Weekly Address: DECEMBER 20, 2014

NASA VIDEO: ORION SPACECRAFT RETURNS TO NASA'S KENNEDY SPACE CENTER

JAPAN, AUSTRALIA PROVIDING MAINTENANCE SITES FOR F-35

FROM:  U.S. DEFENSE DEPARTMENT

An F-35C Lightning II joint strike fighter carrier variant prepares to launch from the aircraft carrier USS Nimitz in the Pacific Ocean, Nov. 6, 2014. U.S. Navy photo, courtesy of Lockheed Martin by Andy Wolfe . 

Japan, Australia to Provide F-35 Maintenance Sites in Pacific Region
By Claudette Roulo
DoD News, Defense Media Activity

WASHINGTON, Dec. 17, 2014 – Japan and Australia will be sharing maintenance and upgrade duties for the F-35 Lightning II joint strike fighter based or operating in the Pacific region, the program executive officer for the aircraft announced today.

F-35 heavy air frame maintenance, repair, overhaul and upgrade capabilities will be provided by Japan in the northern Pacific and Australia in the southern Pacific, Air Force Lt. Gen. Christopher C. Bogdan told reporters. Both countries are expected to have their facilities operational no later than 2018.

Initial heavy engine maintenance capability will be provided by Australia by early 2018, he said, and Japan will provide additional capability 3 to 5 years later.

Once Japan’s heavy engine capability is achieved, Bogdan said, the program office will look at the footprint and distribution of F-35's in the Pacific to “see if these decisions are still appropriate and if we have to make any kind of adjustments in terms of the assignment capabilities and moving forward.”
Similar Process in Europe

A similar process will take place in Europe, and all of the assignments will be reviewed every three to five years, he added.

Over the next two years, assignments for other components, systems and repair capabilities will be determined for both Europe and the Pacific, Bogdan noted.
Japan’s final assembly and check-out facility will be quite different from the facilities in Italy and Fort Worth, Texas, the general said.

“Both the plant at Fort Worth and the plant in Italy are expansive in terms of distance on the ground,” he said, but Japan is building vertically. Manufacturing will take place on a number of different floors, Bogdan said, and the aircraft will move through the facility on elevators as it is assembled.

Efficiencies learned through experience at the Fort Worth facility are being incorporated into the Japanese facility as it is constructed, he said.

Just like in Europe, he said, Japan is responsible for the funding and construction of their facility, which will be operated by a Japanese company. Lockheed-Martin will oversee technical aspects of production in Italy and Japan, Bogdan noted, and the U.S. government will oversee security.

Factors Drove Decisions

Geography and operational necessity played a considerable role in the Defense Department’s final decision to place air frame facilities in two locations, the general said.

Seven thousand miles separate the two primary areas where F-35s will be concentrated in the Pacific, Bogdan said. Moving entire aircraft over that distance would require significant amounts of fuel and other support, he said, making it uneconomical. And, he said, “Quite often, some of those airplanes that have to be inducted into a depot are going in there because they need upgrades or there's something wrong.”

Operationally, it didn’t make sense to introduce a long transportation delay into the MRO&U process, the general said.

“If you're having airplanes in the northern Pacific that need a rapid upgrade to respond to a new threat, having to move them 7,000 miles to do that mod in Australia, or vice versa, has an operational impact, because the war fighter won't get the airplane as quickly as he needed to,” he explained.

Geography wasn’t as serious an initial consideration for engines, Bogdan said.
Easier, Quicker, Cheaper

“You can break the engines down into modules, and when you break them down into modules, transportation is much easier, quicker and cheaper,” he said.
As more aircraft arrive in the Pacific theater, Australia’s heavy engine maintenance, repair, overhaul and upgrades capability will eventually be supplemented by Japan, the general said.

“Bringing a Japanese capability online after that represents the fact that as more airplanes come to the Pacific over time, we want to make sure we have enough throughput to get all the engines done in the region in a timely way.”

“This is another example of the continuing expansion of global sustainment opportunities for the international F-35 community,” Bogdan said in a release that accompanied today’s announcement.

“The F-35 international users will remain a vital part of the support structure of the program,” he said. “Their continuing participation is critical to driving down cost and getting the best value for the F-35 team and improving the strength of the global sustainment base for many years to come."

PRESIDENT ANNOUNCES DELEGATION TO ATTEND INAUGUATION OF DILMA ROUSSEFF AS PRESIDENT OF BRAZIL

FROM:  THE WHITE HOUSE 
President Obama Announces Presidential Delegation to the Federative Republic of Brazil to Attend the Inauguration of Her Excellency Dilma Rousseff

President Barack Obama today announced the designation of a Presidential Delegation to Brasilia to attend the Inauguration of Her Excellency Dilma Rousseff as President of the Federative Republic of Brazil on January 1, 2015.

The Honorable Joseph R. Biden, Jr., Vice President of the United States, will lead the delegation.

Members of the Presidential Delegation:

The Honorable Liliana Ayalde, United States Ambassador to the Federative Republic of Brazil, Department of State

The Honorable Roberta S. Jacobson, Assistant Secretary of State for Western Hemisphere Affairs

The Honorable Ricardo Zuniga, Special Assistant to the President and Senior Director for Western Hemisphere Affairs, National Security Council

FDA APPROVES VIEKIRA PAK FOR TREATMENT OF HEPATITIS C

FROM: U.S. FOOD AND DRUG ADMINISTRATION 
FDA approves Viekira Pak to treat hepatitis C

The U.S. Food and Drug Administration today approved Viekira Pak (ombitasvir, paritaprevir and ritonavir tablets co-packaged with dasabuvir tablets) to treat patients with chronic hepatitis C virus (HCV) genotype 1 infection, including those with a type of advanced liver disease called cirrhosis.

Hepatitis C is a viral disease that causes inflammation of the liver that can lead to reduced liver function, liver failure or liver cancer. Most people infected with HCV have no symptoms of the disease until liver damage becomes apparent, which may take decades. According to the Centers for Disease Control and Prevention, about 3.2 million Americans are infected with HCV, and without proper treatment, 15-30 percent of these people will go on to develop cirrhosis.

Viekira Pak contains three new drugs—ombitasvir, paritaprevir and dasabuvir—that work together to inhibit the growth of HCV. It also contains ritonavir, a previously approved drug, which is used to increase blood levels of paritaprevir. Viekira Pak can be used with or without ribavirin, but it is not recommended for patients whose liver is unable to function properly (decompensated cirrhosis).

“The new generation of therapeutics for hepatitis C virus is changing the treatment paradigm for Americans living with the disease,” said Edward Cox, M.D., M.P.H., director of the Office of Antimicrobial Products in the FDA’s Center for Drug Evaluation and Research. “We continue to see the development of new all-oral treatments with very high virologic response rates and improved safety profiles compared to some of the older interferon-based drug regimens.”

Viekira Pak is the fourth drug product approved by the FDA in the past year to treat chronic HCV infection. The FDA approved Olysio (simeprevir) in November 2013, Sovaldi (sofosbuvir) in December 2013 and Harvoni (ledipasvir and sofosbuvir) in October 2014.

Viekira Pak’s efficacy was evaluated in six clinical trials enrolling 2,308 participants with chronic HCV infection with and without cirrhosis. In different trials, participants were randomly assigned to receive Viekira Pak or placebo (sugar pill); Viekira Pak with or without ribavirin; or Viekira Pak with ribavirin for 12 or 24 weeks.

The trials were designed to measure whether the hepatitis C virus was no longer detected in the blood at least 12 weeks after finishing treatment (sustained virologic response, or SVR), indicating that a participant’s HCV infection has been cured. Results from multiple populations, including those considered difficult to treat, showed 91 to 100 percent of participants who received Viekira Pak at the recommended dosing achieved SVR. The recommended dosing for Viekira Pak is two ombitasvir, paritaprevir, ritonavir 12.5 milligrams (mg)/75 mg/50 mg tablets once daily and one dasabuvir 250 mg tablet twice daily.

The most common side effects reported in clinical trial participants were feeling tired, itching, feeling weak or lack of energy, nausea and trouble sleeping.

Viekira Pak is the eleventh new drug product with breakthrough therapy designation to receive FDA approval. The FDA can designate a drug as a breakthrough therapy at the request of the sponsor if preliminary clinical evidence indicates the drug may demonstrate a substantial improvement over available therapies for patients with serious or life-threatening diseases. Viekira Pak was reviewed under the FDA’s priority review program, which provides for an expedited review of drugs that treat serious conditions and, if approved, would provide significant improvement in safety or effectiveness.

Viekira Pak is marketed by AbbVie Inc., based in North Chicago, Illinois. Olysio is marketed by Raritan, New Jersey-based Janssen Pharmaceuticals. Sovaldi and Harvoni are marketed by Gilead Sciences, based in Foster City, California.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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FORMER FEDERAL AGENT PLEADS GUILTY TO STEALING AMMUNITION

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, December 18, 2014
Former Federal Law Enforcement Agent Pleads Guilty to Theft of Agency's Ammunition

A former special agent with the Department of Health and Human Services-Office of Inspector General (HHS-OIG) pleaded guilty today to theft of government property for stealing thousands of rounds of law enforcement ammunition, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Elton Malone of HHS-OIG’s Special Investigations Branch.

Josef A. Riekers, 44, of Rockwall, Texas, pleaded guilty before Chief U.S. District Judge Jorge A. Solis of the Northern District of Texas, who set a sentencing hearing for April 8, 2015.

According to admissions in his plea agreement, Riekers, who had served as a federal law enforcement agent for over 15 years, stole ammunition from the armory at HHS-OIG’s Dallas regional office.  Riekers then traded the stolen ammunition on Internet forums for other, non-government-issued ammunition that he used for his own personal benefit.

This case was investigated by HHS-OIG’s Special Investigations Branch, with assistance from the Dallas Police Department’s Criminal Intelligence Unit.  The case is being prosecuted by Trial Attorneys Kevin Driscoll and Justin Weitz of the Public Integrity Section.

STATE DEPARTMENT OFFICIAL'S RECENT REMARKS ON NUCLEAR DISARMAMENT

FROM:  U.S. STATE DEPARTMENT 
U.S. Perspectives on the Opportunities and Challenges of Nuclear Disarmament
Remarks
Robert Wood
Special Representative to the Conference on Disarmament 
Geneva Center for Security Policy
Geneva, Switzerland
December 17, 2014

Professor Mohamedou, thank you for that gracious introduction, and for hosting this event. It is an honor to join the ranks of distinguished visitors who have spoken at GCSP venues. Ladies and gentlemen, I also appreciate your interest in American perspectives on the opportunities and challenges of nuclear disarmament.

Disarmament, arms control, and nonproliferation are the focus of my professional life here in Geneva, and nuclear disarmament is under particularly close scrutiny as we approach the 2015 Nuclear Non-Proliferation Treaty Review Conference, which we refer to in the shorthand of this business as the “NPT RevCon.” The last NPT RevCon, in 2010, generated a consensus Action Plan for all States Parties. We put great stock in that historic achievement, we are working on it, and want to see it through. Acknowledging that the pace of nuclear disarmament is under criticism in some quarters, I would underline that the United States remains firmly committed to achieving the peace and security of a world without nuclear weapons – but I would also emphasize that there are no easy solutions to the challenge of advancing nuclear disarmament while also maintaining vital strategic stability and enhancing security for all.

So: Where are we now? And most important, where we are going?

As vital as those questions are, it can be easy to lose sight of the significant progress that has been made in this area. Indeed, in the forums in which I routinely work it is regrettably common for some participants to state flatly that “nothing has happened” or “nothing is happening” on nuclear disarmament. This is not the case.

How can such misperceptions persist? It is well known that global stocks of nuclear weapons are at their lowest level in over half a century, far below the levels existing when the NPT entered into force in 1970. This largely reflects very significant treaty-based arms reductions by the United States of America and the Russian Federation. The latest such bilateral arms control treaty, the New START Treaty, entered into force on February 5, 2011, and when it is fully implemented in 2018, New START will limit deployed strategic nuclear warheads to their lowest levels since the 1950s.

Behind these headlines is an ongoing, intense web of daily, practical implementation activities that support strategic stability and transparency, which are conducive to future progress in disarmament. For example, the United States and Russian Federation together continue to implement successfully the New START Treaty. The two sides have exchanged more than 7,700 New START Treaty notifications through the Nuclear Risk Reduction Centers. These notifications include biannual New START Treaty data exchanges, which provide a detailed picture of U.S. and Russian strategic forces. In addition, the Treaty’s on-site inspections continue to enable each side to verify the validity of those data. These exchanges and inspections, together with detailed discussions in the Bilateral Consultative Commission, help build confidence, stability, and predictability. Historically, implementation of strategic arms control treaties with the former Soviet Union and Russia has proceeded without interruption even during the most challenging periods in the bilateral relationship.

The United States also has reduced the role of nuclear weapons in its national security strategy as outlined in the U.S. Nuclear Posture Review (NPR). Specifically, as outlined in the 2010 NPR, the United States will not develop new nuclear warheads, and life extension programs for existing weapons will not support new military capabilities or provide for new military capabilities. Additionally, as reflected in the NPR, the United States has strengthened the negative security assurances that it provides to non-nuclear weapon states who are party to the NPT, and made clear that the United States would only consider the use of nuclear weapons in extreme circumstances to defend the vital interests of the United States or its allies and partners.

Proceeding further to the heart of the matter, we reported earlier this year that over the past two decades alone the United States has dismantled 9,952 nuclear warheads. That works out to dismantling an average of more than one warhead per day, every day, for 20 years. And the work continues. By the way, the dismantlement of just one nuclear warhead is not an easy process – it is extremely demanding work.

I hope that does not surprise you. But unfortunately, since taking up my duties as ambassador here four months ago, I have repeatedly heard the claim that, while non-nuclear weapons states have by and large honored their nonproliferation obligations, nuclear weapons states have abdicated their nuclear disarmament obligations.

I will let other Nuclear Weapons States speak for themselves. I think that the U.S. can be very proud of our own record. Please consider these facts:

• Over all, the United States has slashed its nuclear arsenal from its Cold War high by 85%. 85%. That is not a percentage pulled out of a hat. It is not fiction or fantasy. It is real!

• Before 1991, the U.S. eliminated an entire category of missiles, scrapping all of its intermediate-range and shorter-range ground-launched nuclear- and conventional-capable missiles and their associated launchers and equipment in accordance with the Intermediate Nuclear Forces (INF) Treaty.

• And just since 1991, the United States has reduced its non-strategic nuclear arsenal by approximately 90%.

When we pledge to continue to pursue nuclear disarmament and to keep faith with our NPT Article VI disarmament obligations, those are not empty words. Our responsible approach to disarmament has borne fruit in the form of major reductions in nuclear weapons, fissile material stocks, and infrastructure. Our nuclear complex has been completely transformed from one built for the mass production of fissile material and warheads and the design and testing of new weapons to one dedicated to the maintenance of a steadily shrinking stockpile.

Underpinning all of our efforts, stretching back decades, has been our clear understanding and recognition of the severe consequences of the use of these weapons. That is the message the United States took to the Conference on the Humanitarian Impact of Nuclear Weapons in Vienna last week. We participated to reinforce the message that the practical step-by-step path we have followed so successfully remains the only realistic route to our shared goal of a nuclear weapons-free world. We cannot and will not support efforts to move to a nuclear weapons convention or the false hope of a fixed timeline for the elimination of all nuclear weapons. We cannot support and will oppose any effort to move to an international legal ban on nuclear weapons.

Looking ahead, it remains the policy of the United States to achieve the peace and security of a world without nuclear weapons. And we are facing new challenges as we consider how to responsibly eliminate the last 15% of those weapons. As we move to smaller and smaller numbers, leading to zero globally, we must in turn become rigorously more and more confident and trusting that all are fulfilling their commitments.

In considering future reductions, the United States believes that the focus must be on responsible measures that can be trusted and verified. We will learn from our past experience and continue to move ahead with each step building on the last. While there is no pre-determined sequence of steps, and indeed we should pursue progress on multiple paths, there is no way to skip to the end and forgo the hard work of preparing for the technical and political disarmament challenges that lie ahead. Patience and persistence are needed from all NPT parties both among and beyond the P5.

Earlier this month in Prague, Under Secretary Gottemoeller announced a new International Partnership for Nuclear Disarmament Verification. We propose to work with nuclear-weapon states and non-nuclear-weapon states to better understand the challenges of verifying nuclear disarmament and to develop solutions to address those challenges.

This new partnership will draw on the talents of experts around the world, both inside and outside government. It will build on the pathbreaking efforts of the U.K.-Norway initiative, begun in 2007, to investigate ways to address nuclear disarmament verification challenges. The Nuclear Threat Initiative will be a prime partner in organizing this exciting new effort.

The United States is committed to a responsible approach to nuclear disarmament in accordance with our obligations under the Treaty on the Non-Proliferation of Nuclear Weapons. The United States has made it clear that we are ready to engage Russia to discuss the full range of issues related to strategic stability, and that we should take real and important actions that can contribute to creating a more predictable and secure world. We hope that these negotiations will take place when the conditions become more favorable for constructive interaction.

Broadening the aperture, I would underline that NPT Parties have committed as a next step in the multilateral nuclear disarmament sphere to negotiations on a treaty banning the production of fissile material for use in nuclear weapons or other nuclear explosive devices, the Fissile Material Cut-off Treaty (FMCT). This goal was embraced by all NPT Parties. Indeed, the 2010 NPT Action 15 notes that “All States agree that the Conference on Disarmament should . . . begin negotiation of a treaty banning the production of fissile material for use in nuclear weapons. . . .”

Achieving such a ban would support our collective Article VI obligations. The United States regrets that the CD remains in deadlock, unable to agree on a Program of Work that takes us forward and puts us on a path toward FMCT negotiations. It is clear that we still have our work cut out for us. And it is difficult to have a meaningful discussion, to set the stage for productive negotiations in the CD, without a better grasp of the facts, without recognition of what has been accomplished as well as the challenges that remain.

For the United States, the CD remains an essential multilateral institution for the negotiation of arms control and disarmament agreements. As a consensus-based body, it is the ideal venue to deal with the most sensitive national security issues multilaterally. While the United States and many other Member States are frustrated by the inability of the CD to get back to the business of negotiating, we need to find creative ways to energize it and put it back to work.

In conclusion, I would emphasize that it is a welcome fact that there remains strong support among governments and publics for nuclear disarmament. For the United States, the task at hand is to help to channel that support into constructive, effective measures that will strengthen international security while further reducing the number of nuclear weapons. Indeed, the United States has led the international community in responsibly reducing nuclear arsenals in a safe and practical step-by-step manner, and we remain firmly committed to our obligations under the NPT. We welcome contributions by all to this important task, but will firmly resist any efforts to oversimplify the path forward and ignore the real security challenges we face along that path. As President Obama has said, the path to zero will require patience and persistence. It requires a broad strategy aimed at strengthening the nonproliferation regime, preventing nuclear terrorism, and pursuing concrete steps that build a foundation for future progress and lead in the direction of nuclear disarmament. Thank you for your attention.

JUSTICE DEPARTMENT GIVES UPDATE ON SONY INVESTIGATION AND THE "GUARDIANS OF PEACE"

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, December 19, 2014
Update in Sony Investigation

Today, the FBI would like to provide an update on the status of our investigation into the cyber attack targeting Sony Pictures Entertainment (SPE).  In late November, SPE confirmed that it was the victim of a cyber attack that destroyed systems and stole large quantities of personal and commercial data.  A group calling itself the “Guardians of Peace” claimed responsibility for the attack and subsequently issued threats against SPE, its employees, and theaters that distribute its movies.

The FBI has determined that the intrusion into SPE’s network consisted of the deployment of destructive malware and the theft of proprietary information as well as employees’ personally identifiable information and confidential communications.  The attacks also rendered thousands of SPE’s computers inoperable, forced SPE to take its entire computer network offline, and significantly disrupted the company’s business operations.

After discovering the intrusion into its network, SPE requested the FBI’s assistance.  Since then, the FBI has been working closely with the company throughout the investigation.  Sony has been a great partner in the investigation, and continues to work closely with the FBI. Sony reported this incident within hours, which is what the FBI hopes all companies will do when facing a cyber attack.  Sony’s quick reporting facilitated the investigators’ ability to do their jobs, and ultimately to identify the source of these attacks.

As a result of our investigation, and in close collaboration with other U.S. Government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions.  While the need to protect sensitive sources and methods precludes us from sharing all of this information, our conclusion is based, in part, on the following:

Technical analysis of the data deletion malware used in this attack revealed links to other malware that the FBI knows North Korean actors previously developed.  For example, there were similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks.

The FBI also observed significant overlap between the infrastructure used in this attack and other malicious cyber activity the U.S. Government has previously linked directly to North Korea.  For example, the FBI discovered that several Internet protocol (IP) addresses associated with known North Korean infrastructure communicated with IP addresses that were hardcoded into the data deletion malware used in this attack.

Separately, the tools used in the SPE attack have similarities to a cyber attack in March of last year against South Korean banks and media outlets, which was carried out by North Korea.

We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there.  Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States.  Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart.  North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves.  Such acts of intimidation fall outside the bounds of acceptable state behavior.  The FBI takes seriously any attempt – whether through cyber-enabled means, threats of violence, or otherwise – to undermine the economic and social prosperity of our citizens.

The FBI stands ready to assist any U.S. company that is the victim of a destructive cyber attack or breach of confidential business information.  Further, the FBI will continue to work closely with multiple departments and agencies as well as with domestic, foreign, and private sector partners who have played a critical role in our ability to trace this and other cyber threats to their source.  Working together, the FBI will identify, pursue, and impose costs and consequences on individuals, groups, or nation states who use cyber means to threaten the United States or U.S. interests.

West Wing Week: 12/19/14 or, "Todos Somos Americanos"

SECRETARY KERRY CONDEMNS CYBER-ATTACKS BY NORTH KOREA

FROM:  U.S. STATE DEPARTMENT
Condemning Cyber-Attack by North Korea
Press Statement
John Kerry
Secretary of State
Washington, DC
December 19, 2014

The United States condemns North Korea for the cyber-attack targeting Sony Pictures Entertainment and the unacceptable threats against movie theatres and moviegoers. These actions are a brazen attempt by an isolated regime to suppress free speech and stifle the creative expression of artists beyond the borders of its own country.

Freedom of expression is at the center of America’s values and a founding principle of our Bill of Rights. We’re a country where artists openly mock and criticize the powerful, including our own government. We don’t always like what they say about us or about others, and sometimes we’re even deeply offended. But those offenses have always taken a backseat to freedom of expression. That’s why the United States is and always will be a staunch advocate for and protector of the right of artists to express themselves freely and creatively. Whatever one’s system of government or views about free expression, there is absolutely no justification whatsoever for an attack like this.

We are deeply concerned about the destructive nature of this state sponsored cyber-attack targeting a commercial entity and its employees in the United States. These lawless acts of intimidation demonstrate North Korea’s flagrant disregard for international norms. Threats in cyberspace pose one of the greatest national security challenges to the United States, and North Korea’s actions – intended to inflict significant economic damage and suppress free speech – are well beyond the bounds of acceptable state behavior in cyberspace. This provocative and unprecedented attack and subsequent threats only strengthen our resolve to continue to work with partners around the world to strengthen cybersecurity, promote norms of acceptable state behavior, uphold freedom of expression, and ensure that the Internet remains open, interoperable, secure and reliable. We encourage our allies and partners to stand with us as we defend the values of all of our people in the face of state-sponsored intimidation.

12/18/14: WHITE HOUSE PRESS BRIEFING

U.S. CONGRATULATES PEOPLE OF MAURITIUS ON ELECTIONS

FROM:  U.S. STATE DEPARTMENT 
United States Congratulates Mauritius on Successful Elections
Press Statement
John Kerry
Secretary of State
Washington, DC
December 18, 2014

On behalf of the American people, I congratulate the people of Mauritius on the peaceful transition of power that resulted from the successful elections held on December 10. Mauritius’ series of free, fair, democratic, and peaceful elections stand as a model for the rest of the world. Prime Minister Jugnauth returns to lead Mauritius with a wealth of experience, and the U.S. government looks forward to working with him and his cabinet of ministers and continuing our valued partnership with Mauritius.

NASA AMES RESEARCH CENTER CELEBRATES 75TH ANNIVERSARY

FROM:  NASA 

December 20, 2014 marks NASA Ames Research Center's 75th Anniversary. The center was established in 1939 as the second laboratory of the National Advisory Committee for Aeronautics, and was named for the chair of the NACA, Joseph S. Ames. It was located at Moffett Field in Sunnyvale, California, now at the heart of Silicon Valley. The Laboratory was renamed the NASA Ames Research Center with the formation of NASA in 1958.  This June 2, 1943 photograph shows the construction of the Ames full-scale 40- by 80-foot wind tunnel, with a side view of the entrance cone and a blimp in the background.  Image Credit: NASA.

U.S. CONTRACTOR'S FORMER EMPLOYEE INDICTED FOR BRIBERY

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, December 16, 2014

Former Employee of U.S. Contractor in Afghanistan Indicted for Bribery
A former employee of a U.S. contractor was indicted today in the Eastern District of Texas for allegedly soliciting and accepting bribes in exchange for his influence in awarding U.S. government-funded contracts in Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John Malcolm Bales of the Eastern District of Texas.

George E. Green, 57, of Carrollton, Texas, was charged with conspiracy to structure financial transactions to avoid currency transaction reporting requirements, wire fraud and receipt of bribes in connection with a program receiving federal funds.

According to the indictment, Green was the former director of contracts, procurement and grants for International Relief and Development Inc. (IRD), and was part of a cooperative agreement between IRD and the U.S. Agency for International Development (USAID) that sought to promote long-term agricultural development in specific areas in Afghanistan.

The indictment alleges that while working for IRD in Afghanistan, Green solicited and received bribes totaling $66,000 from a representative of an Afghan firm that contracted with IRD.  Some of those bribe payments were allegedly wired directly to an Italian automobile dealer for Green’s benefit.  After returning to Texas, Green allegedly attempted to conceal the bribe proceeds by engaging in a conspiracy to structure cash deposits into his bank and credit card accounts to avoid mandatory cash reporting requirements.  Additionally, even after leaving IRD, Green allegedly continued to solicit bribes from the Afghan firm by falsely claiming that he still had the ability to influence the contracting process.

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

This case is being investigated by the Office of Special Inspector General for Afghanistan Reconstruction (SIGAR), FBI and USAID Office of Inspector General.  The case is being prosecuted by Trial Attorney Mark H. Dubester on detail to the Criminal Division’s Fraud Section from SIGAR and Assistant U.S. Attorney Kevin McClendon of the Eastern District of Texas.

FTC ANNOUNCES SETTLEMENT WITH PHONE CRAMMING DEFENDANT

FROM:  U.S. FEDERAL TRADE COMMISSION 

One of the defendants behind a massive landline cramming operation that placed more than $70 million in unauthorized charges on consumers’ phone bills has agreed to settle Federal Trade Commission charges against him.

Nathan M. Sann, one of the defendants in the American eVoice, Ltd. case has agreed to settle the FTC’s charges related to his alleged participation in the scheme. In its complaint, the FTC alleged that the operation placed charges ranging from $9.95 to $24.95 per month on consumers’ landline phone bills for voicemail services they never signed up for and never even knew they had.  The case against the other entities and individuals involved in the scheme is on-going.

Under the terms of his settlement with the FTC, Sann will be banned from placing charges of any kind on consumers’ phone bills. In addition, he will be prohibited from billing consumers for any good or service without their authorization. Sann will also be required to destroy all personal information that he collected from consumers in connection with the cramming operation within 30 days.

The settlement contains a monetary judgment of more than $21 million, which represents the amount of consumer injury attributable to Sann during his involvement with the scam.  The judgment will be suspended due to Sann’s inability to pay upon his surrender of certain personal assets.  Under the terms of the settlement, if Sann has misrepresented his financial condition, the full judgment would become due.

The Commission vote approving the proposed stipulated order was 5-0. The FTC filed the proposed stipulated order in the U.S. District Court for the District of Montana, Missoula Division. It was entered by the court on Nov. 25, 2014.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

EPA TAKES ACTION PROTECTING PUBLIC FROM CERTAIN CHEMICALS

FROM:  U.S. ENVIRONMENTAL PROTECTION AGENCY 
FOR IMMEDIATE RELEASE
December 17, 2014

WASHINGTON – The U.S. Environmental Protection Agency (EPA) is taking action to protect the public from certain chemicals that have the potential to cause a range of health effects from cancer to reproductive and developmental harm to people and aquatic organisms.

“We are committed to protecting all Americans from exposure to harmful chemicals used in domestic and imported products,” said Jim Jones, assistant administrator for chemical safety and pollution prevention. “There must be a level playing field for U.S. businesses – which is why we’re targeting harmful chemicals no longer used in the U.S. that find their way into commerce, sometimes through imported products. This final action will give EPA the opportunity to restrict or limit any new uses of these chemicals, including imported goods with these chemicals.”
Today’s action addresses the following chemicals:

Most uses of certain benzidine-based dyes which can be used in textiles, paints and inks and can be converted in the body into a chemical that is known to cause cancer;

Most uses of DnPP, a phthalate, which can be used in PVC plastics and has been shown to cause developmental and/or reproductive effects in laboratory animals; and

Alkanes C 12-13, chloro, a short-chain chlorinated paraffin (SCCP), which can be used as industrial lubricants and are persistent, bioaccumulative and toxic to aquatic organisms at low concentrations and can be transported globally in the environment.

Some of the chemicals in today’s rule have previously been used in consumer products but are not used in the market today. Today’s Significant New Use Rules (SNURs) issued under the Toxic Substances Control Act allow EPA to review any efforts by manufacturers, including importers, to introduce these chemicals into the market and take appropriate action to ensure that human health and the environment are protected. EPA believes that new uses of these chemicals should not be allowed without an opportunity for review and, if necessary, to place restrictions on these chemicals, as warranted.
The action adds nine benzidine-based dyes to an existing SNUR. It closes a loophole to ensure that these chemicals and products containing them, such as clothing, cannot be imported without EPA review and possible restriction. EPA has investigated safer dyes and colorants as alternatives to benzidine as part of its Safer Chemical Ingredients List and Design for the Environment program.

In 2012, EPA required companies to stop manufacturing and importing SCCPs and to pay fines as a result of an enforcement action.

EPA is further evaluating related medium-chain (MCCPs) and long-chain chlorinated paraffins (LCCPs) as part of the TSCA Work Plan for Chemical Assessments.

EPA has added several phthalates to the TSCA Work Plan for Chemical Assessments. If a TSCA Work Plan assessment indicates a potential risk, the agency would determine if risk reduction actions, as appropriate, should be taken.

These final SNURs will require anyone who wishes to manufacture (including import) or process these chemical substances for a significant new use to notify EPA 90 days before starting or resuming new uses of these chemicals. This notice will provide EPA with the opportunity to evaluate the intended use of the chemicals and, if necessary, take action to prohibit or limit the activity.

SEC ALLEGES INVESTMENT FRAUD IN "QUICK-TO-PRODUCTION" GOLD MINE OPERATIONS IN BRAZIL AND PERU

FROM:  U.S. SECURITIES AND EXCHANGE 

The Securities and Exchange Commission announced charges against two individuals and their companies behind an alleged gold mining investment scheme based in Miami.



The SEC Enforcement Division alleges that Michael Crow and Alexandre Clug promised investors a stake in so-called “quick-to-production” gold mines that their company Aurum Mining LLC purported to own and operate in Brazil and Peru.  Crow, who had filed for personal bankruptcy, teamed up with Clug to raise approximately $3.9 million from seniors and other investors in Florida.  Despite highly optimistic statements that the gold mines would yield millions of dollars, the investors never received any money back from their investments.



According to an order instituting an administrative proceeding, Crow and Clug allegedly used a substantial amount of investor funds to cover their monthly salaries, rental of upscale apartments in Lima, and other living or travel expenses.



In a separate order, certified public accountant Angel E. Lana agreed to settle findings that he was involved in the scheme as the CFO of Aurum Mining.



“Investors are entitled to know the whole truth about their investments and those controlling their investments,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Our case alleges that Crow and Clug used investor money to pay themselves while concealing Crow’s background and Aurum’s failures in Brazil and Peru from investors, including seniors.”



The SEC Enforcement Division alleges that Crow and Clug knew their prospective statements to investors about the gold mining ventures were false and misleading because they were not supported by the conclusions or opinions of Brazilian-based counsel, independent geological experts, or mining analysts.  Among the false representations by Crow and Clug was that Aurum Mining had acquired a 50-percent interest in a Brazilian gold mine with reserves of approximately $400 million worth of gold.



According to the SEC’s order, Crow has twice before been the subject of SEC enforcement actions and has been barred from working in the securities industry or acting as an officer or director of a public company.  The SEC Enforcement Division alleges that Crow and Clug established PanAm Terra Inc. as a public company and raised $400,000 from investors in Florida for purported farmland investment opportunities in South America.  PanAm Terra failed to disclose to investors in its periodic SEC filings that Crow acted as a de facto officer despite being barred from doing so.  The filings also failed to disclose Crow’s bankruptcy.  The SEC Enforcement Division alleges that no farmland was actually purchased and a substantial amount of the money raised was paid to Crow, Clug, and their business associates.



The SEC Enforcement Division further alleges that Crow and Clug operated another company called The Corsair Group through which they brokered the sale of bonds to investors and received more than $10,000 in transaction-based compensation.  The Corsair Group was not registered as a broker-dealer and Crow and Clug were not associated with any registered broker-dealer, and in fact Crow had been barred from associating with any broker-dealer.



The SEC Enforcement Division alleges that Crow, Clug, Aurum Mining, and PanAm Terra violated Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 under the Securities Exchange Act of 1934.  Crow and Clug allegedly aided and abetted and caused the violations by Aurum Mining and PanAm Terra.  In the order, the Enforcement Division alleges additional violations of other provisions of the federal securities laws.  The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate.



The SEC’s separate order against Lana found that he solicited his own accounting clients and others to invest in Aurum Mining without regard to the false or misleading representations being made to investors.  Without admitting or denying the findings, Lana agreed to pay a $50,000 penalty and be barred from practicing as an accountant on behalf of any SEC-regulated entity for five years.  He is ordered to cease-and-desist from further violations of Section 17(a) of the Securities Act.



The SEC Enforcement Division’s investigation was conducted by Ibrahim Bah, Nandy Celamy, Sandra Yanez, David Stoelting, and Valerie A. Szczepanik in the New York Regional Office.  The case was supervised by Amelia A. Cottrell, and the Enforcement Division’s litigation will be led by Mr. Stoelting and Mr. Bah.

USDA VIDEO: USDA WEEK IN REVIEW DECEMBER 12

PRESIDENT OBAMA MAKES STATEMENT ON UKRAINE FREEDOM SUPPORT ACT

FROM:  THE WHITE HOUSE PRESIDENT 
December 18, 2014
Statement by the President on the Ukraine Freedom Support Act

Today, I have signed H.R. 5859, the Ukraine Freedom Support Act of 2014, into law. Signing this legislation does not signal a change in the Administration’s sanctions policy, which we have carefully calibrated in accordance with developments on the ground and coordinated with our allies and partners.  At this time, the Administration does not intend to impose sanctions under this law, but the Act gives the Administration additional authorities that could be utilized, if circumstances warranted.

My Administration will continue to work closely with allies and partners in Europe and internationally to respond to developments in Ukraine and will continue to review and calibrate our sanctions to respond to Russia's actions. We again call on Russia to end its occupation and attempted annexation of Crimea, cease support to separatists in eastern Ukraine, and implement the obligations it signed up to under the Minsk agreements.

As I have said many times, our goal is to promote a diplomatic solution that provides a lasting resolution to the conflict and helps to promote growth and stability in Ukraine and regionally, including in Russia.  In this context, we continue to call on Russia's leadership to implement the Minsk agreements and to reach a lasting and comprehensive resolution to the conflict which respects Ukraine’s sovereignty and territorial integrity.  We remain prepared to roll back sanctions should Russia take the necessary steps.

DOJ TAKES ATION TO ADDRESS PATTERN OF EXCESSIVE FORCE AND VIOLENCE AT NYC JAILS ON RIKERS ISLAND

FROM:  U.S JUSTICE DEPARTMENT 
Thursday, December 18, 2014
Department of Justice Takes Legal Action to Address Pattern and Practice of Excessive Force and Violence at NYC Jails on Rikers Island that Violates the Constitutional Rights of Young Male Inmates

Attorney General Eric Holder, Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division and U.S. Attorney Preet Bharara for the Southern District of New York announced today that the United States has taken legal action to ensure that critically important reforms are put in place to address conduct at Rikers Island that has violated the constitutional rights of New York City’s youngest inmates, who are between the ages of 16 and 18 (“young inmates”).  Specifically, the Department of Justice has filed a motion seeking the court’s permission to join and become a plaintiff in a pending class action lawsuit against New York City, Nunez v. City of New York (the “Nunez Action”), which alleges that the Department of Correction (“DOC”) has engaged in a pattern and practice of using unnecessary and excessive force against inmates.  The department has taken this legal step as part of its ongoing effort to ensure that DOC implements all needed institutional reforms promptly, and that these reforms are lasting, verifiable and enforceable through the judicial process.

"With this filing, the Department of Justice is taking an important step to ensure the safety and constitutional rights of young people incarcerated at Rikers Island," said Attorney General Holder.  "We've seen alarming evidence of unnecessary and excessive use of force against juveniles, as well as a systemic failure to protect them from violence and deeply troubling -- and potentially scarring -- use of solitary confinement.  This action allows the Justice Department to seek necessary reforms to remedy these unlawful conditions, to ensure fair treatment, and to provide all incarcerated young people with the protections, and opportunities to build better futures, that they deserve."

“Today we are taking legal action to ensure that critically important reforms are put in place to address the culture of violence and overuse of punitive segregation at Rikers Island that has violated the constitutional rights of New York City’s youngest inmates,” said Acting Assistant Attorney General Gupta.  “We stand ready to work with the city to remedy these deeply disturbing conditions for the safety of confined youth, remedies that will ultimately also promote public safety and the safety of correctional officers.”

“Sometimes it’s the case that bureaucracy can get in the way of reform-minded thinking and comprehensive cultural change,” said U.S. Attorney Bharara.  “We hope that won’t be the case here.  We welcome the aspirations articulated by Commissioner Ponte but we hope those aspirations will find concrete expression in the form of permanent, enforceable, and verifiable terms in a court-approved settlement agreement.  The devil, as they say, is in the details and we have come to the conclusion that joining the pending case as a formal party is the best and most efficient way to get those details done.  That is why we are now taking the steps necessary to carry out our responsibility under the law.  Given the longstanding sad state of affairs at Rikers Island, our impatience is more than understandable.  As I’ve said before, one way or another, we will get enduring and enforceable reform at Rikers Island.”

On August 4, 2014, the department issued a report that concluded that “a deep-seated culture of violence is pervasive throughout the adolescent facilities at Rikers, and DOC staff routinely use force not as a last resort, but instead as a means to control the adolescent population and punish disorderly or disrespectful behavior.”  The report urged the city to adopt and implement over 70 specific remedial measures.  Although DOC’s new leadership has taken some positive steps in response to the report with respect to the 16 and 17-year old population, including reducing the inmate-to-staff ratio, developing new programming, and moving towards eliminating the use of punitive segregation, much more needs to be done.

The department’s proposed 36-page complaint-in-intervention (“complaint”), filed today along with a motion to intervene in the Nunez action, alleges that the city has engaged in a pattern and practice of violating the constitutional rights of young inmates, and that the city’s deliberate indifference to these constitutional rights has caused these inmates serious physical, psychological, and emotional harm.  Like the August 4, 2014, report, the complaint focuses on use of force by staff, inmate-on-inmate violence, and the use of punitive segregation.

Specifically, the complaint alleges:

Staff use force against young inmates with alarming frequency.In Fiscal Year 2014, there were 553 reported staff use of force incidents involving young inmates at the Robert D.Davoren Center (“RNDC”) and the Eric M.Taylor Center (“EMTC”), the two facilities that housed most young inmates.These incidents resulted in 1,088 injuries.

Inmate-on-inmate fights and assaults are pervasive in large part because inmates are inadequately supervised by inexperienced and poorly trained officers.In Fiscal Year 2014, there were 657 reported inmate-on-inmate fights involving young inmates at RNDC and EMTC.

Staff use of force and inmate-on-inmate fights and assaults have resulted in an alarming number of serious injuries to young inmates, including broken jaws, broken orbital bones, broken noses, long bone fractures, and lacerations requiring stitches.

Staff frequently punch, strike, or kick young inmates in the head or facial area.

Force is used as a means to punish young inmates, and staff unnecessarily continue to use force against inmates who already have been restrained.

Force is used in response to inmate verbal taunts and insults.

Specialized response teams, including probe and cell extraction teams, use excessive force.

Staff regularly tell inmates to “stop resisting,” even though the inmate has been completely subdued, to justify the use of force.

Use of excessive force is common in areas outside video surveillance coverage.DOC recently transferred many 18-year old inmates to housing units that have no video surveillance at all.

The complaint further alleges that, notwithstanding a long and troubled history of pervasive use of force against inmates at Rikers, the city has for years failed to address systemic deficiencies, including:

Failure to ensure that use of force is accurately reported, and allowing a powerful code of silence to persist.

Failure to conduct thorough and comprehensive investigations into use of force incidents.

Failure to appropriately discipline staff for using excessive and unnecessary force.

Failure to ensure that inmates are adequately supervised.

Failure to implement an adequate age-appropriate classification system.

Failure to provide staff with effective training on the proper use of force and how to appropriately manage youth.

In addition, the complaint asserts that the city has engaged in a pattern and practice of placing young inmates in punitive segregation at an alarming rate and for excessive periods of time.

Since issuing its report in August, the U.S. Attorney’s Office has had several meetings with the city’s Law Department regarding the U.S. Attorney’s Office proposed remedial measures.  Some of these discussions have included attorneys representing the Nunez plaintiffs, who have been engaging in settlement discussions with the city for several months.  However, thus far, although there has been some constructive dialogue, the city has been unwilling to commit to an enforceable agreement including the type of reforms and oversight that are necessary to fully address the long-standing problems at Rikers and safeguard the constitutional rights of inmates.

U.S.  Attorney Bharara thanked the Board of Correction for its continuing assistance in connection with this matter.

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Emily E. Daughtry are in charge of the case.

REMARKS: ACTING AG GUPTA ON UNCONSTITUTIONAL CONDITIONS OF CONFINEMENT FOR YOUTH ON RIKERS ISLAND

FROM:  U.S. JUSTICE DEPARTMENT 

Remarks by Acting Assistant Attorney General Vanita Gupta at the Press Conference to Announce the Department's Intervention to Remedy Unconstitutional Conditions of Confinement for Youth on Rikers Island
New York City, NYUnited States ~ Thursday, December 18, 2014
Remarks as Prepared for Delivery

Thank you, Preet.  It is an honor to join you to announce the filing of this important piece of litigation.  The enforcement of the nation’s civil rights laws is a partnership between the Civil Rights Division and United States Attorneys across this country.  Your office has been a leader in this effort and you and your team have undertaken many important civil rights initiatives, including your critical work on Rikers Island.

As Preet mentioned, we are here today to announce our intervention in a class action suit against New York City over a pattern and practice of excessive force and violence in New York City jails on Rikers Island that violate the constitutional rights of adolescent inmates.

The authority to deprive individuals of their liberty and place them in a prison or a jail is one of the most profound powers of government.  With the exercise of that power comes the responsibility to ensure that at least minimum standards of care and protection are observed.  Our constitution recognizes that individuals who are incarcerated have the right to reasonable protection from violence, and to be provided basic necessities of life.  These are not only essential constitutional principles, but good public policy and fundamental to public safety and the safety of correctional staff.  When governments fail to meet these basic responsibilities, the Department of Justice stands ready to appeal to the Courts to ensure that basic rights are respected.  Today, we are doing just that -- taking legal action to ensure that critically important reforms are put in place to address conduct reflecting the culture of violence at Rikers Island that has violated the constitutional rights of New York City’s youngest inmates.

The mandate to ensure safe and humane jail conditions is never more important than when we incarcerate young people.  The findings of the investigation of the United States Attorney’s Office can only be described as deeply disturbing.  Young people are subject to unnecessary and excessive violence by staff, and to the overuse of punitive segregation.  They are not protected from other inmates.  This suit is essential to bring urgent and necessary, sustainable change to the conditions at Rikers Island through a court enforceable agreement.

The Civil Rights Division works to address unconstitutional conditions in prisons, jails and juvenile facilities across this nation.   For example, from Cook County, Illinois to New Orleans, Louisiana to Muscogee, Oklahoma, we have reached cooperative agreements that ensure that people in prison are treated humanely and consistent with the constitution.  From that work we have learned that, sadly, Rikers is not alone.  In far too many places, youth held in adult jails are subject to abhorrent and abusive conditions.

We have also learned that mistreatment, violence and neglect are not inevitable.  The problems we see on Rikers Island can be fixed.   Reform works and the changes we seek will not only ensure that the rights of youthful inmates are protected, but will make a safer work place for corrections staff and promote public safety.

Most prisoners return to their communities following incarceration.  If our compassion does not motivate us to ensure that youthful prisoners are treated with a minimum of decency, our self-interest demands it.   The conditions in which they are confined, the services that they are provided and the opportunities that they are given are critical to their ability to succeed when they come home.   We can make kids better or worse by the way we treat them while they are locked up.

Moreover, the adverse and dangerous conditions that prevail on Rikers Island place the lives and safety of staff at risk.  It is clear from our investigation that corrections officers do not have adequate programmatic options to deal with an admittedly complex and difficult population.  The risk is compounded by the failure to give staff sufficient policy guidance, necessary training, support through supervision and important accountability systems.  These systems failures create a toxic mix that harms prisoners and staff alike.

We recognize that the city has taken initial steps to start reform.  We applaud the Mayor for his public commitment to fixing the problems.  We are committed to working with the city to get at core issues.  Through this litigation, we seek a court enforceable agreement to ensure that:

excess force will be prohibited, that staff will be trained to deescalate and maintain control without excessive force and that when force is used inappropriately it will be identified and addressed;
That necessary steps will be taken to protect youth from violence; and
That other necessary measures are taken to ensure that the rights of adolescent inmates are protected.

It is our sincere hope that we can resolve these issues with the city through a court enforceable agreement with a monitor in order to implement sustainable systemic reforms.  We also hope that this matter can be resolved quickly so that all available resources can be directed at fixing the problems and not in litigation.  Thank you.

SECRETARY OF STATE KERRY'S STATEMENT ON CUBA POLICY ANNOUNCEMENT

FROM:  U.S. STATE DEPARTMENT 
Announcement of Cuba Policy Changes
Press Statement
John Kerry
Secretary of State
Washington, DC
December 17, 2014

I was a seventeen year old kid watching on a black and white television set when I first heard an American President talk of Cuba as an "imprisoned island.”

For five and a half decades since, our policy toward Cuba has remained virtually frozen, and done little to promote a prosperous, democratic and stable Cuba. Not only has this policy failed to advance America's goals, it has actually isolated the United States instead of isolating Cuba.

Since 2009, President Obama has taken steps forward to change our relationship and improve the lives of the Cuban people by easing restrictions on remittances and family travel. With this new opening, the President has committed the United States to begin to chart an even more ambitious course forward.

Beginning more than twenty years ago, I have seen firsthand as three presidents -- one Republican and two Democrats -- have undertaken a similar effort to change the United States' relationship with Vietnam. It wasn't easy. It isn't complete still today. But it had to start somewhere, and it has worked.

As we did with Vietnam, changing our relationship with Cuba will require an investment of time, energy and resources. Today’s step also reflects our firm belief that the risk and the cost of trying to turn the tide is far lower than the risk and cost of remaining stuck in an ideological cement of our own making.

This new course will not be without challenges, but it is based not on a leap of faith but on a conviction that it's the best way to help bring freedom and opportunity to the Cuban people, and to promote America's national security interests in the Americas, including greater regional stability and economic opportunities for American businesses.

In January, as part of the President’s directive to discuss moving toward re-establishment of diplomatic relations, my Assistant Secretary for the Western Hemisphere Roberta Jacobson will travel to Cuba to lead the U.S. Delegation to the next round of U.S.-Cuba Migration Talks. I look forward to being the first Secretary of State in 60 years to visit Cuba. At President Obama’s request, I have also asked my team to initiate a review of Cuba’s designation as a State Sponsor of Terrorism.

Going forward, a critical focus of our increased engagement will continue to be on improving the Cuban Government’s respect for human rights and advocating for democratic reforms within Cuba. Promoting freedom of speech and entrepreneurship and an active civil society will only strengthen Cuban society and help to reintegrate Cuba into the international community.

WHITE HOUSE VIDEO: PRESIDENT OBAMA PROTECTS BRISTOL BAY

DOJ ANNOUNCES INDICTMENT OF 14 IN CONNECTION WITH 2012 FUNGAL MENINGITIS OUTBREAK

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, December 17, 2014
14 Indicted in Connection with New England Compounding Center and Nationwide Fungal Meningitis Outbreak

A 131-count criminal indictment was unsealed today in Boston in connection with the 2012 nationwide fungal meningitis outbreak, the Justice Department announced.  Barry J. Cadden, owner and head pharmacist of New England Compounding Center (NECC) and NECC’s supervisory pharmacist Glenn A. Chin were charged with 25 acts of second-degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia.  

The outbreak was caused by contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by NECC, located in Framingham, Massachusetts.  The U.S. Centers for Disease Control and Prevention (CDC) reported that 751 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA.  Of those 751 patients, the CDC reported that 64 patients in nine states died.

Twelve other individuals, all associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual were charged with additional crimes including racketeering, mail fraud, conspiracy, contempt, structuring, and violations of the Food, Drug and Cosmetic Act.

“As alleged in the indictment, these employees knew they were producing their medication in an unsafe manner and in insanitary conditions, and authorized it to be shipped out anyway, with fatal results,” said Attorney General Eric Holder.  “With the indictment and these arrests, the Department of Justice is taking decisive action to hold these individuals accountable for their alleged participation in grievous wrongdoing.  Actions like the ones alleged in this case display not only a reckless disregard for health and safety regulations, but also an extreme and appalling indifference to human life.  American consumers have a right to know that their medications are safe to use, and this case proves that the Department of Justice will always stand resolute to ensure that right, to protect the American people, and to hold wrongdoers accountable to the fullest extent of the law.”

“Every patient receiving treatment deserves the peace of mind and knowledge that the medicine they are receiving is safe,” said Acting Associate Attorney General Stuart Delery.  “When people and companies violate that trust and break the law, the consequences to patients and their families can be catastrophic.  That’s why it remains a priority of the Department to use every tool at our disposal to protect patients’ safety and hold bad actors accountable.”

“Those who produce and sell the drugs that we take have a special responsibility to make sure that they prepare those drugs under suitable conditions, and that what leaves their facilities is safe,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The indictment charges that the defendants’ conduct in this case was corrupt and carried out with a complete disregard to the public’s health.  The department‘s Consumer Protection Branch along with our law enforcement partners is steadfast in our commitment to use every criminal and civil tool at our disposal to hold accountable those who are willing to put our lives at risk in the reckless pursuit of their profits.”

“Ever since the outbreak occurred, we have been committed to bringing to justice the individuals responsible for the deaths and suffering of so many innocent victims,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts.  “The indictment announced today is the first step in that process which addresses alleged criminal wrongdoing at NECC, a business that prioritized production and profit over safety.  We will make every effort to ensure that licensed pharmacists, and those working with them, are held to a standard of care that protects the public from unsafe and dangerous medications.”

“Two years after the fungal meningitis outbreak, our hearts continue to go out to the victims of this tragedy and to their families,” said FDA Commissioner Margaret A. Hamburg M.D.  “Our work on behalf of all patients who want and deserve medicines that do not subject them to undue risk is far from done.  The FDA will continue to work aggressively on many fronts with the states, the Department of Justice, and others to protect the American public from unsafe compounded drug products.”

“Threats to public health, as alleged in today's indictment, are a priority for the FBI,” said Assistant Director Joseph S. Campbell of the FBI’s Criminal Division.  “Together with our law enforcement and regulatory agency partners, we are determined to stop practices that jeopardize patients' health and violate the public trust.  These types of investigations are complex and resource intensive.  We greatly appreciate the efforts of our partners in this case and look forward to working with them to effectively identify criminal activities and combat fraudulent and abusive health practices in the future.”

The 14 individuals charged in the indictment are Barry J. Cadden, 48, of Wrentham, Massachusetts; Glenn A. Chin, 46, of Canton, Massachusetts; Gene Svirskiy, 33, of Ashland, Massachusetts; Christopher M. Leary, 30, of Shrewsbury, Massachusetts; Joseph M. Evanosky, 42, of Westford, Massachusetts; Scott M. Connolly, 42, of East Greenwich, Rhode Island; Sharon P. Carter, 50, of Hopkinton, Massachusetts; Alla V. Stepanets, 34, of Framingham, Massachusetts; Gregory A. Conigliaro, 49 of Southborough, Massachusetts; Robert A. Ronzio, 40, of North Providence, Rhode Island; Kathy Chin, 42, of Canton, Massachusetts; Michelle Thomas, 31 of Cumberland, Rhode Island; Carla Conigliaro, 51, of Dedham, Massachusetts and Douglas A. Conigliaro, 53, of Dedham, Massachusetts.

The 25 second-degree murders are included in the indictment as predicate racketeering acts under the Racketeer Influenced and Corrupt Organizations Act (RICO).  These charges relate to patients who received NECC MPA and died in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia. As a general matter, and depending on particular state law, second-degree murder does not require the government to prove Cadden and Chin had specific intent to kill the 25 patients, but rather that Cadden and Chin acted with extreme indifference to human life.  According to the indictment, Cadden and Chin knew that NECC was making MPA in a manner and in an environment in which they could not assure that the drug was sterile as it was identified to be.  Despite knowing that they were making the MPA in an unsafe manner and in insanitary conditions, Cadden and Chin nonetheless allegedly directed and authorized the shipping of MPA to NECC customers nationwide.  It is alleged that Cadden and Chin were aware that doctors would inject MPA into their patients’ bodies, and that if the MPA was not in fact sterile, it could kill them.

The 25 murder racketeering acts comprise only a portion of the broad racketeering scheme charged in the indictment.  The indictment also alleges that NECC’s other pharmacists knowingly made and sold numerous drugs in a similar unsafe manner and in insanitary conditions.  The unsafe manner alleged in the indictment includes, among other things, the pharmacists’ failure to properly sterilize NECC’s drugs, failure to properly test NECC’s drugs for sterility, and failure to wait for test results before sending the drugs to customers.  The insanitary conditions alleged in the indictment include, among other things, NECC’s lack of proper cleaning and NECC’s failure to take any action when its own environmental monitoring repeatedly detected mold and bacteria within NECC’s clean room suite of rooms throughout 2012.

It is further alleged that NECC repeatedly took steps to shield its operations from regulatory oversight by the FDA by claiming to be a pharmacy dispensing drugs pursuant to valid, patient-specific prescriptions.  In fact, NECC routinely dispensed drugs in bulk without valid prescriptions.  The indictment alleges that NECC even used fictional and celebrity names on fake prescriptions to dispense drugs.

Finally, the indictment charges Carla Conigliaro, the majority shareholder of NECC, and her husband Douglas Conigliaro with transferring assets following the fungal meningitis outbreak.  Specifically, the indictment charges that after NECC declared bankruptcy, and the bankruptcy court ordered the shareholders not to transfer assets, Carla and Doug Conigliaro transferred approximately $33.3 million to eight different bank accounts opened after the NECC bankruptcy.

Cadden and Chin face a maximum of up to life in prison if convicted on all counts.

“Although no VA patients were affected by the fungal meningitis outbreak, VA unknowingly purchased a variety of pharmaceutical products over a three year period from NECC that were intentionally produced in an unsafe manner under insanitary conditions,” said Assistant Inspector General for Investigations James J. O’Neill for the Office of Inspector General, Department of Veterans Affairs.  “We are pleased to have contributed to this outstanding multi-agency criminal investigation.”

“Today's results are part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of the Department of Defense's health care program and the quality of care our service members receive,” said Deputy Inspector General for Investigations James B. Burch for the U.S. Department of Defense Office of the Inspector General.  “The Defense Criminal Investigative Service will continue to pursue allegations of health care fraud that put the Warfighter at risk.”

“The U.S. Postal Inspection Service is pleased to join our federal partners in this announcement” said Postal Inspector in Charge Shelly A. Binkowski of the Boston Division.  “What's particularly disturbing about this case is that through their alleged misrepresentation and greed, these defendants put the health and well-being of others at a high level of risk.  This criminal action today demonstrates the commitment and vigilance of postal inspectors and other federal agents to pursue criminals who prey on the public in such an egregious way.”

In announcing the indictment today, Attorney General Holder and U.S. Attorney Ortiz acknowledged the assistance and cooperation of Michigan State Attorney General Bill Schuette.  The state of Michigan had the most deaths during the outbreak.

The investigation was conducted by the FDA Office of Criminal Investigations and the FBI with assistance by the Defense Criminal Investigative Service, U.S. Department of Defense, Office of Inspector General; Department of Veterans Affairs Office of Inspector General and U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorneys George P. Varghese and Amanda P.M. Strachan of the Health Care Fraud Unit for the U.S. Attorney’s Office in the District of Massachusetts, and Trial Attorney John W.M. Claud of the Civil Division’s Consumer Protection Branch.

The details contained in the indictment are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

SEC CHARGES AVON PRODUCTS INC. WITH VIOLATING FOREIGN CORRUPT PRACTICES ACT

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged global beauty products company Avon Products Inc. with violating the Foreign Corrupt Practices Act (FCPA) by failing to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.

Avon entities agreed to pay a total of $135 million to settle the SEC’s charges and a parallel case announced today by the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.

The SEC alleges that Avon’s subsidiary in China made $8 million worth of payments in cash, gifts, travel, and entertainment to gain access to Chinese officials implementing and overseeing direct selling regulations in China.  Avon sought to be among the first allowed to test the regulations, and eventually received the first direct selling business license in China in March 2006.  The improper payments also were made to avoid fines or negative news articles that could have impacted Avon’s clean corporate image required to retain the license.  Examples of improper payments alleged in the SEC’s complaint include paid travel for Chinese government officials within China or to the U.S. or Europe as well as such gifts as Louis Vuitton merchandise, Gucci bags, Tiffany pens, and corporate box tickets to the China Open tennis tournament.

“Avon’s subsidiary in China paid millions of dollars to government officials to obtain a direct selling license and gain an edge over their competitors, and the company reaped substantial financial benefits as a result,” said Scott W. Friestad, an Associate Director in the SEC’s Division of Enforcement.  “Avon missed an opportunity to correct potential FCPA problems at its subsidiary, resulting in years of additional misconduct that could have been avoided.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, the improper payments occurred from 2004 to 2008.  Avon management learned about potential FCPA problems at the subsidiary through an internal audit report in late 2005.  Avon management consulted an outside law firm, directed that reforms be instituted at the subsidiary, and sent an internal audit team to follow up.  Ultimately, however, no such reforms were instituted at the Chinese subsidiary.  Avon finally began a full-blown internal investigation in 2008 after its CEO received a letter from a whistleblower.

The SEC alleges that Avon’s books and records failed to accurately record the details and purpose of the payments.  In some instances, payments were concealed by falsely recording the transactions as employee business expenses or as reimbursement of a third-party vendor.  In other instances, the records for the payments set forth almost no detail at all.  The resulting books and records did not allow a reviewer to ascertain the government official or state-owned entities that received the payments or the purpose for which the payments were made.

The SEC’s complaint charges Avon with violating Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.  Avon, which neither admitted nor denied the allegations, agreed to pay disgorgement of $52,850,000 in benefits resulting from the alleged misconduct plus prejudgment interest of $14,515,013.13 for a total of more than $67.36 million.  In the parallel criminal matter, Avon entities agreed to pay $67,648,000 in penalties.  Avon also is required to retain an independent compliance monitor to review its FCPA compliance program for a period of 18 months, followed by an 18-month period of self-reporting on its compliance efforts.  Avon would be permanently enjoined from violating the books and records and internal controls provisions of the federal securities laws.  In reaching the proposed settlement, which is subject to court approval, the SEC considered Avon’s cooperation and significant remedial measures.

The SEC’s investigation was conducted by Paul W. Sharratt and Roger Paszamant and supervised by David Frohlich.  The SEC appreciates the assistance of the Fraud Section of the Department of Justice, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation.

U.S. UN REPRESENTATIVE'S REMARKS ON THE AFRICAN UNION AND ADVANCING PEACE

FROM:  U.S. STATE DEPARTMENT  
Ambassador David Pressman
Alternate Representative to the UN for Special Political Affairs 
New York, NY
December 16, 2014
AS DELIVERED

Thank you, Mr. President. I want to express the United States’ profound condolences to the victims of the horrific Taliban attack on a school in Pakistan. This gruesome attack deliberately targeted Pakistan's – indeed, all of our – most precious and sacred resource: our children. Cowardly and senseless violence like this only increases our resolve to fight terrorism and violent extremism.

Mr. Minister, thank you for being here and convening this important debate. We thank the Secretary-General and High Representative Buyoya for your briefings. Enhancing the partnership between the United Nations and the African Union is critical for advancing peace and security in Africa. From the Central African Republic, to Mali, to Somalia, every improvement in the important partnership between the United Nations and the African Union has very real impacts on regional stability and on security.

The African Union and its member states have demonstrated important leadership in responding to African conflicts through peacekeeping and preventive diplomacy to stop potential conflicts from becoming actual ones.

Peacekeeping, whether it is done by the United Nations or the African Union, or in some cases both, is only as strong as its troop and police contributors. Member states must be willing to contribute the needed troops and resources; and troop contributors must be willing to robustly carry out difficult mandates. We commend the African troop-contributing countries who have answered the call, again and again, to serve in peacekeeping operations and who have demonstrated a commitment to implement their mandates, including the protection of civilians.

While blue-helmeted United Nations peacekeeping is a critically important tool, it is not always the best tool to respond to a particular conflict. That is why so many of us have redoubled our efforts to support regional organizations’ capacity, including the African Union, to launch and support peace operations when they are needed and consistent with the Charter of the United Nations.

The Security Council has a unique role under the United Nations Charter but our decisions and actions should be taken in close consultation with all stakeholders, including member states, regional and sub-regional organizations, potential troop contributors, and decisions related to the deployment of UN or African Union peacekeeping missions must be made on a case-by-case basis, taking into account the unique circumstances of each particular situation. Enhancing the capacity of regional forces to respond is critical, but the ability of regional organizations to deploy peace operations must be seen as a complement to, of course, not a substitute for, the United Nations’ own ability to carry out robust peacekeeping operations.

Mr. President, we continue to be immensely grateful for Africa’s contributions to peacekeeping. In September of this year, Vice President Biden joined other leaders at a summit focused on generating new commitments to peacekeeping to ensure that the whole of the international community does more to share the burden.

We have made demonstrable progress in our cooperative efforts to deploy troops quickly to crisis areas when the need arises, but we are still too slow. Delay in our crisis response often means more unnecessary deaths. To be quicker and better, we must work more closely and collaboratively. That is why the United States is committed to improving the Security Council’s engagement with the African Union Peace and Security Council.

And in our effort to do better, to do more, and to do so more quickly, we should learn from the past. The recent transitions from African Union-led peacekeeping operations to United Nations-led operations in Mali and the Central African Republic demonstrate once again that the African Union is sometimes in a position to deploy troops to trouble spots much more quickly than others. Without the initial leadership of the AU and contributions of African, French, and other European troops in Mali and Central African Republic, far more civilians would have died over the past year in both countries.

This is why the United States has created the African Peacekeeping Rapid Response Partnership, which envisions a new investment of $110 million per year for 3-5 years to build the capacity of African forces to rapidly deploy peacekeepers in response to emerging conflict. Under this program, African partner nations will receive additional support and will commit to maintaining forces and equipment ready to rapidly deploy as part of UN or AU missions to respond to emerging crises.

The United States is also prepared to provide additional support, including training for headquarters staff and key enabler functions, such as engineers, to catalyze the AU’s efforts to establish its African Capacity for Immediate Response to Crisis, which is intended to facilitate the deployment of tactical battle groups of approximately 1,500 military personnel deployed by a lead nation or group of AU member states.

There has been some discussion today about the financing of peacekeeping operations. In order to be effective, peacekeeping operations must be accountable. And they must be accountable to the organization that has authorized and funded it. That is why we do not support assessing UN member states for the expenses of regional organizations. Such arrangements do not allow the United Nations to exercise critical and, indeed, essential oversight of complex operational undertakings.

However, it is also why we continue to champion and invest heavily in support for AU operations through voluntary contributions and bilateral assistance. Since 2009, the United States has committed to provide nearly $892 million to develop African peacekeeping capacity and strengthen African institutions.

Most recently, in 2013, the United States committed nearly $200 million toward training, equipping, sustaining, and airlifting African peacekeepers of the African-led International Support Mission in Mali. In the Central African Republic, we provided critical equipment and airlift to both the AU troops and French forces operating alongside them. And in Somalia, we have obligated more than $680 million to AMISOM on top of the more than $455 million in UN-assessed contributions for UNSOA that are attributable to the United States. Other partners such as the EU, through its African Peace Facility, have similarly provided very robust support, and we look for other partners doing the same.

In closing, I want to reiterate the depth of my government’s commitment to strengthening African responses to crises on the continent both bilaterally and through this Council.

Today, there are more than 67,000 African peacekeepers serving with the African Union and United Nations in Africa. Their contributions to peace cannot be overstated. They deserve more support from all of us to train, equip, and enable their deployment.

As President Obama said during our U.S.-Africa Leaders’ Summit held in August, “the United States is determined to be a partner in Africa’s success – a good partner, an equal partner, and a partner for the long term.”

I thank you, Mr. President.

SCIENTIST STUDYING ECONOMIC IMPACT OF INFECTIOUS DISEASES

FROM:  NATIONAL SCIENCE FOUNDATION
Ebola, Dengue fever, Lyme disease: The growing economic cost of infectious diseases

Five new such diseases expected each year; strategies to reduce climate change adaptable to infectious diseases.

Emerging pandemic disease outbreaks such as Ebola increasingly threaten global public health and world economies, scientists say. We can expect five new such diseases each year, into the future.

And expect them to spread. The tropical disease dengue fever, for example, has made its way to Florida and Texas, seemingly to stay.

But the global response to infectious diseases is often too late to prevent major effects on health and economic growth, researchers believe.

According to the World Health Organization (WHO), the number of people infected with Ebola has surpassed 17,000, with more than 6,000 deaths. The World Bank now estimates that the two-year financial cost of Ebola may reach $32.6 billion and force some already suffering West African economies into a deep recession.

Growing economic cost of global disease outbreaks

Scientists at EcoHealth Alliance in New York and other organizations studied the economic cost of such global disease outbreaks.

Economists, disease ecologists and others collaborated on an in-depth economic analysis of strategies to address pandemic threats in a proactive way--rather than a reactive response to a crisis. The results are published in this week's issue of the journal Proceedings of the National Academy of Sciences (PNAS).

"Our research shows that new approaches to reducing emerging pandemic threats at the source would be more cost-effective than trying to mobilize a global response after a disease has emerged," says Peter Daszak, senior author of the paper and president of EcoHealth Alliance.

The researchers used economic modeling to analyze two strategies for a pandemic response: Current business-as-usual approaches that rely on global surveillance to identify new diseases in people, and new "mitigation" strategies to reduce the underlying drivers of emerging diseases and lower the risk of their emergence.

"Our economic modeling demonstrates that the new approach to dealing with disease emergence is the right strategy in the long-term," says Jamie Pike, an economist at EcoHealth Alliance and first author of the paper.

The results indicate that the strategy for pandemics needs to be coordinated on a global scale to be effective in reducing risk. And that mitigation strategies will be far more cost-effective in the long-term.

The results follow those reported in a September, 2014, paper in the journal EcoHealth, in which Daszak, Charles Perrings of Arizona State University, A. Marm Kilpatrick of the University of California at Santa Cruz, and colleagues show that economic epidemiology has the potential to improve predictions of the course of infectious diseases, and to support new approaches to management of such diseases.

Environmental change causing increase in number of new diseases

Ebola. West Nile virus. Lyme disease. All are infectious diseases spreading in animals, and in humans. Is our interaction with the environment somehow responsible for the increase in incidence of these diseases?

With 60 percent of all human diseases and 75 percent of all emerging infectious diseases involving animal-to-human transmission, the underlying factors that contribute to disease outbreaks are mostly related to environmental changes to global ecosystems, the scientists found. Deforestation and illegal wildlife trade are two culprits.

Large-scale environmental events alter the risks of emergence of viral, parasitic and bacterial diseases in humans and animals.

"Virtually all the world's terrestrial and aquatic communities have undergone dramatic changes in biodiversity due primarily to habitat transformations such as deforestation and agricultural intensification, invasions of exotic species, chemical contamination, and climate change events," says Sam Scheiner, National Science Foundation (NSF) program director for the joint NSF-NIH-USDA Ecology and Evolution of Infectious Diseases (EEID) Program, which funded the research.

Ebola epidemic highlights need to address infectious disease threats

"The current Ebola epidemic highlights the need to anticipate possible health threats from these changes," says Scheiner. "This study shows that the long-term economic benefits outweigh the short-term costs, not to mention the human benefits of preventing the next pandemic."

Rapid changes to the environment are resulting in a continuous year-by-year increase in the number of new diseases emerging, the researchers found.

"With continued pressure causing diseases to rise, we need to analyze the ecological and economic foundations of the risk, and identify economically effective strategies to reduce it," says David Finnoff, an economist at the University of Wyoming and co-author of the PNAS paper.

The paper highlights WHO International Health Regulations goals, and points out that the global capacity to achieve such targets needs to be addressed to deal with the continuous rise in the rate of new diseases.

Five new diseases each year into the future

"We show that we can expect more than five new emerging diseases each year into the future," says Daszak.

"With this continuous rise in the pandemic threat, and our increasing global connectivity, we are at a critical moment in history to act."

-- Cheryl Dybas, NSF

FORMER BOARD CHAIRMAN TO PAY OVER $378,000 TO SETTLE SEC CHARGES OF INSIDER TRADING

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23153 / December 9, 2014

Securities and Exchange Commission v. George H. Holley, et al., Civil Action No. 3:11-cv-00205-MLC-DEA (D.N.J.) filed January 13, 2011; Securities and Exchange Commissionv. Robert J. Hahn-Baiyor, Case No. 3:14-cv-07631-JAP-TJB (D.N.J.) filed December 8, 2014

Court Enters Final Judgment Against Former Chairman of Home Diagnostics, Inc., George H. Holley for Insider Trading; SEC Also Charges Holley's Cousin in Insider Trading Scheme

The Securities and Exchange Commission announced today that on December 8, 2014, the Honorable Douglas E. Arpert of the United States District Court for the District of New Jersey entered a final judgment against defendant George H. Holley, the former Chairman of the Board of Directors of Home Diagnostics, Inc. The final judgment permanently enjoins Holley from violating certain antifraud provisions of the federal securities laws, permanently bars him from acting as an officer or director of a public company, and orders him to pay disgorgement of $66,100 plus prejudgment interest thereon, and a civil penalty in the amount of $312,440.

In its Complaint, the SEC alleged that, in 2010, Holley, who co-founded Home Diagnostics, tipped six of his friends, relatives, and employees with confidential information about the impending acquisition of Home Diagnostics by Nipro Corporation. Each of the tippees subsequently purchased HDI stock on the basis of Holley's tips and, following the public announcement of the acquisition, sold their HDI shares for a combined profit of over $260,000.

On August 8, 2012, Holley pleaded guilty to federal criminal charges of securities fraud in a parallel criminal action before the District Court for the District of New Jersey in United States v. George H. Holley, Crim. No. 11-0066-JAP (D.N.J.). On December 18, 2012, Holley was sentenced to three years of probation and fined $260,000.

The final judgment permanently enjoins Holley from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, the general antifraud and tender offer fraud provisions of the federal securities laws. In addition, the judgment against Holley permanently bars him from acting as an officer or director of a public company, and orders him to pay disgorgement of $66,100, plus prejudgment interest thereon, and a civil penalty in the amount of $312,440. Holley consented to the entry of the final judgment.

The Commission also announced today charges against Holley's first-cousin, Robert J. Hahn-Baiyor, for trading on the basis of inside information about the impending acquisition of Home Diagnostics that was tipped to him by Holley. In a Complaint filed in the United States District Court for the District of New Jersey, the SEC alleges that Hahn-Baiyor violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder,. Without admitting or denying the allegations in the SEC's Complaint against him, Hahn-Baiyor has consented to the entry of a final judgment that permanently enjoins him from future violations of the provisions of the federal securities laws that he is alleged to have violated and requires him to pay a civil penalty of $66,100. Hahn-Baiyor's settlement is subject to approval by the Court.

This concludes the litigation in SEC v. Holley. Previously, the court in SEC v. Holley had entered final judgments against co-defendants Steven V. Dudas and Phairot Iamnaita. In addition, on May 6, 2014, the Commission filed civil injunctive actions against three other tippees of Holley - John Campani, John Mullin, and Alan Posner - each of whom subsequently consented to the entry of final judgments ordering injunctive and monetary relief.

The SEC thanks the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and FINRA, for their cooperation and assistance in this matter.