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

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 9, 2016

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

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

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Inspector General Michael McCarthy of EXIM Bank made the announcement.

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

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

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

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

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

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

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 8, 2016

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

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

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

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

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

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

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

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

TWO SENTENCED FOR ROLES IN FILING FALSE TAX RETURN CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 8, 2016

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

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

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

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

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

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

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

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

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

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, June 7, 2016

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

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

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

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

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

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

DOJ ISSUES DRAFT GUIDANCE REGARDING FORENSIC SCIENCE LAB REPORTS AND TESTIMONY

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, June 3, 2016

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

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

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

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

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

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

MAN SENTENCED FOR TAX EVASION AND PILOTING PLANE WITHOUT A LICENSE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 2, 2016

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

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

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

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

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

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

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

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, June 2, 2016

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

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

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement after the indictment was unsealed today.

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

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

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

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

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

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

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

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

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

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

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

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

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

TWO IRS, SSA SCAMMERS SENT TO PRISON

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, May 31, 2016

Virginia Couple Sentenced to Prison in Tax Fraud Scheme

Defendants Submitted False Information to the IRS and Social Security Administration

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

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

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

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

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

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

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

SHERIFF TO FACE FRAUD AND OTHER CHARGES STEMMING FROM SELLING E-CIGARETTES IN JAIL

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, May 27, 2016

Tennessee Sheriff Indicted by Federal Grand Jury on Conspiracy, Fraud and Related Charges

Chief Administrative Deputy and Sheriff’s Uncle also Indicted

A county sheriff and two other men were indicted for their roles in the formation, marketing and operation of a private company and the concealment and misrepresentation of their involvement with the business, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Jack Smith of the Middle District of Tennessee.

Robert F. Arnold, 40, Sheriff of Rutherford County, Tennessee; Chief Deputy Joe L. Russell II, 49, also of Rutherford County; and John Vanderveer, 58, of Marietta, Georgia, Arnold’s uncle, were charged in a 14-count indictment with honest services fraud, wire fraud, bribery concerning federal programs, extortion under color of official right, obstruction of justice and conspiracy.

The indictment alleges that Arnold, Russell and Vanderveer devised a scheme to exploit Arnold’s and Russell’s official positions to make tens of thousands of dollars selling e-cigarettes in the Rutherford County Jail.  Specifically, in October 2013, each defendant allegedly invested $3,000 to start JailCigs LLC, a private company that would allow friends and family members of inmates to purchase e-cigarettes online and have them shipped to the jail for distribution by jail personnel and use by inmates.  As part of its marketing strategy, JailCigs allegedly promised a $5 commission for every e-cigarette sold to the jail or detention facility.  In late 2013, Arnold and Russell introduced JailCigs into the Rutherford County Jail, JailCigs’s first and largest customer in Tennessee.  Over the next year and a half, JailCigs allegedly sold approximately 10,500 e-cigarettes for delivery to Rutherford County Jail inmates, totaling $156,975 in revenue.

Arnold and Russell allegedly used their official positions to make JailCigs profitable, including by allowing the company’s e-cigarettes to be admitted into the Rutherford County Jail as non-contraband; directing jail employees to perform tasks beneficial to JailCigs on county time; promoting JailCigs to other sheriff offices and counties; and waiving Rutherford County’s customary commission from the sale of JailCigs.  Arnold and Russell also failed to subject the business arrangement with JailCigs to a competitive bidding process and did not enter into a written contract with the company, despite being advised to do both things by the county attorney, according to the indictment.  Between December 2013 and April 2015, Arnold allegedly received $66,790 from JailCigs and Russell and Vanderveer each received roughly $50,000.

On the eve of the 2014 election, in which Arnold was running for reelection as Sheriff of Rutherford County, Russell allegedly emailed a JailCigs customer and reminded the customer that it was Arnold who brought the JailCigs program to the Rutherford County Jail for the enjoyment of inmates and if Arnold was not reelected, the program would come to an end.  The indictment alleges that Russell’s email implored the customer to “tell everyone you know to support Sheriff Arnold in his re-election.”

When various people raised questions and concerns about the propriety of the arrangement between JailCigs and Rutherford County, Arnold and Russell allegedly made misrepresentations that the arrangement had been approved by various officials, including the county attorney and the county auditor, and repeatedly denied that they were personally involved with JailCigs or were receiving any benefit from the sale of its product.  The indictment also alleges that in an effort to protect JailCigs’s ongoing business, Arnold subsequently made several false and misleading statements to the media about his role in and knowledge of JailCigs, including saying that he was unaware of Russell’s involvement with JailCigs and that he was “shocked” and “taken back” by the discovery.  Arnold allegedly also told the media that he had not received any income from JailCigs and had made a mistake when he listed JailCigs as a source of income on his state “Statement of Disclosure of Interests” form.  The day before making this statement, however, Arnold allegedly had deposited a $3,900 check from JailCigs.

The indictment also alleges that on April 17, 2015, after learning of the media reports and pending criminal investigation, Vanderveer met with the Tennessee sales representative for JailCigs and told her that “Joe” wanted her to destroy her commission tabulation sheets, which contained evidence of the scheme.

The charges in the indictment are merely allegations.  The defendants are presumed innocent until and unless convicted.

The Tennessee Bureau of Investigation and the FBI are investigating this case.  Trial Attorney Mark Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Cecil W. Vandevender of the Middle District of Tennessee are prosecuting the case.

DOJ ANNOUNCES CHARGES AGAINST FORMPER PLAYER FOR NBA

 FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, May 25, 2016

Former NBA Player Indicted on Charity Fraud Scheme

A federal grand jury sitting in Kansas City, Missouri, returned an indictment Monday, which was unsealed this morning, against a former professional basketball player and representative for the National Basketball Players Association (NBPA), charging him with corruptly interfering with the internal revenue laws, conspiracy to commit wire fraud, obstruction of justice and aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri.

The indictment alleges that Kermit Alan Washington, 64, used a charity he founded and operated, Project Contact Africa (PCA), to defraud donors, eBay and PayPal and the Internal Revenue Service (IRS).  In order to induce individuals, including former professional athletes, to make donations to PCA, Washington falsely represented that 100 percent of the donations would go to Africa.  However, Washington diverted charitable donations from PCA to buy gifts and pay personal expenses, including rent, vacations, jewelry and entertainment.

“Individuals who use charitable organizations to defraud donors and evade tax obligations inflict substantial harm on every U.S. taxpayer and cause untold damage to well-intentioned charitable endeavors,” said Acting Assistant Attorney General Ciraolo.  “The Department is committed to identifying those engaged in such criminal conduct and holding them accountable.”

“The federal indictment alleges this former NBA player used his celebrity status to exploit the good intentions of those who donated to a charity he founded, called Project Contact Africa,” said U.S. Attorney Dickinson. “According to the indictment, Washington profited by diverting hundreds of thousands of dollars in donations that was supposed to benefit a clinic in Africa for needy families and children, but instead bankrolled his own personal spending.”

It is alleged that Washington referred professional athletes to Ron Mix, a former professional football player and an attorney licensed in the state of California, whose practice focused on the filing of workers’ compensation claims on behalf of former professional athletes.  In exchange for the referrals, Mix made payments to PCA and claimed those amounts as charitable deductions on his personal tax returns.  Upon receipt of these payments, Washington diverted the funds for his own personal benefit.  Washington filed false individual income tax returns for 2010 through 2013, failing to report the funds he diverted from PCA and false Forms 990-EZ on behalf of PCA.  Washington also falsified PCA’s corporate minutes to obstruct the investigation and used the identity of another individual to perpetrate this scheme.

It is further alleged that Washington conspired with others to defraud eBay and PayPal, customers and donors of PCA by allowing the co-conspirators to use PCA’s name, tax-exempt status and IRS Employee Identification Number (EIN) with eBay and PayPal so the co-conspirators could avoid substantial listing and registration fees incurred in operating online, for-profit businesses.  Moreover, customers who made purchases falsely believed that 100 percent of the proceeds from the co-conspirators’ online eBay sales benefited PCA.  In exchange for allowing the co-conspirators to use PCA’s tax-exempt status, Washington received payments from the co-conspirators.

Washington was arrested yesterday in Los Angeles and had his initial appearance in U.S. District Court in the Central District of California. Washington was ordered to surrender his passport and released on bond and must wear a location monitoring device. Washington’s next court date is tentatively scheduled on June 16 before U.S. Magistrate Judge John T. Maughmer in the Western District of Missouri.

If convicted, Washington faces a statutory maximum sentence of three years in prison on the charge of corrupt interference with the internal revenue laws, 20 years in prison on the charge of conspiring to commit wire fraud, 20 years in prison on the charge of obstruction and a mandatory sentence of two years in prison for the charge of aggravated identity theft, which will be in addition to any other term of imprisonment he receives.  He also faces supervised release, a maximum fine of $250,000 on each count and restitution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Dickinson commended special agents of IRS-Criminal Investigation, Immigration and Customs Enforcement’s Homeland Security Investigations, who investigated the case and Assistant U.S.  Attorneys Patrick Daly and Curt Bohling of the Western District of Missouri, and Trial Attorney Ryan Raybould of the Tax Division, who are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

DOJ ANNOUCES CONVICTION OF MAN FOR FAILING TO DISCLOSE BEING A PRISON GUARD IN BOSNIA

FROM:  U.S. JUSTICE DEPARTMENT

Thursday, May 26, 2016

Georgia Man Convicted of Immigration Fraud for Failing to Disclose Role in Bosnian Prison Camp

Mladen Mitrovic, 54, of Loganville, Georgia, was found guilty by a federal jury of obtaining his U.S. citizenship by providing false and fraudulent information on his naturalization application, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John Horn of the Northern District of Georgia and Special Agent in Charge Nick S. Annan of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Atlanta.

Among other things, Mitrovic, who is originally from Bosnia and Herzegovina, failed to disclose his role as a prison guard in a detention camp, which was part of the “ethnic cleansing” that occurred during the Bosnian War from 1992 through 1995.  Mitrovic was convicted yesterday and his sentencing is scheduled for Aug. 25, 2016, before U.S. District Judge Amy Totenberg of the Northern District of Georgia.

“This case demonstrates the Justice Department’s continued commitment to denying safe haven to human rights violators,” said Assistant Attorney General Caldwell.  “No matter how long it takes, we will pursue justice, protect the integrity of our immigration system and seek accountability for crimes.”

“Mitrovic thought that he could bury his past and the horrific human rights violations he committed during the Bosnian War,” said U.S. Attorney Horn.  “A jury saw through his deceit and he will now be held accountable for failing to be truthful during the naturalization process.”

“Human rights violators who think they can conceal their past to escape accountability in the United States are sorely mistaken,” said Special Agent in Charge Annan.  “This individual tried to cheat our nation's immigration system by lying about his actions during the Bosnian Civil War.  This result shows that HSI is firmly committed to investigating and identifying criminals who seek to exploit our nation’s welcoming policy toward legitimate war refugees.”

According to evidence presented at trial, in 1996, Mitrovic was permitted to immigrate to the United States based on his statements in his refugee application that he feared persecution if he remained in Bosnia.  In 2002, he naturalized as an American citizen.  The evidence presented at trial also demonstrated that on his naturalization application, Mitrovic stated, among other things, that he had never persecuted anyone because of their race, religion or membership in a social group; he had never committed a criminal offense for which he had not been arrested; and he had never provided any false or misleading information to obtain an immigration benefit, such as refugee status.

In reality, as the trial evidence established, during the Bosnian War, Mitrovic had been a guard in one of the prison camps that the Bosnian Serb Army (VRS) opened in May 1992 to “ethnically cleanse” northwest Bosnia of non-Serb minorities.  At trial, one victim testified that Mitrovic had used a sharp military knife to carve a Christian cross into his chest, saying from that moment on, he “was going to be a Serb.”  Others testified that Mitrovic and other soldiers beat non-Serb prisoners into unconsciousness or threatened to kill them with automatic rifles.  Bosnian government documents also showed that in February 1996, Mitrovic applied for and was later awarded veterans’ benefits for his later military service in the VRS during the Bosnian War.  Trial evidence showed that Mitrovic failed to disclose any of this conduct or military service on his refugee and naturalization applications.

HSI investigated this case.  Assistant Deputy Chief Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorneys William Traynor and Jessica Morris of the Northern District of Georgia are prosecuting the case.

SOMALI RESTAURANT FIRE STARTER PLEADS GUILTY TO HATE CRIME

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, May 19, 2016

Man Who Set Fire to Somali Restaurant in Grand Forks, North Dakota, Pleads Guilty to Hate Crime

Matthew Gust, 25, pleaded guilty today to a federal hate crime for setting fire to a Somali restaurant in Grand Forks, North Dakota, announced Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Christopher C. Myers of the District of North Dakota.

According to his plea agreement, Gust admitted that he set the Dec. 8, 2015, fire in order to intimidate and interfere with the Somali employees and patrons of the Juba Café.  Early that morning, he drove to a gas station and purchased a small amount of gasoline, which he used to fill a 40 oz. beer bottle, turning it into a Molotov cocktail.  Gust then drove to the café, donned a face mask, punched a hole through the front window of the café, lit the Molotov cocktail, threw it through the window and fled.  The Molotov cocktail exploded on impact, creating an explosion and fire that engulfed Juba Café and caused at least $90,000 worth of damages.

Gust pleaded guilty to an arson charge as well as to the hate-crime charge.  He was by charged by information with those two counts on March 20, 2016.  He had earlier been indicted by a grand jury for using a destructive device in the commission of a crime; that charge will be dismissed as part of his plea agreement.

“We will not tolerate violence that attempts to divide us by targeting individuals based on their national origin,” said Principal Deputy Assistant Attorney General Gupta.  “The Civil Rights Division will continue to bring to justice those who attempt to intimidate and drive out members of our community.”

“This case exemplifies the strong partnership between local, state, and federal authorities working together to ensure the rights of all members of our community are protected from criminal conduct motivated by hate,” said U.S. Attorney Myers.  “In such circumstances, the response from all levels of law enforcement in North Dakota will be swift and certain.”

“Investigating these types of attacks will always remain a priority for the FBI,” said Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division.  “Attacks such as these have no place in our society and those who would commit them should know that they will be aggressively pursued by the FBI.”

“There is no place for hate in our communities, and these targeted acts of violence won’t be tolerated,” said Special Agent in Charge Jim Modzelewski of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) St. Paul, Minnesota, Field Division.  “ATF will continue to diligently investigate these crimes, to ensure that all of our residents feel safe and welcomed.”

Gust is scheduled to be sentenced on Aug. 29, 2016.  The hate-crime charge carries a maximum sentence of 20 years in prison, while the arson charge carries a maximum sentence of 10 years in prison.

This case was investigated by Grand Forks Police Department, the FBI and ATF.  The case is being prosecuted by Assistant U.S. Attorney Megan A. Healy of the District of North Dakota and Trial Attorney Dana Mulhauser of the Civil Rights Division’s Criminal Section.

CONTRACTOR PLEADS GUILTY TO BRIBING GSA EMPLOYEES

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, May 16, 2016

Former Government Contractor Pleads Guilty to Bribery

Bribes Paid to Former GSA Employees Totaling $15,000 in Exchange for Contract Work

A former government contractor pleaded guilty today to paying bribes to public officials related to work his company performed for the General Services Administration (GSA), announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Rod J. Rosenstein of the District of Maryland.

Moustafa Ahmed Ibrahim, 37, of Harrisonburg, Virginia, pleaded guilty today before U.S. District Judge George L. Russell III of the District of Maryland to one count of bribery.  A sentencing hearing is scheduled for Sept. 9, 2016.

In his plea agreement, Ibrahim admitted that between October 2007 and November 2009, he paid cash bribes totaling at least $15,000 to two GSA building managers in the Washington, D.C., metro area.  In exchange for the bribes, the two managers, both of whom have already pleaded guilty to bribery, awarded more than $200,000 in construction and maintenance work at the facilities they managed to Ibrahim’s general contracting company.  Each job was for less than $3,000 and so could be billed to a government credit card without an open bidding process, and Ibrahim admitted that in exchange for the work, that he would kick back approximately 10 percent of each job to the relevant GSA employee.  As part of the plea agreement, Ibrahim also agreed to forfeiture totaling $15,000.

The GSA Office of Inspector General is investigating the case.  Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Kelly O. Hayes of the District of Maryland are prosecuting the case.

CA RESIDENT PLEADS GUILTY TO MANUFACTURING GUNS, POSSESSION OF A MACHINEGUN

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, April 14, 2016

California Man Pleads Guilty to Manufacturing Guns and Dealing in Firearms and Possession of a Machinegun

Daniel Albert Crowninshield, 45, of Sacramento, California, pleaded guilty today to unlawfully manufacturing and dealing in firearms and possession of an unregistered machinegun, announced U.S. Attorney Benjamin B. Wagner for the Eastern District of California.

In his plea agreement, Crowninshield, who was also known by his online moniker “Dr-Death,” admitted that he operated an unlicensed firearms manufacturing business out of C&G Tool, a metal shop in North Sacramento.  Using sophisticated computer controlled machines, Crowninshield manufactured lower receivers for AR-15s and other firearms.  Crowninshield did not conduct background checks, enforce waiting periods, or complete firearm transaction paperwork.

Crowninshield advertised such services on at least one online firearm enthusiast forum.  This website mainly consists of forums where people ask and answer questions related to firearms.  Crowninshield, using the moniker Dr-Death was a prolific poster on the website.  Additionally, other members frequently posted about Dr-Death, including review of service provided and recommending that other users visit his shop.

“The manufacturing and unlicensed sale for profit of high-capacity firearms is a serious threat to public safety,” said U.S. Attorney Wagner.  “We will continue to vigorously investigate unlicensed gun dealers and prosecute violations of the federal firearms laws.”

“Daniel Crownshield aka Dr. Death owned and operated a machine shop where he allowed customers with unknown backgrounds to use his machinery to unlawfully manufacture firearms for profit,” said Special Agent in Charge Jill A. Snyder for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).  “ATF regulates the firearm industry and it is illegal to manufacture and sell firearms without possessing a federal firearms license and without conducting background checks.  ATF’s goal is to keep firearms out of the hands of prohibited individuals and prevent violent crime.”

This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the California Department of Justice’s Bureau of Firearms, with the assistance of the Sacramento Police Department, Sacramento County Sheriff’s Department and California Highway Patrol. Assistant United States Attorneys Justin Lee and Matthew Yelovich are prosecuting the case.

Crowninshield is scheduled to be sentenced by U.S. District Judge Judge Troy L. Nunley for the Eastern District of California on June 30.  Crowninshield faces a maximum statutory penalty of 10 years in prison and a $250,000 fine.  The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

UNIVERSAL ARYAN BROTHERHOOD MEMBER SENTENCED FOR DRUG TRAFFICKING, RACKETEERING

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, April 15, 2016

Universal Aryan Brotherhood Member Sentenced to 294 Months in Prison for Racketeering and Drug Trafficking

A member of the Universal Aryan Brotherhood (UAB) prison gang was sentenced in federal court today to 294 months in prison for conspiring to conduct a racketeering enterprise and related charges, announced Assistant Attorney General ­­­­­­­Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma.

Anthony Ramon Hall, aka Tony, 40, of Tulsa, Oklahoma, was sentenced today by U.S. District Judge Claire V. Eagan of the Northern District of Oklahoma, who also ordered Hall to serve five years of supervised release.

Hall pleaded guilty on June 9, 2015, and in connection with his plea, Hall acknowledged his membership in or association with the UAB, a violent, “whites only” prison-based gang with members and associates operating inside and outside of state prisons throughout Oklahoma.  According to the plea, Hall held a leadership position in the UAB as a “main-council” member.

Hall admitted that he conspired in racketeering activities to advance the UAB enterprise, including possessing and selling 500 grams or more of methamphetamine.  Specifically, Hall admitted to using smuggled cell phones to coordinate the delivery, receipt and sale of methamphetamine by UAB members and associates outside of prison who would then return profits to him while he was incarcerated.  Hall also coordinated the firebombing of automobile car that belonged to someone Hall believed had stolen from the UAB drug conspiracy, he admitted.

The U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Tulsa Police Department; Bureau of Alcohol, Tobacco, Firearms and Explosives; Internal Revenue Service-Criminal Investigation; FBI; Tulsa County Sheriff’s Office and Oklahoma Department of Corrections investigated the case.  Trial Attorney John C. Hanley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Allen Litchfield and Jan Reincke of the Northern District of Oklahoma are prosecuting the case.

THREE TAX PREPARERS RECEIVE PRISON SENTENCES IN FALSE TAX RETURN FILING CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, April 14, 2016

Three Minnesota Tax Return Preparers Sentenced to Prison for Conspiracy to Defraud the Government and Filing False Tax Returns

Defendants Prepared Thousands of False Tax Returns for Filing with IRS and State of Minnesota

Three tax return preparers based in Minneapolis, Minnesota, were sentenced to prison yesterday for their involvement with a fraudulent return-preparation business with multiple storefronts in the Minneapolis area, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Ishmael Kosh, 39, of Philadelphia, Pennsylvania, and Amadou Sangaray, 36, of New York, New York, were convicted following a two-week jury trial in September 2015.  Kosh was convicted of one count of conspiracy to defraud the United States and eight counts of aiding and assisting in the filing of false tax returns.  Sangaray was convicted of one count of conspiracy to defraud the United States, four counts of aggravated identity theft and eight counts of aiding and assisting in the filing of false tax returns.  Francis Saygbay, 43, of Minneapolis, failed to appear for trial, but later pleaded guilty to one count of conspiracy to defraud the United States, one count of aggravated identity theft, and two counts of aiding and assisting in the preparation of false tax returns.

Yesterday, Chief U.S. District Judge John R. Tunheim sentenced Kosh to 52 months in prison, Sangaray to 50 months in prison and Saygbay to 40 months in prison.  In addition to the prison terms, Judge Tunheim also ordered each Kosh and Saygbay to serve three years of supervised release and Sangaray two years of supervised release, following their release from prison.

“As the 2016 tax filing season draws to a close, taxpayers are reminded to be wary of return preparers who make promises that seem too good to be true,” said Acting Assistant Attorney General Ciraolo.  “Dishonest return preparers like Messrs.  Kosh, Sangaray and Saygbay cost the U.S. Treasury billions of dollars each year.  Taxpayers should stay alert for the warning signs that their preparer is more interested in making a quick buck than filing an accurate tax return.”

According to the evidence presented at the trial, Kosh, Sangaray, Saygbay and a fourth individual, Chatonda Khofi, 50, of St. Paul, Minnesota, established a storefront location of Primetime Tax Services Inc. (Primetime), a tax return preparation business in the Minneapolis area.  Along with a fifth individual, David Mwangi, 47, of Arlington, Texas, the defendants prepared over 2,000 fraudulent individual income tax returns on behalf of customers of Primetime for filing with the Internal Revenue Service (IRS) for the years 2006, 2007 and 2008.  The defendants also prepared approximately 1,700 fraudulent state income tax returns for filing with the state of Minnesota for those years.  At yesterday’s sentencing hearing, Judge Tunheim found that the defendants’ conduct caused a total tax loss of between $1.5 and $3.5 million.

On the fraudulent returns, the defendants included false dependents, fake business income and losses, inflated deductions and credits and false filing status in order to obtain inflated tax returns for their customers.  The defendants also bought and sold dependents for use on their customers’ tax returns in order to falsely qualify their customers for inflated deductions and tax credits.  The defendants caused the fraudulently obtained refunds to be sent directly to Primetime in order to maintain control over the funds.  When a customer came to pick up their refund checks or debit card, the defendants sometimes demanded an additional fee in cash, and/or escorted that customer to a check cashing location or ATM.

“Tax-return preparers who try to scam the government for tax refunds are not only stealing from the government, they are stealing from all the honest citizens who pay their fair share of taxes,” stated Special Agent in Charge Shea Jones of IRS-Criminal Investigation St. Paul Field Office.  “The special agents of IRS-Criminal Investigation are committed to protecting the integrity of our system of taxation by investigating tax and accounting professionals who conspire with others to violate the tax laws.  It is our hope that yesterday’s sentencings of Ishmael Kosh, Amadou Sangaray and Francis Saygbay, send the strong message that tampering with the integrity of our nation’s tax system will result in jail time.”

In November 2014, Mwangi pleaded guilty to one count of conspiracy to defraud the United States and Khofi pleaded guilty to one count of conspiracy to defraud the United States and one count of aggravated identity theft.  They are currently awaiting sentencing.  A sixth individual associated with this scheme, Stephanie Robinson, 33, of Minneapolis, pleaded guilty in August 2013 to one count of filing a false tax return in her own name and one count of aiding and assisting in the filing of a false tax return for another individual.

Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Thomas W. Flynn and Ryan R. Raybould, and former Trial Attorney Dennis R. Kihm of the Tax Division, who prosecuted the case.  Acting Assistant Attorney General Ciraolo also thanked the Minnesota Department of Revenue for their significant work on this matter.

Newsletter: The INL Beat, April 2016

Newsletter: The INL Beat, April 2016

COUPLE INDICTED FOR ALLEGED MEDICARE FRAUD AND FORCED LABOR SCHEMES

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, April 11, 2016

Husband and Wife Owners of Chicago Physical Therapy Company Indicted in Schemes to Defraud Medicare and Forced Labor 

A Chicago couple was charged in an indictment with a scheme to use their health care business to defraud Medicare out of millions of dollars, while also conspiring to employ a woman against her will.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office, Special Agent in Charge James D. Robnett of the Internal Revenue Service-Criminal Investigation (IRS-CI) Chicago Field Office, Acting Special Agent in Charge James M. Gibbons of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Chicago Field Office, Special Agent in Charge James Vanderberg of the U.S. Department of Labor’s Office of Inspector General-Office of Labor Racketeering and Fraud Investigations Chicago Region and Cook County State’s Attorney Anita Alvarez made the announcement.

Richard Tinimbang, 38, and his wife, Maribel Tinimbang, 40, both of Chicago, were charged with participating in a $45 million fraud scheme involving three Lincolnwood, Illinois, based home health care companies owned by Richard Tinimbang’s mother, Josephine Tinimbang.  The companies allegedly paid bribes and kickbacks to obtain Medicare beneficiaries, ignored doctors who refused to certify beneficiaries as being in need of home health care and falsified medical records to make patients appear sicker than they actually were.

This indictment is part of a larger health care fraud investigation in which 13 others have been charged.  Three defendants have pleaded guilty and await sentencing; the 10 others, including Josephine Tinimbang, are awaiting trial.  Richard and Maribel Tinimbang’s business, Patients First Physical Therapy Inc., purportedly provided in-home therapy services to patients of three home health care companies – Donnarich Home Health Care Inc., Josdan Home Health Care Inc. and Pathways Home Health Services LLC.  According to the indictment, several individuals who worked at Donnarich, Josdan and Pathways conspired to commit health care fraud and laundered money to conceal the scheme.  From 2008 through 2014, the scheme resulted in $45 million in losses to Medicare, according to the indictment.  

Richard Tinimbang also allegedly submitted fraudulent forms to the U.S. Department of Homeland Security in order to allow a Filipino woman to legally work in the United States, stating that the woman would be hired as a business analyst at Josdan, thus qualifying her for an H-1B visa.  However, according to the indictment, when the woman arrived in the United States, Richard Tinimbang put her to work full time as a nanny and housekeeper for him, his wife and others.  The couple allegedly attempted to induce the woman to sign a servitude contract that provided for payment of $66 per day – regardless of the number of hours worked – for a term of seven years.  According to allegations in the indictment, the contract further provided that if the woman quit before the seventh year, she would be required to pay $25,000 in damages.  The couple allegedly threatened to send her back to the Philippines without being paid for the work she had already performed in order to force her to sign the contract and surrender her passport.

The couple and Josephine Tinimbang used proceeds from the fraud to make numerous personal purchases, including shares of stock, vehicles, real estate and jewelry, according to the indictment.  The indictment alleges that the couple concealed the money they had pocketed by falsely making it appear to be business expenses.

Richard Tinimbang is charged with one count of conspiracy to defraud Medicare, one count of conspiracy to pay or receive health care kickbacks, two counts of paying kickbacks to induce referrals of Medicare beneficiaries, one count of money laundering conspiracy, one count of conspiracy to obtain forced labor and one count of presenting false statements in an immigration document.  Maribel Tinimbang is charged with one count of conspiracy to defraud Medicare, one count of money laundering conspiracy and one count of conspiracy to obtain forced labor.

An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Medicare Fraud Strike Force and the Cook County Human Trafficking Task Force investigated the case.  Trial Attorney Brooke Harper of the Criminal Division’s Fraud Section is prosecuting the case.

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 HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

RETIRED JUDGE INDICTED FOR ROLE IN $600 MILLION SOCIAL SECURITY FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, April 5, 2016

Retired Judge, Attorney and Psychologist Indicted in $600 Million Social Security Fraud Scheme

Thousands of Kentucky Claimants Improperly Received Disability Benefits

A retired administrative law judge, a lawyer and a psychologist were charged in a federal indictment unsealed today for their roles in a scheme to fraudulently obtain more than $600 million in federal disability payments for thousands of claimants.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Special Agent in Charge Michael McGill of the Social Security Administration-Office of Inspector General’s (SSA-OIG) Philadelphia Field Division; Special Agent in Charge Howard S. Marshall of the FBI’s Louisville, Kentucky, Field Division; Special Agent in Charge Tracey D. Montaño of Internal Revenue Service Criminal Investigations (IRS-CI) Nashville, Tennessee, Field Office; and Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) Atlanta Regional Office made the announcement.

David Black Daugherty, 81, of Myrtle Beach, South Carolina; Eric Christopher Conn, 55, and Alfred Bradley Adkins, 44, both of Pikeville, Kentucky, were charged in an 18-count indictment returned on April 1, 2016, in the U.S. District Court for the Eastern District of Kentucky.  The indictment was unsealed upon Conn’s arrest and initial court appearance today before U.S. Magistrate Judge Robert E. Wier of the Eastern District of Kentucky.  Conn was detained pending his detention hearing, which is scheduled for April 7, 2016.

The indictment charges all three defendants with one count of conspiracy to commit mail and wire fraud.  In addition, Conn is charged with three counts of mail fraud, three counts of wire fraud, two counts of obstruction, two counts of false statements, one count of conspiracy to commit money laundering, four counts of money laundering, and one count of conspiracy to structure payments.  Adkins is charged with one count of mail fraud, one count of wire fraud, and one count of false statements.  Daugherty also is charged with two counts of mail fraud, two counts of wire fraud, and one count of conspiracy to commit money laundering.

“The defendants are charged with designing an intricate scheme, using their expertise and positions of authority, to fraudulently induce payment of $600 million in federal disability and healthcare benefits,” said Assistant Attorney General Caldwell.  “While Social Security disability programs are designed to support the disabled, the defendants allegedly used it to enrich themselves.  Today’s arrests demonstrate, however, that the Criminal Division will root out greed and corruption wherever they may be found.”

“The Social Security Administration Office of the Inspector General is committed to pursuing those who violate the public trust by conspiring to misrepresent disabling conditions to defraud not only Social Security, but all American taxpayers,” said Special Agent in Charge McGill.  “We will continue to uphold the integrity of Social Security’s disability programs, which are a lifeline for so many Americans and their families.  I would like to thank the Department of Justice’s Criminal Division, and in particular, the division’s Fraud Section, for their willingness to take on this case and their diligent efforts to ensure these individuals will be held accountable for their actions.”

“As I stated just a few days ago when announcing charges against Kentucky Deputy Attorney General Timothy Longmeyer, the Louisville FBI is committed to cleaning up Kentucky,” said Special Agent in Charge Marshall.  “The allegations against these defendants is yet another example of Kentucky’s historical willingness to accept corruption as the status quo.  Although cleaning up Kentucky is a long and difficult process, today’s announcement is another step toward ending public corruption and taking back the commonwealth from those who corrupt it.”

“IRS-Criminal Investigation is committed to unraveling complex fraud and money laundering schemes,” said Special Agent in Charge Montaño.  “The allegations in this case describe a gross abuse of a system that was established to provide assistance to those truly in need.  The defendants are alleged to have conspired to use their positions, to corrupt the system for their own personal gain, at the expense of the American taxpayers who fund the Social Security system.  We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means.”

“This scheme allegedly enrolled ineligible people in Medicare and Medicaid,” said Special Agent in Charge Jackson.  “We are working with our law enforcement partners to protect these government health care programs funded by our taxpayer dollars.”

The indictment alleges that from October 2004 to Feb. 13, 2012, Conn, Daugherty and Adkins conspired to defraud the government by, among other things, submitting false and fraudulent medical documentation to the SSA in order to have the SSA pay claimants’ retroactive disability benefits, continue to pay claimants’ disability benefits in the future, award Medicare and Medicaid benefits to claimants and pay Conn’s attorney fees.  According to the indictment, the conspirators intended that the SSA disburse more than $600 million in disability benefits in more than 2,000 cases to claimants in Kentucky and elsewhere, irrespective of the claimants’ actual entitlement to benefits.  Conn, Adkins and Daugherty allegedly received more than $5 million during the nearly eight-year scheme.

According to the indictment, Conn is an attorney whose firm in Floyd County has focused for the past 20 years primarily on representing individuals seeking Social Security disability benefits; Adkins is a clinical psychologist who performed medical evaluations for Conn from 2004 through 2011; and Daugherty is a former SSA administrative law judge who began working with the SSA in 1990 and was assigned to the Office of Disability and Adjudication Review hearing office in Huntington, West Virginia, which maintained a satellite office in Prestonsburg, Kentucky, and handled the claims of Kentucky claimants who requested hearings.  Daugherty, who retired in July 2011, was responsible for deciding whether claimants were disabled and entitled to benefits.

As part of the scheme, Conn allegedly filed disability applications with the Prestonsburg Field Office, irrespective of the claimants’ residence in an effort to ultimately bring the cases before the Huntington Hearing Office, where Daugherty either self-assigned or directed others to assign those cases to himself.  Daugherty allegedly solicited Conn to submit falsified medical evidence so that Daugherty could issue fully favorable decisions.  Adkins and others performed pretextual physical and mental evaluations on claimants, the indictment alleges.  They routinely prepared and signed evaluation reports indicating that claimants had limitations considered disabling by the SSA, irrespective of claimants’ actual physical or mental conditions, according to the indictment.

According to the indictment, once the law enforcement investigation began, Conn allegedly threatened to retaliate against another person’s livelihood when that person provided truthful information to a law enforcement officer about the scheme.  Conn also allegedly destroyed and directed others to destroy evidence, including federal reports, a computer tower and other electronic hardware and media located at his law firm.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The SSA-OIG, the FBI, IRS-CI and HHS-OIG investigated the case.  Trial Attorney Dustin M. Davis and Special Trial Attorney Trey Alford of the Criminal Division’s Fraud Section and Trial Attorney Kristen M. Warden of the Criminal Division’s Asset Forfeiture and Money Laundering Section are prosecuting the case.

GUCCIFER FACES CHARGES OF HACKING

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, April 1, 2016

Romanian National “Guccifer” Extradited to Face Hacking Charges

Marcel Lehel Lazăr, 44, of Arad, Romania, allegedly the hacker “Guccifer,” made his initial appearance today in federal court in Alexandria, Virginia.

Lazăr had been temporarily surrendered from Romania to face U.S. charges relating to unauthorized access of protected computers, announced 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 Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, Principal Deputy Assistant Secretary Bill A. Miller of the U.S. Department of State Bureau of Diplomatic Security (DSS) and Special Agent in Charge James M. Murray of the U.S. Secret Service’s Washington Field Office.

“Marcel Lazar is the latest of a dozen high-level cybercriminals who have recently been extradited to face justice in the United States,” said Assistant Attorney General Caldwell.  “Old-fashioned investigative work, enhanced international law enforcement relationships, and a long memory can ensure that foreign-based hackers have no safe haven even in the remote corners of the globe.  As the saying goes, ‘they can run, but they can’t hide.’”

“Mr. Lazar violated the privacy of his victims and thought he could hide behind the anonymity of the Internet,” said U.S. Attorney Boente.  “No matter where they are in the world, those who commit crimes against U.S. citizens will be held accountable for their actions, pursued by our investigators and prosecutors and brought to justice.”

“As a direct result of relentless investigative efforts and cooperation with our international partners, Marcel Lazar, also known as Guccifer, will begin answering for his alleged cyberhacking activities today in the U.S. judicial system,” said Assistant Director in Charge Abbate.  “I commend the dedicated work of the agents, analysts, prosecutors and our federal partners to identify Guccifer, who is alleged to have gained unauthorized access to on-line accounts and violated the privacy of victims, while attempting to hide unsuccessfully behind the anonymity of the Internet.”

In the United States, Lazăr is charged in a nine-count indictment with three counts of wire fraud, three counts of gaining unauthorized access to protected computers, and one count each of aggravated identity theft, cyberstalking and obstruction of justice.  Lazăr's case will be heard before U.S. District Judge James C. Cacheris of the Eastern District of Virginia.

According to the indictment, from December 2012 to January 2014, Lazăr hacked into the email and social media accounts of high-profile victims, including a family member of two former U.S. presidents, a former U.S. Cabinet member, a former member of the U.S. Joint Chiefs of Staff and a former presidential advisor.  After gaining unauthorized access to their accounts, Lazăr publicly released his victims’ private email correspondence, medical and financial information and personal photographs.  The indictment also alleges that in July 2013 and August 2013, Lazar impersonated a victim after compromising the victim’s account.

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

The FBI’s Washington Field Office, the DSS and the U.S. Secret Service are investigating the case with assistance from the Romanian National Police.

Senior Counsels Ryan K. Dickey and Peter V. Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Maya D. Song of the Eastern District of Virginia are prosecuting the case.  The Criminal Division’s Office of International Affairs has provided significant assistance.

FORMER COAL COMPANY CEO SENTENCED TO PRISON

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, April 6, 2016

Former Massey Energy CEO Sentenced to a Year in Federal Prison

Don Blankenship Sentenced on Federal Conspiracy Charge

Acting U.S. Attorney Carol Casto announced that former Massey Energy Chief Executive Officer Don Blankenship was sentenced today to a year in federal prison and ordered to pay a $250,000 fine.  Blankenship was sentenced for conspiracy to willfully violate mine health and safety standards after a jury returned a guilty verdict on the federal crime.

“This sentence is a victory for workers and workplace safety,” said Acting U.S. Attorney Casto.  “It lets companies and their executives know that you can’t take chances with the lives of coal miners and get away with it.  Putting the former chief executive officer of a major corporation in prison sends a message that violating mine safety laws is a serious crime and those who break those laws will be held accountable.”

Over the course of the trial, in which jury selection began on Oct. 1, 2015, and the jury returned a guilty verdict on Dec. 3, 2015, the jury heard evidence from 27 witnesses called by the United States.  Many of these witnesses were coal miners who worked at the Upper Big Branch (UBB) mine prior to the 2010 explosion and they testified in detail from their firsthand knowledge of the unsafe working conditions at UBB, violations of U.S. Mine Safety and Health Administration (MSHA) regulations and organized efforts to obstruct and interfere with MSHA inspectors.  The jury heard from Bill Ross, former Manager of Technical Services at Massey, who testified that he warned Blankenship about the company’s practice of rampant violations and told the defendant prior to the UBB explosion that Massey’s standard tactic of ignoring or defrauding MSHA could not be sustained without the possibility of a serious accident that could have fatalities.  The evidence also showed that Blankenship received daily updates on safety violations and helped perpetuate them.

“Putting profits over the safety of workers is reprehensible,” said Acting U.S. Attorney Casto.  “The jury acknowledged that with the guilty verdict and the sentence imposed today recognizes that disregarding safety laws has real consequences.  From the beginning, the objective of this investigation and this prosecution was to not only show that those who violate safety laws will be held responsible, but also to deter these violations in the future to make everyone’s workplace safer.”

“Today’s sentence marks the culmination of a comprehensive, joint investigation that took over five years to complete and resulted in five criminal convictions.” said Special Agent in Charge Scott S. Smith of the FBI’s Pittsburgh Field Office.  “Along with dedicated prosecutors in the U.S. Attorney’s Office and investigators in U.S. Department of Labor’s Office of Inspector General, the FBI is committed to holding those who commit crimes by enabling safety violations and who place profits above the value of human life accountable.”

“Donald Blankenship’s trial and conviction came after an explosion that killed 29 miners at the Upper Big Branch mine,” said Special Agent in Charge John Spratley of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations’ Philadelphia Regional Office.  “His sentencing today reaffirms the responsibility of company executives to ensure they adhere to health and safety standards.  The Department of Labor’s Office of Inspector General will continue to work with the Mine Safety and Health Administration and our law enforcement partners to investigate criminal worker safety violations that pose a threat to American workers.”

The prosecution was the result of a comprehensive investigation that, including Blankenship, resulted in five criminal convictions.  In addition to the convictions of individuals, the outcome of the investigation also included a resolution of over $200 million with Alpha Natural Resources after it acquired Massey.  This agreement established a foundation dedicated to mine safety and health research, the first of its kind and set aside nearly $50 million in funding for the foundation.  That funding has provided the resources for some of the best and brightest minds in the country to pursue research that will make mines safer all over the world.

This matter was investigated by the FBI and the U.S. Department of Labor’s Office of Inspector General.  Assistant U.S. Attorneys Steven R. Ruby, Gregory McVey and Gabriele Wohl, as well as former U.S. Attorney Booth Goodwin, handled the prosecution and tried the case before a federal jury.

The prosecution is part of a sustained effort by the U.S. Attorney’s Office for the Southern District of West Virginia to protect the health and safety of West Virginia workers by vigorously prosecuting workplace safety crimes and holding accountable those responsible for dangerous working conditions.

Seven Iranians Charged for Conducting Cyber Attacks Against U.S. Financi...

PLASTIC SURGEON SENTENCED TO PRISON FOR TAX EVASION CRIMES

FROM:  U.S.  JUSTICE DEPARTMENT 

Monday, April 4, 2016

Alaska Plastic Surgeon Sentenced to Prison for Wire Fraud and Tax Evasion

Defendant Concealed Bank Accounts in Panama and Costa Rica from the IRS

An Anchorage, Alaska, plastic surgeon was sentenced to 48 months in prison on Friday for wire fraud and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Karen L. Loeffler of the District of Alaska.

“Tax evasion knows no geographic bounds,” said Acting Assistant Attorney General Ciraolo.  “This case demonstrates that there is no longer any country where it is safe for a defendant like Dr. Brandner to hide money from the government.  The Department of Justice, along with its law enforcement partners, will continue to aggressively pursue individuals who conceal assets and income abroad in an effort to evade their responsibilities under our nation’s tax laws.”

Dr. Michael D. Brandner, 67, was convicted by a federal jury in November 2015 of four counts of wire fraud and three counts of tax evasion.  The charges arose from a scheme to conceal over $5 million of assets in secret bank accounts in Panama and Costa Rica from the Internal Revenue Service (IRS) and Dr. Brandner’s wife.  According to the indictment and evidence introduced at trial, shortly after his wife filed for divorce in late 2007, Dr. Brandner collected millions of dollars in marital assets and secretly drove from Tacoma, Washington, to Costa Rica in Central America.  In Costa Rica, he opened two bank accounts into which he deposited over $350,000 in cash and hid a thousand ounces of gold in a safe deposit box.  He then traveled to Panama where he opened an account under the name of a sham corporation and deposited $4.6 million into the account in 2008.

Dr. Brandner concealed both the existence of the bank accounts and the interest income he earned on those accounts from the court in the divorce proceedings and from the IRS.  Dr. Brandner owed the IRS $500,000 in additional taxes for the 2008 through the 2010 tax years.  In 2011, Dr. Brandner repatriated over $4.6 million once the divorce was final only to have the funds seized by U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI) special agents.  He then lied to federal agents about his control of the funds.

In addition to the prison term, U.S. District Judge Sharon Gleason in Anchorage ordered Dr. Brandner to serve two years of supervised release, and pay $25,922.95 toward the costs of prosecution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Loeffler thanked special agents of IRS-Criminal Investigation and HSI, who investigated the case and Trial Attorney Ignacio Perez de la Cruz of the Tax Division and Assistant U.S. Attorney Bryan Schroder of the District of Alaska, who jointly prosecuted the case.

AMBASSADOR SARAH MENDELSON'S REMARKS ON PREVENTING TRAFFICKING OF WOMEN AND GIRLS

FROM:  U.S. STATE DEPARTMENT 

Remarks on Combatting the Trafficking of Women and Girls: What Role Can the Private Sector Play in Addressing and Preventing Human Trafficking and Modern-Day Slavery

Ambassador Sarah Mendelson

U.S. Representative for Economic and Social Affairs

U.S. Mission to the United Nations

New York City

March 16, 2016

AS DELIVERED

Thank you distinguished delegates, guests, and panelists for joining us today. Thank you to our experts who helped put this event together. Now, I want to talk to you about the moment – why we’re here – the call to action, and end with a final word of caution.

The moment - in September, the international community came together in agreement over an ambitious set of priorities. The 2030 Agenda for Sustainable Development presents an unprecedented opportunity to invest in our collective future and achieving progress on the world’s most significant social, economic, and environmental challenges. Among those, of course, is combatting the buying and selling of humans – an industry that is estimated to generate annual profits of $150 billion. Specifically, with the adoption of the 2030 Agenda, Member States have targeted trafficking. We have agreed to end trafficking in Target 5.2, “to eliminate all forms of violence against all women and girls in public and private spheres, including trafficking and sexual and other types of exploitation,” Target 8.7, “to take immediate and effective measures to eradicate forced labor, end modern slavery, and human trafficking and secure the prohibition and elimination of the worst forms of child labor, including recruitment and use of child soldiers, and by 2025 end child labor in all its forms,” and Target 16.2, “to end abuse, exploitation, trafficking, and all forms of violence and torture against children.” This is a universal agenda and applies to all of us. Unlike the Millennium Development Goals, the SDGs shift accountability from recipients and donors to relationships between states and people. Governments, companies, nongovernmental organizations, academic institutions, and citizens all have an essential role to play in making the SDGs real.

The call – so we want to seize this opportunity and explore the possibility of building new and creative partnerships to broaden constituencies specifically to combat human trafficking. We envision this as a network of networks. Each of us as consumers has a unique ability to leverage our individual economic power to influence existing markets and create new ones where workers are free from coercion and the exploitation associated with human trafficking. Consumers, cash in hand, have the power to steer this conversation from responsibilities to results. This is no easy task and cannot be achieved in silos. We look forward to continuing this conversation beyond the walls of this chamber.

Let me give you a snap shot of what we are thinking about and encourage you to engage us with your ideas. Along with other Missions and the UN Global Compact, the U.S. Mission is interested in building a coalition of Member States and CEOs of major companies that commit to making their supply chains free of forced labor. Of course, we welcome partnerships with other members of the UN family, such as UNODC and the ILO. This initiative should be understood as part of our broader effort to address cross-cutting themes, goals, and targets to jump start implementation of the SDGs, specifically Goal 5 “gender equality”, Goal 8 “decent work and economic growth,” and Goal 16 “peace, justice, and strong institutions.”

There is no set way to do this. One possibility is that corporate partners would be chosen by member state’s capitals and drawn from a specific list of industries, such as cocoa, coffee, electronics, seafood, mining, and textiles for example. Founding members could agree on an outcome document, financial commitments, and/or a social marketing campaign to ensure domestic and international outreach on the issue of eradicating human trafficking from public and private sector supply chains.

However the coalition comes together, we hope to launch in the coming months, either at a side event during the High Level Political Forum held under the auspices of ECOSOC in July 2016 in New York or in the lead up to the high-level ministerial week in mid-September 2016. This gathering would present an opportunity to share best practices and build a commitment to establish a growth plan from 2016 to 2030 to increase the numbers of Member States and companies to advance SDG implementation as it relates to human trafficking.

Some member states have shared ideas on what shape this could take, who should be engaged, and how best to engage the private sector. Some have expressed interest in engaging civil society. Others are keen to use technology to map supply chains. Understanding how supply chains operate, where key suppliers are located, and what working conditions exist in those locations and sectors is vital to helping a company gain control of its supply chain and target areas with high risks for human trafficking. Some of have suggested creating an UN-related Hub to build on existing efforts with free training courses and case studies. Many have noted that companies prefer “peer-to-peer” engagement, or B2B, approaches when resolving forced labor issues, as these remain crimes and can be problematic for brands. We are agnostic how this effort comes together. What we want to see is member states and companies and consumers agreeing to take action to make supply chains free of forced labor and therefore helping make the SDGs real.

We recognize there is a lot of action in this space. This is sort of the flavor of the month. But so far, work on this has not been closely linked either to the UN or to the SDGs. And here we see this effort as additive: if successful, it would be the first collaboration between multiple member states and the private sector to address human trafficking ideally in both private and public sector supply chains over the next 15 years.

We can work together so that governments enforce labor laws and treat all workers fairly and business can create anti-trafficking policies that acknowledge and address the risks in their industries, operations and supply chains, ensure workers have the right to fair compensation and redress, train staff to understand the indicators of human trafficking, and put remediation plans in place. Governments should set clear expectations for businesses on this issue and adopt policies that promote greater transparency and better reporting on clean supply chain efforts.

I want to end on a note of caution, however. Thank you to all of the panelists for being here today, but I have to admit, for all the talk about how this is the flavor of the month, it was not easy getting representatives from the private sector here today. When my expert called one corporate contact, the first thing the person said was, “Ouch – why would a company want to attend an event on trafficking in their industry? Wouldn’t that make them look bad?” Thankfully, not all companies are concerned about optics. The State Department’s Office to Monitor and Combat Trafficking in Persons has partnered with executives at the Electronics Industry Citizenship Coalition, a coalition of more than 100 electronics companies with a combined annual revenue greater than $3 Trillion committed to supporting the rights of workers. Similarly, there are partnerships to address trafficking in supply chains between companies themselves, such as the Global Business Coalition Against Human Trafficking, GBCAT. But under their breath, colleagues will tell you, this is no easy task. We hope that corporate coalitions to support SDG implementation, such as Impact2030, and UN Global Compact will be partners in this effort.

As I noted at the top, we are still very much in the idea phase of this effort and we welcome input, advice, and engagement as we hope to build out the Circle of Champions.

DETROIT DOC RECEIVES PRISON SENTENCE FOR PARTICIPATING IN $5.7 MILLION MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, March 23, 2016

Detroit-Area Physician Sentenced to 45 Months in Prison for Role in $5.7 Million Medicare Fraud Scheme

A Detroit-area doctor who prescribed medically unnecessary controlled substances and billed for office visits and diagnostic testing that never took place was sentenced to 45 months in prison today for his role in a $5.7 million Medicare fraud scheme.

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 David P. Gelios of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Region and Special Agent in Charge Jarod J. Koopman of Internal Revenue Service-Criminal Investigation (IRS-CI) Detroit Field Office made the announcement.

Laran Lerner, 59, of Northville, Michigan, was sentenced today by U.S. District Judge Victoria A. Roberts of the Eastern District of Michigan, who also ordered Lerner to pay $2,789,409 in restitution.  Lerner pleaded guilty on Aug. 31, 2015, to one count of health care fraud and one count of structuring cash transactions to avoid bank reporting requirements.

According to admissions made as part of his plea agreement, Lerner lured patients into his clinic with prescriptions for medically unnecessary controlled substances and then caused Medicare to be billed for a variety of unnecessary prescriptions, diagnostic tests and office visits to make it appear as though he was providing legitimate medical services.  Lerner admitted that in reality, the controlled medications were simply used to facilitate and conceal his scheme to steal millions of dollars from the Medicare program.  According to Lerner’s plea agreement, Medicare was billed $5,748,237 as a result of Lerner’s unnecessary prescriptions, office visits and diagnostic testing.

Lerner also admitted that he structured cash deposits he received as a result of his scheme in $5,000 increments on consecutive days at various branch locations in the Detroit area in order to avoid the requirement that domestic banks file a currency transaction report with the Secretary of the Treasury for all currency transactions over $10,000.  According to his plea agreement, for example, in April 2013, Lerner deposited $70,000 in cash by making deposits of $5,000 on 14 different days.

As part of the plea agreement, Lerner agreed to permanently surrender his Drug Enforcement Administration controlled substance registration and agreed to not to re-apply for this license in the future, and agreed that were he granted any application from any agency to prescribe or dispense controlled substances, it would be against the public interest.

The FBI, HHS-OIG and IRS-CI investigated the case, which 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 Eastern District of Michigan.  Fraud Section Trial Attorney Elizabeth Young is prosecuting the case.

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 HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.