FROM: U.S. JUSTICE DEPARTMENT
Friday, May 8, 2015
Two Men Who Breached Photobucket.com Indicted and Arrested on Conspiracy and Fraud Related Charges
Two men have been arrested after breaching the computer services of Colorado based Photobucket, a company that operates an image and video hosting website, announced U.S. Attorney John Walsh for the District of Colorado and Special Agent in Charge Thomas Ravenelle for the Denver Division of the Federal Bureau of Investigations (FBI). Brandon Bourret, 39, of Colorado Springs, Colorado and Athanasios Andrianakis, 26, of Sunnyvale, California, were arrested today without incident at their homes. Both made initial appearances today, where they were advised of their rights and the charges pending against them.
According to the indictment, beginning on July 12, 2012 and continuing through July 1, 2014, Bourret and Andrianakis knowingly conspired to commit acts and offenses against the United States, namely computer fraud and abuse, access device fraud, identification document fraud and wire fraud. The indictment further alleges that there was interdependence among the members of the conspiracy.
The purpose of the conspiracy was for the conspirators to enrich themselves by selling passwords and unauthorized access to private and password protected information, images and videos on the Internet and by selling private and password protected information, images and videos that the conspirators obtained from the Internet.
The conspirators developed, marketed and sold a software application called Photofucket, which allowed viewers to circumvent the privacy settings of the image and video hosting website at Photobucket.com and to access and copy users private and password protected information, images and videos without authorization. The conspirators used Photofucket to obtain guest passwords to access users’ password protected albums. They also transferred, or caused to be transferred, guest passwords to others who paid to use the Photofucket application.
“It is not safe to hide behind your computer, breach corporate servers and line your own pockets by victimizing those who have a right to protected privacy on the internet,” said U.S. Attorney Walsh. “The U.S. Attorney’s Office is keenly focused on prosecuting those people for their theft -- and for the wanton harm they do to innocent internet users.”
“Unauthorized access into a secure computer system is a serious federal crime,” said Special Agent in Charge Ravenelle. “The arrest of Brandon Bourret and his co-conspirator reflects the FBI’s commitment to investigate those who undertake activities such as this with the intent to harm a company and its customers.”
The investigation regarding the breach and who’s albums were accessed is ongoing. For those who want to follow the status of this case, visit http://www.justice.gov/largecases – and then select “Photobucket.” In addition, the U.S. Attorney’s Office and the FBI commend Photobucket for their cooperation from the inception of the investigation – and thanked them for their continued assistance as both the investigation and prosecution moves forward.
Bourret and Andrianakis both face one count of conspiracy, which carries a penalty of not more than five years in federal prison and up to a $250,000 fine. They each face one count of computer fraud, aid and abet, which also carries a penalty of not more than five years in federal prison and up to a $250,000 fine. Finally, they each face two counts of access device fraud, which carries a penalty of not more than ten years in federal prison, and up to a $250,000 fine, per count.
This case is being prosecuted by Assistant U.S. Attorney David Tonini.
The charges contained in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.
Showing posts with label CONSPIRACY. Show all posts
Showing posts with label CONSPIRACY. Show all posts
Sunday, May 17, 2015
Tuesday, April 28, 2015
2 CHINESE NATIONALS SENTENCED TO PRISON FOR CONSPIRACY TO VIOLATE ARMS EXPORT CONTROL ACT BY EXPORTING SENSORS
FROM: U.S. JUSTICE DEPARTMENT
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Thursday, April 23, 2015
Chinese Nationals Sentenced in New Mexico for Conspiring to Violate Arms Export Control Act
This afternoon, a federal judge in the District of New Mexico sentenced two Chinese nationals for conspiring to violate the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) by scheming to illegally export defense articles with military application to the People’s Republic of China, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Damon P. Martinez of the District of New Mexico.
Bo Cai, 29, of Nanjing, China, was sentenced to 24 months in prison and his cousin Wentong Cai, 30, of Chifeng, China, was sentenced to 18 months in federal prison. Both will be deported after completing their prison sentences. The two men were charged in three-count superseding indictment with a scheme to illegally export sensors primarily manufactured for sale to the U.S. Department of Defense for use in high-level applications, such as line-of-sight stabilization and precision motion control systems. The Arms Export Control Act and the ITAR prohibit the export of defense-related materials from the United States without obtaining a license or written approval from the U.S. Department of State.
Bo Cai entered a guilty plea to all three counts of the superseding indictment in July 2014, and Wentong Cai pleaded guilty to Count 3 of the superseding indictment in December 2014. In entering the guilty pleas, each admitted that from March 2012 to December 2013, they conspired with each other to illegally export sensors from the United States to China without first obtaining the required export license. Bo Cai admitted that in March 2012, while he was employed by a technology company in China, he embarked on an illegal scheme to smuggle sensors out of the United States to China for one of his customers despite knowledge that the sensors could not be exported without a license and that the United States did not issue licenses to export the sensors to China. Wentong Cai admitted that while he was in the United States on a student visa, Bo Cai enlisted him to acquire the sensors under the ruse that he planned to use the sensors at Iowa State University where he was a graduate microbiology student.
Court filings indicate that the investigation of this case began in October 2013, when an undercover U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI) agent responded to Wentong Cai’s overtures. After negotiations by telephone and email, in December 2013, Bo Cai and Wentong Cai traveled to New Mexico, where they obtained a sensor from undercover HSI agents and developed a plan for smuggling the sensor out of the United States to China. On Dec. 11, 2013, Bo Cai was arrested at an airport in Los Angeles, as he was preparing to board a flight to China, after the sensor was discovered concealed in a computer speaker in his luggage. Wentong Cai subsequently was arrested on Jan. 22, 2014, in Ames, Iowa.
The HSI Albuquerque, New Mexico, office led the investigation of this case with assistance from the U.S. Air Force Office of Special Investigations, the Defense Security Service, HSI in Iowa and Los Angeles and the FBI. Iowa State University cooperated throughout with HSI’s investigation. Assistant U.S. Attorneys Dean S. Tuckman and Fred J. Federici of the District of New Mexico prosecuted the case with assistance from Deputy Chief Deborah Curtis and Trial Attorneys David Recker and Brian Fleming of the Justice Department’s National Security Division. The U.S. Attorney’s Office of the Central District of California and the U.S. Attorney’s Office of the Southern District of Iowa also assisted in the prosecution.
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Thursday, April 23, 2015
Chinese Nationals Sentenced in New Mexico for Conspiring to Violate Arms Export Control Act
This afternoon, a federal judge in the District of New Mexico sentenced two Chinese nationals for conspiring to violate the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) by scheming to illegally export defense articles with military application to the People’s Republic of China, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Damon P. Martinez of the District of New Mexico.
Bo Cai, 29, of Nanjing, China, was sentenced to 24 months in prison and his cousin Wentong Cai, 30, of Chifeng, China, was sentenced to 18 months in federal prison. Both will be deported after completing their prison sentences. The two men were charged in three-count superseding indictment with a scheme to illegally export sensors primarily manufactured for sale to the U.S. Department of Defense for use in high-level applications, such as line-of-sight stabilization and precision motion control systems. The Arms Export Control Act and the ITAR prohibit the export of defense-related materials from the United States without obtaining a license or written approval from the U.S. Department of State.
Bo Cai entered a guilty plea to all three counts of the superseding indictment in July 2014, and Wentong Cai pleaded guilty to Count 3 of the superseding indictment in December 2014. In entering the guilty pleas, each admitted that from March 2012 to December 2013, they conspired with each other to illegally export sensors from the United States to China without first obtaining the required export license. Bo Cai admitted that in March 2012, while he was employed by a technology company in China, he embarked on an illegal scheme to smuggle sensors out of the United States to China for one of his customers despite knowledge that the sensors could not be exported without a license and that the United States did not issue licenses to export the sensors to China. Wentong Cai admitted that while he was in the United States on a student visa, Bo Cai enlisted him to acquire the sensors under the ruse that he planned to use the sensors at Iowa State University where he was a graduate microbiology student.
Court filings indicate that the investigation of this case began in October 2013, when an undercover U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI) agent responded to Wentong Cai’s overtures. After negotiations by telephone and email, in December 2013, Bo Cai and Wentong Cai traveled to New Mexico, where they obtained a sensor from undercover HSI agents and developed a plan for smuggling the sensor out of the United States to China. On Dec. 11, 2013, Bo Cai was arrested at an airport in Los Angeles, as he was preparing to board a flight to China, after the sensor was discovered concealed in a computer speaker in his luggage. Wentong Cai subsequently was arrested on Jan. 22, 2014, in Ames, Iowa.
The HSI Albuquerque, New Mexico, office led the investigation of this case with assistance from the U.S. Air Force Office of Special Investigations, the Defense Security Service, HSI in Iowa and Los Angeles and the FBI. Iowa State University cooperated throughout with HSI’s investigation. Assistant U.S. Attorneys Dean S. Tuckman and Fred J. Federici of the District of New Mexico prosecuted the case with assistance from Deputy Chief Deborah Curtis and Trial Attorneys David Recker and Brian Fleming of the Justice Department’s National Security Division. The U.S. Attorney’s Office of the Central District of California and the U.S. Attorney’s Office of the Southern District of Iowa also assisted in the prosecution.
Friday, April 24, 2015
THREE SENTENCED FOR ROLES IN $29 MILLION MEDICARE FRAUD CONSPIRACY
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, April 21, 2015
Operator of Detroit Adult Day Care Center and Two Home Health Care
Company Owners Sentenced in $29 Million Medicare Fraud Conspiracy
The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims. Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively. Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims. The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.
All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan. Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks. Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud. Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks. Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.
According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided. The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased. Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.
The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered. Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided. The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.
The case was investigated by the FBI, HHS-OIG and the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Tuesday, April 21, 2015
Operator of Detroit Adult Day Care Center and Two Home Health Care
Company Owners Sentenced in $29 Million Medicare Fraud Conspiracy
The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims. Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively. Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims. The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.
All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan. Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks. Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud. Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks. Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.
According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided. The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased. Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.
The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered. Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided. The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.
The case was investigated by the FBI, HHS-OIG and the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Monday, April 20, 2015
6 MINNESOTANS CHARGED WITH CONSPIRACY TO SUPPORT ISIL
FROM: U.S. JUSTICE DEPARTMENT
Monday, April 20, 2015
Six Minnesota Men Charged with Conspiracy to Provide Material Support to the Islamic State of Iraq and the Levant
Four Defendants Arrested in Minneapolis; Two Arrested in San Diego
A criminal complaint was filed today charging six Minnesota men with conspiracy and attempt to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL).
Zacharia Yusuf Abdurahman, 19, Adnan Farah, 19, Hanad Mustafe Musse, 19, and Guled Ali Omar, 20, were arrested in Minneapolis yesterday. Abdirahman Yasin Daud, 21, and Mohamed Abdihamid Farah, 21, were arrested yesterday in California after driving from Minneapolis to San Diego.
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division made the announcement.
“The six defendants charged in the complaint allegedly planned to travel to Syria as part of their conspiracy to provide material support to ISIL,” said Assistant Attorney General Carlin. “One of the National Security Division’s highest priorities is to identify, disrupt, and hold accountable those who provide or attempt to provide material support to designated foreign terrorist organizations. I would like to thank the many agents, analysts, and prosecutors who are responsible for this investigation and the charges in this case.”
“As described in the criminal complaint, these men worked over the course of the last 10 months to join ISIL,” said U.S. Attorney Luger. “Even when their co-conspirators were caught and charged, they continued to seek new and creative ways to leave Minnesota to fight for a terror group. I applaud the hard work and tireless efforts of the FBI Minneapolis Division and their colleagues around the country.”
“Preventing acts of terrorism is the FBI's highest priority,” said Special Agent in Charge Thornton. “Disrupting individuals from traveling to join and fight for ISIL is an important part of our counter terrorism strategy. As a result of this investigation and arrests, these six Minnesota men who planned to travel and fight for ISIL will answer these charges in U.S. District Court instead of taking up arms in Syria. The FBI remains committed to ending both recruitment efforts and travel on the part of young people from Minnesota to fight overseas on behalf of terror groups. These arrests today signify this continued commitment.”
According to the criminal complaint and documents filed in court, the FBI has been conducting an investigation for the last 10 months into a group of individuals who have tried to join – and in some cases succeeded in joining – overseas designated foreign terrorist organizations. At least nine Minnesotans have now been charged as part of this conspiracy to provide material support to ISIL. The men are all alleged associates and friends of one another.
This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force, U.S. Attorney’s Office of the District of Minnesota and the Counterterrorism Section of the Department of Justice National Security Division. Assistant Attorney General Carlin is also grateful to the U.S. Attorney’s Office of the Southern District of California and the FBI’s San Diego Division for their contributions to the investigation of this case.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Monday, April 20, 2015
Six Minnesota Men Charged with Conspiracy to Provide Material Support to the Islamic State of Iraq and the Levant
Four Defendants Arrested in Minneapolis; Two Arrested in San Diego
A criminal complaint was filed today charging six Minnesota men with conspiracy and attempt to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL).
Zacharia Yusuf Abdurahman, 19, Adnan Farah, 19, Hanad Mustafe Musse, 19, and Guled Ali Omar, 20, were arrested in Minneapolis yesterday. Abdirahman Yasin Daud, 21, and Mohamed Abdihamid Farah, 21, were arrested yesterday in California after driving from Minneapolis to San Diego.
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Andrew M. Luger of the District of Minnesota and Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Division made the announcement.
“The six defendants charged in the complaint allegedly planned to travel to Syria as part of their conspiracy to provide material support to ISIL,” said Assistant Attorney General Carlin. “One of the National Security Division’s highest priorities is to identify, disrupt, and hold accountable those who provide or attempt to provide material support to designated foreign terrorist organizations. I would like to thank the many agents, analysts, and prosecutors who are responsible for this investigation and the charges in this case.”
“As described in the criminal complaint, these men worked over the course of the last 10 months to join ISIL,” said U.S. Attorney Luger. “Even when their co-conspirators were caught and charged, they continued to seek new and creative ways to leave Minnesota to fight for a terror group. I applaud the hard work and tireless efforts of the FBI Minneapolis Division and their colleagues around the country.”
“Preventing acts of terrorism is the FBI's highest priority,” said Special Agent in Charge Thornton. “Disrupting individuals from traveling to join and fight for ISIL is an important part of our counter terrorism strategy. As a result of this investigation and arrests, these six Minnesota men who planned to travel and fight for ISIL will answer these charges in U.S. District Court instead of taking up arms in Syria. The FBI remains committed to ending both recruitment efforts and travel on the part of young people from Minnesota to fight overseas on behalf of terror groups. These arrests today signify this continued commitment.”
According to the criminal complaint and documents filed in court, the FBI has been conducting an investigation for the last 10 months into a group of individuals who have tried to join – and in some cases succeeded in joining – overseas designated foreign terrorist organizations. At least nine Minnesotans have now been charged as part of this conspiracy to provide material support to ISIL. The men are all alleged associates and friends of one another.
This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force, U.S. Attorney’s Office of the District of Minnesota and the Counterterrorism Section of the Department of Justice National Security Division. Assistant Attorney General Carlin is also grateful to the U.S. Attorney’s Office of the Southern District of California and the FBI’s San Diego Division for their contributions to the investigation of this case.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
BUSINESS OWNER PLEADS GUILTY FOR ROLE IN $2.6 MILLION HOME HEALTH CARE SCHEME
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, April 15, 2015
Michigan Home Health Agency Owner Pleads Guilty in Connection with $2.6 Million Home Health Care Scheme
The owner of a greater Detroit-area home health care agency pleaded guilty today to fraud and money laundering charges in connection with her role in a $2.6 million home health care scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Rahmat Begum, 49, of Farmington Hills, Michigan, pleaded guilty today – during the second day of her trial – to all charges in a six-count indictment, including one count of conspiracy to commit wire fraud, one count of making false statements relating to health care matters, one count of conspiracy to violate the Anti-Kickback Statute and three counts of money laundering. A sentencing hearing is scheduled for Aug. 18, 2015, before U.S. District Judge Bernard A. Friedman of the Eastern District of Michigan.
According to admissions made as part of her guilty plea, Begum conspired to submit falsified claims to Medicare where the claims were based upon referrals obtained through illegal kickbacks to patient recruiters and physicians. Begum also admitted to conspiring to pay illegal kickbacks to patient recruiters and physicians and to making a false statement to Medicare pledging not to pay kickbacks, when in fact she was paying them. Finally, Begum admitted to laundering the proceeds of the wire fraud conspiracy.
This case was investigated by the FBI, HHS-OIG and IRS-CI and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Wednesday, April 15, 2015
Michigan Home Health Agency Owner Pleads Guilty in Connection with $2.6 Million Home Health Care Scheme
The owner of a greater Detroit-area home health care agency pleaded guilty today to fraud and money laundering charges in connection with her role in a $2.6 million home health care scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.
Rahmat Begum, 49, of Farmington Hills, Michigan, pleaded guilty today – during the second day of her trial – to all charges in a six-count indictment, including one count of conspiracy to commit wire fraud, one count of making false statements relating to health care matters, one count of conspiracy to violate the Anti-Kickback Statute and three counts of money laundering. A sentencing hearing is scheduled for Aug. 18, 2015, before U.S. District Judge Bernard A. Friedman of the Eastern District of Michigan.
According to admissions made as part of her guilty plea, Begum conspired to submit falsified claims to Medicare where the claims were based upon referrals obtained through illegal kickbacks to patient recruiters and physicians. Begum also admitted to conspiring to pay illegal kickbacks to patient recruiters and physicians and to making a false statement to Medicare pledging not to pay kickbacks, when in fact she was paying them. Finally, Begum admitted to laundering the proceeds of the wire fraud conspiracy.
This case was investigated by the FBI, HHS-OIG and IRS-CI and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Wednesday, April 8, 2015
FORMER EXEC PLEADS GUILTY IN CASE INVOLVING PRICE FIXING OF CERTAIN POSTERS SOLD THROUGH AMAZON MARKETPLACE
FROM: U.S. JUSTICE DEPARTMENT
MONDAY, APRIL 6, 2015
FORMER E-COMMERCE EXECUTIVE CHARGED WITH PRICE FIXING IN THE ANTITRUST DIVISION’S FIRST ONLINE MARKETPLACE PROSECUTION
WASHINGTON — A former executive of an e-commerce seller of posters, prints and framed art has agreed to plead guilty for conspiring to fix the prices of posters sold online, the Department of Justice announced.
A one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco against David Topkins. According to the charge, Topkins and his co-conspirators fixed the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014. Topkins also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“Today’s announcement represents the division’s first criminal prosecution against a conspiracy specifically targeting e-commerce,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms. American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses.”
According to the charge, Topkins and his co-conspirators agreed to fix the prices of certain posters sold in the United States through Amazon Marketplace. To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations seeking to victimize online consumers through illegal anticompetitive conduct,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to investigating price fixing schemes and remains unwavering in our dedication to bring those responsible for theses illegal conspiracies to justice.”
Topkins is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years and a fine of $1 million for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This prosecution arose from an ongoing federal antitrust investigation into price fixing in the online wall décor industry, which is being conducted by the Antitrust Division’s San Francisco Office with the assistance of the FBI’s San Francisco Field Office.
MONDAY, APRIL 6, 2015
FORMER E-COMMERCE EXECUTIVE CHARGED WITH PRICE FIXING IN THE ANTITRUST DIVISION’S FIRST ONLINE MARKETPLACE PROSECUTION
WASHINGTON — A former executive of an e-commerce seller of posters, prints and framed art has agreed to plead guilty for conspiring to fix the prices of posters sold online, the Department of Justice announced.
A one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco against David Topkins. According to the charge, Topkins and his co-conspirators fixed the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014. Topkins also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“Today’s announcement represents the division’s first criminal prosecution against a conspiracy specifically targeting e-commerce,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms. American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses.”
According to the charge, Topkins and his co-conspirators agreed to fix the prices of certain posters sold in the United States through Amazon Marketplace. To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations seeking to victimize online consumers through illegal anticompetitive conduct,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to investigating price fixing schemes and remains unwavering in our dedication to bring those responsible for theses illegal conspiracies to justice.”
Topkins is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years and a fine of $1 million for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This prosecution arose from an ongoing federal antitrust investigation into price fixing in the online wall décor industry, which is being conducted by the Antitrust Division’s San Francisco Office with the assistance of the FBI’s San Francisco Field Office.
Friday, April 3, 2015
SWISS ASSET MANAGER PLEADS GUILTY IN CASE INVOLVING TAX EVASION
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, March 31, 2015
Swiss Asset Manager Pleads Guilty in Federal Court to Conspiring with U.S. Taxpayers to Evade Federal Income Taxes and File False Tax Returns
A Swiss citizen and former asset manager at a Swiss asset management firm pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars in offshore accounts from the Internal Revenue Service (IRS), and to evade U.S. taxes on the income earned in those accounts, the Justice Department announced.
Peter Amrein, 53, a Swiss citizen, pleaded guilty before U.S. District Judge Sidney H. Stein of the Southern District of New York pursuant to a plea agreement to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns. Amrein faces a maximum sentence of five years in prison at his July 1 sentencing before Judge Stein.
“Peter Amrein’s guilty plea today is another example of individuals being held culpable, in addition to institutions, for their criminal violations of U.S. tax laws,” said U.S. Attorney Preet Bharara of the Southern District of New York. “Regardless of the elaborate scheme you might employ, we will use all of our investigative powers to ensure that all citizens pay their fair share, and that those who assist them in evading our laws are also held responsible.”
According to the allegations in the superseding Information and the prior indictment, as well as statements made during the plea proceeding and other documents filed in federal court in Manhattan, New York:
Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm). In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes. Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names. Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS.
In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland. Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts. In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers. Amrein found such a bank (Swiss Bank No. 1). Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.
For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts. For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer. On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize. Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers. For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.
Mr. Bharara praised the outstanding investigative work of the IRS-Criminal Investigations. He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.
Tuesday, March 31, 2015
Swiss Asset Manager Pleads Guilty in Federal Court to Conspiring with U.S. Taxpayers to Evade Federal Income Taxes and File False Tax Returns
A Swiss citizen and former asset manager at a Swiss asset management firm pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars in offshore accounts from the Internal Revenue Service (IRS), and to evade U.S. taxes on the income earned in those accounts, the Justice Department announced.
Peter Amrein, 53, a Swiss citizen, pleaded guilty before U.S. District Judge Sidney H. Stein of the Southern District of New York pursuant to a plea agreement to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns. Amrein faces a maximum sentence of five years in prison at his July 1 sentencing before Judge Stein.
“Peter Amrein’s guilty plea today is another example of individuals being held culpable, in addition to institutions, for their criminal violations of U.S. tax laws,” said U.S. Attorney Preet Bharara of the Southern District of New York. “Regardless of the elaborate scheme you might employ, we will use all of our investigative powers to ensure that all citizens pay their fair share, and that those who assist them in evading our laws are also held responsible.”
According to the allegations in the superseding Information and the prior indictment, as well as statements made during the plea proceeding and other documents filed in federal court in Manhattan, New York:
Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm). In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes. Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names. Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS.
In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland. Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts. In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers. Amrein found such a bank (Swiss Bank No. 1). Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.
For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts. For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer. On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize. Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers. For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.
Mr. Bharara praised the outstanding investigative work of the IRS-Criminal Investigations. He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.
Thursday, April 2, 2015
DOJ ANNOUNCES CHARGES BROUGHT AGAINST CONSPIRATORS WHO PLOTTED WMD ATTACK ON U.S.
FROM: U.S. JUSTICE DEPARTMENT
Thursday, April 2, 2015
Two Queens, New York, Residents Charged With Conspiracy to Use a Weapon of Mass Destruction
Defendants Allegedly Plotted to Construct an Explosive Device for Use in a Terrorist Attack on U.S. Soil
U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD) announced that earlier today, a criminal complaint was unsealed in federal court in the Eastern District of New York charging Noelle Velentzas and Asia Siddiqui with conspiracy to use weapons of mass destruction against persons or property in the United States. The defendants’ initial appearances are scheduled for this afternoon before U.S. Magistrate Judge Viktor V. Pohorelsky of the Eastern District of New York.
As alleged in the complaint, the defendants have repeatedly expressed their support for violent jihad. For instance, in or about 2009, Siddiqui published a poem in a magazine published by al-Qaeda in the Arabian Peninsula that exhorted readers to wage jihad and declared that there is “[n]o excuse to sit back and wait – for the skies rain martyrdom.” More recently, Velentzas, who has characterized al-Qaeda founder Usama Bin Laden as one of her heroes, declared that she and Siddiqui are “citizens of the Islamic State” – a reference to the foreign terrorist organization that is also known as Islamic State in Iraq and the Levant (ISIL). Less than two weeks ago, Velentzas, asked whether she had heard the news about the recent arrest of a former U.S. airman who had attempted to travel to Syria to wage jihad and stated that she did not understand why people were traveling overseas to engage in jihad when there were more opportunities of “pleasing Allah” in the United States.
Since at least August 2014, the defendants have allegedly plotted to construct an explosive device for use in a terrorist attack on American soil. In their self-proclaimed effort to “make history,” the defendants researched numerous explosive precursors. For instance, they researched and acquired some of the components of a car bomb, like the one used in the 1993 World Trade Center bombing; a fertilizer bomb, like the one used in the 1995 bombing of the federal building in Oklahoma City; and a pressure cooker bomb, like the one used in the 2013 Boston Marathon bombing. The investigation recently revealed that the defendants possessed propane gas tanks together with instructions from an online jihadist publication for transforming propane tanks into explosive devices.
“We are committed to doing everything in our ability to detect, disrupt and deter attacks by homegrown violent extremists,” said U.S. Attorney Lynch. “As alleged, the defendants in this case carefully studied how to construct an explosive device to launch an attack on the homeland. We remain firm in our resolve to hold accountable anyone who would seek to terrorize the American people, whether by traveling abroad to commit attacks overseas or by plotting here at home.” U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state and local agencies from the region, as well as to the NYPD Intelligence Division, for their assistance in the investigation.
“Velentzas and Siddiqui are alleged to have researched how to construct bombs as part of their conspiracy to use a weapon of mass destruction on American soil,” said Assistant Attorney General Carlin. “Identifying and disrupting such threats to public safety, whether at home or abroad, is the number one priority of the National Security Division and our partners in the law enforcement and intelligence communities. I want to thank the agents, analysts and prosecutors who are responsible for today’s charges.”
“The defendants allegedly plotted to wreak terror by creating explosive devices and even researching the pressure cooker bombs used during the Boston Marathon bombing,” said Assistant Director in Charge Rodriguez. “We continue to pursue those who look to commit acts of terror and deter others who think they are beyond the reach of law enforcement. I’d like to thank Commissioner Bratton and the New York City Police Department for their partnership on this case and so many others.”
“These defendants allegedly engaged in sustained efforts to obtain bomb-making instructions and materials, including using instructions provided by al-Qaeda’s online magazine,” said Commissioner Bratton. “The work of the NYPD’s Intelligence Bureau, its undercover Detective, and the seamless collaboration with the Special Agents and Detectives of the Joint Terrorism Task Force and United States Attorney for the Eastern District should serve as a model for early detection and prevention of terrorist plotting.”
If convicted, both defendants face a maximum sentence of life imprisonment. The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda and Jennifer S. Carapiet of the Eastern District of New York, with assistance provided by Trial Attorney Clement McGovern of the Justice Department’s National Security Division.
Thursday, April 2, 2015
Two Queens, New York, Residents Charged With Conspiracy to Use a Weapon of Mass Destruction
Defendants Allegedly Plotted to Construct an Explosive Device for Use in a Terrorist Attack on U.S. Soil
U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD) announced that earlier today, a criminal complaint was unsealed in federal court in the Eastern District of New York charging Noelle Velentzas and Asia Siddiqui with conspiracy to use weapons of mass destruction against persons or property in the United States. The defendants’ initial appearances are scheduled for this afternoon before U.S. Magistrate Judge Viktor V. Pohorelsky of the Eastern District of New York.
As alleged in the complaint, the defendants have repeatedly expressed their support for violent jihad. For instance, in or about 2009, Siddiqui published a poem in a magazine published by al-Qaeda in the Arabian Peninsula that exhorted readers to wage jihad and declared that there is “[n]o excuse to sit back and wait – for the skies rain martyrdom.” More recently, Velentzas, who has characterized al-Qaeda founder Usama Bin Laden as one of her heroes, declared that she and Siddiqui are “citizens of the Islamic State” – a reference to the foreign terrorist organization that is also known as Islamic State in Iraq and the Levant (ISIL). Less than two weeks ago, Velentzas, asked whether she had heard the news about the recent arrest of a former U.S. airman who had attempted to travel to Syria to wage jihad and stated that she did not understand why people were traveling overseas to engage in jihad when there were more opportunities of “pleasing Allah” in the United States.
Since at least August 2014, the defendants have allegedly plotted to construct an explosive device for use in a terrorist attack on American soil. In their self-proclaimed effort to “make history,” the defendants researched numerous explosive precursors. For instance, they researched and acquired some of the components of a car bomb, like the one used in the 1993 World Trade Center bombing; a fertilizer bomb, like the one used in the 1995 bombing of the federal building in Oklahoma City; and a pressure cooker bomb, like the one used in the 2013 Boston Marathon bombing. The investigation recently revealed that the defendants possessed propane gas tanks together with instructions from an online jihadist publication for transforming propane tanks into explosive devices.
“We are committed to doing everything in our ability to detect, disrupt and deter attacks by homegrown violent extremists,” said U.S. Attorney Lynch. “As alleged, the defendants in this case carefully studied how to construct an explosive device to launch an attack on the homeland. We remain firm in our resolve to hold accountable anyone who would seek to terrorize the American people, whether by traveling abroad to commit attacks overseas or by plotting here at home.” U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state and local agencies from the region, as well as to the NYPD Intelligence Division, for their assistance in the investigation.
“Velentzas and Siddiqui are alleged to have researched how to construct bombs as part of their conspiracy to use a weapon of mass destruction on American soil,” said Assistant Attorney General Carlin. “Identifying and disrupting such threats to public safety, whether at home or abroad, is the number one priority of the National Security Division and our partners in the law enforcement and intelligence communities. I want to thank the agents, analysts and prosecutors who are responsible for today’s charges.”
“The defendants allegedly plotted to wreak terror by creating explosive devices and even researching the pressure cooker bombs used during the Boston Marathon bombing,” said Assistant Director in Charge Rodriguez. “We continue to pursue those who look to commit acts of terror and deter others who think they are beyond the reach of law enforcement. I’d like to thank Commissioner Bratton and the New York City Police Department for their partnership on this case and so many others.”
“These defendants allegedly engaged in sustained efforts to obtain bomb-making instructions and materials, including using instructions provided by al-Qaeda’s online magazine,” said Commissioner Bratton. “The work of the NYPD’s Intelligence Bureau, its undercover Detective, and the seamless collaboration with the Special Agents and Detectives of the Joint Terrorism Task Force and United States Attorney for the Eastern District should serve as a model for early detection and prevention of terrorist plotting.”
If convicted, both defendants face a maximum sentence of life imprisonment. The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda and Jennifer S. Carapiet of the Eastern District of New York, with assistance provided by Trial Attorney Clement McGovern of the Justice Department’s National Security Division.
Wednesday, March 4, 2015
SEAFOOD COMPANY OWNER SENT TO PRISON FOR DEALING IN ILLEGAL OYSTERS
FROM: U.S. JUSTICE DEPARTMENT I
Monday, March 2, 2015
Delaware Seafood Wholesaler and Company Fined and Owner Sentenced to 26 Months in Prison for Illegally Trafficking in Oysters
Mark Bryan, 59, of New Market, Maryland, and his Delaware-based seafood wholesale business, Harbor House Seafood, were sentenced on Friday in federal court in Camden, New Jersey, for trafficking in illegally possessed oysters, creating false health and safety records, and conspiracy charges.
Bryan was sentenced to serve 26 months in prison followed by three years of supervised release. Bryan was also ordered to pay a $62,500 fine and to pay New Jersey $140,000 for the restoration of oyster beds in Delaware Bay. Harbor House was ordered to pay a $250,000 fine and was sentenced to five years of probation. Friday’s sentences, in addition to the previous sentencing of Bryan’s co-conspirators and suppliers, brings the total fines and forfeitures in this matter to over $625,000, along with $194,000 of restoration costs..
Bryan and Harbor House were convicted in 2012 of multiple felony crimes related to dealings in illegal oysters from 2004 to 2007. The evidence showed that for more than four years, Bryan conspired with New Jersey oystermen Thomas Reeves and Todd Reeves to cover up the Reeves’ overharvest of oysters from the Delaware Bay. Bryan, through his company, Harbor House Seafood, purchased the illegal oysters from the Reeves, then assisted in covering up the Reeves’ overharvest by maintaining double-books, providing federal agents with false records, and by falsifying his FDA-mandated health and safety logs. The jury saw numerous instances of late-night faxes between Bryan and the Reeves which were used to coordinate their conspiracy and hide their wrong-doing from investigators. Bryan was also shown to have purchased illegal oysters from oyster harvester Kenneth Bailey of New Jersey. During the course of his crimes, Bryan moved, purchased and sold over $1.2 million worth of illegal oysters.
The Reeves and Bailey were previously sentenced on Feb. 11, 2015, to 26 months, 16 months, and 12 months in prison, respectively, for their roles.
“The defendants’ actions provided a market for dishonest oystermen who were willing to place natural resources at risk in the name of profit,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division. “Today’s sentences send the message that those who knowingly deal in illegal natural resources will be held accountable.”
“Today's sentence underscores the value that state partnerships add to NOAA Office of Law Enforcement’s ability to complete its mission,” said Assistant Director Logan Gregory for NOAA Fisheries Office of Law Enforcement. “In this case, our partnership with New Jersey Division of Fish and Wildlife was crucial in protecting the oyster resource in New Jersey and leveling the playing field across multiple industry sectors throughout the mid-Atlantic Region.”
The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed. The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect public health and minimize the impact of any oyster-borne outbreak of disease.
The case was investigated by the NOAA Office of Law Enforcement and the New Jersey Department of Environmental Protection’s Division of Fish and Wildlife. The case was prosecuted by Assistant Chief Wayne D. Hettenbach and Trial Attorney Patrick M. Duggan of the Environment and Natural Resources Division’s Environmental Crimes Section, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.
Monday, March 2, 2015
Delaware Seafood Wholesaler and Company Fined and Owner Sentenced to 26 Months in Prison for Illegally Trafficking in Oysters
Mark Bryan, 59, of New Market, Maryland, and his Delaware-based seafood wholesale business, Harbor House Seafood, were sentenced on Friday in federal court in Camden, New Jersey, for trafficking in illegally possessed oysters, creating false health and safety records, and conspiracy charges.
Bryan was sentenced to serve 26 months in prison followed by three years of supervised release. Bryan was also ordered to pay a $62,500 fine and to pay New Jersey $140,000 for the restoration of oyster beds in Delaware Bay. Harbor House was ordered to pay a $250,000 fine and was sentenced to five years of probation. Friday’s sentences, in addition to the previous sentencing of Bryan’s co-conspirators and suppliers, brings the total fines and forfeitures in this matter to over $625,000, along with $194,000 of restoration costs..
Bryan and Harbor House were convicted in 2012 of multiple felony crimes related to dealings in illegal oysters from 2004 to 2007. The evidence showed that for more than four years, Bryan conspired with New Jersey oystermen Thomas Reeves and Todd Reeves to cover up the Reeves’ overharvest of oysters from the Delaware Bay. Bryan, through his company, Harbor House Seafood, purchased the illegal oysters from the Reeves, then assisted in covering up the Reeves’ overharvest by maintaining double-books, providing federal agents with false records, and by falsifying his FDA-mandated health and safety logs. The jury saw numerous instances of late-night faxes between Bryan and the Reeves which were used to coordinate their conspiracy and hide their wrong-doing from investigators. Bryan was also shown to have purchased illegal oysters from oyster harvester Kenneth Bailey of New Jersey. During the course of his crimes, Bryan moved, purchased and sold over $1.2 million worth of illegal oysters.
The Reeves and Bailey were previously sentenced on Feb. 11, 2015, to 26 months, 16 months, and 12 months in prison, respectively, for their roles.
“The defendants’ actions provided a market for dishonest oystermen who were willing to place natural resources at risk in the name of profit,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division. “Today’s sentences send the message that those who knowingly deal in illegal natural resources will be held accountable.”
“Today's sentence underscores the value that state partnerships add to NOAA Office of Law Enforcement’s ability to complete its mission,” said Assistant Director Logan Gregory for NOAA Fisheries Office of Law Enforcement. “In this case, our partnership with New Jersey Division of Fish and Wildlife was crucial in protecting the oyster resource in New Jersey and leveling the playing field across multiple industry sectors throughout the mid-Atlantic Region.”
The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed. The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect public health and minimize the impact of any oyster-borne outbreak of disease.
The case was investigated by the NOAA Office of Law Enforcement and the New Jersey Department of Environmental Protection’s Division of Fish and Wildlife. The case was prosecuted by Assistant Chief Wayne D. Hettenbach and Trial Attorney Patrick M. Duggan of the Environment and Natural Resources Division’s Environmental Crimes Section, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.
Friday, February 20, 2015
REAL ESTATE BUSINESSMAN PLEADS GUILTY TO FRAUD
FROM: U.S. JUSTICE DEPARTMENT
Thursday, February 19, 2015
Detroit Real Estate Businessman Pleads Guilty to Tax and Bank Fraud
On Feb. 18, a Detroit man pleaded guilty in the U.S. District Court for the Eastern District of Michigan to obstructing and impeding the Internal Revenue Service (IRS) and conspiring to commit bank fraud, Principal Deputy Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
According to the information and other court documents, Richard Pierce failed to report over $9 million in gross business receipts during 2007 through 2013, derived from the various Detroit-area businesses that he operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Detroit Matrix, First Metro Properties LLC, First Metro Real Estate Services LLC, Phoenix Office Plaza-II LLC, Rosedale/Grandmont Properties LLC, and RFP Ventures LLC. In addition, on Nov. 26, 2007, Pierce participated in a bank fraud scheme wherein he caused the submission of a false loan application to a mortgage lender on which he falsely reported that the buyer was paying $77,900 for a residential property without disclosing that the buyer received a $46,340 “kickback” from the seller.
Sentencing is scheduled for July 8 before U.S. District Court Judge Arthur J. Tarnow of the Eastern District of Michigan. Pierce faces a statutory maximum sentence of three years in prison for filing a false tax return and a statutory maximum sentence of 30 years in prison for conspiring to commit bank fraud, with maximum potential fines totaling $1.25 million.
Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS – Criminal Investigation, who investigated the case, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who are prosecuting the case. She also thanked the U.S. Attorney’s Office in the Eastern District of Michigan for their assistance.
Thursday, February 19, 2015
Detroit Real Estate Businessman Pleads Guilty to Tax and Bank Fraud
On Feb. 18, a Detroit man pleaded guilty in the U.S. District Court for the Eastern District of Michigan to obstructing and impeding the Internal Revenue Service (IRS) and conspiring to commit bank fraud, Principal Deputy Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
According to the information and other court documents, Richard Pierce failed to report over $9 million in gross business receipts during 2007 through 2013, derived from the various Detroit-area businesses that he operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Detroit Matrix, First Metro Properties LLC, First Metro Real Estate Services LLC, Phoenix Office Plaza-II LLC, Rosedale/Grandmont Properties LLC, and RFP Ventures LLC. In addition, on Nov. 26, 2007, Pierce participated in a bank fraud scheme wherein he caused the submission of a false loan application to a mortgage lender on which he falsely reported that the buyer was paying $77,900 for a residential property without disclosing that the buyer received a $46,340 “kickback” from the seller.
Sentencing is scheduled for July 8 before U.S. District Court Judge Arthur J. Tarnow of the Eastern District of Michigan. Pierce faces a statutory maximum sentence of three years in prison for filing a false tax return and a statutory maximum sentence of 30 years in prison for conspiring to commit bank fraud, with maximum potential fines totaling $1.25 million.
Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS – Criminal Investigation, who investigated the case, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who are prosecuting the case. She also thanked the U.S. Attorney’s Office in the Eastern District of Michigan for their assistance.
Thursday, February 19, 2015
MAN INDICTED FOR CONSPIRACY TO PROVIDE SUPPORT TO ISIL BY JOINING THE ORGANIZATION
FROM: U.S. JUSTICE DEPARTMENT
Thursday, February 19, 2015
Hamza Naj Ahmed Indicted for Conspiring to Provide Material Support to the Islamic State of Iraq and the Levant
Ahmed Stopped in New York While Attempting to Fly Overseas to Join Terror Organization
Defendant Also Charged with Lying to Federal Agents during Terrorism Investigation
Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Andrew M. Luger for the District of Minnesota announced today the indictment of Hamza Naj Ahmed, 19, for conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL). Ahmed is also charged with attempting to provide material support to ISIL and for making a false statement in a terrorism investigation. Ahmed was previously charged by criminal complaint for lying to FBI agents. The defendant was detained on Feb. 5, 2015, after making an initial appearance before Magistrate Judge Steven Rau in U.S. District Court in St. Paul, Minnesota.
“Hamza Ahmed is at least the fourth person from the Twin Cities charged as a result of an ongoing investigation into individuals who have traveled or are attempting to travel to Syria in order to join a foreign terrorist organization,” said U.S. Attorney Luger. “Since 2007, dozens of people from the Twin Cities have traveled or attempted to travel overseas in support of terror. While my office will continue to prosecute those who attempt to provide material support to ISIL or any other terrorist organization, we remain committed to working with dedicated community members to bring this cycle to an end.”
According to the indictment and documents filed in court, Ahmed and three companions, M.F., H.M.M. and Z.A., travelled by bus from Minneapolis to New York City’s John F. Kennedy International Airport (JFK). The four men were each booked on international flights scheduled to depart JFK on Nov. 8, 2014. Ahmed and M.F. were booked on the same flight from JFK to Istanbul, Turkey. M.F., H.M.M. and Z.A. were each prevented from boarding their flights. Ahmed successfully boarded, but was escorted from the aircraft by U.S. Customs and Border Protection agents before it left the boarding gate.
According to the indictment and documents filed in court, Ahmed was subsequently interviewed by FBI agents. He made multiple false statements during the interview, including telling agents that he was traveling alone, and that he did not know M.F. or H.M.M. When Ahmed arrived back in Minnesota on Nov. 9, 2014, FBI agents conducted a second voluntary interview, during which Ahmed again lied to agents.
This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force.
This case is being prosecuted by Attorney Andrew Sigler of the Justice Department’s National Security Division, and Assistant U.S. Attorneys Andrew Winter and John Docherty of the District of Minnesota.
Defendant Information:
HAMZA NAJ AHMED, 19
Minneapolis, Minnesota
Charges:
Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Making a False Statement in a Terrorism Investigation, 1 count
Thursday, February 19, 2015
Hamza Naj Ahmed Indicted for Conspiring to Provide Material Support to the Islamic State of Iraq and the Levant
Ahmed Stopped in New York While Attempting to Fly Overseas to Join Terror Organization
Defendant Also Charged with Lying to Federal Agents during Terrorism Investigation
Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Andrew M. Luger for the District of Minnesota announced today the indictment of Hamza Naj Ahmed, 19, for conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL). Ahmed is also charged with attempting to provide material support to ISIL and for making a false statement in a terrorism investigation. Ahmed was previously charged by criminal complaint for lying to FBI agents. The defendant was detained on Feb. 5, 2015, after making an initial appearance before Magistrate Judge Steven Rau in U.S. District Court in St. Paul, Minnesota.
“Hamza Ahmed is at least the fourth person from the Twin Cities charged as a result of an ongoing investigation into individuals who have traveled or are attempting to travel to Syria in order to join a foreign terrorist organization,” said U.S. Attorney Luger. “Since 2007, dozens of people from the Twin Cities have traveled or attempted to travel overseas in support of terror. While my office will continue to prosecute those who attempt to provide material support to ISIL or any other terrorist organization, we remain committed to working with dedicated community members to bring this cycle to an end.”
According to the indictment and documents filed in court, Ahmed and three companions, M.F., H.M.M. and Z.A., travelled by bus from Minneapolis to New York City’s John F. Kennedy International Airport (JFK). The four men were each booked on international flights scheduled to depart JFK on Nov. 8, 2014. Ahmed and M.F. were booked on the same flight from JFK to Istanbul, Turkey. M.F., H.M.M. and Z.A. were each prevented from boarding their flights. Ahmed successfully boarded, but was escorted from the aircraft by U.S. Customs and Border Protection agents before it left the boarding gate.
According to the indictment and documents filed in court, Ahmed was subsequently interviewed by FBI agents. He made multiple false statements during the interview, including telling agents that he was traveling alone, and that he did not know M.F. or H.M.M. When Ahmed arrived back in Minnesota on Nov. 9, 2014, FBI agents conducted a second voluntary interview, during which Ahmed again lied to agents.
This case is the result of an investigation conducted by the FBI-led Joint Terrorism Task Force.
This case is being prosecuted by Attorney Andrew Sigler of the Justice Department’s National Security Division, and Assistant U.S. Attorneys Andrew Winter and John Docherty of the District of Minnesota.
Defendant Information:
HAMZA NAJ AHMED, 19
Minneapolis, Minnesota
Charges:
Conspiracy to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Attempting to Provide Material Support to a Designated Foreign Terrorist Organization, 1 count
Making a False Statement in a Terrorism Investigation, 1 count
RUSSIAN NATIONAL EXTRADITED TO U.S. FOR ALLEGED ROLE IN MAJOR INTERNATIONAL HACKING SCHEME
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, February 17, 2015
Russian National Charged in Largest Known Data Breach Prosecution Extradited to United States
Defendant Brought From Netherlands
After Fighting Extradition for Over Two Years
A Russian national appeared in federal court in Newark today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Secretary Jeh Johnson of the Department of Homeland Security, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Director Joseph P. Clancy of the U.S. Secret Service.
Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was charged for his alleged role in a data theft conspiracy that targeted major corporate networks, stole more than 160 million credit card numbers, and caused hundreds of millions of dollars in losses. Prior to his extradition, he had been detained by the Dutch authorities since his arrest in the Netherlands on June 28, 2012.
Drinkman appeared today before U.S. Magistrate Judge James B. Clark and entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained without bail. Trial before U.S. District Judge Jerome B. Simandle was scheduled for April 27, 2015.
“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” said Assistant Attorney General Caldwell. “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice. This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”
“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” said U.S. Attorney Fishman. “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”
“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” said Acting Director Clancy. “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators. Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”
According to the second superseding indictment, unsealed on July 25, 2013, and other court filings, Drinkman and four co-defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems. Roman Kotov, 33, of Moscow, allegedly specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data. According to allegations in the indictment, the hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine. Dmitriy Smilianets, 31, of Moscow, then allegedly sold the stolen information and distributed the proceeds of the scheme to the participants.
Drinkman and his co-defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. It is not alleged that the NASDAQ hack affected its trading platform.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: one charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited on Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large. All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.
The Attacks
According to allegations in the indictment, the five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals. They allegedly took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired at least 160 million card numbers through hacking.
The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases. The hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, on the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.
Instant message chats obtained by law enforcement reveal that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted for more than a year.
The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.
Selling the Data
After acquiring the card numbers and associated data—which they referred to as “dumps”—the conspirators allegedly sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers. He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data, offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
The defendants allegedly used a number of methods to conceal the scheme. Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.
To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also allegedly worked to evade existing protections by security software.
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses—including more than $300 million in losses reported by just three of the corporate victims—and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.
The charges and allegations contained indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by the U.S. Secret Service. The case is being prosecuted by Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the District of New Jersey’s Economic Crimes Unit.
The Criminal Division’s Office of International Affairs assisted with the case, as did public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.
Tuesday, February 17, 2015
Russian National Charged in Largest Known Data Breach Prosecution Extradited to United States
Defendant Brought From Netherlands
After Fighting Extradition for Over Two Years
A Russian national appeared in federal court in Newark today after being extradited from the Netherlands to face charges that he conspired in the largest international hacking and data breach scheme ever prosecuted in the United States, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Secretary Jeh Johnson of the Department of Homeland Security, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Director Joseph P. Clancy of the U.S. Secret Service.
Vladimir Drinkman, 34, of Syktyykar and Moscow, Russia, was charged for his alleged role in a data theft conspiracy that targeted major corporate networks, stole more than 160 million credit card numbers, and caused hundreds of millions of dollars in losses. Prior to his extradition, he had been detained by the Dutch authorities since his arrest in the Netherlands on June 28, 2012.
Drinkman appeared today before U.S. Magistrate Judge James B. Clark and entered a plea of not guilty to all 11 counts charged in the indictment and was ordered detained without bail. Trial before U.S. District Judge Jerome B. Simandle was scheduled for April 27, 2015.
“Cyber criminals conceal themselves in one country and steal information located in another country, impacting victims around the world,” said Assistant Attorney General Caldwell. “Hackers often take advantage of international borders and differences in legal systems, hoping to evade extradition to face justice. This case and today's extradition demonstrates that through international cooperation, and through great teamwork between the Department of Justice and the Department of Homeland Security, we are able to bring cyber thieves to justice in the United States, wherever they may commit their crimes.”
“Drinkman’s extradition on the indictment this office brought more than a year and a half ago shows how relentlessly we will pursue those who are charged with these serious crimes,” said U.S. Attorney Fishman. “The incredibly sophisticated work with our partners at the U.S. Secret Service to uncover this enormous, far-reaching scheme demanded an equal effort by our colleagues at the Department of Justice Criminal Division in Washington and our law enforcement partners overseas to bring the defendant back to face these charges.”
“This case demonstrates our commitment to fulfilling an important part of our integrated mission; that of protecting our Nation’s critical financial infrastructure,” said Acting Director Clancy. “Our success in this investigation and other similar investigations is a credit to our skilled and relentless cyber investigators. Our determination, coupled with our network of foreign law enforcement partners, ensures that our investigative reach can expand beyond the borders of the United States.”
According to the second superseding indictment, unsealed on July 25, 2013, and other court filings, Drinkman and four co-defendants each served particular roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, each allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems. Roman Kotov, 33, of Moscow, allegedly specialized in mining the networks Drinkman and Kalinin compromised to steal valuable data. According to allegations in the indictment, the hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 27, of Odessa, Ukraine. Dmitriy Smilianets, 31, of Moscow, then allegedly sold the stolen information and distributed the proceeds of the scheme to the participants.
Drinkman and his co-defendants are charged with attacks on NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard. It is not alleged that the NASDAQ hack affected its trading platform.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 33, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: one charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited on Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large. All of the defendants are Russian nationals except for Rytikov, who is a citizen of Ukraine.
The Attacks
According to allegations in the indictment, the five defendants conspired with others to penetrate the computer networks of several of the largest payment processing companies, retailers and financial institutions in the world, stealing the personal identifying information of individuals. They allegedly took user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired at least 160 million card numbers through hacking.
The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases. The hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, on the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.
Instant message chats obtained by law enforcement reveal that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted for more than a year.
The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.
Selling the Data
After acquiring the card numbers and associated data—which they referred to as “dumps”—the conspirators allegedly sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers. He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data, offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by either withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
The defendants allegedly used a number of methods to conceal the scheme. Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.
To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also allegedly worked to evade existing protections by security software.
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses—including more than $300 million in losses reported by just three of the corporate victims—and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.
The charges and allegations contained indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by the U.S. Secret Service. The case is being prosecuted by Trial Attorney Rick Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the District of New Jersey’s Economic Crimes Unit.
The Criminal Division’s Office of International Affairs assisted with the case, as did public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.
Wednesday, February 18, 2015
FORMER MEMBER OF KKK AFFILIATE SENT TO PRISON FOR ROLE IN CROSS BURNING
FROM: U.S. JUSTICE DEPARTMENT
Friday, February 13, 2015
Former Klansman Sentenced for Cross Burning
Timothy Flanagan, 33, was sentenced to nine months and ordered to pay a $5000 fine in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced. Flanagan previously pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights.
Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30, 2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee. Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house. Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross. Flanagan and the other co-conspirators then drove the cross to the victim’s residence and, upon arriving at the residence, Flanagan and London exited the truck. The cross was placed in the driveway leading up to the house and was ignited. The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence.
Timothy Stafford, 41, of Minor Hill, Tennessee, and Ivan “Rusty” London IV, 21, of Lexington, Kentucky, previously pleaded guilty for their roles in the conspiracy, and will be sentenced on March 3, and March 26, respectively.
“Hate-motivated crimes will not be tolerated in our country,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Justice Department will vigorously prosecute individuals that violate the rights of others because of race.”
“There can be no tolerance for such acts of intimidation when innocent persons are targeted simply because of their race,” said U.S. Attorney David Rivera of the Middle District of Tennessee. “The U.S. Attorney’s Office and our law enforcement partners will work tirelessly to protect the civil rights of all persons and bring to justice, anyone who would attempt to impede the constitutionally protected right to liberty of any person.”
This case was investigated by the Columbia, Tennessee, Division of the FBI and is being prosecuted by Trial Attorney Jared Fishman of the Civil Rights Division and by Assistant U.S. Attorney Hal McDonough of the Middle District of Tennessee.
Friday, February 13, 2015
Former Klansman Sentenced for Cross Burning
Timothy Flanagan, 33, was sentenced to nine months and ordered to pay a $5000 fine in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced. Flanagan previously pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights.
Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30, 2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee. Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house. Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross. Flanagan and the other co-conspirators then drove the cross to the victim’s residence and, upon arriving at the residence, Flanagan and London exited the truck. The cross was placed in the driveway leading up to the house and was ignited. The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence.
Timothy Stafford, 41, of Minor Hill, Tennessee, and Ivan “Rusty” London IV, 21, of Lexington, Kentucky, previously pleaded guilty for their roles in the conspiracy, and will be sentenced on March 3, and March 26, respectively.
“Hate-motivated crimes will not be tolerated in our country,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Justice Department will vigorously prosecute individuals that violate the rights of others because of race.”
“There can be no tolerance for such acts of intimidation when innocent persons are targeted simply because of their race,” said U.S. Attorney David Rivera of the Middle District of Tennessee. “The U.S. Attorney’s Office and our law enforcement partners will work tirelessly to protect the civil rights of all persons and bring to justice, anyone who would attempt to impede the constitutionally protected right to liberty of any person.”
This case was investigated by the Columbia, Tennessee, Division of the FBI and is being prosecuted by Trial Attorney Jared Fishman of the Civil Rights Division and by Assistant U.S. Attorney Hal McDonough of the Middle District of Tennessee.
Thursday, February 12, 2015
TWO U.S. ARMY SERGEANTS PLEAD GUILTY TO ACCEPTING BRIBES FROM AFGHAN TRUCK DRIVERS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, February 11, 2015
Two U.S. Army Sergeants Plead Guilty to Taking Bribes While Deployed in Afghanistan
Two sergeants with the U.S. Army have pleaded guilty for accepting bribes from Afghan truck drivers at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.
James Edward Norris, 41, of Fort Irwin, California, and Seneca Darnell Hampton, 31, of Fort Benning, Georgia, each pleaded guilty before Chief U.S. District Judge Clay D. Land in the Middle District of Georgia to one count of conspiracy to commit bribery of a public official and one count of money laundering.
During their guilty pleas, Hampton and Norris admitted to conspiring with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base. Hampton admitted that he concealed the scheme by attributing the increase in fuel usage to colder winter temperatures.
Hampton and Norris admitted that they shipped the bribe money back to the United States in tough boxes. Norris further admitted that on June 7, 2013, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme. Hampton further admitted that on May 20, 2013, after returning from deployment, he purchased a 2013 GMC Sierra with $29,000 cash derived from the bribery scheme.
As part of their plea agreements, Hampton and Norris agreed to forfeit the proceeds they received from the bribery scheme and the vehicles they purchased with those proceeds, as well as to pay full restitution. Sentencing has been scheduled for May 21, 2015.
The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division. The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section.
Wednesday, February 11, 2015
Two U.S. Army Sergeants Plead Guilty to Taking Bribes While Deployed in Afghanistan
Two sergeants with the U.S. Army have pleaded guilty for accepting bribes from Afghan truck drivers at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.
James Edward Norris, 41, of Fort Irwin, California, and Seneca Darnell Hampton, 31, of Fort Benning, Georgia, each pleaded guilty before Chief U.S. District Judge Clay D. Land in the Middle District of Georgia to one count of conspiracy to commit bribery of a public official and one count of money laundering.
During their guilty pleas, Hampton and Norris admitted to conspiring with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base. Hampton admitted that he concealed the scheme by attributing the increase in fuel usage to colder winter temperatures.
Hampton and Norris admitted that they shipped the bribe money back to the United States in tough boxes. Norris further admitted that on June 7, 2013, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme. Hampton further admitted that on May 20, 2013, after returning from deployment, he purchased a 2013 GMC Sierra with $29,000 cash derived from the bribery scheme.
As part of their plea agreements, Hampton and Norris agreed to forfeit the proceeds they received from the bribery scheme and the vehicles they purchased with those proceeds, as well as to pay full restitution. Sentencing has been scheduled for May 21, 2015.
The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division. The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section.
Sunday, February 8, 2015
2 AUTO PARTS MANUFACTURER EXECS. INDICTED FOR ROLES IN PRICE FIXING CONSPIRACY AND OBSTRUCTIN OF JUSTICE
FROM: U.S. JUSTICE DEPARTMENT
Thursday, February 5, 2015
Two Japanese Automobile Parts Manufacturer Executives Indicted for Roles in Conspiracy to Fix Prices and for Obstruction of Justice
A Detroit federal grand jury returned a two-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hiroyuki Komiya and Hirofumi Nakayama, executives of Mitsuba Corporation, with conspiring to fix the prices of various automotive parts, including windshield wiper systems and components, sold to Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corp., Chrysler Group, LLC, Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries in the United States and elsewhere.
Komiya and Nakayama are also charged with knowingly and corruptly persuading, and attempting to persuade, employees of Mitsuba to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
“These charges demonstrate the Antitrust Division’s continued commitment to prosecuting individuals who commit criminal antitrust violations,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s Criminal Enforcement Program. “Because these same individuals committed the additional crime of obstructing the investigation, they also serve as cautionary tale for those who are tempted to try to thwart the Antitrust Division’s investigative activities by destroying evidence.”
Komiya participated in the conspiracy as Mitsuba Director of Automotive Sales. In 2007, he was promoted to Executive Managing Officer and Vice President of Sales. Nakayama was the Office Manager of Mitsuba’s Nagoya sales office. In 2005, he was promoted to Sales Operating Officer.
The indictment alleges, among other things, that beginning at least as early as April 2000 and continuing until at least February 2010, Komiya, Nakayama and co-conspirators participated in and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the price to be submitted to automobile manufacturers. Upon learning of the existence of this investigation, Komiya and Nakayama also urged their subordinates to delete and destroy documents related to this collusion.
Mitsuba is a corporation organized and existing under the laws of Japan with its principal place of business in Gunma, Japan. On Nov. 6, 2013, Mitsuba pleaded guilty and agreed to pay a $135 million criminal fine for its role in the conspiracy as well as obstruction of justice.
Including Komiya and Nakayama, 52 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing, and bid rigging in the auto parts industry. Additionally, 33 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Komiya and Nakayama are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Komiya et al Indictment
Thursday, February 5, 2015
Two Japanese Automobile Parts Manufacturer Executives Indicted for Roles in Conspiracy to Fix Prices and for Obstruction of Justice
A Detroit federal grand jury returned a two-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hiroyuki Komiya and Hirofumi Nakayama, executives of Mitsuba Corporation, with conspiring to fix the prices of various automotive parts, including windshield wiper systems and components, sold to Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corp., Chrysler Group, LLC, Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries in the United States and elsewhere.
Komiya and Nakayama are also charged with knowingly and corruptly persuading, and attempting to persuade, employees of Mitsuba to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
“These charges demonstrate the Antitrust Division’s continued commitment to prosecuting individuals who commit criminal antitrust violations,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s Criminal Enforcement Program. “Because these same individuals committed the additional crime of obstructing the investigation, they also serve as cautionary tale for those who are tempted to try to thwart the Antitrust Division’s investigative activities by destroying evidence.”
Komiya participated in the conspiracy as Mitsuba Director of Automotive Sales. In 2007, he was promoted to Executive Managing Officer and Vice President of Sales. Nakayama was the Office Manager of Mitsuba’s Nagoya sales office. In 2005, he was promoted to Sales Operating Officer.
The indictment alleges, among other things, that beginning at least as early as April 2000 and continuing until at least February 2010, Komiya, Nakayama and co-conspirators participated in and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the price to be submitted to automobile manufacturers. Upon learning of the existence of this investigation, Komiya and Nakayama also urged their subordinates to delete and destroy documents related to this collusion.
Mitsuba is a corporation organized and existing under the laws of Japan with its principal place of business in Gunma, Japan. On Nov. 6, 2013, Mitsuba pleaded guilty and agreed to pay a $135 million criminal fine for its role in the conspiracy as well as obstruction of justice.
Including Komiya and Nakayama, 52 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing, and bid rigging in the auto parts industry. Additionally, 33 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Komiya and Nakayama are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Komiya et al Indictment
Friday, February 6, 2015
DOJ ANNOUNCES SIX CHARGED WITH PROVIDING MATERIAL SUPPORT TO TERRORISTS
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, February 6, 2015
Six Defendants Charged with Conspiracy and Providing Material Support to Terrorists
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Richard Callahan of the Eastern District of Missouri and Special Agent in Charge William P. Woods of the FBI’s St. Louis Division announced that a federal indictment was unsealed earlier today charging six individuals with terrorist related crimes. Charged in the indictment are: Ramiz Zijad Hodzic, 40, his wife Sedina Unkic Hodzic, 35, and Armin Harcevic, 37, all of St. Louis County, Missouri; Nihad Rosic, 26, of Utica, New York; Mediha Medy Salkicevic, 34 of Schiller Park, Illinois; and Jasminka Ramic, 42, of Rockford, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
All six individuals are natives of Bosnia who immigrated to the United States. Three have become naturalized citizens of the United States and the remaining three have either refugee or legal resident status. Five of the defendants are in the United States and have been arrested. A sixth defendant is overseas.
If convicted, the crimes of conspiring to provide material support and providing material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
“Today’s charges and arrests underscore our resolve to identify, thwart, and hold accountable individuals within the United States who seek to provide material support to terrorists and terrorist organizations operating in Syria and Iraq,” said Assistant Attorney General Carlin. “Preventing the provision of supplies, money, and personnel to foreign terrorist organizations like ISIL remains a top priority of the National Security Division and our partners in the law enforcement and intelligence communities. I want to thank the many agents, analysts and prosecutors responsible for this case.”
“The indictment unsealed today epitomizes the FBI's commitment to disrupting and holding accountable those who seek to provide material support to terrorists and terrorist organizations,” said Special Agent in Charge Woods. “This case underscores the clear need for continued vigilance in rooting out those who seek to join or aid terrorist groups that threaten our national security.”
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Friday, February 6, 2015
Six Defendants Charged with Conspiracy and Providing Material Support to Terrorists
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Richard Callahan of the Eastern District of Missouri and Special Agent in Charge William P. Woods of the FBI’s St. Louis Division announced that a federal indictment was unsealed earlier today charging six individuals with terrorist related crimes. Charged in the indictment are: Ramiz Zijad Hodzic, 40, his wife Sedina Unkic Hodzic, 35, and Armin Harcevic, 37, all of St. Louis County, Missouri; Nihad Rosic, 26, of Utica, New York; Mediha Medy Salkicevic, 34 of Schiller Park, Illinois; and Jasminka Ramic, 42, of Rockford, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
All six individuals are natives of Bosnia who immigrated to the United States. Three have become naturalized citizens of the United States and the remaining three have either refugee or legal resident status. Five of the defendants are in the United States and have been arrested. A sixth defendant is overseas.
If convicted, the crimes of conspiring to provide material support and providing material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
“Today’s charges and arrests underscore our resolve to identify, thwart, and hold accountable individuals within the United States who seek to provide material support to terrorists and terrorist organizations operating in Syria and Iraq,” said Assistant Attorney General Carlin. “Preventing the provision of supplies, money, and personnel to foreign terrorist organizations like ISIL remains a top priority of the National Security Division and our partners in the law enforcement and intelligence communities. I want to thank the many agents, analysts and prosecutors responsible for this case.”
“The indictment unsealed today epitomizes the FBI's commitment to disrupting and holding accountable those who seek to provide material support to terrorists and terrorist organizations,” said Special Agent in Charge Woods. “This case underscores the clear need for continued vigilance in rooting out those who seek to join or aid terrorist groups that threaten our national security.”
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Sunday, January 25, 2015
EXECUTIVE AT AUTO PARTS MANUFACTURER INDICTED FOR ROLE IN PRICE FIXING CONSPRIACY
FROM: U.S. JUSTICE DEPARTMENT
JUSTICE NEWS
Department of Justice
Office of Public Affairs
Thursday, January 22, 2015
Executive of Japanese Automotive Parts Manufacturer Indicted for Role in Conspiracy to Fix Prices
A Detroit federal grand jury returned a one-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of seatbelts, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hiromu Usuda, an executive at Takata Corp., with conspiring to rig bids for, and to fix, stabilize and maintain the prices of, seatbelts sold to Toyota Motor Corp., Honda Motor Company Ltd., Nissan Motor Co. Ltd., Mazda Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and/or certain of their subsidiaries, for installation in vehicles manufactured and sold in the United States and elsewhere. Usuda served as Group and Department Manager in the Customer Relations Division at Takata, from January 2005 until at least February 2011.
“Antitrust violators who refuse to accept responsibility for their crimes leave us no choice but to indict,” said Brent Synder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “We will continue to prosecute those that commit these crimes.”
The indictment alleges, among other things, that from at least Jan. 1, 2005, through at least February 2011, Usuda and others attended meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices of seatbelts sold to the automobile manufacturers. It alleges that Usuda participated directly in the conspiratorial conduct and that he directed, authorized and consented to his subordinates’ participation.
Takata is a Tokyo-based manufacturer of automotive parts, including seatbelts. Takata supplies automotive parts to automobile manufacturers in the United States, in part, through its U.S. subsidiary, TK Holdings Inc., located in Auburn Hills, Michigan. Takata pleaded guilty on Dec. 5, 2013, for its involvement in the conspiracy, and was sentenced to pay a criminal fine of $71.3 million. Four other executives from Takata have pleaded guilty, have been sentenced to serve time in a U.S. prison and to pay criminal fines for their roles in the conspiracy.
Including Usuda, 50 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Usuda is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.
JUSTICE NEWS
Department of Justice
Office of Public Affairs
Thursday, January 22, 2015
Executive of Japanese Automotive Parts Manufacturer Indicted for Role in Conspiracy to Fix Prices
A Detroit federal grand jury returned a one-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of seatbelts, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hiromu Usuda, an executive at Takata Corp., with conspiring to rig bids for, and to fix, stabilize and maintain the prices of, seatbelts sold to Toyota Motor Corp., Honda Motor Company Ltd., Nissan Motor Co. Ltd., Mazda Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and/or certain of their subsidiaries, for installation in vehicles manufactured and sold in the United States and elsewhere. Usuda served as Group and Department Manager in the Customer Relations Division at Takata, from January 2005 until at least February 2011.
“Antitrust violators who refuse to accept responsibility for their crimes leave us no choice but to indict,” said Brent Synder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “We will continue to prosecute those that commit these crimes.”
The indictment alleges, among other things, that from at least Jan. 1, 2005, through at least February 2011, Usuda and others attended meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices of seatbelts sold to the automobile manufacturers. It alleges that Usuda participated directly in the conspiratorial conduct and that he directed, authorized and consented to his subordinates’ participation.
Takata is a Tokyo-based manufacturer of automotive parts, including seatbelts. Takata supplies automotive parts to automobile manufacturers in the United States, in part, through its U.S. subsidiary, TK Holdings Inc., located in Auburn Hills, Michigan. Takata pleaded guilty on Dec. 5, 2013, for its involvement in the conspiracy, and was sentenced to pay a criminal fine of $71.3 million. Four other executives from Takata have pleaded guilty, have been sentenced to serve time in a U.S. prison and to pay criminal fines for their roles in the conspiracy.
Including Usuda, 50 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Usuda is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.
Monday, January 12, 2015
FINDINGS, SENTENCE DISAPPROVED IN TERRORISM CASE AGAINST NOOR UTHMAN MUHAMMED
FROM: U.S. DEFENSE DEPARTMENT
Release No: NR-013-15
January 09, 2015
Findings and sentence disapproved in US v. Noor Uthman Muhammed
On Jan. 9, pursuant to his authority under 10 U.S.C. § 950b, the convening authority for military commissions disapproved the findings and sentence, and dismissed the charges in the case of United States v. Noor Uthman Muhammed.
Muhammed, a native of Sudan, pled guilty in February 2011 at a military commission to providing material support for terrorism and conspiracy to provide material support for terrorism. A panel of military officers sentenced him to fourteen years confinement. In accordance with the provisions of a pretrial agreement, a previous convening authority granted a deferment of confinement effective Dec. 3, 2013.
Muhammed was repatriated from Guantanamo Bay, Cuba, to Sudan on Dec. 19, 2013.
Subsequent to his commission proceedings, decisions by the D.C. Circuit Court of Appeals in separate commissions cases established that it was legal error to try the offense of providing material support for terrorism before a military commission. The decisions of the D.C. Circuit are binding on commissions cases and the convening authority’s action to disapprove the findings and sentence in Muhammed’s case is required in the interests of justice and under the rule of law.
Release No: NR-013-15
January 09, 2015
Findings and sentence disapproved in US v. Noor Uthman Muhammed
On Jan. 9, pursuant to his authority under 10 U.S.C. § 950b, the convening authority for military commissions disapproved the findings and sentence, and dismissed the charges in the case of United States v. Noor Uthman Muhammed.
Muhammed, a native of Sudan, pled guilty in February 2011 at a military commission to providing material support for terrorism and conspiracy to provide material support for terrorism. A panel of military officers sentenced him to fourteen years confinement. In accordance with the provisions of a pretrial agreement, a previous convening authority granted a deferment of confinement effective Dec. 3, 2013.
Muhammed was repatriated from Guantanamo Bay, Cuba, to Sudan on Dec. 19, 2013.
Subsequent to his commission proceedings, decisions by the D.C. Circuit Court of Appeals in separate commissions cases established that it was legal error to try the offense of providing material support for terrorism before a military commission. The decisions of the D.C. Circuit are binding on commissions cases and the convening authority’s action to disapprove the findings and sentence in Muhammed’s case is required in the interests of justice and under the rule of law.
Tuesday, December 23, 2014
SEVEN DAY TRAIL ENDS WITH CONVICTION OF DOMINICAN DRUG TRAFFICKER
FROM: U.S. JUSTICE DEPARTMENT
Friday, December 19, 2014
Jury Convicts Dominican Drug Trafficker Following Seven-Day Trial
BOSTON – A Dominican man, who most recently resided in Salem, was convicted yesterday of participating in a North Shore drug trafficking conspiracy.
Jaime Aristy, a/k/a Junito, 29, was convicted following a seven-day jury trial for conspiracy to possess with intent to distribute and distribution of cocaine, a Schedule II controlled substance. In November 2012, Aristy was indicted. U.S. District Court Judge Denise J. Casper scheduled sentencing for March 25, 2015.
Aristy was one of eleven defendants charged with participation in a large-scale cocaine trafficking conspiracy between 2009 and 2012. The conspiracy included several members of the same family, including Jaime Aristy, who were involved in the distribution of multi-kilogram quantities of cocaine in Lynn, Salem, and Peabody. The investigation included court-authorized wiretaps as well as the seizure of kilograms of cocaine, more than $100,000 in currency, and drug paraphernalia used by the criminal organization. On Sept. 1, 2011, Aristy was arrested following a motor vehicle stop in Salem during which law enforcement officers recovered more than $93,000 in cash that was stashed in a shoe box on the back seat of the car, two cell phones used by the drug organization, and a drug ledger that reflected a series of drug transactions involving multiple kilograms of cocaine and tens of thousands of dollars.
The charging statute provides a sentence of no greater than 20 years in prison and a minimum of three years of supervised release. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; and Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division, made the announcement today. The Salem Police Department and the Massachusetts State Police also assisted with the investigation. The case was tried by Linda M. Ricci and David J. D'Addio of Ortiz’s Drug Task Force Unit.
Friday, December 19, 2014
Jury Convicts Dominican Drug Trafficker Following Seven-Day Trial
BOSTON – A Dominican man, who most recently resided in Salem, was convicted yesterday of participating in a North Shore drug trafficking conspiracy.
Jaime Aristy, a/k/a Junito, 29, was convicted following a seven-day jury trial for conspiracy to possess with intent to distribute and distribution of cocaine, a Schedule II controlled substance. In November 2012, Aristy was indicted. U.S. District Court Judge Denise J. Casper scheduled sentencing for March 25, 2015.
Aristy was one of eleven defendants charged with participation in a large-scale cocaine trafficking conspiracy between 2009 and 2012. The conspiracy included several members of the same family, including Jaime Aristy, who were involved in the distribution of multi-kilogram quantities of cocaine in Lynn, Salem, and Peabody. The investigation included court-authorized wiretaps as well as the seizure of kilograms of cocaine, more than $100,000 in currency, and drug paraphernalia used by the criminal organization. On Sept. 1, 2011, Aristy was arrested following a motor vehicle stop in Salem during which law enforcement officers recovered more than $93,000 in cash that was stashed in a shoe box on the back seat of the car, two cell phones used by the drug organization, and a drug ledger that reflected a series of drug transactions involving multiple kilograms of cocaine and tens of thousands of dollars.
The charging statute provides a sentence of no greater than 20 years in prison and a minimum of three years of supervised release. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Daniel J. Kumor, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; and Michael J. Ferguson, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division, made the announcement today. The Salem Police Department and the Massachusetts State Police also assisted with the investigation. The case was tried by Linda M. Ricci and David J. D'Addio of Ortiz’s Drug Task Force Unit.
Wednesday, December 17, 2014
HOMELAND SECURITY AGENT RECEIVES PRISON TERM FOR IMPEDING GOVERNMENT CORRUPTION INVESTIGATIONS
FROM: U.S. JUSTICE DEPARTMENT
Monday, December 15, 2014
Former Special Agent in Charge of the Department of Homeland Security's Office of Inspector General Sentenced to More Than Three Years in Prison
A former Special Agent in Charge of the Department of Homeland Security - Office of Inspector General (DHS-OIG) was sentenced to 37 months in prison today for a scheme to falsify records and obstruct an internal DHS-OIG inspection, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office. The sentence was imposed by U.S. District Judge Andrew S. Hanen of the Southern District of Texas.
“While leading an office responsible for investigating misconduct at other government agencies, Pedraza sought to impede and obstruct the investigation of his own office,” said Assistant Attorney General Caldwell. “Pedraza’s criminal conduct resulted in the premature closing of criminal cases without resolution, potentially endangering our national security and allowing others to escape justice. We will root out and prosecute corruption wherever it may be found, including within the ranks of federal law enforcement.”
Former DHS-OIG Special-Agent-in-Charge Eugenio Pedraza, 50, of McAllen, Texas, was found guilty following a four-day jury trial on March 14, 2014, of conspiring with three other special agents to falsify criminal investigative reports to impede an internal DHS-OIG inspection and obstruct the underlying criminal investigations. The jury also found Pedraza guilty of five counts of falsifying records.
DHS-OIG is responsible for investigating alleged criminal activity by DHS employees, including corruption by Customs and Border Protection (CBP) and Immigration and Customs Enforcement personnel affecting the integrity of the U.S. borders. Pedraza headed DHS-OIG’s McAllen Field Office (MCA) from January 2009 to January 2012.
According to evidence presented at trial, in September 2011, DHS-OIG conducted an internal inspection of the MCA to evaluate whether the agency’s investigative standards and policies were being followed. In anticipation of the internal inspection, Pedraza and at least three other DHS-OIG agents, including Special Agent Wayne Ball, engaged in a scheme to falsify investigative documents to make it appear that criminal investigations were being conducted in a timely fashion and in accordance with DHS-OIG standard operating procedures. The scheme’s purpose was to conceal severe lapses in DHS-OIG’s investigative standards and policies at the MCA and Pedraza’s failure to properly supervise agents and investigations. Court documents reflect that Pedraza, Ball, and other special agents wrote and signed false criminal investigative reports. Pedraza then approved the reports for inclusion in the official investigative case files.
For example, the evidence at trial showed that, at Pedraza’s direction, a special agent drafted false memoranda of activity (MOAs) to fill gaps of inactivity in a criminal investigation to which he was assigned. The criminal investigation had been initiated in March 2010 and concerned allegations that a CBP officer was assisting the unlawful smuggling of undocumented aliens and narcotics into the United States. Because the MOAs were intended to describe investigative activities that occurred when the drafting agent was either not present at the MCA or not employed by DHS-OIG at all, Pedraza directed the agent to attribute the investigative activity to Ball. Ball then signed and backdated the false MOAs. Pedraza also signed and backdated the false MOAs, which were then placed in the investigation’s case file in advance of the internal inspection. Upon discovery of the falsified reports, the criminal investigation had to be closed without resolution. According to evidence presented at trial, Pedraza similarly directed other special agents to falsify records related to at least four other criminal investigations.
On Jan. 17, 2013, Ball pleaded guilty to one count of conspiring with Pedraza and at least two other special agents to falsify records in federal investigations and obstruct an agency proceeding. Ball is scheduled to be sentenced on Jan. 7, 2015, by U.S. District Judge Hilda G. Tagle of the Southern District of Texas.
This case was investigated by the FBI’s San Antonio Field Office and is being prosecuted by Trial Attorneys Eric Gibson, Brian Kidd and J.P. Cooney of the Criminal Division’s Public Integrity Section.
Monday, December 15, 2014
Former Special Agent in Charge of the Department of Homeland Security's Office of Inspector General Sentenced to More Than Three Years in Prison
A former Special Agent in Charge of the Department of Homeland Security - Office of Inspector General (DHS-OIG) was sentenced to 37 months in prison today for a scheme to falsify records and obstruct an internal DHS-OIG inspection, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office. The sentence was imposed by U.S. District Judge Andrew S. Hanen of the Southern District of Texas.
“While leading an office responsible for investigating misconduct at other government agencies, Pedraza sought to impede and obstruct the investigation of his own office,” said Assistant Attorney General Caldwell. “Pedraza’s criminal conduct resulted in the premature closing of criminal cases without resolution, potentially endangering our national security and allowing others to escape justice. We will root out and prosecute corruption wherever it may be found, including within the ranks of federal law enforcement.”
Former DHS-OIG Special-Agent-in-Charge Eugenio Pedraza, 50, of McAllen, Texas, was found guilty following a four-day jury trial on March 14, 2014, of conspiring with three other special agents to falsify criminal investigative reports to impede an internal DHS-OIG inspection and obstruct the underlying criminal investigations. The jury also found Pedraza guilty of five counts of falsifying records.
DHS-OIG is responsible for investigating alleged criminal activity by DHS employees, including corruption by Customs and Border Protection (CBP) and Immigration and Customs Enforcement personnel affecting the integrity of the U.S. borders. Pedraza headed DHS-OIG’s McAllen Field Office (MCA) from January 2009 to January 2012.
According to evidence presented at trial, in September 2011, DHS-OIG conducted an internal inspection of the MCA to evaluate whether the agency’s investigative standards and policies were being followed. In anticipation of the internal inspection, Pedraza and at least three other DHS-OIG agents, including Special Agent Wayne Ball, engaged in a scheme to falsify investigative documents to make it appear that criminal investigations were being conducted in a timely fashion and in accordance with DHS-OIG standard operating procedures. The scheme’s purpose was to conceal severe lapses in DHS-OIG’s investigative standards and policies at the MCA and Pedraza’s failure to properly supervise agents and investigations. Court documents reflect that Pedraza, Ball, and other special agents wrote and signed false criminal investigative reports. Pedraza then approved the reports for inclusion in the official investigative case files.
For example, the evidence at trial showed that, at Pedraza’s direction, a special agent drafted false memoranda of activity (MOAs) to fill gaps of inactivity in a criminal investigation to which he was assigned. The criminal investigation had been initiated in March 2010 and concerned allegations that a CBP officer was assisting the unlawful smuggling of undocumented aliens and narcotics into the United States. Because the MOAs were intended to describe investigative activities that occurred when the drafting agent was either not present at the MCA or not employed by DHS-OIG at all, Pedraza directed the agent to attribute the investigative activity to Ball. Ball then signed and backdated the false MOAs. Pedraza also signed and backdated the false MOAs, which were then placed in the investigation’s case file in advance of the internal inspection. Upon discovery of the falsified reports, the criminal investigation had to be closed without resolution. According to evidence presented at trial, Pedraza similarly directed other special agents to falsify records related to at least four other criminal investigations.
On Jan. 17, 2013, Ball pleaded guilty to one count of conspiring with Pedraza and at least two other special agents to falsify records in federal investigations and obstruct an agency proceeding. Ball is scheduled to be sentenced on Jan. 7, 2015, by U.S. District Judge Hilda G. Tagle of the Southern District of Texas.
This case was investigated by the FBI’s San Antonio Field Office and is being prosecuted by Trial Attorneys Eric Gibson, Brian Kidd and J.P. Cooney of the Criminal Division’s Public Integrity Section.
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