LOCKHEED MARTIN SETTLES WITH U.S. OVER ALLEGED INFLATED COSTS FOR AIRCRAFT TOOLS

The following excerpt is from the U.S. Department of Justice website:
Friday, March 23, 2012
Lockheed Martin Corporation Reaches $15.85 Million Settlement with U.S. to Resolve False Claims Act AllegationsU.S. Alleges Lockheed Subcontractor Inflated Costs for Military Aircraft Tools That Were Passed on to Government
WASHINGTON – Lockheed Martin Corporation has agreed to pay $15,850,000 to settle allegations that it mischarged perishable tools used on numerous government contracts, the Department of Justice announced today.  Lockheed Martin, headquartered in Bethesda, Md., is one of the world’s largest defense contractors.

Today’s settlement resolves allegations that the government was overcharged as a result
of a seven-year pricing scheme by Tools & Metals Inc. (TMI), a subcontractor that sold perishable tools to Lockheed Martin for use on military aircraft, including the F-22 and the F-35 fighter jets.  Specifically, the government alleged that TMI inflated the costs of these tools between 1998 and 2005, and that Lockheed Martin passed these costs on to the United States under its various contracts with the government.  On Dec. 8, 2005, Todd B. Loftis, a former president of TMI, pleaded guilty and was sentenced to seven years in prison in connection with his role in TMI’s scheme.

The United States subsequently brought civil claims against Lockheed Martin under the False Claims Act, alleging that Lockheed Martin contributed to the inflated amounts paid by the United States in connection with TMI’s pricing scheme.  Specifically, the government alleged that Lockheed Martin acted recklessly by failing to adequately oversee TMI’s charging practices and by mishandling information revealing these practices. These allegations are the subject of today’s settlement between the United States and Lockheed Martin.

“It is troubling that a large defense contractor with long-established contractual ties with the United States failed to undertake appropriate measures to ensure the integrity and validity of the costs it submitted to the United States,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
“This settlement demonstrates the government’s commitment to devoting the necessary resources to protect taxpayer funds from the most complex mischarging schemes,” stated Sarah R. Saldaña, U.S. Attorney for the Northern District of Texas.

Today’s settlement also settles two qui tam, or whistleblower, actions brought under the whistleblower  provisions of the False Claims Act and consolidated in the U.S. District Court in Dallas.  The case is captioned U.S. ex rel. Becker, et al. v. Tools & Metals, Inc., et al., Civil Action No. 3:05-CV-0627-L.

Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the recovery.  The whistleblowers in the two cases resolved by the settlement, Robert Spencer and John Becker, will split a $2 million share of the government’s recovery.

This matter was jointly handled by the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency, the Contract Integrity Offices of the Departments of the Air Force and the Navy, the Defense Contract Management Agency, the Department of Justice's Civil Division and the U.S. Attorney's Office for the Northern District of Texas.

ATTORNEY GENERAL HOLDER COMMENTS ON INTER-AGENCY TASK FORCE MANDATE TO COMBAT HUMAN TRAFFICKING

The following excerpt is from the U.S. Department of Justice website:  
Today Attorney General Eric Holder joined members of the president’s cabinet and other senior advisors at the White House for a meeting of the Interagency Task Force to Monitor and Combat Trafficking in Persons.
Speaking at the meeting, the Attorney General said:
For the Department of Justice, our commitment to preventing human trafficking, bringing traffickers to justice, and assisting victims has never been stronger – and our approach has never been more effective. Our work has sent a clear and critical message: that, in this country – and under this Administration – human trafficking crimes will not be tolerated. I’m proud to report that, this past year, we charged nearly 120 defendants – a record number – in human trafficking cases. And, over the last three years, we’ve achieved significant increases in human trafficking prosecutions – including a rise of more than 30 percent in the number of forced labor and adult sex trafficking prosecutions.

This work has saved lives, ensured freedom, and restored dignity to women, men, and children in virtually every corner of the country. We’ve liberated scores of victims; secured long prison sentences against individual traffickers; and dismantled large, transnational organized criminal enterprises.

The Department of Justice’s comprehensive approach to prevent human trafficking involves the work of many offices. That’s why the Attorney General formed the Anti-Trafficking Coordination Team – or “ACTeam” – Initiative, an interagency collaboration among the Departments of Justice, Homeland Security, and Labor aimed at streamlining federal criminal investigations and prosecutions of human trafficking offenses.
The scourge of human trafficking goes beyond our borders. The Department of Justice continues to work closely with our international counterparts. For instance, we’ve advanced the U.S.-Mexico Human Trafficking Bilateral Enforcement Initiative, in collaboration with DHS and Mexican law enforcement counterparts, to develop high-impact bilateral investigations and prosecutions to dismantle international human trafficking networks, resulting in landmark convictions in coordinated prosecutions under both U.S. and Mexican law.

Department officials have also shared their expertise and helped to train hundreds of prosecutors, investigators and law enforcement officials in partner countries abroad through our International Criminal Investigative Training Assistance Program (ICITAP). ICITAP supported the international anti-human trafficking effort through program activities in seven countries on three continents.

In addition to ensuring those who perpetuate these crimes are found and brought to justice, the department’s anti-trafficking grant programs, training and technical assistance initiatives continue to support communities in building capacity to combat human trafficking and assist victims.

These programs take a multidisciplinary approach to human trafficking prevention and encourage close partnerships among federal prosecutors, state and local law enforcement, victim service providers, and other federal partners, including the FBI, U.S. Immigration and Customs Enforcement (ICE), U.S. Customs and Border Protection, U.S. Citizenship and Immigration Services, and the Departments of Health and Human Services, Labor, and State.

Supplementing training and grant programs are resources like the Anti-Human Trafficking Task Force Strategy and Operations eGuide, a comprehensive online resource to assist anti-trafficking task forces in establishing, strengthening, and operating multidisciplinary response teams to identify and assist trafficking victims across the country.

To better understand trafficking, the National Institute of Justice continues to expand its research portfolio to understand how and why trafficking occurs, how to best help victims and examine the reasons why these crimes go under-reported in the United States.

FORMER FDA CHEMIST GOES TO PRISON FOR INSIDE TRADING

The following excerpt  is from the Department of Justice website:

Monday, March 5, 2012
“Former FDA Chemist Sentenced to 60 Months in Prison for Insider Trading
WASHINGTON – Cheng Yi Liang, a former Food and Drug Administration (FDA) chemist from Gaithersburg, Md., was sentenced today to 60 months in prison for engaging in insider trading on multiple occasions based on material, non-public information he obtained in his capacity as an FDA scientist.  Liang was previously ordered to forfeit $3.7 million representing the proceeds of the insider trading scheme.

The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Specials Investigations Branch.

“Taking advantage of his special access as a chemist at the FDA, Mr. Liang used sensitive inside information to reap illegal profits in the pharmaceutical securities market,” said Assistant Attorney General Breuer.  “For years, he exploited his position in the agency to make easy money on the stock market.  But today’s sentence shows that easy money has consequences.  Investors engage in insider trading at their peril.”

 “Cheng Yi Liang bought and sold stocks based on non-public information, and he tried to conceal his crimes by using the names of friends and relatives,” said U.S. Attorney Rosenstein.  “Mr. Liang violated his duty of loyalty to the FDA and profited from inside information.”

“Liang brazenly sought to profit based on sensitive, insider information.  What he didn’t know is that investigators have been utilizing sophisticated technical tools to identify and track criminal behavior,” said Special Agent in Charge Malone of HHS-OIG.  “We will continue to insist that federal government employee conduct be held to the highest of standards.”

“Mr. Liang breached the trust of his employment by obtaining sensitive information and using it for his own profit,” said Assistant Director in Charge McJunkin.  “Together with our partner agencies, the FBI will continue to pursue and hold accountable those who perpetrate such financial crimes, as we work to protect American taxpayers and our financial markets.”

Liang, 58, was sentenced by U.S. District Judge Deborah K. Chasanow in the District of Maryland.  He pleaded guilty on Oct. 18, 2011, to one count of securities fraud and one count of making false statements.

According to court documents, Liang had been employed as a chemist since 1996 at the FDA’s Office of New Drug Quality Assessment (NDQA).  Through his work at NDQA, Liang had access to the FDA’s password protected internal tracking system for new drug applications, known as the Document Archiving, Reporting and Regulatory Tracking (DARRTS) system.  FDA uses DARRTS to manage, track, receive and report on new drug applications.  Liang reviewed DARRTS for information relating to the progression of experimental drugs through the FDA approval process.  Much of the information accessible on the DARRTS system constituted material, non-public information regarding the pharmaceutical companies that had submitted their experimental drugs to the FDA for review.
In his plea, Liang admitted that between in or about July 2006 and in or about March 2011, using material, non-public information from DARRTS and other sources, he traded in the securities of pharmaceutical companies in violation of the duties of trust and confidence he owed the FDA.  Liang utilized accounts of relatives and acquaintances, including his son, to execute the trades.  When the FDA insider information about a company’s product was positive, Liang purchased securities through the accounts he controlled.  When the FDA insider information was negative, Liang would sell short a company’s stock.  After the FDA’s action with respect to a drug was made public, Liang executed trades to profit from the change in the company’s share price as a result of the FDA announcement, resulting in total profits gained and losses avoided of $3,776,152.
During the time he was employed by the FDA, Liang was required to file a confidential financial disclosure form, disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200.  During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using various brokerage accounts under his control or his income from the illicit securities trading.   For example, on Feb. 16, 2010, Liang signed and submitted the 2010 confidential financial disclosure form, failing to disclose that during 2009 he earned approximately $1,040,000 from trading on material, non-public information obtained from the FDA.

In related actions, the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) filed a civil complaint in the District of Maryland for forfeiture of proceeds related to the insider trading scheme.  To date, the government has obtained over $1 million through the civil forfeiture of nine bank and brokerage accounts.  The forfeiture of two real properties – a house and a condominium in Montgomery County, Md. – is still pending.  Liang previously consented to the entry of final judgment as to the U.S. Securities and Exchange Commission’s (SEC) civil enforcement action against him, also in the District of Maryland.

This case is being prosecuted by Trial Attorneys Kevin Muhlendorf and Thomas Hall of the Criminal Division’s Fraud Section, Assistant U.S. Attorney David Salem for the District of Maryland, and AFMLS Senior Trial Attorney Pamela J. Hicks and Trial Attorney Jennifer Ambuehl.  The case was investigated by the FBI’s Washington Field Office and the HHS-OIG. The department acknowledges the substantial assistance of the SEC, in particular its Market Abuse Unit, which referred the matter to the Criminal Division’s Fraud Section.

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

"CRAMMING" HOW CROOKS CHARGE ITEMS ON PHONE BILLS JUST LIKE A STOLEN CREDIT CARD

The following excerpt is from the Department of Justice website:

February 22nd, 2012 Posted by Tracy Russo
The following post appears courtesy of Richard Goldberg, Assistant Director of the Civil Division’s Consumer Protection Branch.

Did you know that your telephone bills may contain charges for products or services other than telephone service, much like charges on a credit card?  Those who carry out these types of fraud have found ways to insinuate themselves onto the telephone billing system, and arrange for false charges to appear on telephone bills.  As a result, you could be paying for goods or services you never ordered or received.

“Cramming” is the practice of placing unauthorized, misleading or deceptive charges on a telephone bill.  The perpetrators tend to keep crammed charges small, to increase the likelihood that you will pay your bill without noticing the false charges.  They do this on both consumer and business telephone bills, on landline and wireless bills.

The Consumer Protection Branch in the Justice Department’s Civil Division is working hard to prosecute these criminals.  But individuals are really the front line in the battle against cramming and in the best position to notice these false charges.  Crammed charges may appear on any page of a telephone bill, so you should carefully review your bill on a monthly basis.

 If you see unfamiliar or suspicious charges on your telephone bill, you should:
 Contact your local telephone company, tell the telephone company of the cramming, and instruct the company to remove the false charge and give a credit for false charges on any previous bills, and
Submit a complaint summarizing the false charges to the Federal Trade Commission.
Many telephone companies will, upon request, exclude third-party billing from a customer’s telephone bill.  Doing so may prevent crammed charges from appearing on telephone bills in the future. "