICE DEPARTMENT

Thursday, August 13, 2015

Florida Investment Advisor Pleads Guilty to Orchestrating $9 Million Investment Fraud Scheme

A Tampa, Florida, area investment advisor pleaded guilty today to perpetrating a $9 million investment fraud scheme involving Facebook stock.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Inspector in Charge Ronald J. Verrochio of the U.S. Postal Inspection Service (USPIS) Miami Division made the announcement.

Gignesh Movalia, 40, of Tampa, a registered investment advisor, pleaded guilty before U.S. Magistrate Judge Anthony E. Porcelli of the Middle District of Florida to one count of investment advisor fraud.  Sentencing will be scheduled at a later date.

Movalia was the founder and manager of OM Global Investment Fund LLC (the OM Global Fund), an investment fund formed in 2009.  According to admissions made in connection with his guilty plea, beginning in or about 2011, Movalia began soliciting investments for the OM Global Fund by, among other methods, touting access to pre-initial public offering (IPO) shares of Facebook Inc.  Movalia admitted that, by the end of 2012, he had raised more than $15 million for the OM Global Fund, and that more than $9 million of the amount raised was for “side pocket” investments, which Movalia represented were to be used exclusively for purchasing of Facebook shares.

Movalia further admitted that, contrary to these representations and unknown to “side pocket” investors, he used funds designated exclusively for the purchase of Facebook shares for other investments, which he concealed from the investors.  He also admitted that he made material misrepresentations and omissions to investors in order to mislead them about the nature and value of their investments in the OM Global Fund.  The OM Global Fund lost approximately $9 million before it went into receivership in September 2013.

The case is being investigated by the FBI and USPIS, with assistance provided by the U.S. Securities and Exchange Commission’s Miami Regional Office.  The case is being prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.

NIGERIAN CITIZEN RECEIVES 22 YEAR SENTENCE FOR PROVIDING SUPPORT TO TERRORIST ORGANIZATION

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 12, 2015

Terrorist Sentenced to 22 Years for Providing Material Support to al-Qaeda in the Arabian Peninsula

Lawal Olaniyi Babafemi, 35, a Nigerian citizen, was sentenced today to 22 years in prison for conspiring to provide and providing material support to a designated foreign terrorist organization, al-Qaeda in the Arabian Peninsula (AQAP).  The sentence was imposed by the U.S. District Judge John Gleeson of the Eastern District of New York.

Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

Babafemi pleaded guilty to providing and conspiring to provide material support to AQAP on April 29, 2014.  According to previous court filings, between approximately January 2010 and August 2011, the defendant traveled twice from Nigeria to Yemen to meet and train with leaders of AQAP, the Yemen-based branch of al-Qaeda that has been linked to a number of plots targeting the U.S. homeland over the past decade.  AQAP leaders trained Babafemi in the use of weapons, including AK-47 assault rifles, and taught him the importance of AQAP’s English-language media operations to its mission of inspiring “lone-wolf” style attacks abroad in the name of AQAP.  Babafemi assisted in AQAP’s English-language media operations, which include the publication of the online Inspire Magazine, and worked closely with Samir Khan, the founder of Inspire and a U.S. citizen.  Babafemi’s photograph, alongside Khan and other AQAP members, each holding an AK-47, was published in Issue 5 of Inspire; he also wrote rap lyrics on behalf of the group, hoping to extend its appeal to young Westerners.  At the direction of the now-deceased senior AQAP leader Anwar al-Aulaqi, AQAP provided Babafemi with the equivalent of almost $9,000 in cash to recruit other English-speakers from Nigeria to join the terrorist organization.  Babafemi attempted to recruit other Nigerians to join AQAP, but was arrested before he could complete that mission and conduct further activities on behalf of the organization.

“With this sentence, Lawal Olaniyi Babafemi is being held accountable for conspiring with members of al-Qaeda in the Arabian Peninsula and providing material support to the foreign terrorist organization,” said Assistant Attorney General Carlin.  “Babafemi travelled to Yemen to receive weapons training and to learn how to contribute to AQAP’s English-language media operation, in addition to receiving money to recruit others to join AQAP’s ranks.  Counterterrorism is the National Security Division’s highest priority and we will continue our efforts to detect, deter and hold accountable those who provide material support to designated foreign terrorist organizations.”

“The defendant traveled to Yemen twice to seek out and commit himself to the radical terrorist organization AQAP and its goal of causing mass devastation in the West,” said Acting U.S. Attorney Currie.  “He undertook his journey soon after his fellow countryman’s notorious, albeit failed, attempt on behalf of AQAP to detonate a bomb concealed in his underwear in U.S. airspace.  Babafemi received weapons training and worked with AQAP’s English-language media organization to recruit Westerners to its murderous mission.  The investigation, prosecution, and conviction of Babafemi exemplifies the tireless efforts of the FBI’s Joint Terrorism Task Forces in New York and San Diego to identify and bring to justice those intent on joining and supporting violent terrorist organizations around the globe.  This case is especially important as it relates to efforts to prosecute individuals who both engage in physical violence themselves and who create and disseminate violent terrorist propaganda worldwide in an effort to convince others to do so.”

The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad and Hilary Jager of the Eastern District of New York, with assistance from Trial Attorney Annamartine Salick of the Justice Department’s Counterterrorism Section.

FLORIDA SNAKE TRADER PLEADS GUILTY TO TRADING ILLEGALLY CAUGHT SNAKES

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, August 7, 2015

FLORIDA MAN PLEADS GUILTY TO MULTIPLE LACEY ACT VIOLATIONS FOR TRADING ILLEGAL SNAKES

Gerard Kruse, 42, a social worker who lives in Oviedo, Florida, pleaded guilty today in federal court in Brooklyn, New York, to 13 Lacey Act violations for his role in the trade of illegally caught snakes, the Justice Department’s Environment and Natural Resources Division announced.

Kruse pleaded guilty to seven counts of illegal transport of wildlife and six counts of illegal receipt of wildlife, which under the facts of the case are misdemeanors under the Lacey Act.  At the time of the crimes, Kruse was living in Douglaston, New York.  In court documents, Kruse admitted that between 2008 and 2012, he knowingly participated in violations, which involved the illegal collection, transport and receipt of 59 snakes that were collected from and protected by various states, such as New Jersey, California and Oregon.  Under the Lacey Act, it is illegal to knowingly ship or receive snakes in interstate commerce that were taken in violation of state law.  During the course of his conduct, Kruse personally collected protected snakes and shipped them to collectors in other states.  Sometimes he received money for the reptiles; other times he bartered snakes.  In addition, Kruse would solicit snakes from out-of-state collectors, while knowing that those collectors had procured their snakes illegally.  The last charge of the information deals with Kruse’s involvement in the shipment of a diamondback rattlesnake from Texas to Douglaston in a coffee can, in violation of U.S. Postal regulations.

The Lacey Act is an important statute for protecting our nation’s wildlife against those who make enforcement of state laws difficult by crossing state lines with protected species,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “All of our protected species, including reptiles, are important to our ecosystems and must be shielded from such illegal trafficking. The Justice Department will continue to vigorously support efforts against domestic wildlife trafficking.”

According to the terms of the pela agreement, the government will seek 13 months of home confinement with electronic monitoring, a request which is unopposed by the defense.  In addition, Kruse has agreed to be placed on probation and subject to special conditions such as forfeiture of his snakes and being banned from the collection, sale and trade of reptiles and amphibians.  Terms of Kruse’s sentence that the parties could not agree on will be decided at a sentencing hearing set for Dec. 15, 2015.

The case was investigated by agents of the U.S. Fish and Wildlife Service as part of Operation Kingsnake.  The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division.

TECH COMPANY TO PAY $5.9 MILLION FOR ALLEGEDLY INFLATING PRICES

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 11, 2015

Technology Integration Group Agrees to Pay $5.9 Million to Settle False Claims Act Allegations

Company Previously Paid $4.6 Million in Restitution as Part of Non-Prosecution Agreement in Related Criminal Investigation

PC Specialists Inc., doing business as Technology Integration Group (TIG), has agreed to pay the United States $5.9 million to settle allegations that the company inflated the price of computers sold through another company to the National Nuclear Security Administration (NNSA) for use at Sandia National Laboratories in Albuquerque, New Mexico.  TIG, headquartered in San Diego, buys computers and other technology products for resale to other purchasers.

“The resources available to achieve the important goals carried out by our national laboratories are precious and limited,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement demonstrates that diverting funds from the critical mission of the laboratories by inflating costs and making false claims or causing others to make false claims for government funds will not be tolerated.”

From 2003 to 2013, TIG sold Dell computers to Sandia Corporation for resale to the United States under Sandia’s contract with the NNSA.  The NNSA purchased the computers for use at Sandia National Laboratories.  The United States alleged that TIG knowingly inflated the amounts it charged Sandia by failing to give credits for rebates and discounts it received from Dell as required by its contract and causing false claims to the government for the inflated prices.

“Fraud involving government contracts will be zealously pursued in New Mexico,” said U.S. Attorney Damon P. Martinez of the District of New Mexico.  “The U.S. Attorney’s Office and its law enforcement partners are committed to recovering losses, preventing fraud, holding accountable those who exploit government contracts and ensuring that the taxpayers’ monies are properly spent.”

In a separate but related matter, in April 2015, TIG entered into a non-prosecution agreement with the U.S. Attorney’s Office of the District of New Mexico regarding allegations that three employees in TIG’s Albuquerque branch office engaged in a scheme to defraud the United States by inflating the amounts it charged Sandia for computers.  The non-prosecution agreement in that matter required TIG to terminate the employment of the three employees in its Albuquerque branch office – a vice president, a senior account executive and an accounts executive – who participated in and profited from the scheme.  The non-prosecution agreement also required TIG to retain and pay for an independent monitor selected by the U.S. Attorney’s Office who is responsible for monitoring TIG’s compliance with the agreement, and TIG policies, procedures and training relating to federal government contracts over the agreement’s three-year term.

The allegations resolved by the civil settlement announced today arose from a lawsuit filed by Maverick Granger, a former TIG executive in Albuquerque, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and share in the recovery.  Mr. Granger’s share of the settlement has not yet been determined.

These resolutions were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of New Mexico and the U.S. Department of Energy’s Office of Inspector General (DOE-OIG).  The criminal investigation was conducted by DOE-OIG, the FBI’s Albuquerque Division and the Albuquerque Office of the Internal Revenue Service-Criminal Investigation.

The False Claims Act lawsuit is captioned United States ex rel. Granger v. PC Specialists, Inc. d/b/a/ Technology Integration Group, No. 14-cv-00633 (D.N.M.).  The claims resolved by today’s civil settlement and the earlier non-prosecution agreement are allegations only; there has been no determination of guilt or liability.

COMPANY SENTENCED FOR MISLABELING SHRIMP

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 11, 2015

North Carolina Seafood Processor and Distributor Sentenced for Mislabeling Shrimp

North Carolina-based seafood processor and wholesale distributor Alphin Brothers Inc., was sentenced today in federal court for falsely labeling imported shrimp, the Justice Department announced.

Pursuant to plea agreement entered on Feb. 10, 2015, Alphin Brothers Inc., pleaded guilty to one felony count of making or submitting false records in violation of the Lacey Act.  Court documents state that an Alphin Brothers employee, who purchased and sold shrimp on the company’s behalf, directed Alphin Brothers employees and employees of another seafood processing facility to falsely label approximately 25,000 pounds of farm-raised imported shrimp as wild-caught product of the United States.  The falsely labeled shrimp was later sold by Alphin Brothers in interstate commerce to customers in Louisiana.

Consistent with the plea agreement, the court sentenced Alphin Brothers Inc., to pay a criminal fine of $100,000 and to forfeit approximately 21,450 pounds of shrimp.  The company also will serve three years of probation, including a special condition requiring the company to implement a training program to educate its employees on federal labeling requirements, as they relate to business activities at the company.

Federal regulations require seafood retailers to provide customers with notice of the country of origin and the method of production, wild-caught or farm-raised, of shrimp and other shellfish.  These regulations are known by the acronym COOL, which stands for “country of origin labeling.”  The COOL regulations allow country of origin and method of production information to be provided in any format, as long as it is placed in a conspicuous location such that it will likely be read and understood by a customer under normal circumstances.  Many shrimp processors and wholesale distributors, including Alphin Brothers Inc., print country of origin and/or method of production information directly on packaging, such as boxes, intended for retail sale.

Under the COOL regulations, shrimp may be labeled as “product of the United States” only if they were harvested and processed in the United States or by a United States-flagged vessel and have not undergone any substantial transformation outside the United States.  Packing, repacking, thawing, freezing, cleaning, peeling, deveining, grading, cooking, or soaking shrimp in sodium tripolyphosphate solution does not constitute a substantial transformation under the COOL regulations.

The Lacey Act is a federal law making it illegal to make or submit any false record, account, or label for, or any false identification of, any fish or wildlife that has been or is intended to be imported, transported, purchased or received from any foreign country, or transported in interstate or foreign commerce.  The maximum penalties for a felony violation of the Lacey Act include up to five years of imprisonment and $250,000 in fines for individual defendants and up to $500,000 in fines for corporate defendants.

The case was investigated by the National Oceanic and Atmospheric Administration Office of Law Enforcement, with assistance from the Louisiana Department of Wildlife and Fisheries.  The case was prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Eastern District of North Carolina.

MISSOURI HEALTH CARE PROVIDERS TO PAY $5.5 MILLION TO SETTLE ALLEGATIONS OF FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, August 13, 2015

Missouri Hospital Agrees to Pay United States $5.5 Million to Settle Alleged False Claims Act Violations

Two Southwest Missouri health care providers have agreed to pay the United States $5.5 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.  The two providers are Mercy Health Springfield Communities, formerly known as St. John’s Health System Inc., which owns and operates a hospital in Springfield, Missouri, and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic, which operates health care facilities in southwest Missouri.

“Financial relationships between heath care providers and their referral sources must be structured to comply with all applicable laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone.  In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“This settlement protects patients and the public by enforcing the federal protections against illegal profit incentives for physicians,” said U.S. Attorney Tammy Dickinson of the Western District of Missouri. “A bonus structure that rewards physicians based on the value of their referrals is detrimental to both the quality and the cost of health care. Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”

“Health care organizations paying physicians based on referrals – as alleged in this case – undermines public trust in medical institutions and the financial integrity of federal health care programs,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”

The settlement announced today resolved allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic.  Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

The allegations settled today arose from a lawsuit filed by a whistleblower, Dr. Jean Moore, a physician who is employed by one of the defendants, under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  Dr. Moore will receive $825,000 from the recovery announced today.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The case, United States ex rel. Moore v. Mercy Health Springfield Communities f/k/a St. John’s Health System, Inc., et al., Case No. 13-3019-CV (W.D. Mo.), was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of Missouri and HHS-OIG.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

FTC CHARGES DATA BROKER WITH SELLING PAYDAY LOAN APPLICANTS' INFORMATION TO SCAMMERS

FROM:  U.S. FEDERAL TRADE COMMISSION 

The Federal Trade Commission has charged a data broker operation with illegally selling payday loan applicants’ financial information to a scam operation that took millions of dollars from consumers by debiting their bank accounts and charging their credit cards without their consent.

According to the FTC’s complaint, the data broker enterprise bought loan applications from the operators of payday loan websites, and got others directly from consumers via their own payday loan websites. Instead of passing on those applications to legitimate payday lenders, the defendants sold the information to companies like Ideal Financial Solutions Inc., which purchased the financial account information for more than 500,000 consumers from the defendants and raided their accounts for at least $7.1 million. As a result, some consumers had to close their accounts or were charged fees for insufficient funds.

“Scammers used consumer information they bought from this operation to make millions in unauthorized charges,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Companies that collect people’s sensitive information and give it to scammers can expect to hear from the FTC.”

The defendants often sold payday loan applications to Ideal Financial for about 50 cents each, while legitimate lenders pay up to $100 or more. The complaint alleges they did this knowing that Ideal Financial was making unauthorized bank account debits and credit card charges. In fact, according to the complaint, the defendants helped hide Ideal Financial’s fraud by using fine-print disclosures on their websites as well as other misleading tactics to avoid alerting banks to the fraudulent activity.

The defendants are Sequoia One LLC, Gen X Marketing Group LLC, Jason A. Kotzker, Theresa D. Bartholomew, John E. Bartholomew, Jr., and Paul T. McDonnell.

Three of the defendants, Paul T. McDonnell, Theresa D. Bartholomew, and John E. Bartholomew, Jr., have agreed to settle the FTC charges. Under proposed settlement orders, they are prohibited from selling or otherwise benefitting from customers’ personal information. The order against the Bartholomews imposes a $7.1 million judgment that will be suspended upon  payment of $15,000. The order against McDonnell imposes a judgment of more than $3.7 million, which will be suspended due to his inability to pay. The full judgments will become due immediately if these defendants are found to have misrepresented their financial condition. Litigation against the other defendants continues.

The Commission vote authorizing the staff to file the complaint and proposed final orders was 5-0. The documents were filed in the U.S. District Court for the District of Nevada. The proposed final orders are subject to court approval.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Final orders have the force of law when approved and signed by the district court judge.

U.S. MARSHALS ANNOUNCE ESCAPED FUGITIVE CAUGHT AFTER ALMOST 34 YEARS ON THE RUN

FROM:  U.S. MARSHALS SERVICE 

August 06, 2015

Georgia Escapee on the Run for Almost 34 Years Captured

Lauderdale Lakes, FL - Willie Lee Austin was arrested by the U.S. Marshals Service Florida Caribbean Regional Fugitive Task Force Wednesday after escaping from the Central State Correctional Institute on Dec. 27, 1981. Austin was serving a 15-year sentence for Armed Robbery after being convicted in Muscogee County, Georgia.

Georgia Department of Corrections Investigators assigned to the U.S. Marshals Service Southeast Regional Fugitive Task Force (SERFTF) recently conducted a comprehensive investigation into the fugitive case and eventually uncovered a possible alias identity for Austin. Investigators then discovered an  address in Lauderdale Lakes, which was linked to the alias identity. Members of the U.S. Marshals Florida Caribbean Fugitive Task Force acted upon this information and took Austin into custody without incident.

Since its inception in 2003, investigations carried out by the SERFTF have resulted in the apprehension
of more than 20,000 violent fugitives in the state of Georgia. Of these arrests, more than 1,100 were fugitives wanted for homicide. The successful initiative is led by the U.S. Marshals Service and combines federal, state and local law enforcement agencies. The SERFTF has offices in Atlanta, Macon, and Savannah that cover the entire state of Georgia. The task force objective is to seek out and arrest fugitives charged with violent crimes, gang members, sex offenders, and other felonies.

MOTORCYCLE CLUB LEADER SENTENCED TO PRISON FOR RACKETEERING AND SHOOTING AT ATF AGENTS

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 11, 2015

GANG LEADER SENTENCED TO 40 YEARS IN PRISON FOR VIOLENT RACKETEERING-RELATED CRIMES AND SHOOTING AT FEDERAL AGENTS

A leader of the Phantom Outlaw Motorcycle Club, who was also a member of the Vice Lords street gang, was sentenced to 40 years in prison today for violent racketeering-related crimes and shooting at federal agents.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Division made the announcement.

Marvin Nicholson, 46, of Detroit, was convicted on March 16, 2015, after a multi-week trial before U.S. District Judge Paul D. Borman of the Eastern District of Michigan, of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, assault on federal officers, using and carrying firearms during and in relation to a crime of violence and being a felon in possession of firearms.

At trial, the evidence showed that the Phantom Outlaw Motorcycle Club, which is headquartered in northwest Detroit, and its members were involved in a range of criminal activity, including conspiracy to commit murder, shootings, robbery, extortion and the possession and sale of stolen vehicles and motorcycles.  The evidence also demonstrated that the leadership of the Phantoms was heavily involved in the Vice Lords street gang, which is a well-known street gang originating in Chicago.

According to the evidence presented at trial, Nicholson was the National Enforcer of the Phantoms and a member of the Vice Lords street gang.  Further, the evidence showed that Nicholson played a significant role in planning armed assaults on rivals, imposing discipline on the Phantoms and carrying out the orders of Antonio Johnson, aka Mister Tony, MT and Big Bro, who was the National President of the Phantoms and the “Three-Star General” over the Vice Lords street gang in Michigan.  The charges of which Nicholson was convicted primarily stemmed from the Phantoms’ attacks or planned attacks on their rivals and enemies, including a murder plot.

Finally, the trial evidence demonstrated that, on Oct. 4, 2013, while the ATF attempted to execute a search warrant at his residence in Detroit, Nicholson shot at ATF agents as they attempted to enter his residence.  A wall prevented the bullets from hitting the agents.

Another 12 defendants have been convicted of a variety of racketeering and weapons offenses in this case.  Additional sentencing hearings will be held before U.S. District Judge Paul D. Borman of the Eastern District of Michigan.

These convictions are the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI.

This case is being prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Louis Gabel of the Eastern District of Michigan.

WOMAN SENTENCED IN CASE INVOLVING DEFRAUDING THE ELDERLY IN A SWEEPSTAKES SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 11, 2015

CALIFORNIA WOMAN SENTENCED TO OVER 10 YEARS FOR HER ROLE IN DEFRAUDING ELDERLY THROUGH OFFSHORE SWEEPSTAKES SCHEME

A California woman was sentenced to 130 months in prison for her role in a half-million dollar Costa Rica-based “sweepstakes fraud” scheme that victimized hundreds of U.S. residents.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina made the announcement.

Patricia Diane Clark, 57, of Sacramento, California, was sentenced today by Chief U.S. District Judge Frank D. Whitney of the Western District of North Carolina for conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering.   Clark was also ordered to pay $642,032 in restitution and to forfeit the same amount jointly and severally with her co-defendants.

In connection with her guilty plea, Clark admitted that, from approximately 2007 through February 2013, her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a “sweepstakes.”  The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.”  Clark admitted that she picked up money from the victims and sent it to her co-conspirators in Costa Rica.  Clark also admitted that she managed others who picked up money from the victims in the United States and that she kept a portion of the victims’ payments.

Clark also admitted that, once the victims sent money, her co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified.  The victims then had to send additional money to pay for new purported fees to receive the now larger sweepstakes prize.  The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme.

Clark admitted that, along with her co-conspirators, she was responsible for approximately $640,000 in losses to more than a hundred U.S. citizens.

This case is being investigated by the U.S. Postal Inspection Service, Internal Revenue Service, FBI, Federal Trade Commission and Department of Homeland Security.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section.

THREE CHARGED IN BRIBERY SCHEME INVOLVING $17 MILLION IN CONSTRUCTION CONTRACTS IN VIRGIN ISLANDS

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, August 6, 2015

FORMER DIRECTOR OF VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY AND OTHERS CHARGED WITH CONSPIRACY AND BRIBERY

Three Virgin Islands men were charged in an indictment unsealed today with various offenses based on their participation in a bribery scheme involving over $17 million in construction contracts awarded by the Virgin Islands Public Finance Authority (VIPFA).

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands, Special Agent in Charge Carlos Cases of the FBI’s San Juan, Puerto Rico, Division, Virgin Islands Inspector General Steven Van Beverhoudt and Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Julito Francis, 53, former Director of Finance and Administration for the VIPFA, is charged with 11 counts of conspiracy, bribery, extortion under color of official right, honest services wire fraud and perjury.  Gerard Castor, 69, president and owner of Balbo Construction Corporation, is charged with 10 counts of conspiracy, bribery and honest services wire fraud.  John Woods, 59, co-principal of an architectural company that worked on behalf of the VIPFA, is charged with three counts of conspiracy, bribery and extortion under color of official right.

Francis, Castor and Woods were arrested earlier today and appeared before U.S. Magistrate Judge Ruth Miller of the District of the Virgin Islands.  The defendants were released pending an August 12 arraignment.

According to the indictment, Castor provided more than $400,000 in improvements to Francis’ personal residence, and over $10,000 in improvements to Woods’ personal property.  In    return, Francis and Woods used their official positions to ensure that Balbo Construction was awarded construction contracts by the VIPFA that were worth over $17 million, including a multi-million contract, and supplements thereto, to build the St. Thomas Regional Library.  The indictment further alleges that the defendants attempted to conceal the bribery scheme by creating false documents that suggested Francis and Woods intended to pay Castor for the work performed.

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

This case is being investigated by the FBI’s San Juan Division, St. Thomas Resident Agency, the Virgin Islands Office of the Inspector General and IRS-CI.  This case is being prosecuted by Trial Attorneys Laura Fulton and Justin D. Weitz of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Nelson Jones of the District of the Virgin Islands.  Deputy Chief Tracee Plowell of the Criminal Division’s Office of Enforcement Operations and Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section participated in the investigation when they were assigned to the Public Integrity Section.

FORMER INTELLIGENCE AGENCY OFFICIAL PLEADS GUILTY TO MAKING FALSE STATEMENTS TO INVESTIGATORS

FROM:   U.S. JUSTICE DEPARTMENT 

Friday, August 7, 2015

FORMER NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY OFFICIAL PLEADS GUILTY TO MAKING FALSE STATEMENTS

A former National Geospatial-Intelligence Agency (NGA) official pleaded guilty to making false statements to federal investigators regarding his financial interest in a private company.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Inspector General for Investigations Patricia C. Langford of NGA and Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office made the announcement.

Brian P. Hearing, 43, of Falls Church, Virginia, pleaded guilty before U.S. District Judge T. S. Ellis III of the Eastern District of Virginia to an information charging him with making material false statements to federal investigators.

According to the statement of facts filed along with his plea agreement, Hearing worked at NGA from 2011 to 2015 in its Innovision Directorate, an applied science and technology research group.  Hearing admitted that, during this time, he also co-founded a private company for the purpose of developing and commercializing a certain type of automated detection system.  Hearing also admitted that he inappropriately used his position with the NGA to promote the company.

In connection with his guilty plea, Hearing also admitted that, when questioned by federal agents about his involvement with the company, he lied to conceal his conflict of interest.  Among other things, Hearing admitted to falsely claiming that another individual was the only founder of the company and to denying having any legal or financial connections to the company when, in fact, he co-founded the company and shared equal ownership of it.

This case was investigated by the NGA-OIG and the DCIS.  The case is being prosecuted by Trial Attorney Heidi Boutros Gesch of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Paul J. Nathanson of the Eastern District of Virginia.

MAN SENTENCED FOR PART IN $58 MILLION HOMEOWNERS' ASSOCIATIONS TAKEOVER AND CONTRACTOR SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, August 6, 2015

FORMER CONSTRUCTION BOSS SENTENCED TO MORE THAN 15 YEARS FOR ROLE IN $58 MILLION SCHEME TO FRAUDULENTLY CONTROL HOMEOWNERS’ ASSOCIATIONS

A former construction boss from Las Vegas was sentenced today to 188 months in prison for his role in a $58,141,275 million scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to secure construction and other contracts for himself and others.  Forty-two individuals have been convicted of crimes in connection with the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Office, Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Leon Benzer, 48, pleaded guilty on Jan. 23, 2015, to one count of conspiracy to commit mail and wire fraud, 14 counts of wire fraud, two counts of mail fraud and two counts of tax evasion.  In addition to imposing the prison term, U.S. District Judge James C. Mahan of the District of Nevada ordered Benzer to pay restitution in the amount of $13,294,100.

“Leon Benzer recruited and paid off puppets to serve on homeowners’ boards so that they would steer lucrative contracts to his company and cronies,” said Assistant Attorney General Caldwell.  “Far from enjoying their corrupt proceeds, however, Benzer and his co-conspirators will serve years behind prison bars.”

“This sentence serves as a reminder of the FBI's dedication and commitment to investigate, apprehend and prosecute criminals that prey on innocent and unsuspecting consumers,” said Special Agent in Charge Bucheit.

“When Leon Benzer named his company, Silver Lining Construction, he probably wasn’t aware of the IRS Criminal Investigation Division and the expertise of our special agents when it comes to putting pieces of a puzzle together to build a picture of fraudulent activity,” said Chief Weber.  “Benzer manipulated and bribed HOA boards in order to enrich himself and his co-conspirators at the expense of American taxpayers.  Not only did he try to hide the proceeds of his crimes in order to evade paying taxes, but he failed to pay his employment taxes.  Today, justice was served and the “silver lining” that Benzer anticipated was not realized thanks to the work of IRS-CI and our law enforcement partners.”

In connection with his guilty plea, Benzer admitted that, from approximately August 2003 through February 2009, he and an attorney developed a scheme to control the boards of directors of HOAs in the Las Vegas area.  According to plea documents, Benzer and his co-conspirators recruited straw buyers to purchase condominiums and secure positions on HOAs’ boards of directors.  Benzer admitted that he paid the board members to take actions favorable to his interests, including hiring his co-conspirator’s law firm to handle construction-related litigation and awarding remedial construction contracts to Benzer’s company, Silver Lining Construction.

The case was investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department’s Criminal Intelligence Section.  The case was prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Thomas B.W. Hall and Alison Anderson of the Criminal Division’s Fraud Section.

RESOLUTION REACHED WITH BANK EKI GENOSSENSCHAFT REGARDING DOJ'S SWISS BANK PROGRAM

FROM:   U.S. JUSTICE DEPARTMENT 

Monday, August 3, 2015

Bank EKI Genossenschaft Reaches Resolution under Justice Department's Swiss Bank Program

The Department of Justice announced today that Bank EKI Genossenschaft (Bank EKI) has reached a resolution under the department’s Swiss Bank Program.

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Under the program, banks are required to:

Make a complete disclosure of their cross-border activities;

Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

Cooperate in treaty requests for account information;

Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and

Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreement signed today, Bank EKI agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute Bank EKI for tax-related criminal offenses.

Bank EKI was founded in 1852 and has its headquarters in the tourist resort town of Interlaken, Switzerland.  It also operates small branch offices in Bönigen, Wilderswil, Grindelwald and Lauterbrunnen, Switzerland.

Bank EKI opened, serviced and profited from accounts for U.S. clients with the knowledge that many were likely not complying with their tax obligations.  Many of the U.S.-related accounts were transferred from other Swiss financial institutions that were closing such accounts, and Bank EKI knew or had reason to know that a portion of these accounts were likely undeclared.

Bank EKI provided traditional Swiss banking services that it knew could assist, and that did in fact assist, certain U.S. taxpayers in concealing their Bank EKI accounts from the Internal Revenue Service (IRS).  One such service was hold mail: for a fee, Bank EKI would hold all mail correspondence for a particular client at the bank.  By accepting and maintaining such accounts, Bank EKI thus ensured that documents reflecting the existence of the accounts remained outside the United States, beyond the reach of U.S. tax authorities and protected by Swiss banking secrecy laws.

Due in part to the means provided by Bank EKI and its personnel, and with the knowledge that Swiss banking secrecy laws would prevent Bank EKI from disclosing their identities to the IRS, many of the U.S. clients of Bank EKI filed false and fraudulent U.S. Individual Income Tax Returns, or IRS Forms 1040, that failed to report their respective interests in their undeclared accounts and the related income.  Moreover, many of the U.S. clients of Bank EKI also failed to file and otherwise report their undeclared accounts on Reports of Foreign Bank and Financial Accounts (FBARs).

Bank EKI did not sufficiently implement an effective system of supervisory policies, procedures or controls over its relationship managers to increase its U.S.-related clients’ tax compliance.  Moreover, Bank EKI’s relationship managers too readily accepted representations and directions from the accountholders without adequately investigating questionable information.

Since Aug. 1, 2008, Bank EKI held a total of 64 U.S.-related accounts with just over $21 million in aggregate assets.  Bank EKI will pay a penalty of $400,000.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS, and in particular, IRS-Criminal Investigation and the IRS Large Business and International Division for their substantial assistance.  Ciraolo also thanked Dara B. Oliphant, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer and Senior Litigation Counsel Nanette L. Davis of the Tax Division.

PHARMACIST RECEIVES PRISON TIME FOR ROLE IN MEDICARE PART D PRESCRIPTION DRUG FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, August 3, 2015

Los Angeles Pharmacist Sentenced to 18 Months in Prison for Medicare Part D Scheme

The owner and operator of a Los Angeles pharmacy was sentenced today to 18 months in prison for his role in a fraud scheme involving the Medicare Part D prescription drug program.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.

Rouzbeh Javaherian, 35, of Beverly Grove, California, pleaded guilty to health care fraud on March 16, 2015.  In addition to imposing the prison term, U.S. District Court Judge Stephen V. Wilson of the Central District of California ordered Javaherian to pay $644,060 in restitution to Medicare.

Javaherian was a licensed pharmacist and owner of Emoonah Inc., doing business as Westaid Pharmacy and Medical Supply (Westaid), which was located in Los Angeles.  According to admissions in the plea agreement, from January 2008 to November 2014, Javaherian devised and executed a scheme to defraud the Medicare Part D program by paying illegal cash kickbacks to Medicare beneficiaries to induce them to submit their prescriptions to Westaid.  Javaherian then filled some of those prescriptions, but also submitted false and fraudulent claims to Medicare Part D plan sponsors for prescriptions that he did not actually fill.  Javaherian received approximately $644,060 in overpayments from Medicare as the result of the fraud scheme.

The case was investigated by the FBI 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 of the Central District of California.  The case is being prosecuted by Trial Attorney Alexander F. Porter of the Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services, working in conjunction with the HHS-Office of Inspector General, are taking steps to increase accountability and decrease the presence of fraudulent providers.

CHARGES BROUGHT IN COUNTERFEIT PET PRODUCT LABELS CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, August 3, 2015

Four Men Charged with Trafficking in Pet Products with Counterfeit Labels

An indictment was recently unsealed in Houston charging four men with various offenses based on their roles in smuggling pet products with counterfeit labels into the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Catherine A. Hermsen of the Food and Drug Administration – Office of Criminal Investigations (FDA-OCI) Kansas City, Missouri, Field Office and Special Agent in Charge Brian M. Moskowitz of the U.S. Immigration and Customs Enforcement Homeland Security Investigations’ (HSI) Houston Field Office made the announcement.

Iain Nigel MacKellar, 58, of England; Lam Ngoc Tran, aka Mark Tran, 40, of Fountain Valley, California; Allen Smith, 49, of Phoenix; and William Humphreys, 58, of Laguna Hills, California, were indicted on July 9, 2015.  They are charged with conspiracy to commit wire fraud, mail fraud and trafficking in counterfeit labels, and smuggling goods into the United States.  Mackellar and Tran also are charged with additional counts of wire fraud, mail fraud, trafficking in counterfeit labels and smuggling.  The defendants were suspected members of one of the largest known groups of importers of counterfeit packaged pet products.

Smith turned himself in to authorities this morning and made his initial appearance before U.S. Magistrate Judge Mary Milloy.  Humphreys and Tran were taken into custody in Phoenix and in California, respectively.  Tran made his initial appearance in Houston on July 29, while Humphreys is set to appear tomorrow before Judge Milloy.  MacKellar is considered a fugitive and a warrant remains outstanding for his arrest.

The indictment alleges the defendants smuggled veterinary products that were not manufactured for the U.S. market into the United States for distribution under false labels, including Frontline and Frontline Plus pesticides manufactured by Merial Pharmaceutical Company (Merial).  In some cases, the defendants allegedly imported the products into the U.S. under the pretense that the products were destined for use by charitable organizations, but instead distributed the products to large retail outlets for commercial sale, according to the indictment.

Merial did not participate in or authorize the alleged unlawful conduct.  All known counterfeit veterinary products have been removed from store shelves.

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

This case is being investigated by the FDA-OCI, HSI and the Environmental Protection Agency.  The case is being prosecuted by Assistant Deputy Chief John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorneys Jennifer Lowery and Kebharu Smith of the Southern District of Texas.  The U.S. Attorney’s Office of the Central District of California and the CCIPS Cybercrime Lab provided significant assistance.

FORMER JAIL EMPLOYEE BECOMES INMATE AFTER STEALING IDENTITIES IN TAX REFUND FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, August 3, 2015

Former Alabama Jail Employee Sentenced for Stealing Identities as Part of Tax Refund Fraud Scheme

A Troy, Alabama, man was sentenced to prison today in U.S. District Court for the Middle District of Alabama for his involvement in a stolen identity tax refund fraud scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

Devon Tucker, 31, a former jailer of the Troy Police Department at the city jail, pleaded guilty earlier this year to one count of conspiracy to defraud the United States and one count of aggravated identity theft.  U.S. District Judge Callie V.S. Granade sentenced Tucker to serve 32 months in prison and three years of supervised release, and ordered him to pay $13,162 in restitution to the Internal Revenue Service (IRS).

According to court documents, from January 2014 to January 2015, Tucker stole the personal identification information of approximately 150 individuals who were processed into the Troy city jail.  Tucker provided those identities to his co-conspirators for the purpose of filing false federal income tax returns claiming fraudulent refunds from the U.S. Treasury.  Tucker was paid in pre-paid debit cards in the names of the identity theft victims for his involvement in the scheme.    

“The Tax Division will vigorously pursue and prosecute government employees who abuse their positions by exploiting their access to personal information to victimize members of the community and steal from the U.S. Treasury,” said Acting Assistant Attorney General Ciraolo.

“It is always a sad day when a law enforcement officer sworn to uphold the law, takes advantage of his position for his own personal gain,” stated U.S. Attorney Beck.  “This district will continue to vigorously prosecute those who steal identities and file fraudulent tax returns, regardless of where they are employed or what position they hold.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Gregory P. Bailey and Michael P. Hatzimichalis of the Tax Division and Assistant U. S. Attorney Jonathan Ross of the Middle District of Alabama, who prosecuted this case.

AG LYNCH DELIVERS REMARKS AT PRISON EDUCATION PARTNERSHIP

FROM:  U.S. JUSTICE DEPARTMENT

Attorney General Loretta E. Lynch Delivers Remarks at Goucher College's Prison Education Partnership at the Maryland Correctional Institute

Jessup, MD United States~ Friday, July 31, 2015

Justice Department Announces First-Ever Second Chance Fellow to Help Advance Vital Diversion and Reentry Strategies

Remarks as prepared for delivery

Thank you, Secretary [Arne] Duncan, for that kind introduction – and for your outstanding leadership in our efforts to advance education and improve the lives of students throughout the United States.  It’s a pleasure to be here today and a privilege to join you, Cabinet Secretary [Broderick] Johnson, members of Congress, Dallas Pell, extraordinary advocates and role models like Glenn Martin and Vivian Nixon and our other distinguished guests to announce this important pilot program and to discuss the vital steps we are taking together to reorient our nation’s approach to criminal justice while strengthening our country and empowering our communities.

This is an exciting moment in our ongoing, bipartisan work to reform this nation’s criminal justice system.  As Secretary Duncan has noted, postsecondary education provides individuals from all backgrounds and circumstances with the opportunity to better themselves and their communities.  For incarcerated individuals, education can provide an avenue to redemption and a chance to earn their way back into mainstream society.  It can allow individuals to see themselves as more than their worst decision and encourage them to value themselves for what they can achieve.  And the results can deliver significant benefits for communities and taxpayers already burdened by the high costs associated with incarceration and crime.

We know from research that incarcerated individuals who participate in correctional education – including remedial, vocational and postsecondary programs – are more likely to stay out of prison; more likely to seek, gain and maintain employment; and substantially more likely to remain crime-free.  We recognize that our communities are safer and more secure when those who have engaged with our criminal justice system are involved in positive behavior.  And given that the vast majority of people behind bars will one day be released – with more than 600,000 individuals leaving state and federal institutions every year – we believe that it is incumbent upon us as a nation to ensure that people who have served their time are able to fully and productively engage in our society.

Lifting the ban on Pell Grants for a limited number of incarcerated students to pursue higher education is an important step forward as we seek to build avenues of opportunity from imprisonment to improvement.  I am pleased to announce that the Justice Department’s Bureau of Justice Assistance will provide technical assistance through the Vera Institute of Justice to correctional facilities that partner with institutions of higher learning to provide postsecondary education under the Pell Experimental Site.  And I am looking forward to continued partnership on this important work.

The issues we are addressing today are not new – and I am proud to say that they have been a central focus of the Department of Justice throughout the Obama Administration.  Under the outstanding leadership of my predecessor, Attorney General Eric Holder and with Secretary Duncan’s invaluable support, we convened the Federal Interagency Reentry Council in 2011 to reduce barriers to successful reentry for formerly incarcerated individuals.  We directed every U.S. Attorney to designate a Prevention and Reentry Coordinator in his or her district to focus on building community engagement and creating positive outcomes.  We asked our law enforcement partners and state Attorneys General to reconsider policies that create overly burdensome collateral consequences – often in the form of barriers to employment, housing and education – that are unlikely to improve public safety.  Earlier this week, I chaired a productive meeting of the Reentry Council and introduced the first-ever Second Chance Fellow.  And we are currently working to implement and advance the Smart on Crime initiative that Attorney General Holder launched in 2013 to reduce this country’s reliance on incarceration; to increase investment in diversion and reentry programs; and to ensure that our criminal justice practices are carried out in a way that is both effective and fair.

Today’s action is not the end of our effort.  We have a great deal more to do in order to ensure that incarcerated individuals receive opportunities to turn their lives around.  But with the partnership of the advocates and public servants joining us today and the hard work of individuals seeking to chart a new course – for themselves, their families and their communities – I am confident about where our work will take us from here. I am excited about the progress we will achieve together.  And I am hopeful that today’s announcement will be the beginning of a new era for dedicated students around the country.

At this time, I’d like to hand things over to Cabinet Secretary Broderick Johnson, who will provide further information on today’s announcement.

HUNTSVILLE POLICE OFFICER CONVICTED FOR USING EXCESSIVE FORCE

FROM:  U.S. JUSTICE DEPARTMENT

Friday, July 31, 2015

Huntsville, Alabama, Police Officer Convicted of Excessive Use of Force and Obstruction of Justice

A federal jury in Huntsville, Alabama, convicted Huntsville Police Department Officer Brett Russell, 48, of deprivation of rights under color of law for assaulting and injuring G.H., a detainee, as well as obstruction of justice for filing a false police report regarding this incident.

According to the evidence presented at trial, on Dec. 23, 2011, G.H. was detained in the rear of a police vehicle parked in a hotel parking lot.  After initially uttering profanity and kicking a rear window, G.H. sat handcuffed, compliant and nonresisting for approximately 30 minutes.  As officers attempted to remove G.H. from the vehicle to place leg shackles on him, Russell yanked G.H. from the vehicle.  While G.H. was lying handcuffed on the ground, the defendant repeatedly punched and kneed G.H.  Other officers placed leg shackles on G.H. and Russell then transported G.H. to the Madison County, Alabama, Jail.  When the jail refused to accept G.H. because of his injuries, Russell transported G.H.to the Huntsville Hospital.  Russell subsequently wrote and submitted a false report claiming that G.H. tried to kick and head butt the officers.  Further, Russell omitted from the false report any reference to the fact that he had used force on G.H.

Russell faces a statutory maximum sentence of 10 years in prison for the civil rights charge and a statutory maximum sentence of 20 years for the obstruction charge.  Sentencing has yet to be scheduled, but will occur before U.S. District Court Judge Abdul K. Kallon in the Northern District of Alabama.

“The criminal behavior of this officer undermines the dedicated efforts of the vast majority of officers who serve honorably,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Justice Department is committed to holding officers who engage in such criminal acts accountable.”

“Most police officers honor their oaths, day in and day out, to uphold the law and protect the public, but this defendant disgraced his badge and used excessive force against a man in handcuffs,” said U.S. Attorney Joyce White Vance of the Northern District of Alabama.  "This verdict reflects that abusing the authority of a police badge is a serious crime and it will be punished accordingly.  My office remains committed to aggressive civil rights enforcement, and I thank the FBI for its dedication to investigating and compiling evidence in these type of cases. "

This case is being investigated by the FBI’s Florence Resident Agency.  It is being prosecuted by Trial Attorney Carroll McCabe of the Civil Rights Division and Assistant U.S. Attorneys Daniel Fortune and Xavier O. Carter Sr. of the Northern District of Alabama.