Wednesday, December 31, 2014
ANOTHER COMPANY PLEADS GUILTY TO PRICE FIXING ON SHIPING SERVICES OF CARS AND TRUCKS
FROM: U.S. JUSTICE DEPARTMENT
Monday, December 29, 2014
Third Company Agrees to Plead Guilty to Price Fixing on Ocean Shipping Services for Cars and Trucks
Company Agrees to Pay $59.4 Million Criminal Fine
Nippon Yusen Kabushiki Kaisha (NYK), a Japanese corporation, has agreed to plead guilty and to pay a $59.4 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers, and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, NYK conspired to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. NYK participated in the conspiracy from at least February 1997 until at least September 2012. NYK has agreed to cooperate with the Department’s ongoing antitrust investigation. The plea agreement is subject to court approval. NYK is the third company to agree to plead guilty in this investigation, bringing the total agreed-upon fines to over $135 million.
Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and rolled off of an ocean-going vessel. Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.
“This is another step in the effort to restore competition in the ocean shipping industry to the benefit of U.S. consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Including today’s charges, three companies have now agreed to plead guilty to participating in this long-running conspiracy. We are not done. Our investigation is ongoing.”
According to the charge, NYK and its co-conspirators conspired by agreeing on prices, allocating customers, agreeing to refrain from bidding against one another and exchanging customer pricing information. The department said the companies then charged fees in accordance with those agreements for international ocean shipping services for certain roll-on, roll-off cargo to and from the United States and elsewhere at collusive and non-competitive prices.
NYK is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.
Monday, December 29, 2014
Third Company Agrees to Plead Guilty to Price Fixing on Ocean Shipping Services for Cars and Trucks
Company Agrees to Pay $59.4 Million Criminal Fine
Nippon Yusen Kabushiki Kaisha (NYK), a Japanese corporation, has agreed to plead guilty and to pay a $59.4 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers, and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, NYK conspired to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. NYK participated in the conspiracy from at least February 1997 until at least September 2012. NYK has agreed to cooperate with the Department’s ongoing antitrust investigation. The plea agreement is subject to court approval. NYK is the third company to agree to plead guilty in this investigation, bringing the total agreed-upon fines to over $135 million.
Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and rolled off of an ocean-going vessel. Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.
“This is another step in the effort to restore competition in the ocean shipping industry to the benefit of U.S. consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Including today’s charges, three companies have now agreed to plead guilty to participating in this long-running conspiracy. We are not done. Our investigation is ongoing.”
According to the charge, NYK and its co-conspirators conspired by agreeing on prices, allocating customers, agreeing to refrain from bidding against one another and exchanging customer pricing information. The department said the companies then charged fees in accordance with those agreements for international ocean shipping services for certain roll-on, roll-off cargo to and from the United States and elsewhere at collusive and non-competitive prices.
NYK is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.
USA.gov TIPS FOR NEW YEAR'S EVE PARTIES
FROM: USA.gov
If you are hosting a New Year's Eve party, following a few simple rules could prevent a tragedy:
Plan ahead by naming a "designated driver." Make this your responsibility as the host.
Contact a local cab company to provide rides for your guests.
Serve non-alcoholic beverages as an option to your guests.
Stop serving alcohol to your guests several hours before the party ends.
Provide your guests with a place to stay overnight in your home.
If you are attending New Year's Eve parties and celebrations:
If you drink, don't drive.
Plan ahead and always designate a sober driver before the party or celebration begins.
If you are impaired, call a taxi, use mass transit, or get a sober friend or family member to come pick you up.
Or, stay where you are until you are sober.
Take the keys from someone if you think he/she is too impaired to drive.
If you are hosting a New Year's Eve party, following a few simple rules could prevent a tragedy:
Plan ahead by naming a "designated driver." Make this your responsibility as the host.
Contact a local cab company to provide rides for your guests.
Serve non-alcoholic beverages as an option to your guests.
Stop serving alcohol to your guests several hours before the party ends.
Provide your guests with a place to stay overnight in your home.
If you are attending New Year's Eve parties and celebrations:
If you drink, don't drive.
Plan ahead and always designate a sober driver before the party or celebration begins.
If you are impaired, call a taxi, use mass transit, or get a sober friend or family member to come pick you up.
Or, stay where you are until you are sober.
Take the keys from someone if you think he/she is too impaired to drive.
MOST WHO SELECTED 2015 HEALTH PLANS THROUGH HEALTHCARE.GOV ARE GETTING ASSISTANCE TO LOWER PREMIUMS
FROM: U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
December 30, 2014
87 percent of people who selected 2015 plans through HealthCare.gov in first month of open enrollment are getting financial assistance to lower monthly premiums
A report released by the Department of Health and Human Services today provides the first detailed analysis of enrollment in the Marketplaces for the first month of the 2015 open enrollment period. About 87 percent of people who selected health insurance plans through HealthCare.gov for coverage beginning Jan. 1, 2015 were determined eligible for financial assistance to lower their monthly premiums, compared to 80 percent of enrollees who selected plans over a similar period last year. In addition, more than 4 million people in both the state and federal Marketplaces signed up for the first time or reenrolled in coverage for 2015 during the first month of open enrollment. That includes more than 3.4 million people who selected a plan in the 37 states that are using the HealthCare.gov platform for 2015, and more than 600,000 consumers who selected plans in the 14 states that are operating their own Marketplace platform for 2015.
Today’s report includes data through December 15 for the 37 states using the HealthCare.gov platform, and through December 13 for 12 states and the District of Columbia that are using their own Marketplace platforms. Data for California are through December 14. Data for automatic reenrollments are not yet available in the vast majority of states, so today’s report does not fully capture the number of people who selected plans leading up to the deadline for Jan. 1, 2015 coverage. In particular, the automatic reenrollment process for the 37 states using the HealthCare.gov platform began on December 16 and was completed for the vast majority of consumers on December 18.
HHS also released a Weekly Enrollment Snapshot that captures more recent enrollment activity in the 37 states using the HealthCare.gov platform. The Weekly Snapshot shows that from November 15 to December 26, nearly 6.5 million consumers selected a plan or were automatically reenrolled.
“We’re pleased that nationwide, millions of people signed up for Marketplace coverage starting January 1. The vast majority were able to lower their costs even further by getting tax credits, making a difference in the bottom lines of so many families,” HHS Secretary Sylvia M. Burwell said. “Interest in the Marketplace has been strong during the first month of open enrollment. We still have a ways to go and a lot of work to do before February 15, but this is an encouraging start.”
Detailed findings for HealthCare.gov states through December 15:
More than 3.4 million people selected a plan through December 15 in the 37 states that are using the HealthCare.gov platform for 2015, including Oregon and Nevada. Of those:
87 percent selected a plan with financial assistance compared to 80 percent in the early months of the first open enrollment period.
33 percent were under 35 years of age compared to 29 percent in the early months of the first open enrollment period.
Nearly 1 million consumers selected a plan in the three days leading up to December 15. That is almost one third (28 percent) of total plan selections from November 15 through December 15.
Of the 3.4 million plan selections, 48 percent (1.6 million) reenrolled in a Marketplace plan and 52 percent (1.8 million) signed up for the first time.
The most recent Weekly Enrollment Snapshot with data available through December 26 can be found here.
Detailed findings for the 14 states using state based Marketplace enrollment platforms:
More than 600,000 consumers selected plans in the 14 states that are operating their own Marketplace platform for 2015. That includes:
161,752 Marketplace plan selections in two states reporting only data for new consumers (California and New York);
153,011 Marketplace plan selections in seven states reporting data on new consumers and consumers actively reenrolling in Marketplace coverage (Colorado, District of Columbia, Hawaii, Maryland, Massachusetts, Minnesota, and Rhode Island); and
318,075 Marketplace plan selections in five states reporting data on new enrollees, consumers actively reenrolling in Marketplace coverage, and automatic reenrollees (Connecticut, Idaho, Kentucky, Vermont, and Washington).
The information contained in this report provides the most systematic summary of enrollment-related activity in the Marketplaces to date. Data for the various metrics are counted using comparable definitions for data elements across states and Marketplace types. But because many states extended their plan selection deadlines for January 1 coverage, the report does not include the full count of consumers who will have selected coverage that begins Jan. 1, 2015.
Open Enrollment in the Marketplace runs from Nov. 15, 2014, through Feb. 15, 2015. Consumers should visit HealthCare.gov to review and compare health plan options. Consumers shopping for health insurance coverage should sign up by Jan. 15, 2015, in order to have coverage effective on Feb. 1, 2015. If consumers who were automatically reenrolled decide in the coming weeks that a better plan exists for their families, they can make that change at any time before the end of open enrollment on February 15.
AFGHANISTAN: COMBAT MISSION ENDS BUT, ASSISTANCE CONTINUES
FROM: U.S. DEFENSE DEPARTMENT
℠2014 - U.S. forces will continue to assist counterparts in Afghanistan.
Tuesday, December 30, 2014
U.S. OFFICIAL'S EXPLANATION OF U.S VOTE AT UN ON ISRAELI-PALESTINIAN RESOLUTION .
FROM: U.S. STATE DEPARTMENT
Samantha Power
U.S. Permanent Representative to the United Nations
New York, NY
December 30, 2014
FOR IMMEDIATE RELEASE
Thank you Mr. President,
In recent years, no government has invested more in the effort to achieve Israeli-Palestinian peace than the United States. Peace – however difficult it may be to forge – is too important to give up on. As we were reminded this summer in Gaza, and as we’ve been reminded too painfully recently in Jerusalem and the West Bank, the human consequences of ensuing cycles of violence are too grave. The United States every day searches for new ways to take constructive steps to support the parties in making progress toward achieving a negotiated settlement.
The Security Council resolution put before us today is not one of those constructive steps; it would undermine efforts to get back to an atmosphere that makes it possible to achieve two states for two people.
Regrettably, instead of giving voice to the aspirations of both Palestinians and Israelis, this text addresses the concerns of only one side. It is deeply imbalanced and contains many elements that are not conducive to negotiations between the parties, including unconstructive deadlines that take no account of Israel’s legitimate security concerns. In addition, this resolution was put to a vote without a discussion or due consideration among Council members, which is highly unusual, especially considering the gravity of the matter at hand. We must proceed responsibly, not take actions that would risk a downward spiral.
We voted against this resolution not because we are comfortable with the status quo. We voted against it because we know what everyone here knows, as well – peace will come from hard choices and compromises that must be made at the negotiating table. Today’s staged confrontation in the UN Security Council will not bring the parties closer to achieving a two-state solution.
We voted against this resolution not because we are indifferent to the daily hardships or the security threats endured by Palestinians and Israelis, but because we know that those hardships will not cease and those threats will not subside until the parties reach a comprehensive settlement achieved through negotiations. This resolution sets the stage for more division – not for compromise. It could well serve to provoke the very confrontation it purports to address.
For decades, the United States has worked to try to help achieve a comprehensive end to the Israeli-Palestinian conflict, and we remain committed to achieving the peace that both Palestinians and Israelis deserve: two states for two peoples, with a sovereign, viable, and independent Palestine living side-by-side in peace and security with a Jewish and democratic Israel.
The United States does not just acknowledge the tremendous frustrations and disappointments on both sides over the years in pursuit of peace; we share them. And we understand the immense challenges the parties need to overcome to make peace a reality. Yet at the same time, we firmly believe the status quo between Israelis and Palestinians is unsustainable.
The United States recognizes the role that this Council has played before in advancing a sustainable end to the Israeli-Palestinian conflict, including through resolutions 242, 338, and 1515, which calls for the creation of a Palestinian state alongside Israel, with both states “living side-by-side within secure and recognized borders.” In a May 2011 speech, President Obama elaborated further that “the United States believes that negotiations should result in two states, with permanent Palestinian borders with Israel, Jordan, and Egypt, and permanent Israeli borders with Palestine…based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.” He made clear that the “Palestinian people must have the right to govern themselves, and reach their full potential, in a sovereign and contiguous state.”
The United States will continue reaching out to the parties in an effort to find a way forward, and we are ready to engage and support them when they are ready to return to the table. And we will continue to oppose actions by both sides that we view as detrimental to the cause of peace, whether those actions come in the form of settlement activity or imbalanced draft resolutions in this Council. The parties have a responsibility to negotiate and to own the hard choices that will be needed if they are to bring real and long-overdue change to their region to benefit their people.
Today’s vote should not be interpreted as a victory for an unsustainable status quo. Instead, it should serve as a wake-up call to catalyze all interested parties to take constructive, responsible steps to achieve a two-state solution, which remains the only way to bring an end to the ongoing cycle of violence and suffering. We hope that those who share our vision for peace between two states – Israel and Palestine, both secure, democratic, and prosperous – will join us in redoubling efforts to find a path forward that can rally international consensus, advance future negotiations, and provide a horizon of hope for Palestinians and Israelis alike. Thank you.
Samantha Power
U.S. Permanent Representative to the United Nations
New York, NY
December 30, 2014
FOR IMMEDIATE RELEASE
Thank you Mr. President,
In recent years, no government has invested more in the effort to achieve Israeli-Palestinian peace than the United States. Peace – however difficult it may be to forge – is too important to give up on. As we were reminded this summer in Gaza, and as we’ve been reminded too painfully recently in Jerusalem and the West Bank, the human consequences of ensuing cycles of violence are too grave. The United States every day searches for new ways to take constructive steps to support the parties in making progress toward achieving a negotiated settlement.
The Security Council resolution put before us today is not one of those constructive steps; it would undermine efforts to get back to an atmosphere that makes it possible to achieve two states for two people.
Regrettably, instead of giving voice to the aspirations of both Palestinians and Israelis, this text addresses the concerns of only one side. It is deeply imbalanced and contains many elements that are not conducive to negotiations between the parties, including unconstructive deadlines that take no account of Israel’s legitimate security concerns. In addition, this resolution was put to a vote without a discussion or due consideration among Council members, which is highly unusual, especially considering the gravity of the matter at hand. We must proceed responsibly, not take actions that would risk a downward spiral.
We voted against this resolution not because we are comfortable with the status quo. We voted against it because we know what everyone here knows, as well – peace will come from hard choices and compromises that must be made at the negotiating table. Today’s staged confrontation in the UN Security Council will not bring the parties closer to achieving a two-state solution.
We voted against this resolution not because we are indifferent to the daily hardships or the security threats endured by Palestinians and Israelis, but because we know that those hardships will not cease and those threats will not subside until the parties reach a comprehensive settlement achieved through negotiations. This resolution sets the stage for more division – not for compromise. It could well serve to provoke the very confrontation it purports to address.
For decades, the United States has worked to try to help achieve a comprehensive end to the Israeli-Palestinian conflict, and we remain committed to achieving the peace that both Palestinians and Israelis deserve: two states for two peoples, with a sovereign, viable, and independent Palestine living side-by-side in peace and security with a Jewish and democratic Israel.
The United States does not just acknowledge the tremendous frustrations and disappointments on both sides over the years in pursuit of peace; we share them. And we understand the immense challenges the parties need to overcome to make peace a reality. Yet at the same time, we firmly believe the status quo between Israelis and Palestinians is unsustainable.
The United States recognizes the role that this Council has played before in advancing a sustainable end to the Israeli-Palestinian conflict, including through resolutions 242, 338, and 1515, which calls for the creation of a Palestinian state alongside Israel, with both states “living side-by-side within secure and recognized borders.” In a May 2011 speech, President Obama elaborated further that “the United States believes that negotiations should result in two states, with permanent Palestinian borders with Israel, Jordan, and Egypt, and permanent Israeli borders with Palestine…based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.” He made clear that the “Palestinian people must have the right to govern themselves, and reach their full potential, in a sovereign and contiguous state.”
The United States will continue reaching out to the parties in an effort to find a way forward, and we are ready to engage and support them when they are ready to return to the table. And we will continue to oppose actions by both sides that we view as detrimental to the cause of peace, whether those actions come in the form of settlement activity or imbalanced draft resolutions in this Council. The parties have a responsibility to negotiate and to own the hard choices that will be needed if they are to bring real and long-overdue change to their region to benefit their people.
Today’s vote should not be interpreted as a victory for an unsustainable status quo. Instead, it should serve as a wake-up call to catalyze all interested parties to take constructive, responsible steps to achieve a two-state solution, which remains the only way to bring an end to the ongoing cycle of violence and suffering. We hope that those who share our vision for peace between two states – Israel and Palestine, both secure, democratic, and prosperous – will join us in redoubling efforts to find a path forward that can rally international consensus, advance future negotiations, and provide a horizon of hope for Palestinians and Israelis alike. Thank you.
STATE DEPARTMENT ON SERGEI MAGNITSKY RULE OF LAW ACCOUNTABILITY ACT
FROM: U.S. STATE DEPARTMENT
Background Briefing on Implementation of the Sergei Magnitsky Rule of Law Accountability Act
Special Briefing
Senior State Department Official
Via Teleconference
December 29, 2014
MODERATOR: Thank you very much, Laurie, and welcome to everyone who has joined us for this background call today. As noted, this call will be on background, so no names or titles. It’s attributable to a senior State Department official, but just for everyone’s understanding, the person who will do the background call today is [Senior State Department Official]. But from here on out [Senior State Department Official] will be Senior State Department Official, and we will get started now, and I’ll turn the floor over to our briefer. Go ahead, please.
SENIOR STATE DEPARTMENT OFFICIAL: Thank you, everyone, for joining the call. Today, Secretary Kerry transmitted to the Congress the third of our Magnitsky reports, or reports to Congress pursuant to the Magnitsky Act. This report included a list of four Russian officials newly added to the list. They will be – in fact, are as of now – subject to both a visa restriction, a ban on entry into the United States; and an asset freeze, in accordance with the Magnitsky Act. I believe you have the four names. Two are Russian officials who were implicated in the death and subsequent cover-up of the – of Sergei Magnitsky himself. Two are Chechen officials who were implicated in the kidnapping, torture, and later framing of a noted Chechen activist – a Mr. Kutayev -- earlier this year.
These four are the latest in – as I said earlier, are the latest in the – our listings pursuant to the Magnitsky Act. We have said throughout this process that we will continue to investigate new cases, both having to do with the death of Sergei Magnitsky himself, but also having to do with non-Magnitsky-related examples of gross violations of human rights, including extrajudicial killings, torture, or other actions.
In each Magnitsky list so far, we have combined those designations associated with Magnitsky himself with those associated with other gross human rights violations. The same is true in this case. The numbers of Magnitsky-related designations have dropped, you have noticed. This is partly – in fact, it is largely due to the fact that the numbers of individuals whom we can designate, whom we can tie through fact-based analysis to Magnitsky’s death and the subsequent cover-up of that death, will drop. We’re not done with that process, but it is going to become more of a challenge to designate Magnitsky-related individuals. And just as a matter of reality, our efforts will begin to turn to the gross violations of human rights, as in the case of the Chechen activist, Mr. Kutayev.
One other thing worth mentioning about the two Russian officials, Viktor Grin, deputy prosecutor general, and Andrei Strizhov, investigator under the investigative committee, who were, of course, designated because of their involvement in the death and cover-up of Magnitsky’s killing. In their particular case, it was related to the cover-up. They are also, and in addition to this, associated with arrests, prosecutions, and other problematic actions with respect to the Bolotnaya case. You remember the demonstrations in Bolotnaya Square in the beginning of 2012, after which – during which and after which people were rounded up and prosecuted. They were not designated under the Magnitsky Act because of this involvement, but it is a fact that they were involved in Bolotnaya cases, and one of them – Deputy Prosecutor General Grin – was also involved in the Khodorkovsky and Lebedev case.
And by the way, with respect to Mr. Grin’s involvement in the Magnitsky cover-up, specifically Grin was responsible for opening two posthumous cases against Magnitsky. They put Magnitsky on trial after – well after he was dead, which astonished us. We didn’t know it was possible. And in fact, it really isn’t possible under Russian law, as I understand it, except in response to the request of the family. And Magnitsky’s family has gone on record saying they did not request their family member to be put on trial again after he was dead. So Viktor Grin’s involvement of this strange – in fact bizarre – action was one that is particularly satisfying to those of us who want to see the Magnitsky Act implemented fairly.
I will finish up here and – at this point, and happily take your questions.
OPERATOR: Thank you. And ladies and gentlemen, if you would like to ask a question, press * then 1 on your touchtone phone. You will hear a tone indicating you’ve been placed in queue. You may remove yourself from the queue by pressing the # key. And if you are using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, press * then 1 at this time. One moment for our first question.
MODERATOR: All right, Laurie. Please go ahead with the first question.
OPERATOR: It is from the line of Leandra Bernstein with RIA Novosti. Your line is open.
QUESTION: Hi. Just a question on the effectiveness of the Magnitsky sanctions. There have been some members of Congress who have – who’ve claimed that the Administration hasn’t been faithfully implementing the Magnitsky Act. So just your response on how effective you believe the implementation is, and then you made reference to further expanding the conditions to deal with the gross violations of human rights, so how effective you believe that will be.
SENIOR STATE DEPARTMENT OFFICIAL: I am aware of various views expressed by members of Congress, but for our part, the Executive Branch is happy to work with the Congress to see to it that the Magnitsky Act is implemented – not just once, not but – just twice, but over time. By the way, I should clarify what I said. This is the third list, the third time we have sent a list up to the Congress, but it is only technically the second report. There’s a technical difference, but I want to be clear.
We intend to continue to administer the Magnitsky Act. Specifically, we intend to pursue additional designations. I can’t make promises in advance as to the timing or the extent, but I can tell you that we are committed to continuing this process.
As to effectiveness, in any – in pursuit of any sustained human rights policy, results come unevenly and there tend to be tipping points. That is, our listing of individuals may have the indirect effect of putting Russian officials on notice that if they are involved in gross violations of human rights, trumped-up cases, false accusations, grotesque examples of misappropriate – mishandling of justice, such as putting a dead man on trial, under this law they may be held personally liable.
Now, this is not an ideal situation. In democracies, in the rule of law, governments and a free media inside the country are responsible for correcting mistakes and issuing reports – sometimes embarrassing to the host government when we make mistakes. But absent that process, the Magnitsky Act can serve as an admittedly imperfect tool to advance human rights and ultimately the cause of justice, which was, I believe, its intent. And it is that tool which we will attempt to advance, working with the Congress, with human rights communities, inside and outside Russia, and with the knowledge that now as in the Soviet period, a sustained, determined human rights policy can, in fact, be effective.
MODERATOR: Thank you. Laurie, would you make one more call for questions and explain how to lodge questions?
OPERATOR: Yes. If you do have questions, please press * then 1 on your touchtone phone.
MODERATOR: Okay, very good. We’ll take the next question then.
OPERATOR: And that comes from Carol Morello with The Washington Post. Please go ahead.
QUESTION: Thank you for doing this. So what is the total number of people, including those whose names you have not made public, who are on the list? And when you said that number is clearly going to diminish, I mean, realistically speaking, how many more people could we expect for you to put on the list in the future? Are we talking less than a dozen more to come, or can you just give us a ballpark figure on what might still be coming down the road? Thank you.
SENIOR STATE DEPARTMENT OFFICIAL: Well, the first part of your question is easy. There have been 34 individual designations so far under the Magnitsky Act in the three tranches of names we have provided to Congress. I won’t speak at all to the number of classified designations, if indeed there – I won’t even confirm that there are any, so that’s outside of this number.
I can’t give you a number, obviously, of how many designations there may be in the future, because increasingly our designations will be a reaction to events as they occur inside Russia, now and in – starting now and in the future – well, also in the recent past. But that depends – what we do depends on what happens in Russia. We’re not working according to a quota; we are working in response to actual events and our ability to link individuals with those actual events. We work very closely – the State Department works very closely with the Treasury Department, with the Justice Department to obtain information which can support a designation by linking an individual to actual conduct. And the factual basis has to be strong. I can’t, as I said, give you a number, but I can tell you that we will be working on implementing the Magnitsky Act in the future.
MODERATOR: All right, thank you. Operator, do we have any more calls in the queue?
OPERATOR: We have no additional questions.
MODERATOR: Okay. Well, then let me wrap up by thanking our briefer and by thanking all of you who participated in the call. Oh, let’s see, Senior Administration Official, would you be willing to entertain one final question?
SENIOR STATE DEPARTMENT OFFICIAL: Yes, I would.
MODERATOR: Okay, very good. Then, operator, why don’t you open the line for that one?
OPERATOR: And that will be from Paul Richter with The Los Angeles Times. Please go ahead.
QUESTION: Hi. I’d like to know what kind of response you expect from the Russians, if any, based on the way they’ve reacted in the past cases.
SENIOR STATE DEPARTMENT OFFICIAL: I – well, I expect that they will complain and they may threaten retaliation. They may actually retaliate. We’re aware – we are aware of retaliation they have taken in – throughout this year in response to other sanctions, particularly because of their aggression against Ukraine. So that wouldn’t surprise us, but it will not deter us from doing the right thing. And it is also true that the day will come in the future when we have better relations with Russia. I firmly believe that. It would be in the interests of both countries. But given Russian actions, that day is not today.
MODERATOR: All right. Well, that’s our last question, and I want to thank our briefer and thank all of the participants in the call, and remind once again that this call has been on background, so no names or titles, and attributable to a senior State Department official. Thanks very much, everyone, and until next time.
Background Briefing on Implementation of the Sergei Magnitsky Rule of Law Accountability Act
Special Briefing
Senior State Department Official
Via Teleconference
December 29, 2014
MODERATOR: Thank you very much, Laurie, and welcome to everyone who has joined us for this background call today. As noted, this call will be on background, so no names or titles. It’s attributable to a senior State Department official, but just for everyone’s understanding, the person who will do the background call today is [Senior State Department Official]. But from here on out [Senior State Department Official] will be Senior State Department Official, and we will get started now, and I’ll turn the floor over to our briefer. Go ahead, please.
SENIOR STATE DEPARTMENT OFFICIAL: Thank you, everyone, for joining the call. Today, Secretary Kerry transmitted to the Congress the third of our Magnitsky reports, or reports to Congress pursuant to the Magnitsky Act. This report included a list of four Russian officials newly added to the list. They will be – in fact, are as of now – subject to both a visa restriction, a ban on entry into the United States; and an asset freeze, in accordance with the Magnitsky Act. I believe you have the four names. Two are Russian officials who were implicated in the death and subsequent cover-up of the – of Sergei Magnitsky himself. Two are Chechen officials who were implicated in the kidnapping, torture, and later framing of a noted Chechen activist – a Mr. Kutayev -- earlier this year.
These four are the latest in – as I said earlier, are the latest in the – our listings pursuant to the Magnitsky Act. We have said throughout this process that we will continue to investigate new cases, both having to do with the death of Sergei Magnitsky himself, but also having to do with non-Magnitsky-related examples of gross violations of human rights, including extrajudicial killings, torture, or other actions.
In each Magnitsky list so far, we have combined those designations associated with Magnitsky himself with those associated with other gross human rights violations. The same is true in this case. The numbers of Magnitsky-related designations have dropped, you have noticed. This is partly – in fact, it is largely due to the fact that the numbers of individuals whom we can designate, whom we can tie through fact-based analysis to Magnitsky’s death and the subsequent cover-up of that death, will drop. We’re not done with that process, but it is going to become more of a challenge to designate Magnitsky-related individuals. And just as a matter of reality, our efforts will begin to turn to the gross violations of human rights, as in the case of the Chechen activist, Mr. Kutayev.
One other thing worth mentioning about the two Russian officials, Viktor Grin, deputy prosecutor general, and Andrei Strizhov, investigator under the investigative committee, who were, of course, designated because of their involvement in the death and cover-up of Magnitsky’s killing. In their particular case, it was related to the cover-up. They are also, and in addition to this, associated with arrests, prosecutions, and other problematic actions with respect to the Bolotnaya case. You remember the demonstrations in Bolotnaya Square in the beginning of 2012, after which – during which and after which people were rounded up and prosecuted. They were not designated under the Magnitsky Act because of this involvement, but it is a fact that they were involved in Bolotnaya cases, and one of them – Deputy Prosecutor General Grin – was also involved in the Khodorkovsky and Lebedev case.
And by the way, with respect to Mr. Grin’s involvement in the Magnitsky cover-up, specifically Grin was responsible for opening two posthumous cases against Magnitsky. They put Magnitsky on trial after – well after he was dead, which astonished us. We didn’t know it was possible. And in fact, it really isn’t possible under Russian law, as I understand it, except in response to the request of the family. And Magnitsky’s family has gone on record saying they did not request their family member to be put on trial again after he was dead. So Viktor Grin’s involvement of this strange – in fact bizarre – action was one that is particularly satisfying to those of us who want to see the Magnitsky Act implemented fairly.
I will finish up here and – at this point, and happily take your questions.
OPERATOR: Thank you. And ladies and gentlemen, if you would like to ask a question, press * then 1 on your touchtone phone. You will hear a tone indicating you’ve been placed in queue. You may remove yourself from the queue by pressing the # key. And if you are using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, press * then 1 at this time. One moment for our first question.
MODERATOR: All right, Laurie. Please go ahead with the first question.
OPERATOR: It is from the line of Leandra Bernstein with RIA Novosti. Your line is open.
QUESTION: Hi. Just a question on the effectiveness of the Magnitsky sanctions. There have been some members of Congress who have – who’ve claimed that the Administration hasn’t been faithfully implementing the Magnitsky Act. So just your response on how effective you believe the implementation is, and then you made reference to further expanding the conditions to deal with the gross violations of human rights, so how effective you believe that will be.
SENIOR STATE DEPARTMENT OFFICIAL: I am aware of various views expressed by members of Congress, but for our part, the Executive Branch is happy to work with the Congress to see to it that the Magnitsky Act is implemented – not just once, not but – just twice, but over time. By the way, I should clarify what I said. This is the third list, the third time we have sent a list up to the Congress, but it is only technically the second report. There’s a technical difference, but I want to be clear.
We intend to continue to administer the Magnitsky Act. Specifically, we intend to pursue additional designations. I can’t make promises in advance as to the timing or the extent, but I can tell you that we are committed to continuing this process.
As to effectiveness, in any – in pursuit of any sustained human rights policy, results come unevenly and there tend to be tipping points. That is, our listing of individuals may have the indirect effect of putting Russian officials on notice that if they are involved in gross violations of human rights, trumped-up cases, false accusations, grotesque examples of misappropriate – mishandling of justice, such as putting a dead man on trial, under this law they may be held personally liable.
Now, this is not an ideal situation. In democracies, in the rule of law, governments and a free media inside the country are responsible for correcting mistakes and issuing reports – sometimes embarrassing to the host government when we make mistakes. But absent that process, the Magnitsky Act can serve as an admittedly imperfect tool to advance human rights and ultimately the cause of justice, which was, I believe, its intent. And it is that tool which we will attempt to advance, working with the Congress, with human rights communities, inside and outside Russia, and with the knowledge that now as in the Soviet period, a sustained, determined human rights policy can, in fact, be effective.
MODERATOR: Thank you. Laurie, would you make one more call for questions and explain how to lodge questions?
OPERATOR: Yes. If you do have questions, please press * then 1 on your touchtone phone.
MODERATOR: Okay, very good. We’ll take the next question then.
OPERATOR: And that comes from Carol Morello with The Washington Post. Please go ahead.
QUESTION: Thank you for doing this. So what is the total number of people, including those whose names you have not made public, who are on the list? And when you said that number is clearly going to diminish, I mean, realistically speaking, how many more people could we expect for you to put on the list in the future? Are we talking less than a dozen more to come, or can you just give us a ballpark figure on what might still be coming down the road? Thank you.
SENIOR STATE DEPARTMENT OFFICIAL: Well, the first part of your question is easy. There have been 34 individual designations so far under the Magnitsky Act in the three tranches of names we have provided to Congress. I won’t speak at all to the number of classified designations, if indeed there – I won’t even confirm that there are any, so that’s outside of this number.
I can’t give you a number, obviously, of how many designations there may be in the future, because increasingly our designations will be a reaction to events as they occur inside Russia, now and in – starting now and in the future – well, also in the recent past. But that depends – what we do depends on what happens in Russia. We’re not working according to a quota; we are working in response to actual events and our ability to link individuals with those actual events. We work very closely – the State Department works very closely with the Treasury Department, with the Justice Department to obtain information which can support a designation by linking an individual to actual conduct. And the factual basis has to be strong. I can’t, as I said, give you a number, but I can tell you that we will be working on implementing the Magnitsky Act in the future.
MODERATOR: All right, thank you. Operator, do we have any more calls in the queue?
OPERATOR: We have no additional questions.
MODERATOR: Okay. Well, then let me wrap up by thanking our briefer and by thanking all of you who participated in the call. Oh, let’s see, Senior Administration Official, would you be willing to entertain one final question?
SENIOR STATE DEPARTMENT OFFICIAL: Yes, I would.
MODERATOR: Okay, very good. Then, operator, why don’t you open the line for that one?
OPERATOR: And that will be from Paul Richter with The Los Angeles Times. Please go ahead.
QUESTION: Hi. I’d like to know what kind of response you expect from the Russians, if any, based on the way they’ve reacted in the past cases.
SENIOR STATE DEPARTMENT OFFICIAL: I – well, I expect that they will complain and they may threaten retaliation. They may actually retaliate. We’re aware – we are aware of retaliation they have taken in – throughout this year in response to other sanctions, particularly because of their aggression against Ukraine. So that wouldn’t surprise us, but it will not deter us from doing the right thing. And it is also true that the day will come in the future when we have better relations with Russia. I firmly believe that. It would be in the interests of both countries. But given Russian actions, that day is not today.
MODERATOR: All right. Well, that’s our last question, and I want to thank our briefer and thank all of the participants in the call, and remind once again that this call has been on background, so no names or titles, and attributable to a senior State Department official. Thanks very much, everyone, and until next time.
U.S. CONTINUES AIRSTRIKES AGAINST ISIL
FROM: U.S. DEFENSE DEPARTMENT
Airstrikes Continue Against ISIL in Syria, Iraq
From a Combined Joint Task Force Operation Inherent Resolve News Release
SOUTHWEST ASIA, Dec. 29, 2014 – U.S. and partner-nation military forces continued to attack Islamic State of Iraq and the Levant terrorists in Syria and Iraq today, Combined Joint Task Force Operation Inherent resolve officials reported.
Fighter, attack and remotely piloted aircraft conducted 12 airstrikes in Syria and six in Iraq, officials said.
Airstrikes in Syria
Here are the details of today’s strikes in Syria:
-- Near Kobani, 10 airstrikes destroyed 11 ISIL fighting positions, two ISIL buildings and an ISIL storage container and struck an ISIL tactical unit.
-- Near Day az Zawr, an airstrike struck several ISIL buildings.
-- Near Raqqah, an airstrike struck several ISIL buildings.
Airstrikes in Iraq
Here are the details of today’s strikes in Iraq:
-- Near Asad, two airstrikes destroyed two ISIL vehicles and struck an ISIL tactical unit.
-- Near Sinjar, two airstrikes destroyed an ISIL vehicle.
-- Near Mosul, two airstrikes destroyed two ISIL buildings and struck a large ISIL unit.
Part of Operation Inherent Resolve
The strikes were conducted as part of Operation Inherent Resolve, the operation to eliminate the ISIL terrorist group and the threat they pose to Iraq, the region and the wider international community, officials said, noting that strike assessments are based on initial reports.
Coalition nations conducting airstrikes in Iraq include the United States, Australia, Belgium, Canada, Denmark, France, Netherlands and the United Kingdom. Coalition nations conducting airstrikes in Syria include the United States, Bahrain, Jordan, Saudi Arabia and the United Arab Emirates.
Airstrikes Continue Against ISIL in Syria, Iraq
From a Combined Joint Task Force Operation Inherent Resolve News Release
SOUTHWEST ASIA, Dec. 29, 2014 – U.S. and partner-nation military forces continued to attack Islamic State of Iraq and the Levant terrorists in Syria and Iraq today, Combined Joint Task Force Operation Inherent resolve officials reported.
Fighter, attack and remotely piloted aircraft conducted 12 airstrikes in Syria and six in Iraq, officials said.
Airstrikes in Syria
Here are the details of today’s strikes in Syria:
-- Near Kobani, 10 airstrikes destroyed 11 ISIL fighting positions, two ISIL buildings and an ISIL storage container and struck an ISIL tactical unit.
-- Near Day az Zawr, an airstrike struck several ISIL buildings.
-- Near Raqqah, an airstrike struck several ISIL buildings.
Airstrikes in Iraq
Here are the details of today’s strikes in Iraq:
-- Near Asad, two airstrikes destroyed two ISIL vehicles and struck an ISIL tactical unit.
-- Near Sinjar, two airstrikes destroyed an ISIL vehicle.
-- Near Mosul, two airstrikes destroyed two ISIL buildings and struck a large ISIL unit.
Part of Operation Inherent Resolve
The strikes were conducted as part of Operation Inherent Resolve, the operation to eliminate the ISIL terrorist group and the threat they pose to Iraq, the region and the wider international community, officials said, noting that strike assessments are based on initial reports.
Coalition nations conducting airstrikes in Iraq include the United States, Australia, Belgium, Canada, Denmark, France, Netherlands and the United Kingdom. Coalition nations conducting airstrikes in Syria include the United States, Bahrain, Jordan, Saudi Arabia and the United Arab Emirates.
PRESIDENT'S STATEMENT ON END OF COMBAT MISSION IN AFGHANISTAN
FROM: THE WHITE HOUSE PRESIDENT
December 28, 2014
Statement by the President on the End of the Combat Mission in Afghanistan
Today's ceremony in Kabul marks a milestone for our country. For more than 13 years, ever since nearly 3,000 innocent lives were taken from us on 9/11, our nation has been at war in Afghanistan. Now, thanks to the extraordinary sacrifices of our men and women in uniform, our combat mission in Afghanistan is ending, and the longest war in American history is coming to a responsible conclusion.
On this day we give thanks to our troops and intelligence personnel who have been relentless against the terrorists responsible for 9/11--devastating the core al Qaeda leadership, delivering justice to Osama bin Laden, disrupting terrorist plots and saving countless American lives. We are safer, and our nation is more secure, because of their service. At the same time, our courageous military and diplomatic personnel in Afghanistan--along with our NATO allies and coalition partners--have helped the Afghan people reclaim their communities, take the lead for their own security, hold historic elections and complete the first democratic transfer of power in their country's history.
We honor the profound sacrifices that have made this progress possible. We salute every American--military and civilian, including our dedicated diplomats and development workers--who have served in Afghanistan, many on multiple tours, just as their families have sacrificed at home. We pledge to give our many wounded warriors, with wounds seen and unseen, the world-class care and treatment they have earned. Most of all, we remember the more than 2,200 American patriots who made the ultimate sacrifice in Afghanistan, and we pledge to stand with their Gold Star families who need the everlasting love and support of a grateful nation.
Afghanistan remains a dangerous place, and the Afghan people and their security forces continue to make tremendous sacrifices in defense of their country. At the invitation of the Afghan government, and to preserve the gains we have made together, the United States--along with our allies and partners--will maintain a limited military presence in Afghanistan to train, advise and assist Afghan forces and to conduct counterterrorism operations against the remnants of al Qaeda. Our personnel will continue to face risks, but this reflects the enduring commitment of the United States to the Afghan people and to a united, secure and sovereign Afghanistan that is never again used as a source of attacks against our nation.
These past 13 years have tested our nation and our military. But compared to the nearly 180,000 American troops in Iraq and Afghanistan when I took office, we now have fewer than 15,000 in those countries. Some 90 percent of our troops are home. Our military remains the finest in the world, and we will remain vigilant against terrorist attacks and in defense of the freedoms and values we hold dear. And with growing prosperity here at home, we enter a new year with new confidence, indebted to our fellow Americans in uniform who keep us safe and free.
December 28, 2014
Statement by the President on the End of the Combat Mission in Afghanistan
Today's ceremony in Kabul marks a milestone for our country. For more than 13 years, ever since nearly 3,000 innocent lives were taken from us on 9/11, our nation has been at war in Afghanistan. Now, thanks to the extraordinary sacrifices of our men and women in uniform, our combat mission in Afghanistan is ending, and the longest war in American history is coming to a responsible conclusion.
On this day we give thanks to our troops and intelligence personnel who have been relentless against the terrorists responsible for 9/11--devastating the core al Qaeda leadership, delivering justice to Osama bin Laden, disrupting terrorist plots and saving countless American lives. We are safer, and our nation is more secure, because of their service. At the same time, our courageous military and diplomatic personnel in Afghanistan--along with our NATO allies and coalition partners--have helped the Afghan people reclaim their communities, take the lead for their own security, hold historic elections and complete the first democratic transfer of power in their country's history.
We honor the profound sacrifices that have made this progress possible. We salute every American--military and civilian, including our dedicated diplomats and development workers--who have served in Afghanistan, many on multiple tours, just as their families have sacrificed at home. We pledge to give our many wounded warriors, with wounds seen and unseen, the world-class care and treatment they have earned. Most of all, we remember the more than 2,200 American patriots who made the ultimate sacrifice in Afghanistan, and we pledge to stand with their Gold Star families who need the everlasting love and support of a grateful nation.
Afghanistan remains a dangerous place, and the Afghan people and their security forces continue to make tremendous sacrifices in defense of their country. At the invitation of the Afghan government, and to preserve the gains we have made together, the United States--along with our allies and partners--will maintain a limited military presence in Afghanistan to train, advise and assist Afghan forces and to conduct counterterrorism operations against the remnants of al Qaeda. Our personnel will continue to face risks, but this reflects the enduring commitment of the United States to the Afghan people and to a united, secure and sovereign Afghanistan that is never again used as a source of attacks against our nation.
These past 13 years have tested our nation and our military. But compared to the nearly 180,000 American troops in Iraq and Afghanistan when I took office, we now have fewer than 15,000 in those countries. Some 90 percent of our troops are home. Our military remains the finest in the world, and we will remain vigilant against terrorist attacks and in defense of the freedoms and values we hold dear. And with growing prosperity here at home, we enter a new year with new confidence, indebted to our fellow Americans in uniform who keep us safe and free.
DOL TOUTS TRAINING PROGRAM
FROM: U.S. DEPARTMENT OF LABOR
DOL Working for You
Training Program Illuminates New Career Path
Justin Hitchcock. Click for a larger photo.
Justin Hitchcock was working on a spray rig for an agricultural company while attending Mississippi Delta Community College. When the company closed, he followed his grandfather's advice: "you need to find a job, doing something that everybody needs... and you'll never have to worry about being laid off again." Hitchcock enrolled in the college's electrical lineman training program. Funded by the Employment and Training Administration's Workforce Investment Act as part of the Delta Workforce Investment Program, the 16-week program brought his grandfather's advice to life. Upon graduation, Justin joined Delta Electric Power Association as an apprentice lineman. His supervisor allowed him to go out on every call he could to gain experience and earn his journeyman rating at an accelerated rate. Today, Justin's entire crew is comprised of graduates of the community college program. "Nobody worries about who keeps their lights on, they just want them on. I love being one of the people keeping the lights on," he said.
DOL Working for You
Training Program Illuminates New Career Path
Justin Hitchcock. Click for a larger photo.
Justin Hitchcock was working on a spray rig for an agricultural company while attending Mississippi Delta Community College. When the company closed, he followed his grandfather's advice: "you need to find a job, doing something that everybody needs... and you'll never have to worry about being laid off again." Hitchcock enrolled in the college's electrical lineman training program. Funded by the Employment and Training Administration's Workforce Investment Act as part of the Delta Workforce Investment Program, the 16-week program brought his grandfather's advice to life. Upon graduation, Justin joined Delta Electric Power Association as an apprentice lineman. His supervisor allowed him to go out on every call he could to gain experience and earn his journeyman rating at an accelerated rate. Today, Justin's entire crew is comprised of graduates of the community college program. "Nobody worries about who keeps their lights on, they just want them on. I love being one of the people keeping the lights on," he said.
Monday, December 29, 2014
DOL GRANTS WORLD VISION $10 MILLION TO FIGHT EXPLOITED CHILD LABORERS IN ETHIOPIA
FROM: U.S. DEPARTMENT OF LABOR
World Vision receives $10M US Labor Department grant to combat
exploitative child labor in Ethiopia
WASHINGTON — The U.S. Department of Labor's Bureau of International Labor Affairs today announced the award of a $10 million cooperative agreement with World Vision to implement a project to address exploitative labor among youth in Ethiopia.
"We know when youth are provided skills training and career services that align with needs in the jobs market, they are less likely to be drawn into exploitative labor," said Deputy Undersecretary of Labor for International Affairs Carol Pier. "Our goal is to help vulnerable youth in Ethiopia develop the skills they need to make a successful transition into decent jobs."
The project will promote education and vocational training opportunities and seek to enhance livelihoods and access to social protection programs for youth and their households. Focusing specifically on the needs of girls, the project aims to address exploitative child labor by providing youth ages 14 to 17, with marketable skills and support to secure decent work. The project will also support President Obama's Young African Leaders Initiative.
Since 1993, ILAB has produced reports to raise awareness globally about child labor and forced labor. ILAB has also provided funding for more than 280 projects in more than 94 countries to combat the worst forms of child labor by providing assistance to vulnerable children and their families.
Based in Washington State, World Vision is a non-profit, humanitarian organization conducting relief, development, and advocacy activities in its work with children, families, and their communities in nearly 100 countries to help them reach their full potential by tackling the causes of poverty and injustice. World Vision serves all people regardless of religion, race, ethnicity, or gender.
World Vision receives $10M US Labor Department grant to combat
exploitative child labor in Ethiopia
WASHINGTON — The U.S. Department of Labor's Bureau of International Labor Affairs today announced the award of a $10 million cooperative agreement with World Vision to implement a project to address exploitative labor among youth in Ethiopia.
"We know when youth are provided skills training and career services that align with needs in the jobs market, they are less likely to be drawn into exploitative labor," said Deputy Undersecretary of Labor for International Affairs Carol Pier. "Our goal is to help vulnerable youth in Ethiopia develop the skills they need to make a successful transition into decent jobs."
The project will promote education and vocational training opportunities and seek to enhance livelihoods and access to social protection programs for youth and their households. Focusing specifically on the needs of girls, the project aims to address exploitative child labor by providing youth ages 14 to 17, with marketable skills and support to secure decent work. The project will also support President Obama's Young African Leaders Initiative.
Since 1993, ILAB has produced reports to raise awareness globally about child labor and forced labor. ILAB has also provided funding for more than 280 projects in more than 94 countries to combat the worst forms of child labor by providing assistance to vulnerable children and their families.
Based in Washington State, World Vision is a non-profit, humanitarian organization conducting relief, development, and advocacy activities in its work with children, families, and their communities in nearly 100 countries to help them reach their full potential by tackling the causes of poverty and injustice. World Vision serves all people regardless of religion, race, ethnicity, or gender.
DOJ FILES PREGNANCY DISCRIMINATION LAWSUIT AGAINST CHICAGO BOARD OF EDUCATION
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, December 23, 2014
Justice Department Files Pregnancy Discrimination Lawsuit Against the Chicago Board of Education
The Justice Department today announced the filing of a lawsuit against the Chicago Board of Education, alleging that the board discriminated against pregnant teachers at Scammon Elementary School by subjecting them to adverse personnel actions, including termination in some instances, after they announced their pregnancies. According to the complaint, these adverse personnel actions were in violation of Title VII of the Civil Rights Act of 1964. Title VII is a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion. The statute explicitly prohibits employers from discriminating against female employees due to pregnancy, childbirth or related medical conditions.
The suit, filed in the United States District Court for the Northern District of Illinois, alleges that, starting in 2009, the principal at Scammon subjected female teachers to lower performance evaluations, discipline, threatened termination and/or termination because of their pregnancies. The complaint further alleges that the board approved the firing of six recently pregnant teachers employed at Scammon and forced two other recently pregnant teachers to leave Scammon. The department’s complaint seeks a court order that would require the board to develop and implement policies that would prevent its employees from being subjected to discrimination due to their pregnancies. The relief sought also includes monetary damages as compensation for those teachers who were harmed by the alleged discrimination.
Two teachers who had been pregnant while working at Scammon filed charges of sex discrimination with the Chicago District Office of the Equal Employment Opportunity Commission (EEOC). The EEOC investigated the charges and determined that there was reasonable cause to believe discrimination occurred against the two charging parties as well as against other pregnant teachers. The EEOC was unsuccessful in its attempts to conciliate the matter before referring it to the Department of Justice.
“No woman should have to make a choice between her job and having a family,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “Federal law requires employers to maintain a workplace free of discrimination on the basis of sex.”
“Despite much progress, we continue to see the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices in the workplace,” said EEOC Chair Jenny R. Yang.
“The EEOC will continue to vigorously enforce Title VII’s prohibition of discrimination against pregnant employees,” said John P. Rowe, former District Director of the EEOC’s Chicago District Office. Rowe led the EEOC’s administrative investigation of the charges filed by the two teachers.
This lawsuit is brought by the Department of Justice as a result of a joint effort to enhance collaboration between the EEOC and the Justice Department’s Civil Rights Division for vigorous enforcement of Title VII.
Tuesday, December 23, 2014
Justice Department Files Pregnancy Discrimination Lawsuit Against the Chicago Board of Education
The Justice Department today announced the filing of a lawsuit against the Chicago Board of Education, alleging that the board discriminated against pregnant teachers at Scammon Elementary School by subjecting them to adverse personnel actions, including termination in some instances, after they announced their pregnancies. According to the complaint, these adverse personnel actions were in violation of Title VII of the Civil Rights Act of 1964. Title VII is a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion. The statute explicitly prohibits employers from discriminating against female employees due to pregnancy, childbirth or related medical conditions.
The suit, filed in the United States District Court for the Northern District of Illinois, alleges that, starting in 2009, the principal at Scammon subjected female teachers to lower performance evaluations, discipline, threatened termination and/or termination because of their pregnancies. The complaint further alleges that the board approved the firing of six recently pregnant teachers employed at Scammon and forced two other recently pregnant teachers to leave Scammon. The department’s complaint seeks a court order that would require the board to develop and implement policies that would prevent its employees from being subjected to discrimination due to their pregnancies. The relief sought also includes monetary damages as compensation for those teachers who were harmed by the alleged discrimination.
Two teachers who had been pregnant while working at Scammon filed charges of sex discrimination with the Chicago District Office of the Equal Employment Opportunity Commission (EEOC). The EEOC investigated the charges and determined that there was reasonable cause to believe discrimination occurred against the two charging parties as well as against other pregnant teachers. The EEOC was unsuccessful in its attempts to conciliate the matter before referring it to the Department of Justice.
“No woman should have to make a choice between her job and having a family,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “Federal law requires employers to maintain a workplace free of discrimination on the basis of sex.”
“Despite much progress, we continue to see the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices in the workplace,” said EEOC Chair Jenny R. Yang.
“The EEOC will continue to vigorously enforce Title VII’s prohibition of discrimination against pregnant employees,” said John P. Rowe, former District Director of the EEOC’s Chicago District Office. Rowe led the EEOC’s administrative investigation of the charges filed by the two teachers.
This lawsuit is brought by the Department of Justice as a result of a joint effort to enhance collaboration between the EEOC and the Justice Department’s Civil Rights Division for vigorous enforcement of Title VII.
EARTH'S PAST CHANGING POLARITY
FROM: NATIONAL SCIENCE FOUNDATION
Geomagnetic reversal: Understanding ancient flips and flops in Earth's polarity
Researcher boards R/V Sikuliaq to gather data about Earth's geomagnetic history
Imagine one day you woke up, and the North Pole was suddenly the South Pole.
This geomagnetic reversal would cause your hiking compass to seem impossibly backwards. However, within our planet's history, scientists know that this kind of thing actually has happened...not suddenly and not within human time scales, but the polarity of the planet has in fact reversed, which has caused scientists to wonder not only how it's happened, but why.
This week, as the National Science Foundation (NSF) research vessel R/V Sikuliaq continues its journey towards its home port in University of Alaska Fairbanks' Marine Center in Seward, Alaska, she detours for approximately 35 days as researchers take advantage of her close proximity to the western Pacific Ocean's volcanic sea floors. With the help of three types of magnetometers, they will unlock more of our planet's geomagnetic history that has been captured in our Earth's crust there.
"The geomagnetic field is one of the major physical properties of planet Earth, and it is a very dynamic property that can change from milliseconds to millions of years. It is always, always changing," said the expedition's chief scientist, Masako Tominaga, an NSF-funded marine geophysicist from Michigan State University. "Earth's geomagnetic field is a shield, for example. It protects us from magnetic storms--bursts from the sun--so very pervasive cosmic rays don't harm us. Our research will provide data to understand how changes in the geomagnetic field have occurred over time and give us very important clues to understand the planet Earth as a whole."
Flipping and flopping
Reportedly, the last time, a geomagnetic reversal occurred was 780,000 years ago, known as the Brunhes-Matuyama reversal. Bernard Brunhes and Motonori Matuyama were the geophysicists who identified that reversal in 1906.
Researchers Tominaga, Maurice Tivey (from Woods Hole Oceanographic Institution) and William Sager (from University of Houston) have an interest that goes further back in history to the Jurassic period, 145-200 million years ago when a curious anomaly occurred. Scientists originally thought that during this time period, no geomagnetic reversals had happened at all. However, data--like the kind that Tominaga's team will be collecting--revealed that in fact, the time period was full of reversals that occurred much more quickly.
"We came to the conclusion that it was actually 'flipping flopping,' but so fast that it did not regain the full strength of the geomagnetic field of Earth like today's strength. That's why it was very low," Tominaga explained. "The Jurassic period is distinctive. We think that understanding this part of the geomagnetic field's behavior can provide important clues for computer simulation where researchers have been trying to characterize this flipping and flopping. Our data could help predict future times when we might see these reversals again."
Better tools equal better data
For approximately three decades, researchers like Tominaga have been probing this area of the western Pacific seafloor. With her cruise on R/V Sikuliaq, Tominaga and Tivey come with even more technology in hand.
Thirty years ago, researchers didn't have access to autonomous underwater vehicles (AUV) that could go to deeper, harder-to-reach ocean areas. However, that is just one of three ways Tominaga's team will deploy three magnetometers during its time at sea. One magnetometer will be towed at the seasurface from R/V Sikuliaq. Another will trail behind the ship at mid-water depth, and the third will be part of the AUV at near the seafloor.
"The seafloor spreading at mid-ocean ridge occurred because of volcanic eruption over time. And when this molten lava formed the seafloor, it actually recorded ambient geomagnetic data. So when you go from the very young ocean seafloor right next to the mid-ocean ridge to very, very old seafloor away from the mid-ocean ridge, a magnetometer basically unveils changes in the geomagnetic field for us," Tominaga said. "The closer we can get to the seafloor, the better the signal. That's the rule of thumb for geophysics."
With the help of R/V Sikuliaq's ship's crew, Tominaga and Tivey, a cruise archivist who is also a computer engineer/scientist, and seven students (three of whom are undergraduates), the team will run 24 hours a day/seven days a week operations, deploying underway geophysics, the magnetometers, collecting data and then moving on to the next site.
Naturally, the weather can waylay even the best plans. "Our goal is always about the science, but the road likely will be winding," Tominaga said. "The most enjoyable part of this work is to be able to work together with this extremely diverse group of people. The Sikuliaq crew, the folks at UAF and those connected to the ship from NSF have all been committed to seeing this research happen, which is incredibly gratifying.... When we make things happen together as a team, it is really rewarding."
Focus on fundamentals
Not surprisingly, this kind of oceanographic research is among some of the most fundamental, serving as a foundation for other research where it might correlate or illuminate. Additionally, because the causes and impacts of these geomagnetic changes are unknown, connections to currents, weather patterns, and other geologic phenomenon can still be explored also.
"NSF, along with the entire science community, has waited years for this unique state-of-the-art Arctic vessel, and the timing couldn't be more critical," said Rose DuFour, NSF program director. "Our hope is to use R/V Sikuliaq to help carry out the abundant arctic-based seagoing science missions that go beyond NSF-funded science and extend to those from other federal agencies, like Office of Naval Research as well."
Tominaga notes that another key part to the cruise's mission is record keeping; it's why an archivist is part of her team. He even will blog daily (with pictures). As foundational research, it's important to "keep every single record intact," and she believes this broadcasting daily narrative will assist in this effort.
"Without going there, getting real data--providing ground truth--how do we know what is going on?" Tominaga said, explaining fieldwork's importance.
Tominaga is quite clear on what prompts her to keep one of the busiest fieldwork schedules, even during a season usually reserved for family and friends, sipping eggnog or champagne. "I was 'raised' as a scientist/marine geophysicist, and I don't just mean academically," she said. "I really looked up to my mentors and friends and how they handed down what they know-so unselfishly. And when I was finishing my Ph.D., I realized that there will be a time I will hand down these things to the next generation. Now, as a professor at Michigan State University, I'm the one who has to pass the torch, if you will--knowledge, experience, and skills at sea. That's what drives me."
-- Ivy F. Kupec
Investigators
Masako Tominaga
Maurice Tivey
William Sager
Related Institutions/Organizations
Woods Hole Oceanographic Institution
Locations
Western Pacific Seafloor , Hawaii
Related Programs
Marine Geology and Geophysics
Geomagnetic reversal: Understanding ancient flips and flops in Earth's polarity
Researcher boards R/V Sikuliaq to gather data about Earth's geomagnetic history
Imagine one day you woke up, and the North Pole was suddenly the South Pole.
This geomagnetic reversal would cause your hiking compass to seem impossibly backwards. However, within our planet's history, scientists know that this kind of thing actually has happened...not suddenly and not within human time scales, but the polarity of the planet has in fact reversed, which has caused scientists to wonder not only how it's happened, but why.
This week, as the National Science Foundation (NSF) research vessel R/V Sikuliaq continues its journey towards its home port in University of Alaska Fairbanks' Marine Center in Seward, Alaska, she detours for approximately 35 days as researchers take advantage of her close proximity to the western Pacific Ocean's volcanic sea floors. With the help of three types of magnetometers, they will unlock more of our planet's geomagnetic history that has been captured in our Earth's crust there.
"The geomagnetic field is one of the major physical properties of planet Earth, and it is a very dynamic property that can change from milliseconds to millions of years. It is always, always changing," said the expedition's chief scientist, Masako Tominaga, an NSF-funded marine geophysicist from Michigan State University. "Earth's geomagnetic field is a shield, for example. It protects us from magnetic storms--bursts from the sun--so very pervasive cosmic rays don't harm us. Our research will provide data to understand how changes in the geomagnetic field have occurred over time and give us very important clues to understand the planet Earth as a whole."
Flipping and flopping
Reportedly, the last time, a geomagnetic reversal occurred was 780,000 years ago, known as the Brunhes-Matuyama reversal. Bernard Brunhes and Motonori Matuyama were the geophysicists who identified that reversal in 1906.
Researchers Tominaga, Maurice Tivey (from Woods Hole Oceanographic Institution) and William Sager (from University of Houston) have an interest that goes further back in history to the Jurassic period, 145-200 million years ago when a curious anomaly occurred. Scientists originally thought that during this time period, no geomagnetic reversals had happened at all. However, data--like the kind that Tominaga's team will be collecting--revealed that in fact, the time period was full of reversals that occurred much more quickly.
"We came to the conclusion that it was actually 'flipping flopping,' but so fast that it did not regain the full strength of the geomagnetic field of Earth like today's strength. That's why it was very low," Tominaga explained. "The Jurassic period is distinctive. We think that understanding this part of the geomagnetic field's behavior can provide important clues for computer simulation where researchers have been trying to characterize this flipping and flopping. Our data could help predict future times when we might see these reversals again."
Better tools equal better data
For approximately three decades, researchers like Tominaga have been probing this area of the western Pacific seafloor. With her cruise on R/V Sikuliaq, Tominaga and Tivey come with even more technology in hand.
Thirty years ago, researchers didn't have access to autonomous underwater vehicles (AUV) that could go to deeper, harder-to-reach ocean areas. However, that is just one of three ways Tominaga's team will deploy three magnetometers during its time at sea. One magnetometer will be towed at the seasurface from R/V Sikuliaq. Another will trail behind the ship at mid-water depth, and the third will be part of the AUV at near the seafloor.
"The seafloor spreading at mid-ocean ridge occurred because of volcanic eruption over time. And when this molten lava formed the seafloor, it actually recorded ambient geomagnetic data. So when you go from the very young ocean seafloor right next to the mid-ocean ridge to very, very old seafloor away from the mid-ocean ridge, a magnetometer basically unveils changes in the geomagnetic field for us," Tominaga said. "The closer we can get to the seafloor, the better the signal. That's the rule of thumb for geophysics."
With the help of R/V Sikuliaq's ship's crew, Tominaga and Tivey, a cruise archivist who is also a computer engineer/scientist, and seven students (three of whom are undergraduates), the team will run 24 hours a day/seven days a week operations, deploying underway geophysics, the magnetometers, collecting data and then moving on to the next site.
Naturally, the weather can waylay even the best plans. "Our goal is always about the science, but the road likely will be winding," Tominaga said. "The most enjoyable part of this work is to be able to work together with this extremely diverse group of people. The Sikuliaq crew, the folks at UAF and those connected to the ship from NSF have all been committed to seeing this research happen, which is incredibly gratifying.... When we make things happen together as a team, it is really rewarding."
Focus on fundamentals
Not surprisingly, this kind of oceanographic research is among some of the most fundamental, serving as a foundation for other research where it might correlate or illuminate. Additionally, because the causes and impacts of these geomagnetic changes are unknown, connections to currents, weather patterns, and other geologic phenomenon can still be explored also.
"NSF, along with the entire science community, has waited years for this unique state-of-the-art Arctic vessel, and the timing couldn't be more critical," said Rose DuFour, NSF program director. "Our hope is to use R/V Sikuliaq to help carry out the abundant arctic-based seagoing science missions that go beyond NSF-funded science and extend to those from other federal agencies, like Office of Naval Research as well."
Tominaga notes that another key part to the cruise's mission is record keeping; it's why an archivist is part of her team. He even will blog daily (with pictures). As foundational research, it's important to "keep every single record intact," and she believes this broadcasting daily narrative will assist in this effort.
"Without going there, getting real data--providing ground truth--how do we know what is going on?" Tominaga said, explaining fieldwork's importance.
Tominaga is quite clear on what prompts her to keep one of the busiest fieldwork schedules, even during a season usually reserved for family and friends, sipping eggnog or champagne. "I was 'raised' as a scientist/marine geophysicist, and I don't just mean academically," she said. "I really looked up to my mentors and friends and how they handed down what they know-so unselfishly. And when I was finishing my Ph.D., I realized that there will be a time I will hand down these things to the next generation. Now, as a professor at Michigan State University, I'm the one who has to pass the torch, if you will--knowledge, experience, and skills at sea. That's what drives me."
-- Ivy F. Kupec
Investigators
Masako Tominaga
Maurice Tivey
William Sager
Related Institutions/Organizations
Woods Hole Oceanographic Institution
Locations
Western Pacific Seafloor , Hawaii
Related Programs
Marine Geology and Geophysics
ANOTHER REAL ESTATE INVESTOR PLEADS GUILTY TO BID RIGGING PUBLIC FORECLOSURE AUCTIONS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, December 24, 2014
Northern California Real Estate Investor Pleads Guilty to Bid Rigging and Fraud at Public Foreclosure Auctions
Investigations Have Yielded 51 Plea Agreements and Five Indictments to Date
A Northern California real estate investor pleaded guilty for his role in bid rigging and fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Charles Rock was indicted on Dec. 3, 2014, in the U.S. District Court for the Northern District of California in Oakland, California. The indictment alleged that Charles Rock and others agreed not to compete at public foreclosure auctions in Contra Costa County, California, and diverted money to themselves that should have gone to mortgage holders and other beneficiaries. Charles Rock pleaded guilty to one count of bid rigging and two counts of mail fraud.
To date, 51 individuals have agreed to plead or have pleaded guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California. In addition, 21 real estate investors, including Charles Rock, have been charged in five multi-count indictments for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Francisco, and San Mateo counties.
The indictment alleges, among other things, that as early as June 2008 until about January 2011, Charles Rock and others conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Contra Costa County, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and in the process, defrauded mortgage holders and other beneficiaries.
“This is the first post-indictment plea resulting from the investigation and marks a positive step forward in resolving the case,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “It is important for those who conspired to profit from rigged bids and illegal payoffs to take responsibility for their actions.”
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.
Wednesday, December 24, 2014
Northern California Real Estate Investor Pleads Guilty to Bid Rigging and Fraud at Public Foreclosure Auctions
Investigations Have Yielded 51 Plea Agreements and Five Indictments to Date
A Northern California real estate investor pleaded guilty for his role in bid rigging and fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Charles Rock was indicted on Dec. 3, 2014, in the U.S. District Court for the Northern District of California in Oakland, California. The indictment alleged that Charles Rock and others agreed not to compete at public foreclosure auctions in Contra Costa County, California, and diverted money to themselves that should have gone to mortgage holders and other beneficiaries. Charles Rock pleaded guilty to one count of bid rigging and two counts of mail fraud.
To date, 51 individuals have agreed to plead or have pleaded guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California. In addition, 21 real estate investors, including Charles Rock, have been charged in five multi-count indictments for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Francisco, and San Mateo counties.
The indictment alleges, among other things, that as early as June 2008 until about January 2011, Charles Rock and others conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Contra Costa County, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and in the process, defrauded mortgage holders and other beneficiaries.
“This is the first post-indictment plea resulting from the investigation and marks a positive step forward in resolving the case,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “It is important for those who conspired to profit from rigged bids and illegal payoffs to take responsibility for their actions.”
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.
CFTC ORDERS MAN AND CO. TO PAY $2.5 MILLION IN SANCTIONS
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
December 16, 2014
Federal Court Orders Missouri Resident Daniel K. Steele and His Missouri Company, Champion Management International, LLC, to Pay over $2.5 Million in Monetary Sanctions
Order Also Requires Relief Defendant Judy D. Steele to Disgorge Ill-Gotten Gains
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that the Honorable Ronnie L. White of the U.S. District Court for the Eastern District of Missouri entered a Consent Order for permanent injunction against Defendants Daniel K. Steele and Champion Management International, LLC, (Champion Management), a Missouri limited liability company. The Court’s Order requires Defendants jointly to pay $1,544,722.81 in restitution to defrauded investors, imposes a $1 million civil monetary penalty, and requires Relief Defendant Judy D. Steele to disgorge ill-gotten gains totaling $187,083.58. The Order also imposes a permanent trading and registration ban on the Defendants and prohibits them from further violations of the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.
The Court’s Order stems from a CFTC Complaint filed on September 25, 2013 and an amended Complaint filed on July 16, 2014, charging that from approximately February 28, 2011 through September 25, 2013, Steele individually and acting as an agent of Champion Management solicited at least $1.97 million from at least 24 pool participants to participate in three foreign currency (forex) pools (see CFTC Press Release and Complaint 6712-13, September 26, 2013, and CFTC Press Release and Amended Complaint 6962-14, July 18, 2014).
Specifically, the Court’s Order finds that Steele knowingly made material misrepresentations to actual and prospective pool participants concerning Defendants’ forex trading and trading results, such as: “I’ve been doing this long enough to know what I can consistently deliver above expenses, in all market conditions…the return is fixed and is currently 5% per month on your invested amount compounded… .”
The Court’s Order also finds, among other things, that Steele concealed trading losses, misappropriated approximately $1 million of pool participants’ funds, issued false account statements to pool participants, and failed to disclose that the counterparty to the retail forex transactions that were offered or entered into with the respective pools was not registered with the CFTC as a Retail Foreign Exchange Dealer, all in violation of Sections 4o and 4b of the CEA.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC appreciates the assistance of the Missouri Secretary of State, Securities Division, the U.S. Postal Inspection Service, and the Swiss Financial Market Supervisory Authority.
CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Melanie Devoe, George Malas, Kyong J. Koh, Peter M. Haas, and Paul G. Hayeck.
* * * * * *
CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
December 16, 2014
Federal Court Orders Missouri Resident Daniel K. Steele and His Missouri Company, Champion Management International, LLC, to Pay over $2.5 Million in Monetary Sanctions
Order Also Requires Relief Defendant Judy D. Steele to Disgorge Ill-Gotten Gains
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that the Honorable Ronnie L. White of the U.S. District Court for the Eastern District of Missouri entered a Consent Order for permanent injunction against Defendants Daniel K. Steele and Champion Management International, LLC, (Champion Management), a Missouri limited liability company. The Court’s Order requires Defendants jointly to pay $1,544,722.81 in restitution to defrauded investors, imposes a $1 million civil monetary penalty, and requires Relief Defendant Judy D. Steele to disgorge ill-gotten gains totaling $187,083.58. The Order also imposes a permanent trading and registration ban on the Defendants and prohibits them from further violations of the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.
The Court’s Order stems from a CFTC Complaint filed on September 25, 2013 and an amended Complaint filed on July 16, 2014, charging that from approximately February 28, 2011 through September 25, 2013, Steele individually and acting as an agent of Champion Management solicited at least $1.97 million from at least 24 pool participants to participate in three foreign currency (forex) pools (see CFTC Press Release and Complaint 6712-13, September 26, 2013, and CFTC Press Release and Amended Complaint 6962-14, July 18, 2014).
Specifically, the Court’s Order finds that Steele knowingly made material misrepresentations to actual and prospective pool participants concerning Defendants’ forex trading and trading results, such as: “I’ve been doing this long enough to know what I can consistently deliver above expenses, in all market conditions…the return is fixed and is currently 5% per month on your invested amount compounded… .”
The Court’s Order also finds, among other things, that Steele concealed trading losses, misappropriated approximately $1 million of pool participants’ funds, issued false account statements to pool participants, and failed to disclose that the counterparty to the retail forex transactions that were offered or entered into with the respective pools was not registered with the CFTC as a Retail Foreign Exchange Dealer, all in violation of Sections 4o and 4b of the CEA.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC appreciates the assistance of the Missouri Secretary of State, Securities Division, the U.S. Postal Inspection Service, and the Swiss Financial Market Supervisory Authority.
CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Melanie Devoe, George Malas, Kyong J. Koh, Peter M. Haas, and Paul G. Hayeck.
* * * * * *
CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Sunday, December 28, 2014
ANTI-AGING, WART REMOVAL AND WEIGHT LOSS MARKETERS SETTLE FTC'S DECEPTIVE ADVERTISING CHARGES
FROM: U.S. FEDERAL TRADE COMMISSION
Marketers Settle FTC Charges That They Used Deceptive Ads In Promoting Products for Mole and Wart Removal, Anti-Aging and Weight Loss
Companies Must Stop Making Deceptive Claims
Two companies that market skin care and weight-loss products must stop making false or unsubstantiated deceptive claims about their products, under settlements resolving charges in two separate cases brought by the Federal Trade Commission.
In one case, the FTC challenged ads for DermaTend, a skin cream that was promoted for do-it-yourself removal of moles, skin tags, and warts, as well as Lipidryl, a supplement promoted for weight loss. In the second case, the agency challenged claims for Photodynamic Therapy anti-aging lotions, as well Shrinking Beauty, a supposed body-slimming lotion.
The FTC settlements in both cases prohibit the defendants from misleading consumers about the efficacy of their products and about whether their claims are backed by scientific evidence. In addition, the marketers of DermaTend and Lipidryl are required to disclose when people promoting the products are paid for their endorsement.
“These companies made outrageous claims that their products could provide a range of benefits – from removing warts to decreasing the appearance of cellulite to providing substantial weight loss,” said Jessica Rich, Director of the Bureau of Consumer Protection. “The common thread for all of these claims was the fundamental lack of scientific evidence. Consumers deserve better.”
DermaTend and Lipidryl
Aaron Lilly, a Nevada-based marketer, owns and operates both Solace International, Inc. and Bioscience Research Institute LLC, which sell DermaTend and Lipidryl, respectively. DermaTend was advertised in SkyMall (both the magazine and website), as well as on Amazon.com and eBay, and through Google AdWords. It was also sold on company-owned websites and marketed through affiliates.
According to the FTC’s complaint, DermaTend contains the botanical bloodroot and zinc chloride. A 1.7 ounce container of the “Original” formula sells for $39.95, while a 3.4 ounce container of “Ultra” sells for $69.95. Consumers who bought DermaTend also received an emery board and instructions directing consumers to file down their mole, skin tag, or wart with the emery board before applying the product.
The complaint alleges that DermaTend ads made false or unsubstantiated claims that the product worked in a very short amount of time, caused little or no scarring, and was safe (even for children). They also touted a “97 percent success rate.” The FTC also alleges that DermaTend ads touted “real user results” supposedly showing before and after photos of consumers who had success using the products, and written testimonials, without disclosing that reviewers were sometimes paid for their stories.
Bioscience, Lilly’s other company, charged $129.99 for a three-month supply of Lipidryl, which contains African mango seed extract. The FTC complaint charges that ads for Lipidryl falsely claimed that the supplement was clinically proven to cause substantial weight loss (such as 28 pounds in 10 weeks) and reduce users’ waistlines.
The FTC’s settlement order with Lilly and his companies requires that future claims for DermaTend and other products promoted for removing skin lesions be supported by high-quality human clinical testing. Future claims for Lipidryl or other weight-loss products must be supported by at least two well-done human clinical studies.
The order prohibits the defendants from making a number of specific unsubstantiated representations; requires disclosure if endorsers are provided with compensation; and requires monitoring of affiliate marketers. The order also requires the defendants to pay $402,338 and to provide the Commission with the proceeds from the sale of four homes in Texas.
DERMAdoctor, Inc.
According to the FTC’s complaint, DERMADoctor, Inc. and its majority owner, Audrey Kunin, M.D., violated the FTC Act by making deceptive claims about their anti-aging products and a body-slimming lotion. DERMAdoctor is based in Missouri and marketed Photodynamic Therapy Liquid Red Light Anti-Aging Lotion and Photodynamic Therapy Liquid Red Light Eye Lift Lotion, as well Shrinking Beauty, a “firming, sculpting & toning lotion with lobster weight loss inspired technology.”
The complaint states that since October 2010, the defendants have marketed and sold Photodynamic Therapy lotion with extract of the noni fruit, which was promoted as able to capture UV light and transform it into visible red light that has purported anti-aging effects on the skin. The defendants charged $85 for a one-ounce bottle of the face lotion. DERMAdoctor products are sold in retailers such as Nordstrom, Sephora, and Ulta, and according to the FTC, Photodynamic Therapy was advertised on QVC, the DERMAdoctor website, and in women’s magazines, including Cosmopolitan and Shape.
Since December 2012, the defendants also have marketed and sold Shrinking Beauty, with a retail price of $58 for a 5.5-ounce tube. Through ads in magazines such as Health and on the DERMAdoctor website, the defendants claimed the product would improve the appearance of cellulite, smooth and tighten skin, and that the results were “clinically proven to reduce measurements up to one inch in two weeks.”
The proposed settlement order with DERMAdoctor requires that the defendants have competent and reliable scientific evidence to support future anti-aging and cellulite-reduction claims, as well as at least two randomized, double-blind, placebo-controlled human clinical studies to support claims relating to weight loss or reduction of body size. It also prohibits them from misrepresenting the existence or results of any scientific test, study or research. The order requires payment of $12,675.
The Commission votes approving the complaints and proposed stipulated orders in both cases were 5-0. The complaint and proposed order in the Lilly case were filed in the U.S. District Court for the District of Nevada on December 10, 2014 and signed by the judge the next day The complaint and proposed order in the DERMAdoctor case were filed in the U.S. District Court for the Western District of Missouri, Western Division, on December 23, 2014.
In the course of its investigation into Solace International and Bioscience Research Institute, the FTC worked with the U.S. Food and Drug Administration (FDA), which issued a warning letter to Solace regarding its marketing of DermaTend, and law enforcers in 10 California counties. The National Advertising Division of the Better Business Bureaus referred this matter to the Commission.
Information for Consumers
When it comes to treatments for health and fitness, it can be tough to tell useful products and services from those that don’t work or aren’t safe. For more information, see the FTC’s guidance on Treatments & Cures and Weight Loss & Fitness.
The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.
Marketers Settle FTC Charges That They Used Deceptive Ads In Promoting Products for Mole and Wart Removal, Anti-Aging and Weight Loss
Companies Must Stop Making Deceptive Claims
Two companies that market skin care and weight-loss products must stop making false or unsubstantiated deceptive claims about their products, under settlements resolving charges in two separate cases brought by the Federal Trade Commission.
In one case, the FTC challenged ads for DermaTend, a skin cream that was promoted for do-it-yourself removal of moles, skin tags, and warts, as well as Lipidryl, a supplement promoted for weight loss. In the second case, the agency challenged claims for Photodynamic Therapy anti-aging lotions, as well Shrinking Beauty, a supposed body-slimming lotion.
The FTC settlements in both cases prohibit the defendants from misleading consumers about the efficacy of their products and about whether their claims are backed by scientific evidence. In addition, the marketers of DermaTend and Lipidryl are required to disclose when people promoting the products are paid for their endorsement.
“These companies made outrageous claims that their products could provide a range of benefits – from removing warts to decreasing the appearance of cellulite to providing substantial weight loss,” said Jessica Rich, Director of the Bureau of Consumer Protection. “The common thread for all of these claims was the fundamental lack of scientific evidence. Consumers deserve better.”
DermaTend and Lipidryl
Aaron Lilly, a Nevada-based marketer, owns and operates both Solace International, Inc. and Bioscience Research Institute LLC, which sell DermaTend and Lipidryl, respectively. DermaTend was advertised in SkyMall (both the magazine and website), as well as on Amazon.com and eBay, and through Google AdWords. It was also sold on company-owned websites and marketed through affiliates.
According to the FTC’s complaint, DermaTend contains the botanical bloodroot and zinc chloride. A 1.7 ounce container of the “Original” formula sells for $39.95, while a 3.4 ounce container of “Ultra” sells for $69.95. Consumers who bought DermaTend also received an emery board and instructions directing consumers to file down their mole, skin tag, or wart with the emery board before applying the product.
The complaint alleges that DermaTend ads made false or unsubstantiated claims that the product worked in a very short amount of time, caused little or no scarring, and was safe (even for children). They also touted a “97 percent success rate.” The FTC also alleges that DermaTend ads touted “real user results” supposedly showing before and after photos of consumers who had success using the products, and written testimonials, without disclosing that reviewers were sometimes paid for their stories.
Bioscience, Lilly’s other company, charged $129.99 for a three-month supply of Lipidryl, which contains African mango seed extract. The FTC complaint charges that ads for Lipidryl falsely claimed that the supplement was clinically proven to cause substantial weight loss (such as 28 pounds in 10 weeks) and reduce users’ waistlines.
The FTC’s settlement order with Lilly and his companies requires that future claims for DermaTend and other products promoted for removing skin lesions be supported by high-quality human clinical testing. Future claims for Lipidryl or other weight-loss products must be supported by at least two well-done human clinical studies.
The order prohibits the defendants from making a number of specific unsubstantiated representations; requires disclosure if endorsers are provided with compensation; and requires monitoring of affiliate marketers. The order also requires the defendants to pay $402,338 and to provide the Commission with the proceeds from the sale of four homes in Texas.
DERMAdoctor, Inc.
According to the FTC’s complaint, DERMADoctor, Inc. and its majority owner, Audrey Kunin, M.D., violated the FTC Act by making deceptive claims about their anti-aging products and a body-slimming lotion. DERMAdoctor is based in Missouri and marketed Photodynamic Therapy Liquid Red Light Anti-Aging Lotion and Photodynamic Therapy Liquid Red Light Eye Lift Lotion, as well Shrinking Beauty, a “firming, sculpting & toning lotion with lobster weight loss inspired technology.”
The complaint states that since October 2010, the defendants have marketed and sold Photodynamic Therapy lotion with extract of the noni fruit, which was promoted as able to capture UV light and transform it into visible red light that has purported anti-aging effects on the skin. The defendants charged $85 for a one-ounce bottle of the face lotion. DERMAdoctor products are sold in retailers such as Nordstrom, Sephora, and Ulta, and according to the FTC, Photodynamic Therapy was advertised on QVC, the DERMAdoctor website, and in women’s magazines, including Cosmopolitan and Shape.
Since December 2012, the defendants also have marketed and sold Shrinking Beauty, with a retail price of $58 for a 5.5-ounce tube. Through ads in magazines such as Health and on the DERMAdoctor website, the defendants claimed the product would improve the appearance of cellulite, smooth and tighten skin, and that the results were “clinically proven to reduce measurements up to one inch in two weeks.”
The proposed settlement order with DERMAdoctor requires that the defendants have competent and reliable scientific evidence to support future anti-aging and cellulite-reduction claims, as well as at least two randomized, double-blind, placebo-controlled human clinical studies to support claims relating to weight loss or reduction of body size. It also prohibits them from misrepresenting the existence or results of any scientific test, study or research. The order requires payment of $12,675.
The Commission votes approving the complaints and proposed stipulated orders in both cases were 5-0. The complaint and proposed order in the Lilly case were filed in the U.S. District Court for the District of Nevada on December 10, 2014 and signed by the judge the next day The complaint and proposed order in the DERMAdoctor case were filed in the U.S. District Court for the Western District of Missouri, Western Division, on December 23, 2014.
In the course of its investigation into Solace International and Bioscience Research Institute, the FTC worked with the U.S. Food and Drug Administration (FDA), which issued a warning letter to Solace regarding its marketing of DermaTend, and law enforcers in 10 California counties. The National Advertising Division of the Better Business Bureaus referred this matter to the Commission.
Information for Consumers
When it comes to treatments for health and fitness, it can be tough to tell useful products and services from those that don’t work or aren’t safe. For more information, see the FTC’s guidance on Treatments & Cures and Weight Loss & Fitness.
The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.
SEC ANNOUNCES AN INVESTMENT MANAGEMENT FIRM TO PAY $35 MILLION TO SETTLE FRAUD CHARGES
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced that investment management firm F-Squared Investments has agreed to pay $35 million and admit wrongdoing to settle charges that it defrauded investors through false performance advertising about its flagship product.
The SEC separately charged the firm’s co-founder and former CEO Howard Present with making false and misleading statements to investors as the public face of F-Squared.
According to the SEC’s order instituting a settled administrative proceeding against Massachusetts-based F-Squared, which is the largest marketer of index products using exchange-traded funds (ETFs), the firm began receiving signals from a third-party data provider in September 2008 indicating when to buy or sell an investment. The signals were based on an algorithm, and F-Squared and Present used the signals to create a model portfolio of sector ETFs that could be rebalanced periodically as the signals changed. They named the new product “AlphaSector” and launched the first index a month later. AlphaSector’s indexes quickly became the firm’s largest revenue source, and F-Squared went from losing money to becoming a highly profitable investment manager.
The SEC alleges that while marketing AlphaSector into the largest active ETF strategy in the market, F-Squared falsely advertised a successful seven-year track record for the investment strategy based on the actual performance of real investments for real clients. In reality, the algorithm was not even in existence during the seven years of purported performance success. The data used in F-Squared’s advertising was actually derived through backtesting, which is the application of a quantitative model to historical market data to generate a hypothetical performance during a prior period. F-Squared and Present specifically advertised the investment strategy as “not backtested.” Furthermore, the hypothetical data contained a substantial performance calculation error that inflated the results by approximately 350 percent.
“Investors must be able to trust that performance advertisements are accurate,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “F-Squared has admitted that it misled its clients over a number of years about the existence and success of its core strategy.”
According to the SEC’s complaint against Present filed in federal court in Boston, he was responsible for F-Squared’s advertising materials that were often posted on the company website and sent to clients and prospective clients. Present also was responsible for the descriptions of AlphaSector in its filings with the SEC, and he certified the accuracy of those filings. F-Squared and Present made the false and misleading statements about AlphaSector from September 2008 to September 2013. The SEC alleges that they claimed AlphaSector was based on an investment strategy that had been used to invest client assets since April 2001. Yet Present knew that the algorithm was not finalized until late summer 2008 when he devised rules for turning the signals into a model ETF portfolio and directed an assistant to calculate hypothetical returns for the portfolio going back to April 2001.
The SEC further alleges that the F-Squared analyst who calculated the backtested AlphaSector performance inadvertently applied the buy/sell signals to the week preceding any ETF price change that the signals were based on. The mistake carried the model portfolio’s backtested buy and sell decisions back in time one week, enabling the model to buy an ETF just before the price rose and sell an ETF just before the price fell. The SEC alleges that the analyst tried to explain this possible calculation error to Present in late September 2008, yet F-Squared went on to advertise the inflated data for the next five years and overstated that AlphaSector significantly outperformed the S&P 500 from April 2001 to September 2008.
“We allege that not only did F-Squared and Present attract clients to this investment strategy by touting a track record they presented as real when it was merely hypothetical, but the hypothetical calculations also were substantially inflated,” said Julie M. Riewe, co-chief of the Enforcement Division’s Asset Management Unit.
F-Squared consented to the entry of the order finding that it violated Sections 204, 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a)(16), 206(4)-1(a)(5), 206(4)-7, and 206(4)-8. The order also finds that F-Squared aided and abetted and caused certain mutual funds sub-advised by F-Squared to violation Section 34(b) of the Investment Company Act of 1940. F-Squared acknowledged that its conduct violated federal securities laws, and agreed to cease and desist from committing or causing violations of these provisions. F-Squared agreed to retain an independent compliance consultant and pay disgorgement of $30 million and a penalty of $5 million.
The SEC’s complaint against Present alleges that he violated Sections 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-8.
The SEC’s investigation, which is continuing, is being conducted by Bill Donahue, Robert Baker, Jose Santillan, and John Farinacci of the Asset Management Unit as well as Rachel Hershfang, Frank Huntington, Mayeti Gametchu, Jennifer Cardello, and Rory Alex of the Boston Regional Office. The case has been supervised by Kevin Kelcourse. The SEC’s litigation against Present will be led by Mr. Huntington and Ms. Hershfang.
The Securities and Exchange Commission announced that investment management firm F-Squared Investments has agreed to pay $35 million and admit wrongdoing to settle charges that it defrauded investors through false performance advertising about its flagship product.
The SEC separately charged the firm’s co-founder and former CEO Howard Present with making false and misleading statements to investors as the public face of F-Squared.
According to the SEC’s order instituting a settled administrative proceeding against Massachusetts-based F-Squared, which is the largest marketer of index products using exchange-traded funds (ETFs), the firm began receiving signals from a third-party data provider in September 2008 indicating when to buy or sell an investment. The signals were based on an algorithm, and F-Squared and Present used the signals to create a model portfolio of sector ETFs that could be rebalanced periodically as the signals changed. They named the new product “AlphaSector” and launched the first index a month later. AlphaSector’s indexes quickly became the firm’s largest revenue source, and F-Squared went from losing money to becoming a highly profitable investment manager.
The SEC alleges that while marketing AlphaSector into the largest active ETF strategy in the market, F-Squared falsely advertised a successful seven-year track record for the investment strategy based on the actual performance of real investments for real clients. In reality, the algorithm was not even in existence during the seven years of purported performance success. The data used in F-Squared’s advertising was actually derived through backtesting, which is the application of a quantitative model to historical market data to generate a hypothetical performance during a prior period. F-Squared and Present specifically advertised the investment strategy as “not backtested.” Furthermore, the hypothetical data contained a substantial performance calculation error that inflated the results by approximately 350 percent.
“Investors must be able to trust that performance advertisements are accurate,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “F-Squared has admitted that it misled its clients over a number of years about the existence and success of its core strategy.”
According to the SEC’s complaint against Present filed in federal court in Boston, he was responsible for F-Squared’s advertising materials that were often posted on the company website and sent to clients and prospective clients. Present also was responsible for the descriptions of AlphaSector in its filings with the SEC, and he certified the accuracy of those filings. F-Squared and Present made the false and misleading statements about AlphaSector from September 2008 to September 2013. The SEC alleges that they claimed AlphaSector was based on an investment strategy that had been used to invest client assets since April 2001. Yet Present knew that the algorithm was not finalized until late summer 2008 when he devised rules for turning the signals into a model ETF portfolio and directed an assistant to calculate hypothetical returns for the portfolio going back to April 2001.
The SEC further alleges that the F-Squared analyst who calculated the backtested AlphaSector performance inadvertently applied the buy/sell signals to the week preceding any ETF price change that the signals were based on. The mistake carried the model portfolio’s backtested buy and sell decisions back in time one week, enabling the model to buy an ETF just before the price rose and sell an ETF just before the price fell. The SEC alleges that the analyst tried to explain this possible calculation error to Present in late September 2008, yet F-Squared went on to advertise the inflated data for the next five years and overstated that AlphaSector significantly outperformed the S&P 500 from April 2001 to September 2008.
“We allege that not only did F-Squared and Present attract clients to this investment strategy by touting a track record they presented as real when it was merely hypothetical, but the hypothetical calculations also were substantially inflated,” said Julie M. Riewe, co-chief of the Enforcement Division’s Asset Management Unit.
F-Squared consented to the entry of the order finding that it violated Sections 204, 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a)(16), 206(4)-1(a)(5), 206(4)-7, and 206(4)-8. The order also finds that F-Squared aided and abetted and caused certain mutual funds sub-advised by F-Squared to violation Section 34(b) of the Investment Company Act of 1940. F-Squared acknowledged that its conduct violated federal securities laws, and agreed to cease and desist from committing or causing violations of these provisions. F-Squared agreed to retain an independent compliance consultant and pay disgorgement of $30 million and a penalty of $5 million.
The SEC’s complaint against Present alleges that he violated Sections 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-8.
The SEC’s investigation, which is continuing, is being conducted by Bill Donahue, Robert Baker, Jose Santillan, and John Farinacci of the Asset Management Unit as well as Rachel Hershfang, Frank Huntington, Mayeti Gametchu, Jennifer Cardello, and Rory Alex of the Boston Regional Office. The case has been supervised by Kevin Kelcourse. The SEC’s litigation against Present will be led by Mr. Huntington and Ms. Hershfang.
MF GLOBAL HOLDINGS LTD. ORDERED TO PAY $1.212 BILLION TO COVER CUSTOMER CLAIMS RESULTING FROM IMPROPER USE OF FUNDS
FROM: U.S. JUSTICE DEPARTMENT
December 24, 2014
Federal Court in New York Orders MF Global Holdings Ltd. to Pay $1.212 Billion in Restitution for Unlawful Use of Customer Funds and Imposes a $100 Million Penalty
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court consent Order against Defendant MF Global Holdings Ltd. (MFGH) requiring it to pay $1.212 billion in restitution or such amount as necessary to ensure that claims of customers of its subsidiary, MF Global Inc. (MFGI), are paid in full. The CFTC previously filed and settled charges against MFGI for misuse of customer funds and related supervisory failures in violation of the Commodity Exchange Act and CFTC Regulations (see CFTC Press Release 6776-13). MFGI was required to pay $1.212 billion in restitution to its customers, as well as a $100 million penalty. MFGH’s restitution obligation is joint and several with MFGI’s restitution obligation, pursuant to which a substantial portion of the restitution obligation has already been paid (see CFTC Press Prelease 6904-14). The consent Order, entered on December 23, 2014, by Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MFGH, to be paid after claims of customers and certain other creditors entitled to priority under bankruptcy law have been fully paid.
The consent Order arises out of the CFTC’s amended Complaint, filed on December 6, 2013, charging MFGH and the other Defendants with unlawful use of customer funds. In the consent Order, MFGH admits to the allegations pertaining to its liability based on the acts and omissions of its agents as set forth in the consent Order and the amended Complaint.
The CFTC’s amended Complaint charged that MFGH controlled MFGI’s operations and was responsible for MFGI’s unlawful use of customer segregated funds during the last week of October 2011. In addition to the misuse of customer funds, the amended Complaint alleged that MFGH is responsible for MFGI’s (i) failure to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts, (ii) filing of false statements in reports with the CFTC that failed to show the deficits in the customer accounts, and (iii) use of customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid, in violation of CFTC regulations.
The CFTC’s litigation continues against the remaining Defendants, Jon S. Corzine and Edith O’Brien.
The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.
The consent Order recognizes the cooperation of MFGH and requires MFGH’s continued cooperation with the CFTC.
Staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk, and Office of Data and Technology assisted in this matter. CFTC Division of Enforcement staff members responsible for this matter are David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan.
December 24, 2014
Federal Court in New York Orders MF Global Holdings Ltd. to Pay $1.212 Billion in Restitution for Unlawful Use of Customer Funds and Imposes a $100 Million Penalty
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court consent Order against Defendant MF Global Holdings Ltd. (MFGH) requiring it to pay $1.212 billion in restitution or such amount as necessary to ensure that claims of customers of its subsidiary, MF Global Inc. (MFGI), are paid in full. The CFTC previously filed and settled charges against MFGI for misuse of customer funds and related supervisory failures in violation of the Commodity Exchange Act and CFTC Regulations (see CFTC Press Release 6776-13). MFGI was required to pay $1.212 billion in restitution to its customers, as well as a $100 million penalty. MFGH’s restitution obligation is joint and several with MFGI’s restitution obligation, pursuant to which a substantial portion of the restitution obligation has already been paid (see CFTC Press Prelease 6904-14). The consent Order, entered on December 23, 2014, by Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MFGH, to be paid after claims of customers and certain other creditors entitled to priority under bankruptcy law have been fully paid.
The consent Order arises out of the CFTC’s amended Complaint, filed on December 6, 2013, charging MFGH and the other Defendants with unlawful use of customer funds. In the consent Order, MFGH admits to the allegations pertaining to its liability based on the acts and omissions of its agents as set forth in the consent Order and the amended Complaint.
The CFTC’s amended Complaint charged that MFGH controlled MFGI’s operations and was responsible for MFGI’s unlawful use of customer segregated funds during the last week of October 2011. In addition to the misuse of customer funds, the amended Complaint alleged that MFGH is responsible for MFGI’s (i) failure to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts, (ii) filing of false statements in reports with the CFTC that failed to show the deficits in the customer accounts, and (iii) use of customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid, in violation of CFTC regulations.
The CFTC’s litigation continues against the remaining Defendants, Jon S. Corzine and Edith O’Brien.
The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.
The consent Order recognizes the cooperation of MFGH and requires MFGH’s continued cooperation with the CFTC.
Staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk, and Office of Data and Technology assisted in this matter. CFTC Division of Enforcement staff members responsible for this matter are David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan.
MAN PLEADS GUILTY FOR ROLE IN $53 MILLION TAX SCHEME THAT INVOLVED BRIBING BANK OFFICIALS
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, December 23, 2014
Kentucky Businessman Pleads Guilty in Manhattan Federal Court to $53 Million Tax Scheme and Massive Fraud That Involved the Bribery of Bank Officials
U.S. Attorney Preet Bharara for the Southern District of New York and Deputy Assistant Attorney General David A. Hubbert for the Tax Division of the Department of Justice announced that Wilbur Anthony Huff, a Kentucky businessman, pleaded guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators. Huff pleaded guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.
“Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud – complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators,” said U.S. Attorney Bharara. “Those who might be tempted to follow in Huff’s criminal footsteps should understand that this office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”
Huff, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison. He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (FDIC); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the IRS.
According to the information, plea agreement, and statements made during court proceedings:
Background
Huff was a businessman who controlled numerous entities located throughout the United States (Huff-controlled entities). Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes. However, rather than exercise control of these companies openly, Huff concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors or officers. Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci Sr., the president and chief executive officer, and Matthew L. Morris, the senior vice president.
Tax Crimes
From 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an Oklahoma-based insurance company – for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes. Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses. The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.
Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company
From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company. As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank.
As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period. Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.
Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.
Bribery of Park Avenue Bank Executives
From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; (2) allowed the Huff-controlled entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of Huff’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.
Fraud on Bank Regulators and a Publicly-Traded Company
From 2008 to 2009, Huff, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions, and that would subject the bank to a range of potential enforcement actions by regulators. Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital. Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci. This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program. To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned. Huff, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.
Fraud on Insurance Regulators and the Investment Firm
From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “investment firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C – the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the investment firm into providing a $30 million loan to finance the purchase. Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan. However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the investment firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.
* * *
Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on Oct. 8, 2010. Matthew L. Morris and Allen Reichman were charged by Indictment with Huff on Oct. 1, 2012. Morris pleaded guilty in connection with the case on Oct.17.
Reichman is currently scheduled to go to trial March 2, 2015 before Judge Buchwald. The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt.
U.S. Attorney Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the FBI, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI), and the Office of Inspector General of the FDIC. Mr. Bharara also thanked the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Southern District of Florida for their assistance.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.
Tuesday, December 23, 2014
Kentucky Businessman Pleads Guilty in Manhattan Federal Court to $53 Million Tax Scheme and Massive Fraud That Involved the Bribery of Bank Officials
U.S. Attorney Preet Bharara for the Southern District of New York and Deputy Assistant Attorney General David A. Hubbert for the Tax Division of the Department of Justice announced that Wilbur Anthony Huff, a Kentucky businessman, pleaded guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators. Huff pleaded guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.
“Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud – complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators,” said U.S. Attorney Bharara. “Those who might be tempted to follow in Huff’s criminal footsteps should understand that this office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”
Huff, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison. He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (FDIC); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the IRS.
According to the information, plea agreement, and statements made during court proceedings:
Background
Huff was a businessman who controlled numerous entities located throughout the United States (Huff-controlled entities). Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes. However, rather than exercise control of these companies openly, Huff concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors or officers. Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci Sr., the president and chief executive officer, and Matthew L. Morris, the senior vice president.
Tax Crimes
From 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an Oklahoma-based insurance company – for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes. Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses. The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.
Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company
From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company. As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank.
As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period. Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.
Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.
Bribery of Park Avenue Bank Executives
From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; (2) allowed the Huff-controlled entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of Huff’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.
Fraud on Bank Regulators and a Publicly-Traded Company
From 2008 to 2009, Huff, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions, and that would subject the bank to a range of potential enforcement actions by regulators. Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital. Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci. This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program. To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned. Huff, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.
Fraud on Insurance Regulators and the Investment Firm
From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “investment firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C – the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the investment firm into providing a $30 million loan to finance the purchase. Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan. However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the investment firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.
* * *
Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on Oct. 8, 2010. Matthew L. Morris and Allen Reichman were charged by Indictment with Huff on Oct. 1, 2012. Morris pleaded guilty in connection with the case on Oct.17.
Reichman is currently scheduled to go to trial March 2, 2015 before Judge Buchwald. The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt.
U.S. Attorney Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the FBI, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI), and the Office of Inspector General of the FDIC. Mr. Bharara also thanked the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Southern District of Florida for their assistance.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.
Saturday, December 27, 2014
RECENT U.S. NAVY PHOTOS
FROM: U.S. NAVY
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| SAN DIEGO (Dec. 19, 2014) The guided-missile destroyers USS Kidd (DDG 100), left, and USS Wayne E. Meyer (DDG 108) display their lights during Naval Base San Diego's third annual Holiday Lights Open House. During the event, the public was invited to drive through and observe the decorated ships along the base's waterfront. U.S. Navy photo by Mass Communication Specialist Seaman Amanda Chavez (Released) 141219-N-LR795-026. |
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| AIFA, Israel (Dec. 23, 2014) Sailors aboard the guided-missile destroyer USS Cole (DDG 67) stand by their lines as a tug boat maneuvers the ship into positing for mooring in Haifa, Israel, for a scheduled port visit. Cole is conducting naval operations in the U.S. 6th Fleet area of responsibility in support of U.S. national security interests in Europe. U.S. Navy photo by Mass Communication Specialist 2nd Class John Herman (Released) 141223-N-IY142-094. |
SECRETARY HAGEL CALLS SERVICE MEMBERS ON CHRISTMAS DAY
FROM: U.S. DEFENSE DEPARTMENT
Hagel Calls Service Members on Christmas, Thanks Them for Service to Nation
DoD News, Defense Media Activity
WASHINGTON, Dec. 25, 2014 – Defense Secretary Chuck Hagel today called service members taking part in U.S. operations around the world to wish them a Merry Christmas, according to Pentagon Press Secretary Navy Rear Adm. John Kirby.
In a DoD News Release, Kirby said “Secretary Hagel expressed his appreciation for their service in defending the United States, and supporting our allies and partners.
“In each of the calls, Secretary Hagel noted that he knows how difficult it is to be away from home on this holiday and thanked the service members and their families for their sacrifice for the nation,” Kirby said.
Hagel spoke with representatives from each military service, including:
- Army Spc. Randolph A. Priest, of Barren Springs, Va. Priest is a communications specialist serving in Afghanistan, who is responsible for ensuring reliable communications between the headquarters and soldiers.
- Air Force Capt. Laura A. Klepper, of Palmdale, Calif. Klepper is an F-15E weapon system officer deployed to the Central Command area of responsibility, providing combat airpower in support of regional missions. She was selected as her squadron’s flight commander of the year.
- Marine Corps Cpl. Thomas A. Vasko, Jr., of Medina, Ohio. Vasko is an infantry advisor in Afghanistan, training allies in how to conduct patrols to prevent enemy freedom of movement and indirect fire attacks. He is also an assistant patrol leader.
- Navy Petty Officer 1st Class Taylor A. Porter, of Dayton, Wash. Porter is deployed to the Central Command area of responsibility and leads an 11-person team in ensuring aviation equipment is maintained and safe for flight. She was selected as her squadron’s maintainer of the year and led the stand-up of a unit supporting Operation Inherent Resolve.
“The secretary was delighted to be able to reach these service members, forward deployed as they are, and to wish them his best for the holiday,” Kirby said. “He asked that each pass on his best wishes to their units as well. The secretary was very grateful for the time these young leaders gave him.”
Hagel Calls Service Members on Christmas, Thanks Them for Service to Nation
DoD News, Defense Media Activity
WASHINGTON, Dec. 25, 2014 – Defense Secretary Chuck Hagel today called service members taking part in U.S. operations around the world to wish them a Merry Christmas, according to Pentagon Press Secretary Navy Rear Adm. John Kirby.
In a DoD News Release, Kirby said “Secretary Hagel expressed his appreciation for their service in defending the United States, and supporting our allies and partners.
“In each of the calls, Secretary Hagel noted that he knows how difficult it is to be away from home on this holiday and thanked the service members and their families for their sacrifice for the nation,” Kirby said.
Hagel spoke with representatives from each military service, including:
- Army Spc. Randolph A. Priest, of Barren Springs, Va. Priest is a communications specialist serving in Afghanistan, who is responsible for ensuring reliable communications between the headquarters and soldiers.
- Air Force Capt. Laura A. Klepper, of Palmdale, Calif. Klepper is an F-15E weapon system officer deployed to the Central Command area of responsibility, providing combat airpower in support of regional missions. She was selected as her squadron’s flight commander of the year.
- Marine Corps Cpl. Thomas A. Vasko, Jr., of Medina, Ohio. Vasko is an infantry advisor in Afghanistan, training allies in how to conduct patrols to prevent enemy freedom of movement and indirect fire attacks. He is also an assistant patrol leader.
- Navy Petty Officer 1st Class Taylor A. Porter, of Dayton, Wash. Porter is deployed to the Central Command area of responsibility and leads an 11-person team in ensuring aviation equipment is maintained and safe for flight. She was selected as her squadron’s maintainer of the year and led the stand-up of a unit supporting Operation Inherent Resolve.
“The secretary was delighted to be able to reach these service members, forward deployed as they are, and to wish them his best for the holiday,” Kirby said. “He asked that each pass on his best wishes to their units as well. The secretary was very grateful for the time these young leaders gave him.”
DEALER'S ALLEGED DECEPTIVE AUTO ADS HALTED BY FTC
FROM: U.S. FEDERAL TRADE COMMISSION
FTC Halts Texas Auto Dealer’s Deceptive Ads
Misleading Ads Claimed $1 Gets Consumers Out of Current Loan or Lease
An auto dealer in suburban Dallas has agreed to settle Federal Trade Commission charges that it used deceptive ads to promote the sale and lease of its vehicles, including an ad that claimed consumers could get out of their current loan or lease for $1.
According to the complaint, false or deceptive ads from TXVT Limited Partnership, doing business as Trophy Nissan (Trophy), violated the FTC Act as well as the Consumer Leasing Act (CLA) and Regulation M, and the Truth in Lending Act (TILA) and Regulation Z.
The FTC charged that Trophy advertised enticing prices, lease or finance terms, and promotions and then attempted to disclaim its attractive offers using small text in print and video ads. In addition to print and TV advertisements, Trophy also ran ads on its website, Facebook and Twitter. The dealership also ran print ads in a local Spanish-language newspaper, Al Dia.
Among the deceptive ads run by Trophy was one that misled consumers into thinking they could get out of their current loan or lease for only $1. The Commission’s complaint alleges the advertisement was deceptive since consumers could not get out of their loan or lease for that amount. In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan.
In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed it limited match refunds to no more than $1,000. The FTC alleges that Trophy failed to disclose adequately the additional terms.
As part of the proposed consent order, Trophy is prohibited from:
misrepresenting it will pay off a consumers’ trade-in;
misrepresenting material terms of any promotion or other incentive;
misrepresenting the cost of leasing or purchasing a vehicle; and
failing to clearly and conspicuously disclose material terms of a promotion or other incentive.
The proposed consent order also requires Trophy to comply with CLA and Regulation M and TILA and Regulation Z.
The case is part of the Commission’s continued efforts to protect consumers in the auto marketplace. The FTC provides a variety of resources for consumers buying or leasing a vehicle, including Are Car Ads Taking You For A Ride?
The Commission vote to issue the administrative complaint and accept the proposed consent order was 5-0. The agreement is subject to public comment for 30 days, beginning today and continuing through Jan. 22, 2015, after which the Commission will decide whether to make the proposed consent order final. Submit a comment online or through the mail.
NOTE: The Commission issues administrative complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues consent orders on a final basis, they carry the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.
FTC Halts Texas Auto Dealer’s Deceptive Ads
Misleading Ads Claimed $1 Gets Consumers Out of Current Loan or Lease
An auto dealer in suburban Dallas has agreed to settle Federal Trade Commission charges that it used deceptive ads to promote the sale and lease of its vehicles, including an ad that claimed consumers could get out of their current loan or lease for $1.
According to the complaint, false or deceptive ads from TXVT Limited Partnership, doing business as Trophy Nissan (Trophy), violated the FTC Act as well as the Consumer Leasing Act (CLA) and Regulation M, and the Truth in Lending Act (TILA) and Regulation Z.
The FTC charged that Trophy advertised enticing prices, lease or finance terms, and promotions and then attempted to disclaim its attractive offers using small text in print and video ads. In addition to print and TV advertisements, Trophy also ran ads on its website, Facebook and Twitter. The dealership also ran print ads in a local Spanish-language newspaper, Al Dia.
Among the deceptive ads run by Trophy was one that misled consumers into thinking they could get out of their current loan or lease for only $1. The Commission’s complaint alleges the advertisement was deceptive since consumers could not get out of their loan or lease for that amount. In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan.
In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed it limited match refunds to no more than $1,000. The FTC alleges that Trophy failed to disclose adequately the additional terms.
As part of the proposed consent order, Trophy is prohibited from:
misrepresenting it will pay off a consumers’ trade-in;
misrepresenting material terms of any promotion or other incentive;
misrepresenting the cost of leasing or purchasing a vehicle; and
failing to clearly and conspicuously disclose material terms of a promotion or other incentive.
The proposed consent order also requires Trophy to comply with CLA and Regulation M and TILA and Regulation Z.
The case is part of the Commission’s continued efforts to protect consumers in the auto marketplace. The FTC provides a variety of resources for consumers buying or leasing a vehicle, including Are Car Ads Taking You For A Ride?
The Commission vote to issue the administrative complaint and accept the proposed consent order was 5-0. The agreement is subject to public comment for 30 days, beginning today and continuing through Jan. 22, 2015, after which the Commission will decide whether to make the proposed consent order final. Submit a comment online or through the mail.
NOTE: The Commission issues administrative complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues consent orders on a final basis, they carry the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.
FORMER FBI AGENT PLEADS GUILTY IN BRIBERY CASE
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, December 23, 2014
Former FBI Special Agent Pleads Guilty to Bribery Scheme
A former FBI special agent pleaded guilty today to bribery charges, admitting that he provided internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival in exchange for cash.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.
“Robert Lustyik discarded the FBI’s principles of ‘fidelity, bravery, and integrity,’ and sold his badge to the highest bidder,” said Assistant Attorney General Caldwell. “Greed has no place in public service or law enforcement. The Department of Justice will root out corruption wherever it takes hold, and hold accountable those who abuse the public’s trust for personal gain.”
“Robert Lustyik today admitted to conducting a bribery scheme in which, for his own personal gain, he secretly sold information and documents to which he had access as an FBI agent,” said U.S. Attorney Bharara. “Lustyik betrayed our system of justice: he breached not only the law, but also his sworn oath, and the great trust and confidence placed in him by citizens and colleagues. For his criminal conduct he now faces, as he must, serious, commensurate penalties.”
“The Department of Justice Office of the Inspector General is committed to working with our law enforcement partners to identify, investigate, and bring to justice all DOJ employees who engage misconduct,” said Inspector General Horowitz.
Robert Lustyik, 52, of Westchester County, New York, pleaded guilty to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property, and unauthorized disclosure of a Suspicious Activity Report. Lustyik is scheduled to be sentenced by U.S. District Court Judge Vincent L. Briccetti of the Southern District of New York on April 30, 2015.
According to the complaint, indictment, court hearings, and today’s plea proceeding, Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency. Johannes Thaler was Lustyik’s friend, and Rizve Ahmed, aka, “Caesar,” was an acquaintance of Thaler. From September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme. As part of the scheme, Lustyik and Thaler solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI special agent. The documents and information pertained to a prominent citizen of Bangladesh (Individual 1), who Ahmed perceived as a political rival. Ahmed sought, among other things, to obtain information about Individual 1, to locate and harm Individual 1 and others associated with Individual 1.
As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information. For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.” Thaler responded, “I know. It’s all right there in front of us. Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .”
As another example, in late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, sent a text message to Thaler stating, “I want to kill C . . . . I hung my ass out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to Individual 1].” Lustyik further stated, “So bottom line. I need ten gs asap. We gotta squeeze C.”
Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud, and are scheduled to be sentenced on Jan. 23, 2015.
The case was investigated by the Department of Justice Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.
Tuesday, December 23, 2014
Former FBI Special Agent Pleads Guilty to Bribery Scheme
A former FBI special agent pleaded guilty today to bribery charges, admitting that he provided internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival in exchange for cash.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.
“Robert Lustyik discarded the FBI’s principles of ‘fidelity, bravery, and integrity,’ and sold his badge to the highest bidder,” said Assistant Attorney General Caldwell. “Greed has no place in public service or law enforcement. The Department of Justice will root out corruption wherever it takes hold, and hold accountable those who abuse the public’s trust for personal gain.”
“Robert Lustyik today admitted to conducting a bribery scheme in which, for his own personal gain, he secretly sold information and documents to which he had access as an FBI agent,” said U.S. Attorney Bharara. “Lustyik betrayed our system of justice: he breached not only the law, but also his sworn oath, and the great trust and confidence placed in him by citizens and colleagues. For his criminal conduct he now faces, as he must, serious, commensurate penalties.”
“The Department of Justice Office of the Inspector General is committed to working with our law enforcement partners to identify, investigate, and bring to justice all DOJ employees who engage misconduct,” said Inspector General Horowitz.
Robert Lustyik, 52, of Westchester County, New York, pleaded guilty to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property, and unauthorized disclosure of a Suspicious Activity Report. Lustyik is scheduled to be sentenced by U.S. District Court Judge Vincent L. Briccetti of the Southern District of New York on April 30, 2015.
According to the complaint, indictment, court hearings, and today’s plea proceeding, Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency. Johannes Thaler was Lustyik’s friend, and Rizve Ahmed, aka, “Caesar,” was an acquaintance of Thaler. From September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme. As part of the scheme, Lustyik and Thaler solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI special agent. The documents and information pertained to a prominent citizen of Bangladesh (Individual 1), who Ahmed perceived as a political rival. Ahmed sought, among other things, to obtain information about Individual 1, to locate and harm Individual 1 and others associated with Individual 1.
As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information. For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.” Thaler responded, “I know. It’s all right there in front of us. Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .”
As another example, in late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, sent a text message to Thaler stating, “I want to kill C . . . . I hung my ass out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to Individual 1].” Lustyik further stated, “So bottom line. I need ten gs asap. We gotta squeeze C.”
Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud, and are scheduled to be sentenced on Jan. 23, 2015.
The case was investigated by the Department of Justice Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.
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