GOVERNMENT ALLEGES FORMER EXECS AT SIEMENS TOOK PART IN FOREIGN BRIBERY SCHEME

The following excerpt is from the Department of Justice website;

Tuesday, December 13, 2011
“Eight Former Senior Executives and Agents of Siemens Charged in Alleged $100 Million Foreign Bribe Scheme
WASHINGTON – Eight former executives and agents of Siemens AG and its subsidiaries have been charged for allegedly engaging in a decade-long scheme to bribe senior Argentine government officials to secure, implement and enforce a $1 billion contract with the Argentine government to produce national identity cards, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara for the Southern District of New York and Ronald T. Hosko, Special Agent in Charge of the FBI, Washington Field Office’s Criminal Division.
The defendants charged in the indictment returned late yesterday are:
Uriel Sharef, a former member of the central executive committee of Siemens AG;
Herbert Steffen, a former chief executive officer of Siemens Argentina;
Andres Truppel, a former chief financial officer of Siemens Argentina;
Ulrich Bock, Stephan Signer and Eberhard Reichert, former senior executives of Siemens Business Services (SBS); and
Carlos Sergi and Miguel Czysch, who served as intermediaries and agents of Siemens in the bribe scheme.
The indictment charges the defendants and their co-conspirators with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and the wire fraud statute, money laundering conspiracy and wire fraud.
“Today’s indictment alleges a shocking level of deception and corruption,” said Assistant Attorney General Breuer. “The indictment charges Siemens executives, along with agents and conduits for the company, with committing to pay more than $100 million in bribes to high-level Argentine officials to win a $1 billion contract. Business should be won or lost on the merits of a company’s products and services, not the amount of bribes paid to government officials. This indictment reflects our commitment to holding individuals, as well as companies, accountable for violations of the FCPA.”
“As alleged, the defendants in this case bribed Argentine government officials in two successive administrations and paid off countless others in a successful effort to secure a billion dollar contract,” said U.S. Attorney Bharara. “When the project was terminated, they even sought to recover the profits they would have reaped from a contract that was awarded to them illegitimately in the first place. Bribery corrupts economic markets and creates an unfair playing field for law-abiding companies. It is critical that we hold individuals as well as corporations accountable for such corruption as we are doing today.”
“Backroom deals and corrupt payments to foreign officials to obtain business wear away public confidence in our global marketplace,” said FBI Special Agent in Charge Hosko of the Washington Field Office’s Criminal Division. “The investigation into this decades-long scheme serves as an example that the FBI is committed to curbing corruption and will investigate those who try to advance their businesses through foreign bribery.”
According to the indictment, the government of Argentina issued a tender for bids in 1994 to replace an existing system of manually created national identity booklets with state of the art national identity cards (the DNI project). The value of the DNI project was $1 billion. In 1998, the Argentine government awarded the DNI project to a special-purpose subsidiary of Siemens AG.
The indictment alleges that during the bidding and implementation phases of the project, the defendants and their co-conspirators caused Siemens to commit to paying nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party and candidates for office who were likely to come to power during the performance of the project. According to the indictment, members of the conspiracy worked to conceal the illicit payments through various means. For instance, Bock made cash withdrawals from Siemens AG general-purpose accounts in Germany totaling approximately $10 million, transported the cash across the border into Switzerland and deposited the funds into Swiss bank accounts for transfer to officials. Bock, Truppel, Reichert and other conspirators also allegedly caused Siemens to wire transfer more than $7 million in bribes to a bank account in New York disguised as a foreign exchange hedging contract relating to the DNI project. Over the duration of the conspiracy, the conspirators allegedly relied on at least 17 off-shore shell companies associated with Sergi, Czysch and other intermediaries to disguise and launder the funds, often documenting the payments through fake consulting contracts.
In May 1999, according to the indictment, the Argentine government suspended the DNI project, due in part to instability in the local economy and an impending presidential election. When a new government took power in Argentina, and in the hopes of getting the DNI project resumed, members of the conspiracy allegedly committed Siemens to paying additional bribes to the incoming officials and to satisfying existing obligations to officials of the outgoing administration, many of whom remained in influential positions within the government.
When the project was terminated in May 2001, members of the conspiracy allegedly responded with a multi-faceted strategy to overcome the termination. According to the indictment, the conspirators sought to recover the anticipated proceeds of the DNI project, notwithstanding the termination, by causing Siemens AG to file a fraudulent arbitration claim against the Republic of Argentina in Washington, D.C. The claim alleged wrongful termination of the contract for the DNI project and demanded nearly $500 million in lost profits and expenses. Members of the conspiracy allegedly caused Siemens to actively hide from the tribunal the fact that the contract for the DNI project had been secured by means of bribery and corruption, including tampered witness statements and pleadings that falsely denied the existence of corruption.
In related actions, the indictment also alleges that members of the conspiracy continued the bribe scheme, in part to prevent disclosure of the bribery in the arbitration and to ensure Siemens’ ability to secure future government contracts in Argentina and elsewhere in the region. In four installments between 2002 and 2007, members of the conspiracy allegedly caused Siemens to pay approximately $28 million in further satisfaction of the obligations. Conspirators continued to conceal these additional payments through various means. For example, Sharef, Truppel and other members of the conspiracy allegedly caused Siemens to transfer approximately $9.5 million through fictitious transactions involving a Siemens business division that had no role in the DNI project. They also caused Siemens to pay an additional $8.8 million in 2007 under the legal cover of a separate arbitration initiated in Switzerland by the intermediaries to enforce a sham $27 million contract from 2001 between SBS and Mfast Consulting, a company controlled by their co-conspirator intermediaries, which consolidated existing bribe commitments into one contract. The conspirators caused Siemens to quietly settle the arbitration, keeping all evidence of corruption out of the proceeding. The settlement agreement included a provision preventing Sergi, Czysch and another intermediary from testifying in, or providing information to, the Washington arbitration.
Siemens’s corrupt procurement of the DNI project was not exposed during the lifespan of the conspiracy, and, in February 2007, the arbitral tribunal in Washington sided with Siemens AG, awarding the company nearly $220 million on its DNI claims, plus interest. On Aug. 12, 2009, following Siemens’ corporate resolutions with the U.S. and German authorities – new management of Siemens caused Siemens AG to forego its right to receive the award and, as a result, the company never claimed the award money.
The indictment charges the defendants with conspiracy to violate the anti-bribery, books and records and internal control provisions of the FCPA; conspiracy to commit wire fraud; conspiracy to commit money laundering; and substantive wire fraud.
The charges announced today follow the Dec. 15, 2008, guilty pleas by Siemens AG and its subsidiary, Siemens S.A. (Siemens Argentina), to criminal violations of the FCPA. As part of the plea agreement, Siemens AG and Siemens Argentina agreed to pay fines of $448.5 million and $500,000, respectively.
In a parallel civil action, the Securities and Exchange Commission (SEC) announced charges against executives and agents of Siemens. The department acknowledges and expresses its appreciation of the significant assistance provided by the staff of the SEC during the course of these parallel investigations.
Today’s charges follow, in large part, the laudable actions of Siemens AG and its audit committee in disclosing potential FCPA violations to the department after the Munich Public Prosecutor’s Office initiated an investigation. Siemens AG and its subsidiaries disclosed these violations after initiating an internal FCPA investigation of unprecedented scope; shared the results of that investigation; cooperated extensively and authentically with the department in its ongoing investigation; and took remedial action, including the complete restructuring of Siemens AG and the implementation of a sophisticated compliance program and organization.
The department and the SEC closely collaborated with the Munich Public Prosecutor’s Office in bringing this case. The high level of cooperation, including sharing information and evidence, was made possible by the use of mutual legal assistance provisions of the 1997 Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
The case is being prosecuted by Principal Deputy Chief Jeffrey H. Knox of the Criminal Division’s Fraud Section, and by Assistant U.S. Attorneys Jason P. Hernandez and Sarah McCallum of the U.S. Attorney’s Office for the Southern District of New York. The Fraud Section of the Justice Department’s Criminal Division and the Complex Frauds Unit of the U.S. Attorney’s Office for the Southern District of New York are handling the case. The case was investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.”

NATIONAL GUARD MAJOR GETS 60 MONTHS IN PRISON FOR TAKING BRIBES IN AFGHANISTANN

The following excerpt is from the Department of Justice website:

Thursday, December 22, 2011

"WASHINGTON – A former Major in the U.S. Army National Guard who was deployed to Bagram Airfield, Afghanistan, was sentenced to 60 months in prison for receiving bribes from military contractors in exchange for fraudulently verifying the receipt of concrete bunkers and barriers that were never received, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced today.

Christopher P. West, of Chicago, was sentenced on Dec. 20, 2011, by U.S. District Judge Matthew F. Kennelly of the Northern District of Illinois in Chicago.   In addition to his prison term, West was sentenced to two years of supervised release and was ordered to pay $500,000 in restitution to the United States Department of Defense.

West pleaded guilty in June 2009 to a superseding indictment charging him with eight counts of bribery, conspiracy and fraud.   According to court documents, West was deployed to Bagram Airfield from March 2004 until March 2005.   West and Lieutenant Robert Moore had sole responsibility over ordering, receiving and verifying the receipt of bunkers and barriers at Bagram, which, at the time, served as the central receiving point for all bunkers and barriers in Afghanistan.   West and Moore conspired with the bunker and barrier contractors at Bagram to fraudulently inflate the number of bunkers and barriers delivered to Bagram, and to profit in the resulting overpayments made by DOD.

According to court documents, the contractors fraudulently billed the DOD for bunkers and barriers never delivered to Bagram.  West and Moore fraudulently verified on material inspection and receiving reports that the contractors had delivered the inflated number of bunkers and barriers.  As a result, the contractors were able to receive payment for the falsely inflated number of bunkers and barriers.   Upon receiving payment, the contractors paid West and Moore a portion of the money received.

In addition, according to the superseding indictment and other documents filed in this case, West, Moore and co-conspirator Sergeant Patrick Boyd awarded contracts to three different contractors in return for $30,000 each, which the conspirators split among themselves.

West is the eighth defendant sentenced in this investigation.   Ten additional defendants remain to be sentenced, some in the Northern District of Illinois and others in the District of Hawaii.

West’s co-conspirators, Robert Moore and Patrick Boyd, were sentenced to 15 months and 40 months in prison, respectively, for their roles in this criminal activity.   Sergeant Sheryl Ayeni was also sentenced recently to one year in prison for the receipt of $30,000 in return for her official acts as a vendor pay agent at Bagram during 2004 and 2005.   Also arising from this investigation, John Mihalczo was sentenced to 15 months in prison for accepting approximately $115,000 in bribes at Bagram between 2003 and 2004.

This case is being prosecuted by Trial Attorney Mark W. Pletcher of the Criminal Division’s Fraud Section , and investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service and the Department of the Air Force, Office of Special Investigations, with assistance from the Special Inspector General for Afghanistan Reconstruction.”

IDENTITY THEFT OF STUDENT LOAN BORROWERS LANDS PERPETRATOR IN FEDERAL PRISON

The following excerpt is from the Department of Justice website:

Wednesday, December 21
 “WASHINGTON – Janika Fernae Bates, a resident of Millbrook, Ala., was sentenced today in the Middle District of Alabama to 94 months in federal prison for stealing identities of student loan borrowers and providing them to a co-conspirator, who used them to file false tax returns, the Justice Department and Internal Revenue Service (IRS) announced.

On Sept. 23, 2011, a jury in Montgomery, Ala., convicted Bates of identity theft, wire fraud, aggravated identity theft and conspiracy to make false claims for tax refunds.

According to evidence introduced at the five day trial, Bates obtained the names and Social Security numbers of student loan borrowers from the databases at her former employer and conspired to use the stolen identifying information to steal money from the government and from a bank.   Several victims testified that they did not consent to the use of their names and Social Security numbers on tax returns and they testified that they did not receive any money from refunds generated from the false documents filed with the IRS.   Evidence also revealed that Bates and her co-conspirator, Keshia Brayboy, fraudulently obtained refund anticipation loans from a bank predicated on the fraudulently filed tax returns.   Brayboy pleaded guilty in 2009 to filing a false tax return and served two years in federal prison.

U.S. District Judge Myron H. Thompson also ordered Bates to pay $246,064 in restitution to HSBC Taxpayer Financial Services and $30,211 in restitution to the IRS.

Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS Criminal Investigation special agents who investigated this case, Tax Division Trial Attorneys Justin Gelfand and Jason Poole, who are prosecuting the case, and U.S. Attorney George L. Beck Jr. and his entire office for their assistance.”

ATTORNEY GENERAL HOLDER SPEAKS ON SETTLEMENT WITH COUTRYWIDE FINANCIAL

The following excerpt is from the Department of Justice website:

Wednesday, December 21, 2011
“Good afternoon.  Today, I’m proud to join with these critical partners – Assistant Attorney General for the Civil Rights Division, Tom Perez; the United States Attorney for the Central District of California, Andre Birotte; Illinois Attorney General, Lisa Madigan; the Secretary for the U.S. Department of Housing and Urban Development, Shaun Donovan; and Governor Sarah Bloom Raskin of the Federal Reserve – in announcing the largest residential fair lending settlement ever reached in the history of our nation’s Department of Justice.

In today’s settlement with Countrywide Financial Corporation, we resolved the government’s allegations that Countrywide and its subsidiaries – which are now owned by Bank of America – engaged in discriminatory mortgage lending practices against more than 200,000 qualified African-American and Hispanic borrowers from 2004 through 2008.  The settlement provides $335 million in compensation to victims of Countrywide’s discrimination during a period whenCountrywide served as one of the nation’s largest single-family mortgage lenders and originated more than 4 million residential mortgage loans.

In this thorough investigation, the Department uncovered a pattern or practice of discrimination involving victims in more than 180 geographic markets across 41 states and the District of Columbia.  These discriminatory acts allegedly included widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act, and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans – solely because of their race or national origin.

These allegations represent alarming conduct – by one of the largest mortgage lenders in this country, during the height of the housing market boom.  For example, in 2007, a qualified African American customer in Los Angeles borrowing $200,000 paid an average of roughly $1200 more in fees than a similarly qualified white borrower.

This settlement will compensate the more than 200,000 African-American and Hispanic borrowers who were victims of discriminatory conduct, including more than 10,000 African-American or Hispanic borrowers who – despite the fact that they qualified for prime loans – were steered into subprime loans.

Subprime borrowers are often subjected to penalties and higher interest rates, and have a greater likelihood of default and foreclosure than those who have prime loans.  Often, the impact of discriminatory lending practices can reach even farther – potentially harming borrowers’ credit; inhibiting their ability to find quality housing, employment, or access to higher education; and depriving entire communities of economic opportunities.

Today’s settlement makes clear that today’s Justice Department – and our law enforcement and government partners – will not hesitate to move aggressively in holding lenders – including the nation’s largest – accountable for discrimination and financial misconduct.  We are committed to protecting the sacred rights, and best interests, of the American people – and to ensuring equal opportunity through the vigorous enforcement of our civil rights laws.

Nowhere is this commitment more evident than in the work of the Civil Rights Division’s Fair Lending Unit, which has filed or resolved 10 fair lending matters since its formation last February.  An additional seven lawsuits, and more than 10 open investigations, are currently pending – and the Department stands ready to hold financial institutions accountable to remedy and prevent discriminatory conduct.

Through critical interagency partnerships like the Financial Fraud Enforcement Task Force – and particularly its Non-Discrimination Working Group; through the diverse network of relationships we have forged with the Department of Housing and Urban Development, the Federal Reserve Board, the Consumer Financial Protection Bureau, state and local officials, and our law enforcement and regulatory partners – the Justice Department will continue to vigorously pursue those who would take advantage of certain Americans because of their race, national origin, gender, or disability.

Such conduct undercuts the notion of a level playing field for all consumers.  It betrays the promise of equal opportunity that is enshrined in our Constitution and our legal framework.  And, under this Administration, these harmful and discriminatory practices will not be tolerated.  As we have done through this settlement, the Department will pursue remedies and reforms that preserve and protect equal opportunity for all.

I’d like to thank the many professionals, attorneys, and support staff whose hard work has made today’s announcement possible – and whose dedicated efforts help to advance the core missions of this Department every single day.  And, now, I’d like to turn things over to another key leader in this work – Assistant Attorney General Tom Perez.”

2 FOUND GUILTY OF INTERNATIONAL COCAINE DISTRIBUTION CONSPIRACY

The following excerpt is from the Department of Justice website:

Wednesday, December 21
“WASHINGTON – Two Las Vegas men were sentenced yesterday in the District of Nevada to 20 and 25 years in prison for their roles in an international cocaine distribution and money laundering conspiracy, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada announced today.

U.S. District Judge Gloria M. Navarro sentenced Jose Lopez-Buelna, aka “Miguel,” 51, to 20 years in prison, and Erik Dushawn Webster, 47, to 25 years in prison.   Lopez-Buelna and Webster were also sentenced to five years of supervised release.

Lopez-Buelna pleaded guilty on Feb. 16, 2011, to conspiracy to distribute five kilograms or more of cocaine, conspiracy to launder money and two counts of money laundering.   Webster was convicted by a federal jury on Feb. 18, 2011, of conspiracy to distribute five kilograms or more of cocaine and conspiracy to launder money.

At the sentencing hearings, the court found that the drug distribution conspiracy in this case involved 150 kilograms or more of cocaine.    

According to court documents and trial testimony, from 2007 through October 2009, Lopez-Buelna and co-defendant Jesus Gastelum recruited various individuals, including Webster and others, to drive motor homes outfitted with sophisticated, lead-lined, hidden compartments throughout the United States, Mexico and Canada.   The hidden compartments were used to store large amounts of cocaine and drug proceeds.   Lopez-Buelna and Gastelum ordered the motor home drivers to make stops at various destinations, including Atlanta, Chicago, New York and Montreal, where the cocaine was unloaded and bulk cash was loaded into the hidden compartments.   The motor home drivers then transported these proceeds from the cocaine distribution back to Mexico.   Testimony at trial also indicated that Webster recruited additional motor home drivers to drive a motor home registered in his name across the U.S./Mexico border and back to various destinations in the United States.

Gastelum was charged with conspiracy to distribute five kilograms or more of cocaine, conspiracy to launder money, money laundering and other charges.   He remains a fugitive in this case.

Another co-defendant charged in the conspiracy, Adolph Vargas, aka “Adolph Vargas Ibarra,” aka “Al,” pleaded guilty in January 2011 to conspiracy to distribute five kilograms or more of cocaine and one count of money laundering.   Vargas was sentenced in November 2011 to 97 months in prison followed by two years of supervised release.

On July 22, 2011, the court entered a final forfeiture order in the case against all of the defendants.   The forfeiture order included two recreational vehicles, two .38 caliber semi-automatic pistols, various vehicles and more than $4 million, all of which represented drug proceeds that law enforcement recovered during the course of the investigation of this case.

The case was investigated by the FBI, the Drug Enforcement Administration, the Las Vegas Metropolitan Police Department and the Internal Revenue Service - Criminal Investigation.

The case was prosecuted by Trial Attorneys Marty Woelfle and Margaret Honrath of the Criminal Division’s Organized Crime and Gang Section, with substantial assistance from the U.S. Attorney’s Office for the District of Nevada. “

BUSINESSMAN CONVICTED FOR FAILING TO PAY OVER $15 MILLION IN PAYROL TAXES

The following excerpt is from the Department of Justice website:

December 21, 2011
“WASHINGTON - Bruce Gregory Harrison III was convicted yesterday following a jury trial in federal court in Winston-Salem, N.C., announced the Department of Justice.   Harrison had been charged in a 63-count indictment with large-scale payroll tax fraud and failure to file individual income tax returns.   The evidence at trial proved that Harrison failed to pay over more than $15 million dollars in federal taxes withheld from the pay of his thousands of employees in the years 2004-2006 and 2009.

“Mr. Harrison not only defrauded his own employees, but he defrauded the American people as well,” said Ripley Rand, U.S. Attorney for the Middle District of North Carolina. “This sort of conduct is intolerable, especially during these difficult economic times, and we will do everything we can to make sure it is punished accordingly.”

“Honest, hard-working taxpayers count on their payroll deductions for Social Security and Medicare being paid over to fund their retirement and health care needs,” said John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division.  “They should rest assured that those who would steal those funds will be prosecuted to the fullest extent of the law.”

“The IRS-Criminal Investigation Division takes these violations of law very seriously.   Payroll tax fraud results in the loss of tax revenue to the United States government and the loss of future social security or Medicare benefits for the employees,” said Victor S.O. Song, Chief of the Internal Revenue Service (IRS) – Criminal Investigation.

According to the trial evidence and other documents filed in the case, Harrison, a resident of Greensboro, N.C., did business under various corporate names including U.S.A. Staffing and Compensation Management Inc.   He owned or controlled temporary staffing companies operating in at least nine states.   Harrison’s staffing companies were headquartered in Guilford County, N.C., and contracted with client businesses to provide temporary workers.   Harrison’s companies promised to assume full responsibility for the payment of wages and the withholding and transmitting of taxes to the IRS for those employees.   Instead, Harrison failed to account for and pay over in excess of $15 million in federal payroll taxes for the employees of those companies.   The evidence at trial showed that Harrison caused false bank statements to be presented to auditors to conceal the nonpayment of the payroll taxes.

Harrison was also convicted of corruptly endeavoring to obstruct the IRS by means of false statements to IRS revenue officers.   Evidence established he had used company funds to purchase personal residences, to buy a yacht and to finance commercial motion pictures, including National Lampoon’s Pucked and Home of the Giants.   Harrison was also convicted of failing to timely file his own income tax returns for 2004, 2005 and 2006.   Following the jury verdict, Chief Judge James A. Beaty Jr. ordered Harrison detained.   Sentencing is scheduled for April 6, 2012, at 9:30 a.m. in Winston-Salem.

U.S. Attorney Rand and Principal Deputy Assistant Attorney General DiCicco commended Assistant U.S. Attorneys Frank Chut and Terri-Lei O’Malley and Tax Division Trial Attorney Jeffrey McLellan, and the IRS Agents who assisted them, in successfully prosecuting the case.”

COUNTRYWIDE FINANCIAL DISCRIMINATION CASE SETTLED FOR $335 MILLION

The following excerpt is from the Department of Justice website:

“Wednesday, December 21, 2011Justice Department Reaches $335 Million Settlement to Resolve Allegations of Lending Discrimination by Countrywide Financial CorporationMore than 200,000 African-American and Hispanic Borrowers who Qualified for Loans were Charged Higher Fees or Placed into Subprime Loans
The Department of Justice today filed its largest residential fair lending settlement in history to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008.

The settlement provides $335 million in compensation for victims of Countrywide’s discrimination during a period when Countrywide originated millions of residential mortgage loans as one of the nation’s largest single-family mortgage lenders.

The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Central District of California in conjunction with the department’s complaint which alleges that Countrywide discriminated by charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending.   The complaint alleges that these borrowers were charged higher fees and interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.

The United States also alleges that Countrywide discriminated by steering thousands of African-American and Hispanic borrowers into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.   All the borrowers who were discriminated against were qualified for Countrywide mortgage loans according to Countrywide’s own underwriting criteria.

“The department’s action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for lending discrimination,” said Attorney General Eric Holder. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin. With today’s settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation.”

The settlement resolves the United States’ pricing and steering claims against Countrywide for its discrimination against African Americans and Hispanics.

The United States’ complaint alleges that African-American and Hispanic borrowers paid more than non-Hispanic white borrowers, not based on borrower risk, but because of their race or national origin.   Countrywide’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors .   This subjective and unguided pricing discretion resulted in African American and Hispanic borrowers paying more.   The complaint further alleges that Countrywide was aware the fees and interest rates it was charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it.
“Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “We are using every tool in our law enforcement arsenal, including some that were dormant for years, to go after institutions of all sizes that discriminated against families solely because of their race or national origin.”
The United States’ complaint also alleges that, as a result of Countrywide’s policies and practices, qualified African-American and Hispanic borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans.   The discriminatory placement of borrowers in subprime loans, also known as “steering,” occurred because it was Countrywide’s business practice to allow mortgage brokers and employees to place a loan applicant in a subprime loan even when the applicant qualified for a prime loan .   In addition, Countrywide gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Countrywide’s employees had discretion to grant these exceptions.        

This is the first time that the Justice Department has alleged and obtained relief for borrowers who were steered into loans based on race or national origin, a practice that systematically placed borrowers of color into subprime mortgage loan products while placing non-Hispanic white borrowers with similar creditworthiness in prime loans.   By steering borrowers into subprime loans from 2004 to 2007, the complaint alleges, Countrywide harmed those qualified African-American and Hispanic borrowers.   Subprime loans generally carried higher-cost terms, such as prepayment penalties and exploding adjustable interest rates that increased suddenly after two or three years, making the payments unaffordable and leaving the borrowers at a much higher risk of foreclosure.

The settlement also resolves the department’s claim that Countrywide violated the Equal Credit Opportunity Act by discriminating on the basis of marital status against non-applicant spouses of borrowers by encouraging them to sign away their home ownership rights .   The law allows married individuals to apply for credit either in their own name or jointly with their spouse, even when the property is owned by both spouses.   For applications made by married individuals applying solely in their own name between 2004 and 2008, Countrywide encouraged non-applicant spouses to sign quitclaim deeds or other documents transferring their legal rights and interests in jointly-held property to the borrowing spouse.   Non-applicant spouses who execute a quitclaim deed risk substantial uncertainty and financial loss by losing all their rights and interests in the property securing the loan.

In addition, the settlement requires Countrywide to implement policies and practices to prevent discrimination if it returns to the lending business during the next four years.   Countrywide currently operates as a subsidiary of Bank of America but does not originate new loans.  

The department’s investigation into Countrywide’s lending practices began after referrals by the Board of Governors of the Federal Reserve and the Office of Thrift Supervision to the Justice Department’s Civil Rights Division in 2007 and 2008 for potential patterns or practices of discrimination by Countrywide.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.   The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.    The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.    For more information on the task force, visit www.StopFraud.gov .

A copy of the complaint and proposed settlement order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing .

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Countrywide’s discrimination.   The department will make a public announcement and post contact information on its website once an administrator is chosen.  Borrowers who are eligible for compensation from the settlement will then be contacted by the administrator.  Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department atcountrywide.settlement@usdoj.gov .”

8 U.S. SOLDIERS CHARGED WITH FELLOW SOLDIER'S DEATH IN AFGHANISTAN

The following excerpt is from the American Forces Press (DOD):

Army Charges Eight in Death of Fellow Soldier
Regional Command South Public Affairs
KANDAHAR AIR FIELD, Afghanistan, Dec. 21, 2011 - Eight U.S. soldiers deployed to southern Afghanistan were charged today in connection with the death of a fellow soldier, military officials reported.
Army Pvt. Danny Chen, an infantryman assigned to Company C, 3rd Battalion, 21st Infantry Regiment, 25th Infantry Division, died Oct. 3, officials said. His body was found in a guard tower with an apparent self-inflicted gunshot wound.

All of the accused are assigned to Company C, and posted to Combat Outpost Palace in southern Afghanistan, officials said".

ADMITTED WHITE SUPREMACIST SENTENCED FOR ATTEMPTED BOMBING OF UNITY MARCH

The following is from the Department of Justice website:

"SPOKANE, Wash. – The Justice Department announced today that Kevin William Harpham, 37, of Colville, Wash., has been sentenced to 32 years in prison for the placement of the improvised explosive device alongside the planned Martin Luther King Jr. Day Unity March held on Jan. 17, 2011, in Spokane, Wash.  Harpham will serve the rest of his life under court supervision after he is released from prison.  Harpham pleaded guilty in Sept. 7, 2011, to two counts of a superseding indictment; attempted use of a weapon of mass destruction and attempt to cause bodily injury with an explosive device because of actual or perceived race, color and national origin of any person.

On March 9, 2011, Harpham was arrested for placing the explosive device alongside the Unity March.  The march was attended by approximately 2,000 individuals, including racial minorities.  The explosive device placed by Harpham was capable of inflicting serious injury or death, according to laboratory analysis conducted by the FBI.  Harpham admitted that he is a white supremacist and white separatist, and that he placed the explosive device at the march with the intent to cause bodily injury to the person or persons in order to further his racist beliefs.

“Acts of hate like this one have no place in our country in the year 2011, but yet, unfortunately, we continue to see attempted violence in our communities due to racial animus,” said Assistant Attorney General for the Civil Rights Division Thomas Perez.   “The Justice Department is committed to enforcing the Matthew Shepard and James Byrd Jr. hate Crimes Prevention Act, and all the tools in our law enforcement arsenal, to prosecute such egregious crimes.

“This case underscores the continuing threat from those who seek to express their hatred through violence and the serious consequences these individuals face for such actions,” said Lisa Monaco, Assistant Attorney General for National Security.  “The sentence handed down today is the culmination of an outstanding investigation conducted jointly by federal, state and local law enforcement officials.
Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington, said, “I commend the law enforcement efforts at all phases of the investigation and prosecution of this matter.  This was one of the most thorough investigations that I have ever seen and involved multi-levels of law enforcement and multiple offices and other professionals.  Our office received significant assistance from the Civil Rights Division and National Security Division of the Justice Department.  All who participated should be thanked and congratulated, this was truly a team effort.”  U.S. Attorney Ormsby also added, “It is very important that Mr. Harpham receive the significant sentence that he did today to send the message to our community that hate and violence will not be tolerated.”

“Today, Mr. Harpham faces the consequences of his hate-filled act.  A prototypical “lone wolf” such as Mr. Harpham presents a particularly vexing threat—with nothing foreshadowing a carefully planned attack,” said Laura M. Laughlin, Special Agent-in-Charge of the FBI Seattle office.  “However, the actions of everyday citizens, the Spokane Police Department, the Spokane Explosives Disposal Unit, and the round-the-clock work of Joint Terrorism Task Force and its local, state, and federal members unraveled Mr. Harpham’s plan and swiftly brought him to justice.  We will continue to tirelessly disrupt and rapidly apprehend others who attempt to express their hatred though violence.”

This investigation was conducted by the Inland Northwest Joint Terrorism Task Force comprised of the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service, the Federal Air Marshal Service, the U.S. Border Patrol, the Department of Homeland Security – Homeland Security Investigations, the Spokane Police Department, the Spokane County Sheriff’s Office and the Washington State Patrol, and with assistance from Stevens County Sheriff’s Office and Washington State Employment Security Department.  The Stevens County Road Department also provided significant assistance.”

AON CORP. SETTLES WITH SEC OVER VIOLATIONS OF THE FOREIGN CORRUPT PRACTICES ACT

The following excerpt is from the SEC website:

December 20, 2011
"The Securities and Exchange Commission today filed a settled enforcement action in the U.S. District Court for the District of Columbia against Aon Corporation (Aon), an Illinois-based global provider of risk management services, insurance and reinsurance brokerage, alleging violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA). Aon will pay a total of approximately $14.5 million in disgorgement and prejudgment interest to the SEC. In a related action, Aon will pay a $1.764 million criminal fine to the U.S. Department of Justice (DOJ).
The Commission’s complaint alleges that Aon’s subsidiaries made over $3.6 million in improper payments to various parties between 1983 and 2007 as a means of obtaining or retaining insurance business in those countries. The complaint alleges that some of the improper payments were made directly or indirectly to foreign government officials who could award business directly to Aon subsidiaries, who were in position to influence others who could award business to Aon subsidiaries, or who could otherwise provide favorable business treatment for the company’s interests. The complaint alleges that these payments were not accurately reflected in Aon’s books and records, and that Aon failed to maintain an adequate internal control system reasonably designed to detect and prevent the improper payments.
According to the Commission’s complaint, the improper payments made by Aon’s subsidiaries fall into two general categories: (i) training, travel, and entertainment provided to employees of foreign government-owned clients and third parties; and (ii) payments made to third-party facilitators. Aon subsidiaries made these payments in various countries around the world, including Costa Rica, Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar, and Bangladesh. The complaint alleges that Aon realized over $11.4 million in profits from these improper payments.
Without admitting or denying the allegations in the Commission’s complaint, Aon consented to the entry of a final judgment permanently enjoining it from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and ordering the company to pay disgorgement of $11,416,814 in profits, together with prejudgment interest thereon of $3,128,206, for a total of $14,545,020. Aon’s proposed settlement offer has been submitted to the court for its consideration. In a related criminal proceeding, DOJ announced today that Aon has entered into a non-prosecution agreement under which the company will pay a $1.764 million criminal fine for the misconduct. Aon cooperated with the Commission’s and DOJ’s investigations and implemented remedial measures during the course of the investigations.
The Commission acknowledges the assistance of the Fraud Section of DOJ’s Criminal Division, the Federal Bureau of Investigation, and the Financial Services Authority of the U.K. in this matter."

CHINA HOLDS ANTIMONOPOLY TALKS WITH U.S.

The following excerpt is from the Department of Justice, Antitrust Division website:

November 29, 2011
“WASHINGTON — Acting Assistant Attorney General Sharis Pozen of the Department of Justice’s Antitrust Division and Federal Trade Commission (FTC) Chairman Jon Leibowitz today met with a delegation from China’s Ministry of Commerce (MOFCOM) to discuss antitrust merger enforcement. The delegation was led by China International Trade Representative and MOFCOM Vice Minister Gao Hucheng. MOFCOM is responsible for handling reviews of mergers and acquisitions under China’s Antimonopoly Law.
This is the first high-level MOFCOM visit to the U.S. antitrust agencies since the department and the FTC signed an antitrust memorandum of understanding (MOU) with China’s three antimonopoly agencies in July 2011, to promote communication and cooperation among the antitrust enforcement agencies in both countries.
The discussion topics in today’s meeting included recent antitrust enforcement and policy developments, the role of antitrust enforcement in times of economic downturn and cooperation among the three agencies on merger enforcement issues. The three agencies developed further guidance for cooperation on investigations when one of the U.S. antitrust agencies and MOFCOM are reviewing the same merger.
Department and FTC officials said that the discussions with the delegation from MOFCOM were productive, and that they look forward to continuing their cooperative relationship.”

3 FAMILY MEMBERS PLEAD GUILTY TO $60 MILLION DOLLAR MEDICARE FRAUD SCHEME

The following excerpt is from the Department of Justice Website:

"WASHINGTON – Three operators of a Miami health care agency pleaded guilty yesterday for their participation in a $60 million home health Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Roberto Gonzalez, 61, Olga Gonzalez, 57, and their son, Fabian Gonzalez, 39, each pleaded guilty before U.S. District Judge Ursula Ungaro in the Southern District of Florida to one count of conspiracy to commit health care fraud.

According to the court documents, Roberto Gonzalez was the president and Olga Gonzalez was the vice president of Nany Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.  Their son, Fabian, was head of the Quality and Assurance Department for Nany.  

                                                                                                         

According to plea documents, the Gonzalezes conspired with patient recruiters, including Miami-area “staffing agencies,” for the purpose of billing the Medicare program for unnecessary home health care and therapy services.   These recruiters and “staffing agencies” recruited patients to Nany, and provided prescriptions, Plans of Care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.   In return, the Gonzalezes and their co-conspirators paid these staffing agencies and patient recruiters kickbacks and bribes.   The Gonzaleses then used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services, knowing that their behavior violated federal criminal laws.

According to plea documents, nurses and office staff at Nany falsified patient files, including by documenting non-existent “symptoms” for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services when, in fact, the beneficiaries did not actually qualify for such services.   The fictitious symptoms, which suggested that the patients were unable to self-inject insulin and were homebound, formed the basis for the false claims for home health care benefits and medically unnecessary therapy filed under the Medicare program.  

From approximately January 2006 through November 2009, Roberto, Olga and Fabian Gonzalez, and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare and Medicare paid approximately $40 million on those claims.

The pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.   The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida."

ARYAN BROTHRHOOD MEMBER CONVICTED ON FEDERAL CRIMES IN TEXAS

The following excerpt is from the Department of Justice website:

Friday, December 2, 2011
“Aryan Brotherhood of Texas Member Convicted of Federal Racketeering and Firearms Charges Related to Jefferson County, Texas, Shooting
WASHINGTON – A member of the Aryan Brotherhood of Texas (ABT) was convicted yesterday of racketeering and firearms charges related to his role in the 2009 shooting of a man in Jefferson County, Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John M. Bales of the Eastern District of Texas.
John Oliver Manning, aka “Fish,” 52, of Pasadena, Texas, was charged by a federal grand jury on Mar. 17, 2011, with violent crimes in aid of racketeering activity. The activities include conspiracy to commit assault with a dangerous weapon, assault with a dangerous weapon, using and carrying a firearm during and in relation to a crime of violence and possession of a firearm by a convicted felon.
Co-defendant Joshua Mark Bodine, aka “Desperado,” 32, of Vidor, Texas, pleaded guilty Oct. 11, 2011, to assault with a dangerous weapon in aid of racketeering activity. Bodine has been in custody since his arrest on Feb. 24, 2011, and Manning has been in custody since his arrest on Sept. 9, 2009.
According to the indictment, the ABT is a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. The ABT was established in the early 1980s within the Texas prison system. It modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to the indictment, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, the ABT expanded its focus to create a criminal enterprise that includes illegal activities for profit.
According to evidence presented at trial, the ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as “direct orders.”
The evidence at trial established that on Sept. 7, 2009, Manning shot and wounded ABT associate Matthew Fails in Nederland, Texas, on the orders of Bodine. Specifically, Manning approached Fails with a firearm and a pair of handcuffs in an attempt to collect a debt on Bodine’s behalf, and ultimately shot Fails. Fails was declared brain-dead, but later regained consciousness after emergency surgery. A surgeon testified that the wound Fails received caused “agonizing pain” and that Fails “would not ever be the same.”
At sentencing, Manning faces up to life in prison and a mandatory minimum sentence of 25 years in prison. Sentencing dates have not been scheduled for Manning and Bodine.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Nederland Police Department; Orange County, Texas, Constable’s Office, Precinct 2; Jefferson County, Texas, Sheriff’s Office; Williamson County, Texas, Sheriff’s Office; Chambers County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Mont Belvieu, Texas, Police Department; Texas Department of Criminal Justice. The case was prosecuted by Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section and Special Assistant U.S. Attorney Baylor Wortham of the Eastern District of Texas.”

"VIOLENT CRIME DECREASES" SO SAYS THE U.S. ATTORNEY GENERAL AND FBI

The following excerpt is from the Department of Justice website:

WASHINGTON – Attorney General Eric Holder today issued the following statement on the release of the FBI’s Preliminary Uniform Crime Report showing a continued decrease in violent crime nationwide.  The results show that the number of violent crimes reported in the first six months of 2011 declined 6.4 percent when compared with figures from the first six months of 2010.   

“Safe neighborhoods are the underpinning of our nation’s prosperity, and this Department of Justice has made protecting the American people from violent crime a top priority.  The results of the 2011 Preliminary Uniform Crime Report show that the decline in violent crime in recent years continued in the first half of 2011.

“Working with our state, local and tribal partners, federal prosecutors and agents have increased community participation in our shared efforts to hold accountable those whose illegal activity spread fear into our communities.  We have targeted violent criminals involved in gang-related activity from Florida to California, organized crime networks in cities across this country and drug trafficking organizations that extend beyond our borders.

“Ensuring that law enforcement has the necessary resources is critical to continuing our aggressive fight against violent crime.  Although we can all be encouraged that violent crime rates continue to decline nationwide, it is clear that we must remain vigilant and more work remains to be done.   In recent months, we have seen an alarming spike in law enforcement fatalities and the number of line-of-duty law enforcement deaths.   This is appalling and unacceptable.   And it is why we will continue making investments to provide life-saving equipment, training and information-sharing capabilities to our courageous men and women in the field.

“We also recognize that enforcement alone will not prevent every future crime, which is why we’ve launched initiatives in communities across this country to fight recidivism and support reentry programs.  We will continue to support our state, local and tribal partners and to implement the tough, smart policing policies that we know make a difference in the fight against violent crime."

MICHIGAN NON-INCOME TAX FILERS SENTENCED TO PRISON

December 19, 2011
“WASHINGTON - David A. Cusumano of Plymouth, Mich., and Henry Nino, a resident of Northville, Mich., were sentenced today following their pleas of guilty to tax evasion, the Justice Department and Internal Revenue Service Criminal Investigation (IRS-CI) announced today.  District Court Judge Gerald E. Rosen, presiding in Detroit, sentenced Cusumano to 15 months and Nino to 18 months in prison.  Judge Rosen also imposed three years of supervised release for each defendant.

According to court documents, Cusumano was a mechanical engineer who worked at various companies throughout Michigan.   Nino was an electrician with an automotive company.  Despite earning substantial income in their respective jobs, for multiple years, Cusumano and Nino failed to file income tax returns and failed to pay taxes due and owing to the IRS, Cusumano during the calendar years 2003-2008 and Nino during the calendar years 2004-2008.   Both men successfully prevented their employers from withholding federal income taxes from their wages by submitting false IRS Forms W-4 to their employers on which they falsely claimed they were “exempt” from income tax withholding.  A Form W-4 is a document that an employee submits to an employer to assist the employer in withholding the correct amount of income taxes from the employee’s pay.

The plea agreements state that in addition to failing to file income tax returns and submitting false Forms W-4 to their employers, the two men also attempted to prevent the IRS from determining their tax liabilities and collecting their unpaid taxes by participating in several obstructive schemes.   Both men paid tax fraud promoters, including a Florida-based organization called American Rights Litigators/Guiding Light of God Ministries to submit frivolous and obstructive correspondence to the IRS and to the defendants’ employers, including false complaints that wrongly accused IRS employees of criminal activity.   Cusumano and Nino also submitted multiple fake financial instruments to the IRS in a failed attempt to pay off their outstanding tax debts.

Court documents state that Nino also attempted to prevent the IRS from collecting his unpaid taxes for the years 1996, 1997 and 2000-2003 by, among other things, transferring title of his personal residence to a nominee entity called the Michigan Natural Group, using money orders to make mortgage payments and cashing paychecks rather than depositing them in a bank account.

Cusumano caused a tax loss to the government of $390,145.   Nino’s conduct resulted in a tax loss of $366,088.   Under the terms of their plea agreements, both are required to make restitution to the IRS in the amount of their unpaid taxes.”

.

U.S. DEPARTMENT OF JUSTICE FINDS EAST HAVEN POLICE DEPARTMENT HAS PATTERN OF DISCRIMINATION AGAINST LATINOS

The following excerpt is from the Department of Justice website: 

December 19, 2011

"WASHINGTON – Following a thorough investigation, the Justice Department today announced its findings that the East Haven Police Department (EHPD) has engaged in a pattern or practice of discrimination against Latinos in violation of the Constitution and federal law.

Launched in September 2009, the investigation was conducted under provisions of the Violent Crime Control and Law Enforcement Act of 1994, the Omnibus Crime Control and Safe Streets Act of 1968, and Title VI of the Civil Rights Act of 1964.

Specifically, the investigation found that EHPD intentionally targets Latinos for traffic enforcement and treats Latino drivers more harshly after traffic stops in violation of the Fourteenth Amendment, Title VI and the Safe Streets Act.   The investigation further found that EHPD has willfully enabled discrimination by failing to put in place basic law enforcement practices and procedures used by law enforcement agencies across the country to prevent discrimination.

The Department of Justice findings are based on:

• a statistical analysis demonstrating that Latino drivers are disproportionally targeted for traffic stops;
• an analysis of traffic stops showing that officers use non-standard and, in some cases, unacceptable, justifications for stops that are not employed against non-Latino drivers, and post-stop treatment that shows EHPD treating Latino drivers more punitively than non-Latino drivers;
• serious incidents of abuse of authority and retaliation against individuals who criticize or complain of EHPD’s discriminatory treatment of Latinos; and
• a failure to remedy a history of discrimination and a deliberate indifference to the rights of minorities, including EHPD’s failure to guide, train, supervise and discipline officers engaged in unlawful discrimination.

The department also found a number of serious deficiencies in EHPD’s management, oversight and accountability systems that have enabled discriminatory policing by EHPD officers.   These deficiencies include:

• a failure to collect and report traffic stop data in accordance with state racial profiling laws;
• a failure to implement policies prohibiting discrimination;
• a failure to hold officers accountable through internal investigations;
• a failure to provide limited English proficient Latinos with appropriate language access; and
• a failure to abide by individuals’ consular rights.

In addition, although not making formal findings, the department noted two areas of serious concern regarding allegations of use of excessive force and unconstitutional searches and seizures.   The department also expressed concern with EPHD leadership creating and condoning a hostile and intimidating environment for anyone seeking to provide relevant information in this investigation.  

“These findings show that the East Haven Police Department systematically violated the constitutional rights of people it is supposed to serve and protect.   By failing to have in place the most basic systems designed to protect individuals from unlawful discrimination, EHPD has fallen short of its obligations,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The recommendations we make will put the police department on a path towards correcting the serious deficiencies that have long plagued the department and regaining the community’s trust.”

“The residents of East Haven should not have to choose between effective crime-fighting and constitutional policing,” said U.S. Attorney David Fein. “By addressing the serious deficiencies we uncovered, EHPD will not only ensure constitutional policing, but will also give the men and women of EHPD the support they need to combat crime effectively.”

The Justice Department’s comprehensive and independent investigation was conducted by department attorneys, investigators and police executives and other experts who interviewed EHPD officers and residents in East Haven.   The investigation also involved exhaustive review of documents and data, including EHPD policies and procedures, incident reports and traffic stop activity.   This civil investigation was separate from any ongoing criminal investigations of EHPD.

Federal law permits the attorney general to initiate a civil action in the name of the United States against the town of East Haven, EHPD and its officials to remedy the pattern or practice of misconduct and ensure compliance with the Constitution and federal law.   The department will work with town officials to obtain voluntary compliance through a court-enforceable agreement that will lead to sustainable reforms. Should EHPD and East Haven choose to not cooperate in reaching an agreed-upon remedy, the department may seek relief unilaterally from the federal courts.

This investigation was conducted by the Special Litigation Section of the Civil Rights Division in coordination with the U.S. Attorney’s Office for the District of Connecticut and with the assistance of expert police consultants."

TEXAS COMPANY PLEADS GUILTY TO DEFRAUDING MEDICARE

The following excerpt is from the Department of Justice website:

Tuesday, November 29, 2011
“Owner of Houston Health Care Company Pleads Guilty to Defrauding Medicare
WASHINGTON – The owner of a Houston health care company pleaded guilty today in connection with a Medicare fraud scheme involving durable medical equipment (DME), announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Akinsunbo Akinbile, 44, pleaded guilty before U.S. District Judge Keith P. Ellison in Houston to eight counts of health care fraud.
Akinbile admitted that he was the owner and operator of Hallco Medical Supply, a company that purported to provide DME to Medicare beneficiaries. According to court documents, Hallco submitted claims to Medicare for DME, including orthotic devices, that were medically unnecessary and/or never provided. Many of the orthotic devices were components of “arthritis kits,” and purported to be for the treatment of arthritis-related conditions. The arthritis kits generally contained a number of devices including braces for both sides of the body and related accessories such as heat pads. In total, from June 2007 through May 2009, Hallco submitted approximately $737,770 in fraudulent claims to Medicare.
At sentencing, scheduled for Feb. 15, 2012, Akinbile faces a maximum sentence of 10 years in prison.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Stephen L. Morris of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG) and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was prosecuted by Trial Attorney Laura M.K. Cordova and Assistant Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”

MAJOR GOVERNMENT CRACKDOWN AGAINST WEBSITES ALLEGEDLY SELLING COUTERFEIT GOODS

150 WEBSITES SELLING COUNTERFEIT GOODS GET A GOVERNMENT SMACK DOWN

The following excerpt is from the Department of Justice website:

Monday, November 28, 2011
WASHINGTON – Seizure orders have been executed against 150 domain names of commercial websites engaged in the illegal sale and distribution of counterfeit goods and copyrighted works as part of Operation In Our Sites, the Department of Justice, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the ICE-led National Intellectual Property Rights Coordination Center (IPR Center), and the FBI Washington Field Office announced today.
“Through this operation we are aggressively targeting those who are selling counterfeit goods for their own personal gain while costing our economy much-needed revenue and jobs,” said Attorney General Eric Holder. “Intellectual property crimes harm businesses and consumers, alike, threatening economic opportunity and financial stability, and today we have sent a clear message that the Department will remain ever vigilant in protecting the public’s economic welfare and public safety through robust intellectual property enforcement.”
“For most, the holidays represent a season of good will and giving, but for these criminals, it’s the season to lure in unsuspecting holiday shoppers,” said ICE Director John Morton. “More and more Americans are doing their holiday shopping online, and they may not realize that purchasing counterfeit goods results in American jobs lost, American business profits stolen and American consumers receiving substandard products. And the ramifications can be even greater because the illicit profits made from these types of illegal ventures often fuel other kinds of organized crime.”
“The sale of counterfeit goods cheats consumers and robs legitimate businesses – both large and small – of the fruits of their hard-earned work,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “We will not tolerate those who seek to profit by abusing the Internet and stealing intellectual property at the expense of authors, artists and inventors. The Department of Justice will continue to work aggressively to combat intellectual property crime.”
“The theft of intellectual property, to include the trafficking of counterfeit goods, creates significant financial losses,” said FBI Section Chief Zack Miller of the Cyber Division. “The FBI aggressively pursues intellectual property enforcement through traditional investigative methods, intelligence initiatives and coordinated efforts with private industry and domestic and foreign law enforcement partners.”
The 150 seized domains are in the custody of the federal government. Visitors to the sites will now find a seizure banner that notifies them that the domain name has been seized by federal authorities and educates them that willful copyright infringement is a federal crime.
During this operation, federal law enforcement agents made undercover purchases of a host of products, including professional sports jerseys, golf equipment, DVD sets, footwear, handbags and sunglasses, representing a variety of trademarks from online retailers who were suspected of selling counterfeit products. In most cases, the goods were shipped directly into the United States from suppliers in other countries. If the trademark holders confirmed that the purchased products were counterfeit or otherwise illegal, seizure orders for the domain names of the websites that sold the goods and associated websites were obtained from federal magistrate judges.
This operation is the eighth phase of Operation In Our Sites, a sustained law enforcement initiative to protect consumers by targeting counterfeit and piracy on the Internet. This is the second year that a phase of Operation In Our Sites has coincided with Cyber Monday. In November 2010, 82 websites were seized during the Cyber Monday-related operation.
Since the operation’s June 2010 launch, the IPR Center has seized a total of 350 domain names, and the seizure banner has received more than 77 million individual views.
Of the 350 domain names seized, 116 have now been forfeited to the U.S. government. The federal forfeiture process affords individuals who have an interest in the seized domain names a period of time after the “Notice of Seizure” to file a petition with a federal court and additional time after the “Notice of Forfeiture” to contest the forfeiture. If no petitions or claims are filed, the domain names become property of the U.S. government.
Additionally, a public service announcement (PSA), launched in April 2011, appears on each of the 116 forfeited domain names. This video educates the public about the economic impact of trademark counterfeiting and copyright infringement.”

FREDDIE AND FANNIE FORMER EXECS CHARGED BY SEC WITH SECUITIES FRAUD

The following excerpt is from the Securities and Exchange Commission website:

“Washington, D.C., Dec. 16, 2011 — The Securities and Exchange Commission today charged six former top executives of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) with securities fraud, alleging they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives. In entering into these Agreements, the Commission considered the unique circumstances presented by the companies' current status, including the financial support provided to the companies by the U.S. Treasury, the role of the Federal Housing Finance Agency as conservator of each company, and the costs that may be imposed on U.S. taxpayers.

Three former Fannie Mae executives - former Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund - were named in the SEC's complaint filed in U.S. District Court for the Southern District of New York.
The SEC also charged three former Freddie Mac executives — former Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius — in a separate complaint filed in the same court.
"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, Director of the SEC's Enforcement Division. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors."

The SEC is seeking financial penalties, disgorgement of ill-gotten gains with interest, permanent injunctive relief and officer and director bars against Mudd, Dallavecchia, Lund, Syron, Cook, and Bisenius. Both lawsuits allege that the former executives caused the federal mortgage firms to materially misstate their holdings of subprime mortgage loans in periodic and other filings with the Commission, public statements, investor calls, and media interviews. The suit involving the Fannie Mae executives also includes similar allegations regarding Alt-A mortgage loans. The suit against the former Fannie Mae executives alleges they made misleading statements — or aided and abetted others — between December 2006 and August 2008. The former Freddie Mac executives are alleged to have made misleading statements — or aided and abetted others - between March 2007 and August 2008.

The SEC's complaint against the former Fannie Mae executives alleges that, when Fannie Mae began reporting its exposure to subprime loans in 2007, it broadly described the loans as those "made to borrowers with weaker credit histories," and then reported — with the knowledge, support, and approval of Mudd, Dallavecchia, and Lund — less than one-tenth of its loans that met that description. Fannie Mae reported that its 2006 year-end Single Family exposure to subprime loans was just 0.2 percent, or approximately $4.8 billion, of its Single Family loan portfolio. Investors were not told that in calculating the Company's reported exposure to subprime loans, Fannie Mae did not include loan products specifically targeted by Fannie Mae towards borrowers with weaker credit histories, including more than $43 billion of Expanded Approval, or "EA" loans.
Fannie Mae's executives also knew and approved of the decision to underreport Fannie Mae's Alt-A loan exposure, the SEC alleged. Fannie Mae disclosed that its March 31, 2007 exposure to Alt-A loans was 11 percent of its portfolio of Single Family loans. In reality, Fannie Mae's Alt-A exposure at that time was approximately 18 percent of its Single Family loan holdings.

The misleading disclosures were made as Fannie Mae's executives were seeking to increase the Company's market share through increased purchases of subprime and Alt-A loans, and gave false comfort to investors about the extent of Fannie Mae's exposure to high-risk loans, the SEC alleged.

In the complaint against the former Freddie Mac executives, the SEC alleged that they and Freddie Mac led investors to believe that the firm used a broad definition of subprime loans and was disclosing all of its Single-Family subprime loan exposure. Syron and Cook reinforced the misleading perception when they each publicly proclaimed that the Single Family business had "basically no subprime exposure." Unbeknown to investors, as of December 31, 2006, Freddie Mac's Single Family business was exposed to approximately $141 billion of loans internally referred to as "subprime" or "subprime like," accounting for 10 percent of the portfolio, and grew to approximately $244 billion, or 14 percent of the portfolio, as of June 30, 2008.

The SEC's complaint alleges that Mudd violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5(b) and 13(a)14(a) thereunder, and Section 17(a)(2) of the Securities Act of 1933 (the "Securities Act"); and that Mudd aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder. The SEC complaint also alleges that Dallavecchia violated Section 17(a)(2) of the Securities Act and aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder. Finally, the SEC complaint alleges that Lund aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder.
The SEC's complaint alleges that Syron and Cook violated Exchange Act Section 10(b) and Rule 10b-5(b) thereunder and Securities Act Section 17(a)(2); that Syron violated Exchange Act Rule 13a-14; and that Syron, Cook and Bisenius aided and abetted violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5(b), 12b-20 and 13a-13 thereunder.
The SEC's investigation of Fannie Mae was conducted by Senior Attorneys Natasha S. Guinan, Christina M. Marshall, Liban Jama, Mona L. Benach, and Associate Chief Accountant, Peter Rosario, under the supervision of Assistant Director Charles E. Cain, and Associate Director Stephen L. Cohen. Sarah Levine and James Kidney will lead the SEC's litigation efforts.”

SEC CHARGES 13 INDIVIDUALS IN ALLEGED PUMP AND DUMP SCAM

The following excerpt is from the SEC website:

“The Securities and Exchange Commission announced charges today against Daniel “Rudy” Ruettiger and twelve other individuals who participated in a pump-and-dump scheme involving the stock of Rudy Nutrition, a now defunct Nevada corporation. The SEC's complaint, filed in the United States District Court for the District of Nevada, alleges that Rudy Ruettiger, who is known for having inspired the motion picture “Rudy,” founded Rudy Nutrition to compete with Gatorade in the sports drink market. The SEC alleges that while Rudy Nutrition produced and sold modest amounts of a sports drink called “Rudy,” with the tagline “Dream Big! Never Quit!,” the company primarily served as a vehicle for a pump-and-dump scheme in 2008. As alleged in the complaint, participants in this scheme made false and misleading statements in company press releases, SEC filings, and promotional materials, and engaged in manipulative trading to artificially inflate the price of Rudy Nutrition stock, while selling unregistered shares to investors. The complaint alleges that the scheme generated more than $11 million in illicit profits.
The SEC’s complaint names thirteen defendants and includes the following allegations:
Daniel “Rudy” Ruettiger, a resident of Las Vegas, Nevada, was the CEO of Rudy Nutrition. Ruettiger made false statements in SEC filings and authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Rocco “Rocky” Brandonisio, a resident of Las Vegas, Nevada, was the President of Rudy Nutrition. Brandonisio made false statements in an SEC filing and authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Stephen DeCesare, a resident of Las Vegas, Nevada, is a stock promoter. DeCesare was the primary organizer of the scheme. He recruited other defendants to manipulate the price of Rudy Nutrition stock, and directed the issuance of false company press releases.
Pawel P. Dynkowski, a citizen of Poland, is a stock promoter. Dynkowski manipulated the price of Rudy Nutrition stock using wash sales, matched orders, and other trading coordinated with the issuance of false company press releases.
Kevin S. Kaplan, a resident of Las Vegas, Nevada, was the Chief Financial Officer of Rudy Nutrition. Kaplan authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Gregg R. Mulholland, a resident of Huntington Beach, California, is a stock promoter. As part of the scheme, Mulholland made false statements about the company in mailers sent to two million domestic households, and controlled nominee accounts that sold shares in the scheme.
Mehmet Mustafoglu, a resident of Beverly Hills, California, was a consultant to Rudy Nutrition. Mustafoglu sold unregistered shares of Rudy Nutrition during the scheme.
Joseph A. Padilla, a resident of San Marcos, California, is a stock promoter and a former registered representative at the broker-dealer Scottsdale Capital Advisors LLC. Padilla sold unregistered shares of Rudy Nutrition during the scheme.
Angelo R. Panetta, a resident of Montebello, California, is a stock promoter. Panetta made false statements about Rudy Nutrition on an Internet radio show and in an Internet chat room, and sold unregistered shares of the company during the scheme.
Kevin J. Quinn, a resident of Santa Monica, California, is a business consultant and a disbarred attorney. Quinn arranged for the company to issue unregistered shares to nominee accounts used to sell shares during the scheme.
Andrea M. Ritchie, a resident of San Marcos, California, is a former registered representative at the broker-dealer Scottsdale Capital Advisors LLC. Ritchie sold shares of Rudy Nutrition for other defendants without conducting a reasonable inquiry as to the registration status of the shares.
Chad P. Smanjak, a citizen of the Republic of South Africa, is a stock promoter. Smanjak directed Dynkowski’s manipulative trading, and controlled a series of Panamanian companies that sold shares during the scheme.
Gary J. Yocom, a resident of Altamonte Springs, Florida, is a former registered representative at Thomas Anthony & Associates, Inc., a now defunct broker-dealer. Yocom sold shares of Rudy Nutrition for other defendants without conducting a reasonable inquiry as to the registration status of the shares.
As a result of the conduct described in the complaint, the Commission alleges that Ruettiger, Brandonisio, DeCesare, Dynkowski, Kaplan, Panetta, Quinn, and Smanjak violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 10b-5; that Mulholland violated Sections 5(a), 5(c), 17(a), and 17(b) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5; and that Padilla, Ritchie, Mustafoglu and Yocom violated Sections 5(a) and 5(c) of the Securities Act. The Commission’s complaint seeks against each defendant permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties, and, as to certain defendants, orders barring them from participating in penny stock offerings and/or serving as officers and directors of public companies.
Without admitting or denying the allegations in the complaint, nine of the defendants – Ruettiger, Brandonisio, DeCesare, Kaplan, Mustafoglu, Padilla, Panetta, Quinn, and Yocom – have agreed to final judgments, which are subject to Court approval:
Ruettiger has consented to a final judgment that orders disgorgement of $185,750, prejudgment interest of $11,366, and a civil penalty of $185,750, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5;

Brandonisio has consented to a final judgment that orders a civil penalty of $50,000, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

DeCesare has consented to a final judgment that orders disgorgement of $1,341,366 and prejudgment interest of $108,744, bars him participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Kaplan has consented to a final judgment that orders a civil penalty of $25,000, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company for a period of five years, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Mustafoglu has consented to a final judgment that orders disgorgement of $363,603, prejudgment interest of $31,765, and a civil penalty of $40,000, bars him from participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act.

Padilla has consented to a final judgment that orders disgorgement of $197,427, prejudgment interest of $18,128, and a civil penalty of $100,000, bars him from participating in the offering of any penny stock for a period of three years, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act. Additionally, in related administrative proceedings, Padilla has consented to a Commission Order barring him from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.

Panetta has consented to a final judgment that orders disgorgement of $175,000 and prejudgment interest of $21,692, bars him participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Quinn has consented to a final judgment that orders disgorgement of $197,286 and prejudgment interest of $17,755, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Yocom has consented to a final judgment that orders disgorgement of $166,250 and prejudgment interest of $20,608, bars him from participating in the offering of any penny stock for a period of three years, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act. Additionally, in related administrative proceedings, Yocom has consented to a Commission Order barring him from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.
In addition, two defendants – Mulholland and Ritchie – have agreed to bifurcated judgments which are subject to Court approval:
Mulholland has consented to a judgment that bars him from participating in the future offering of any penny stock, permanently enjoins him from violating Sections 5(a), 5(c), 17(a), and 17(b) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5, and provides that upon subsequent motion the Court will determine issues relating to monetary relief.

Ritchie has consented to a judgment that bars her from participating in the offering of any penny stock for a period of three years, permanently enjoins her from violating Sections 5(a) and 5(c) of the Securities Act, and provides that upon subsequent motion the Court will determine issues relating to monetary relief. In related administrative proceedings, Ritchie has also consented to a Commission Order barring her from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.
The SEC thanks the following agencies for their cooperation and assistance in connection with this matter: the U.S. Attorney’s Office for the Central District of California; the U.S. Attorney’s Office for the District of Delaware; United States Immigration and Customs Enforcement, Department of Homeland Security, Homeland Security Investigations; and the Department of the Treasury, Internal Revenue Service, Criminal Investigation.”