DEBT COLLECTOR AND SON-IN-LAW RECEIVE PRISON TIME FOR IDENTITY THEFT

FROM: U.S. JUSTICE DEPARTMENT
Monday, November 4, 2013
Debt Collection Employee and Son-in-Law Sent to Prison for Identity Theft Tax Scheme

Quentin Collick of Montgomery, Ala., and Deatrice Williams of Duluth, Ga., were sentenced Nov. 1, 2013, to serve 85 and 51 months in prison, respectively, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  Collick and Williams were previously found guilty by a jury in the Middle District of Alabama of conspiring to file false claims, wire fraud, and aggravated identity theft.  Collick was also convicted of three counts of theft of public funds.  Corey Thompson, a co-conspirator, previously pleaded guilty and was sentenced to serve 30 months in jail.

Based on evidence introduced at trial and court filings, Williams worked for a debt collection company located in Norcross, Ga.  As an employee, Williams had access to a database that stored names, social security numbers and dates of birth of individuals who owed medical debts.  Williams stole the identities of a number of these individuals and provided the stolen information to Collick, her son-in-law.

Collick and Thompson used stolen identities to file false tax returns and fraudulently claim tax refunds.  In 2011 and 2012, Thompson worked as an independent contractor for a cable company installing cable and internet access for customers.  To conceal the filing of the false tax returns, Thompson used his specialized knowledge and equipment to shut down and hijack his customers’ internet service, and along with Collick, filed false tax returns using the customers’ internet access, making it appear as if the false tax returns were being filed by the customers.  Thompson and Collick then directed the tax refunds to be placed on pre-paid debit cards, which were mailed to Montgomery, Ala.  However, those cards were intercepted by the U.S. Postal Service.  Several tax refund checks were also mailed by the IRS, based upon the fraudulent returns, which Collick retrieved and cashed.

This case was investigated by special agents of IRS - Criminal Investigation and prosecuted by Tax Division Trial Attorneys Michael Boteler, Jason H. Poole and Alexander Effendi

MARKETERS CHARGED BY FTC WITH DECEIVING BUSINESSES INTO PURCHASING CREDIT/DEBIT CARD PROCESSING FEES

FROM:  FEDERAL TRADE COMMISSION 
FTC Charges Marketers with Deceiving Small Businesses into Buying Credit/Debit Card Processing Services and Equipment

The Federal Trade Commission has charged an operation that sells credit and debit card payment processing services to small businesses with violating federal law.  The defendants allegedly made false and unsubstantiated claims and failed to disclose material facts to storefront businesses and sole proprietorships before they applied for services and equipment to process credit and debit card payments.  The FTC seeks to halt the allegedly illegal practices and return money to victims.

The defendants are Merchant Services Direct LLC (MSD), also doing business as Sphyra Inc.; Boost Commerce Inc.; Generation Y Investments LLC; Kyle Lawson Dove; and Shane Patrick Hurley.  The Washington State Attorney General’s Office has simultaneously filed an action against these defendants in the Superior Court for Spokane County, Washington.

According to the FTC’s complaint, as an “independent sales organization” (ISO), MSD sells to small local businesses the ability to accept credit and debit card payments.   The businesses pay fees whenever their customers pay with a credit or debit card.

As alleged in the complaint, MSD sales agents typically call small businesses and lead them to believe they are associated with the businesses’ current card processor, Visa or MasterCard, or their bank.  The sales agents allegedly promise substantial savings on credit and debit card processing.  They specify a much lower rate than the businesses currently pay, and quote one fee, a fixed per-transaction cost, without mentioning all the other fees the businesses will have to pay.  Merchants who ask if there are other fees allegedly are told there are none.

According to the FTC’s complaint, MSD agents also dupe customers into leasing new card processing terminals for two to four years, falsely claiming their current “swipe” terminals are outdated or incompatible with its services.  Sometimes they even claim the terminals are free.  Agents persuade merchants to sign fine-print, binding contracts on the spot by telling them the documents are merely applications – a ruse made easier, according to the FTC, by the fact that the contracts are labeled “applications.”  Merchants are often falsely told they can cancel any time.  Many victims discover their new lease obligation only after being billed, still owing the balance of their previous lease, which can be thousands of dollars.

Defendants also tout on various versions of their website “Guaranteed Lowest Rates,” claiming merchants could “save 30%” with “whole sale [sic] processing” or have “anywhere from 20% to 30% savings when switching to” MSD.  In fact, according to the FTC, there are no wholesale rates, as third parties process card payments, not MSD.   As alleged in the complaint, those who call MSD’s customer service department reach employees who either do not help them or say they will waive fees or provide refunds but don’t.  Customers who were promised they could cancel the “applications” they signed with no penalty are charged substantial cancellation fees, according to the FTC’s complaint.  Generally, only in response to complaints filed with the Better Business Bureau and state attorneys general have the defendants refunded money or waived fees.

The Commission vote authorizing the staff to file the complaint was 4-0.  The complaint was filed in the U.S. District Court for the Eastern District of Washington.  In addition to filing the lawsuit, the FTC has sought a court order immediately halting the unlawful practices along with an order freezing the defendants’ assets and appointing a receiver over the corporate defendants.

The FTC acknowledges the assistance of the Washington State Attorney General’s Office and the Better Business Bureau of Eastern Washington, North Idaho, and Montana.

NOTE:  The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.  The case will be decided by the court.

U.S. JOINS LAWSUIT AGAINST LANCE ARMSTRONG AND OTHERS



FROM: U.S. DEPARTMENT OF JUSTICE

Friday, February 22, 2013
United States Joins Lawsuit Alleging Lance Armstrong and Others Caused the Submission of False Claims to the U.S. Postal Service

The Department of Justice announced today that the government has joined a civil lawsuit alleging that Lance Armstrong, Johan Bruyneel and Tailwind Sports LLC and Tailwind Sports Corporation (Tailwind) submitted or caused the submission of false claims to the U.S. Postal Service (USPS) in connection with its sponsorship of a professional bicycle racing team by regularly employing banned substances and methods to enhance their performance, in violation of the USPS sponsorship agreements.

From 1996 through 2004, the USPS sponsored a professional cycling team owned by Tailwind and its predecessors. Lance Armstrong was the lead rider on the team, and between 1999 and 2004, he won six consecutive Tour de France titles as a member of the USPS-sponsored team. Johan Bruyneel was the directeur sportif, or manager, of the cycling team.

The sponsorship agreements gave the USPS certain promotional rights, including the right to prominent placement of the USPS logo on the cycling team’s uniform. Each of the agreements required the team to follow the rules of cycling’s governing bodies, which prohibited the use of certain performance enhancing substances and methods. Between 2001 and 2004 alone, the Postal Service paid $31 million in sponsorship fees.

The lawsuit joined today by the government alleges that riders on the USPS-sponsored team, including Armstrong, knowingly caused the USPS agreements to be violated by regularly employing banned substances and methods to enhance their performance. The lawsuit further alleges that Bruyneel knew that team members were using performance enhancing substances and facilitated the practice.

The government today notified the court that it is joining this lawsuit against Armstrong, Bruyneel and Tailwind, and will file its formal complaint within 60 days.

"The Postal Service contract with Tailwind required the team to enter cycling races, wear the Postal Service logo, and follow the rules banning performance enhancing substances – rules that Lance Armstrong has now admitted he violated," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. "Today’s action demonstrates the Department of Justice’s steadfast commitment to safeguarding federal funds and making sure that contractors live up to their promises."

"Lance Armstrong and his cycling team took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules – including the rules against doping," said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. "The Postal Service has now seen its sponsorship unfairly associated with what has been described as ‘the most sophisticated, professionalized, and successful doping program that sport has ever seen.’ This lawsuit is designed to help the Postal Service recoup the tens of millions of dollars it paid out to the Tailwind cycling team based on years of broken promises. In today’s economic climate, the U.S. Postal Service is simply not in a position to allow Lance Armstrong or any of the other defendants to walk away with the tens of millions of dollars they illegitimately procured."

"The Postal Service conducts business with many different contractors and subcontractors, with a large majority of them providing a much needed service and fulfilling their contractual duties. It is critical that public confidence in contractor performance remains high. When that public trust is compromised, as occurred in this case, the Office of Inspector General will fully investigate," said David C. Williams, Inspector General, U.S. Postal Service, and Office of Inspector General.

"The Postal Service strongly supports intervention by the Department of Justice in this matter and a vigorous pursuit of this case," said Postal Service General Counsel and Executive Vice President Mary Anne Gibbons. "The defendants agreed to play by the rules and not use performance enhancing drugs. We now know that the defendants failed to live up to their agreement, and instead knowingly engaged in a pattern of activity that violated the rules of professional cycling and, therefore, violated the terms of their contracts with the Postal Service. For that reason, the Postal Service fully agrees with the decision by the Department of Justice to seek appropriate damages under the False Claims Act."

For many years, including during the USPS sponsorships, Armstrong and others repeatedly denied that the team used performance enhancing substances or methods. Yet on Oct. 10, 2012, the U.S. Anti-Doping Agency (USADA) issued a report concluding that Armstrong used banned performance enhancing substances starting in at least 1998 and continuing throughout his professional career, and that he pressured and helped his teammates to engage in similar conduct. Accordingly, USADA disqualified all of his competitive results since Aug. 1, 1998, including his seven Tour de France victories, and banned him from sport for life pursuant to the World Anti-Doping Code.

In a recently-televised interview with Oprah Winfrey, Armstrong contradicted his earlier denials and admitted that he used banned substances and methods throughout his career, starting in the mid-1990s. In particular, he admitted having engaged in banned practices during each of his seven Tour de France victories, including the six he won as a USPS rider. Armstrong explained that he avoided detection by anti-doping authorities by carefully timing his use of banned drugs so that they would leave his system prior to his undergoing cycling’s required periodic drug testing.

The lawsuit joined by the United States was filed by Floyd Landis, a former rider and teammate of Armstrong on the USPS sponsored team from 2002 through 2004. The lawsuit was filed under the False Claims Act, which imposes liability on those who submit false claims for government funds, and provides for the recovery of three times the government’s damages, plus civil penalties. The False Claims Act contains a qui tam or whistleblower provision, which permits private parties to sue on behalf of the United States for false claims and share in any recovery. The False Claims Act permits the government to investigate the allegations and intervene, or decline to intervene in the whistleblower’s lawsuit. While the government notified the court that it was joining the lawsuit’s allegations as to Armstrong, Bruyneel, and Tailwind, it advised the court that it was not intervening in the case as to several other defendants named in the complaint.

Principal Deputy Assistant Attorney General Delery and U.S. Attorney Machen commended the coordinated effort of the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Columbia, and the USPS Office of Inspector General and Office of General Counsel, in their investigation of this matter.

The lawsuit, filed in the U.S. District Court for the District of Columbia, is captioned United States ex rel. Landis v. Tailwind Sports Corporation, et al. The claims made in the complaint are only allegations and do not constitute a determination of liability. Trial Attorney Robert Chandler of the Department of Justice’s Civil Division and Assistant U.S. Attorneys Darrell Valdez and Mercedeh Momeni of the U.S. Attorney’s Office for the District of Columbia are representing the government.

U.S. SUES KBR AND KUWAITI SUBCONTRACTOR FOR FALSE CLAIMS ON CONTRACTS IN IRAQ

FROM: U.S. DEPARTMENT OF JUSTICE

Monday, November 19, 2012
United States Sues Houston-based KBR and Kuwaiti Subcontractor for False Claims on Contracts to House American Troops in Iraq

The government’s complaint arises from the Bed Down Mission, a push to replace the tents used to house soldiers during the early days of the war with trailers, also called living containers. KBR performed many of the services required under LOGCAP III, including the Bed Down Mission, through foreign and domestic subcontractors. According to the complaint, KBR awarded a subcontract to First Kuwaiti on Oct. 16, 2003, to supply, transport and install 2,252 living containers at Camp Anaconda in Iraq for about $80 million. The government alleges that First Kuwaiti was required to complete delivery and installation of the trailers at Camp Anaconda by Dec. 15, 2003. The government further alleges that in July 2004, First Kuwaiti presented two claims to KBR contending that government-caused delays in providing military escorts for convoys into Iraq entitled the company to an increase in the contract price to cover its increased costs. According to the complaint, KBR agreed to pay First Kuwaiti an additional $48.8 million and passed that cost on to the United States.

The government’s complaint alleges that First Kuwaiti knowingly inflated its crane and truck costs, among other items, and misrepresented the cause of its delays. The complaint further alleges that KBR charged these costs to the United States knowing they were improper.

"We depend on companies like KBR to provide valuable noncombat services to our military such as housing and feeding our troops," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. "We will en sure that contractors live up to their promises, and are not permitted to profit at the expense of the taxpayers at home who are supporting our men and women in uniform."

"When dealing with the government, just like dealing with anyone else, it’s important to give an honest account," said Jim Lewis, U.S. Attorney for the Central District of Illinois. "The facts alleged in the complaint indicate that KBR and First Kuwaiti did not provide an honest accounting."

The United States is suing KBR and First Kuwaiti under the False Claims Act. The act holds persons responsible for presenting, or causing to be presented, claims for gov ernment money or property they know are false. The statute entitles the government to recover three times its damages, plus a $5,500 to $11,000 civil penalty for each false claim.

The United States is also suing KBR under the antifraud section of the Contract Disputes Act and for breach of contract. The Contract Disputes Act establishes liability for contractors who certify that they are entitled to money under a contract, if any part of their claim is unsupported due to a misrepresentation of fact or fraud. Under the Contract Disputes Act, the government may recover the false and unsupported part of the claim, plus its costs of review.

This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Central District of Illinois; and the Defense Contract Audit Agency, the Defense Criminal Investigative Service, and the Defense Contract Management Agency of the Department of Defense. The claims asserted against KBR and First Kuwaiti in the United States’ complaint are allegations only and there has been no determination of liability.

The lawsuit was filed in the Central District of Illinois and is captioned United States v. Kellogg, Brown & Root Services, Inc., et al.

The United States has filed a civil complaint against Kellogg, Brown & Root Services Inc. (KBR) and First Kuwaiti Trading Company for submitting inflated claims for the delivery and installation of trailers to house troops in Iraq, the Justice Department announced today. KBR is headquartered in Houston. First Kuwaiti, a KBR subcontractor, is based in Kuwait.

KBR is the Army’s primary contractor for logistical support in Iraq. On Dec. 14, 2001, t he Army awarded KBR the LOGCAP III contract, the third generation of contracts under the Army’s Logistics Civil Augmentation Program (LOGCAP) since the program’s inception in the 1980s. LOGCAP III required KBR to provide logistical support in the military theater whenever and wherever it was needed. Support included services such as transportation, dining services, facilities management, maintenance and living accommodations for United States and coalition forces. LOGCAP III was originally awarded to Brown and Root Services, a division of KBR. The United States has paid KBR tens of billions of dollars for logistical support services since awarding the contract.