FORMER SENIOR EXEC AT QUALCOMM SENTENCED FOR INSIDER TRADING

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 26, 2015
Former Senior Executive of Qualcomm Sentenced to 18 Months and Fined $500,000 for Insider Trading and Money Laundering
The former Executive Vice President and President of Global Business Operations for Qualcomm Inc., was sentenced today to 18 months in prison and fined $500,000 for his role in a three-year insider trading scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California made the announcement.

“Through his position as a high-ranking executive at Qualcomm, Jing Wang gained unique access to information about the company’s earnings and intended acquisitions and illegally exploited that inside information for personal gain,” said Assistant Attorney General Caldwell.  “He then enlisted the services of others – his stock broker and his brother – to cover up the scheme.  This prosecution demonstrates the Criminal Division’s commitment to holding accountable corporate executives who would undermine the integrity of the financial marketplace.”

“Jing Wang was a powerful insider at one of the world’s top corporations – but he threw it all away to make a few hundred thousand dollars,” said U.S. Attorney Duffy. “While Wang has lost his power, his position and his freedom, the real losers here are investors who play by the rules, and our nation’s financial system, which is diminished with every one of these schemes.”

Jing Wang, 52, of Del Mar, California, pleaded guilty in July 2014 to insider trading, money laundering and obstruction of justice for orchestrating a multi-year scheme to trade on the confidential information of Qualcomm and cover up his criminal conduct.  The sentence was imposed by U.S. District Judge William Q. Hayes of the Southern District of California.

In connection with his plea, Wang admitted that he made three, separate insider trades using a brokerage account in the name of his British Virgin Island (BVI) shell company, Unicorn Global Enterprises.  First, in early 2010, prior to Qualcomm’s announcement of a dividend increase and stock repurchase, Wang bought company stock valued at approximately $277,000.  He also admitted that, in December 2010, while attending Qualcomm’s Board of Directors meeting in Hong Kong, and hours after the Board approved a non-public offer to purchase Atheros, a developer of semiconductors for wireless communications, Wang purchased stock in Atheros.  Wang further admitted that, just a few weeks later, he directed his stockbroker, Gary Yin, to sell the Atheros stock, for approximately $481,000, and purchase Qualcomm stock one day before the company announced record earnings.

Wang also pleaded guilty to money laundering for transferring the illegal proceeds from Unicorn’s account to an account of a new BVI shell company he controlled.  He further admitted to obstructing justice by creating a false cover story in which he and co-conspirator Yin would blame Wang’s brother Bing Wang, who resides in rural China, for the insider trading and ownership of the Unicorn Account.  Among other acts, Wang collected incriminating evidence and provided it to Yin to take to China, and arranged meetings between Yin and Bing Wang during which the two rehearsed the false account.                                                                                              

Yin pleaded guilty to conspiring to obstruct justice and launder money, and currently is scheduled to be sentenced on July 17, 2015.  Bing Wang has been charged in connection with the scheme, and is wanted on an international arrest warrant.

This case was investigated by the FBI’s San Diego Field Office and the Internal Revenue Service-Criminal Investigation’s San Diego Field Division.  The SEC’s Los Angeles Regional Office provided substantial assistance.  The case is being prosecuted by Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eric J. Beste of the Southern District of California.

FORMER FBI AGENT INDICTED FOR ALLEGEDLY STEALING DRUG PROCEEDS AND OBSTRUCTING JUSTICE

FROM:  U.S. JUSTICE DEPARTMENT
Thursday, June 4, 2015
Former FBI Special Agent Indicted for Theft of Drug Proceeds and Obstruction of Justice

A former special agent of the FBI was indicted yesterday for allegedly stealing over $100,000 of drug proceeds seized during the execution of search warrants and obstructing justice by taking steps to hide his alleged theft.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Angel D. Gunn of the Justice Department’s Office of the Inspector General’s Los Angeles Field Office made the announcement.

“As alleged, former Agent Bowman put his own greed above the trust placed in him by the FBI and the American public,” said Assistant Attorney General Caldwell.  “Corrupt law enforcement agents not only compromise those investigations in which they are involved, but also damage the reputations of fellow law enforcement officers who are dedicated to public service and the protection of all Americans.”

Scott M. Bowman, 44, of Moreno Valley, California, was charged in the Central District of California with three counts of conversion of property by a federal employee, three counts of obstruction of justice, two counts of money laundering, one count of falsification of records and one count of witness tampering.

According to allegations in the indictment, which was unsealed today, Bowman misappropriated over $100,000 of drug proceeds seized in June and August 2014 during the execution of three search warrants.  The defendant allegedly misappropriated these funds after they were transferred to his custody in his official capacity as a federal law enforcement officer.

The indictment alleges that Bowman used the stolen money for his own purposes, including spending $43,850 in cash to purchase a 2012 Dodge Challenger coupe, $27,500 in cash to purchase a 2013 Toyota Scion FR-S coupe and approximately $26,612 in cash to outfit these vehicles with new equipment including speakers, rims and tires.  According to the allegations in the indictment, the defendant also used approximately $15,000 of the misappropriated cash to pay for cosmetic surgery for his spouse, and opened a checking account into which he deposited approximately $10,665 of the stolen funds, a portion of which he used to pay for a weekend stay at a luxury hotel, casino and resort in Las Vegas, Nevada.

According to the indictment, to conceal his misappropriation of the drug proceeds, Bowman allegedly falsified official FBI reports and other records.  Specifically, in connection with one of the seizures, Bowman allegedly endorsed an evidence receipt knowing that it did not accurately reflect the amount of cash seized and altered the same receipt by forging the signature of a police detective next to his own.

The indictment further alleges that Bowman made false representations to his colleagues regarding the disposition of certain seized drug proceeds.  In addition, Bowman allegedly sent an email to the detective whose signature Bowman had forged setting forth a detailed cover story that the detective should offer if asked about Bowman’s activities with respect to the seized drug proceeds.  According to the indictment, Bowman also allegedly provided the detective with a copy of the forged receipt so that the detective falsely could claim the forged signature as his own, if asked.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

This case was investigated by the Department of Justice Office of the Inspector General and is being prosecuted by Trial Attorneys Robert J. Heberle and Lauren Bell of the Criminal Division’s Public Integrity Section.

POLYGRAPH COMPANY OWNER PLEADS GUILTY TO TRAINING CUSTOMERS TO LIE DURING POLYGRAPH EXAMS

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, May 13, 2015
Owner of ‘Polygraph.Com’ Pleads Guilty to Training Customers to Lie During Federally Administered Polygraph Examinations

A former Oklahoma City law enforcement officer and owner of “Polygraph.com” pleaded guilty today to obstruction of justice and mail fraud for training customers to lie and conceal crimes during polygraph examinations.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Assistant Commissioner Anthony Triplett of U.S. Customs and Border Protection’s Office of Internal Affairs and Special Agent in Charge James E. Finch of the Federal Bureau of Investigation’s (FBI) Oklahoma City Field Office made the announcement.

“Lying, deception and fraud cannot be allowed to influence the hiring of national security and law enforcement officials, particularly when it might affect the security of our borders,” said Assistant Attorney General Caldwell.  “Today’s conviction sends a message that we pursue those who attempt to corrupt law enforcement wherever and however they may try to do so.”

Douglas Williams, 69, of Norman, Oklahoma, pleaded guilty to a five-count indictment charging him with mail fraud and obstruction.  Williams was indicted on Nov. 14, 2014, in the Western District of Oklahoma.

According to admissions made in connection with his plea, Williams, the owner and operator of “Polygraph.com,” marketed his training services to people appearing for polygraph examinations before federal, state and local law enforcement agencies and federal intelligence agencies, as well as people required to take polygraph examinations under the terms of their parole or probation.

Williams further admitted that he trained an individual posing as a federal law enforcement officer to lie and conceal involvement in criminal activity from an internal agency investigation.  Williams also admitted to having trained a second individual posing as an applicant seeking federal employment to lie and conceal crimes in a pre-employment polygraph examination.  Williams, who was paid for both training sessions, admitted to having instructed the individuals to deny having received his polygraph training.

The investigation is being investigated by U.S. Custom and Border Protection’s Office of Internal Affairs and the FBI’s Oklahoma City Field Office.  The case is being prosecuted by Trial Attorneys Heidi Boutros Gesch and Brian K. Kidd of the Criminal Division’s Public Integrity Section.

FOMER CIA OFFICER SENT TO PRISON FOR LEAKING CLASSIFIED INFORMATION, OBSTRUCTION OF JUSTICE

FROM:  U.S. JUSTICE DEPARTMENT
Monday, May 11, 2015
Former CIA Officer Sentenced to 42 Months in Prison for Leaking Classified Information and Obstruction of Justice

Jeffrey A. Sterling, 47, of O’Fallon, Missouri, was sentenced today to 42 months in prison for disclosing national defense information and obstructing justice.  Sterling disclosed classified information about a clandestine operational program concerning Iran’s nuclear weapons program to a New York Times reporter in 2003.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew McCabe of the FBI’s Washington, D.C. Field Office made the announcement.

“For his own vindictive purposes, Jeffrey Sterling carelessly disclosed extremely valuable, highly classified information that he had taken an oath to keep secret,” said U.S. Attorney Boente.  “His attempt to leverage national security information for his own malicious reasons brought him to this sentence today.  I would like to thank the trial team and our partners at the FBI’s Washington Field Office and the Central Intelligence Agency for their hard work and commitment to this case.”

“The sentence handed down by a federal judge is the culmination of a lengthy investigation, a protracted prosecution and a unanimous decision by a federal jury to convict Mr. Sterling for the unauthorized disclosure of national security information,” said Assistant Director in Charge McCabe.  “The time and effort dedicated to this case by FBI special agents, intelligence analysts and prosecutors working on this matter exemplify the extent the FBI will undertake in pursuit of justice.”

Sterling was found guilty by a federal jury on Jan. 26, 2015.  According to court records and evidence at trial, Sterling was employed by the CIA from May 1993 to January 2002.  From November 1998 through May 2000, he was assigned to a classified clandestine operational program designed to undermine the Iranian nuclear weapons program.  He was also the operations officer assigned to handle a human asset associated with that program, a person identified at trial as Merlin.  Sterling was reassigned in May 2000, at which time he was no longer authorized to receive or possess classified documents concerning the program or the individual.

In connection with his employment, Sterling, who is a lawyer, signed various security, secrecy and non-disclosure agreements in which he agreed never to disclose classified information to unauthorized persons, acknowledged that classified information was the property of the CIA, and also acknowledged that the unauthorized disclosure of classified information could constitute a criminal offense.  These agreements also set forth the proper procedures to follow if Sterling had concerns that the CIA had engaged in any “unlawful or improper” conduct that implicated classified information.  These procedures permit such concerns to be addressed while still protecting the classified nature of the information.  The media was not an authorized party to receive such classified information.

In August 2000, Sterling pursued administrative and civil actions against the CIA.  Evidence at trial showed that Sterling, in retaliation for the CIA’s refusal to settle those actions on terms favorable to him, disclosed information concerning the classified operational program and the human asset to a New York Times reporter working on an unpublished article in early 2003 and a book the reporter published in January 2006.  Sterling’s civil and administrative claims were ultimately dismissed by the court.

Evidence demonstrated that in February and March 2003, Sterling made various telephone calls to the reporter’s residence and e-mailed a newspaper article about the weapons capabilities of a certain country that was within Sterling’s previous clandestine operational assignment.  While the possible newspaper article containing the classified information Sterling provided was ultimately not published in 2003, evidence showed that Sterling and the reporter remained in touch from December 2003 through November 2005 via telephone and e-mail.  In January 2006, the reporter published a book that contained classified information about the program and the human asset.

Evidence at trial showed that Sterling was aware of a grand jury investigation into the matter by June 2006 when he was served a grand jury subpoena for documents relating to the reporter’s book.  Nevertheless, between April and July 2006, Sterling deleted the e-mail containing the classified information he had sent from his account in an effort to obstruct the investigation.

This case was investigated by the FBI’s Washington Field Office, with assistance in the arrest from the FBI’s St. Louis Field Office.  This case was prosecuted by Deputy Chief Eric G. Olshan of the Criminal Division’s Public Integrity Section and Senior Litigation Counsel James L. Trump and Assistant U.S. Attorney Dennis Fitzpatrick of the Eastern District of Virginia.

NEW YORK MAN WHO TRIED T JOIN AL-QAEDA RECEIVES 25 YEAR PRISON SENTENCE

FROM:  U.S. JUSTICE DEPARTMENT
Monday, April 20, 2015
Long Island, New York, Man Sentenced to 25 Years in Prison for Attempting to Join Al-Qaeda in the Arabian Peninsula

Defendant Attempted to Travel to Yemen to Join al-Qaeda Affiliate, Assist Co-Conspirator’s Efforts to Join The Terrorist Group and Destroy Evidence of Terrorism Offenses

Earlier today at the federal courthouse in Central Islip, New York, Marcos Alonso Zea, also known as “Ali Zea,” an American citizen and resident of Brentwood, New York, was sentenced to 25 years in prison following his Sept. 9, 2014, guilty plea to attempting to provide material support to a foreign terrorist organization, al-Qaeda in the Arabian Peninsula, also known as Ansar al-Sharia (collectively AQAP), and obstruction of justice.

The sentencing was announced by 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 Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York Police Department (NYPD).

Beginning in the fall of 2011, Zea planned to travel overseas in order to wage violent jihad against the perceived enemies of Islam, which included the government of Yemen and its allies.  In furtherance of his plot, on Jan. 4, 2012, Zea boarded a flight at John F. Kennedy Airport (JFK) in Queens, New York, to London, en route to Yemen.  Zea was not permitted to travel onward from London, however, and was returned to the United States by British authorities.  Zea was interviewed and closely monitored by investigators following his return.  Despite being prevented from traveling to Yemen, Zea continued to plot, including by encouraging and supporting his co-conspirator, Justin Kaliebe, who also was planning to travel to fight jihad.  In January 2013, Kaliebe was arrested at JFK while attempting to travel to Yemen to join AQAP.  Months later, after learning that he too was under investigation, Zea caused electronic media on his computer to be destroyed in an effort to obstruct the investigation.  Notwithstanding his efforts, a forensic examination of Zea’s electronic media subsequently conducted by investigators revealed an assortment of violent Islamic extremist materials, including issues of Inspire magazine, part of AQAP’s English-language media operations.

“Marcos Alonso Zea presents a chilling reminder of the danger presented to the United States by homegrown terrorists,” said U.S. Attorney Lynch.  “Born, raised and schooled in the United States, the defendant nevertheless betrayed his country by attempting to join al-Qaeda in the Arabian Peninsula, assisting a co-conspirator’s attempt to join that terrorist group, and, after learning he was under investigation, attempting to destroy evidence of his guilt.  We will continue to work tirelessly to protect our national security from all enemies, both foreign and domestic.”  U.S. Attorney Lynch expressed her grateful appreciation to all the members of the FBI’s Joint Terrorism Task Force and the NYPD’s Intelligence Division for their work on the investigation.

“One of our highest priorities is to protect our country by identifying, disrupting and holding accountable those who provide or attempt to provide material support to designated foreign terrorist organizations,” said Assistant Attorney General Carlin.  “This sentence serves unambiguous notice that attempting to travel abroad to engage in such conduct has significant consequences.”

“The threat from al-Qaeda is real, look no further than Marcos Zea,” said Assistant Director in Charge Rodriguez.  “Zea betrayed our country, attempting to first join al-Qaeda.  When that failed, he helped others wage jihad.  We continue working relentlessly to disrupt the plans of those who look to do us harm.”

“The New York City Police Department will continue to work closely with our federal counterparts to identify and arrest homegrown terrorists like Marcos Alonso Zea, and ensure all extremists bring no harm to American soil, especially here in New York City,” said Commissioner Bratton.

After being arrested in January 2013, Zea’s co-conspirator Kaliebe subsequently pleaded guilty to one count of attempting to provide material support to terrorists and one count of attempting to provide material support to AQAP.  Kaliebe is pending sentencing by U.S. District Judge Denis R. Hurley of the Eastern District of New York.

The case is being prosecuted by Assistant U.S. Attorneys Seth D. DuCharme, John J. Durham and Michael P. Canty of the Eastern District of New York, with assistance provided by Trial Attorney Kelli Andrews of the National Security Division’s Counterterrorism Section.

CYBERCRIME RING MEMBER RECEIVES 150 MONTH PRISON TERM

FROM:  U.S. JUSTICE DEPARTMENT
Thursday, April 9, 2015
Member of Organized Cybercrime Ring Sentenced to 150 Months in Prison for Selling Stolen and Counterfeit Credit Cards

A member of the identity theft and credit card fraud ring known as “Carder.su” was sentenced today to 150 months in federal prison for selling stolen and counterfeit credit cards over the Internet.  He was further ordered to pay $50.8 million in restitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Assistant Special Agent in Charge Michael Harris of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Las Vegas Field Office made the announcement.  U.S. District Judge Andrew P. Gordon of the District of Nevada imposed the sentence.

“Criminal cyber organizations like Carder.su threaten not just U.S. citizens but people in every corner of the globe,” said Assistant Attorney General Caldwell.  “Managers in Russia seamlessly ran their criminal enterprise online using, among others, a counterfeit card vendor from New Jersey, with whom they communicated through screen name aliases.  The success in this case was achieved through equally seamless cooperation with our foreign law enforcement partners and effective use of the RICO statute.  As more countries work with us to fight these organizations, we will continue to evolve to meet this growing threat.”

“Mr. Smith’s crimes were very serious and justify a lengthy prison sentence,” said U.S. Attorney Bogden.  “He admitted that he caused a loss of seven to $20 million involving over 250 victims, and that he obstructed justice when he fled to Jamaica while released on bond awaiting trial.  We are working closely with our international, federal, state and local law enforcement partners to make sure that the perpetrators of these sorts of crimes are prosecuted no matter where in the world they commit their crimes or attempt to flee.”

“As this sentence demonstrates, cyber-criminals who purposely harm innocent Americans and compromise our financial system and global commerce will be aggressively pursued, investigated and prosecuted,” said Assistant Special Agent in Charge Harris.  “These criminals may believe they can escape detection by fleeing the country and hiding behind their computer screens, but as this case shows, cyberspace is not a refuge from justice.”

Jermaine Smith, aka “SirCharlie57,” aka “Fairbusinessman,” 34, of East Orange, New Jersey, pleaded guilty in October 2014 to one count of participating in a racketeer influenced corrupt organization.  

During his guilty plea, Smith admitted that in May 2009 he became associated with the Carder.su organization, a criminal enterprise whose members trafficked in compromised credit card account data and counterfeit identifications, and committed money laundering, narcotics trafficking, and various types of computer crime.  Specifically, Smith admitted that he operated as a vendor on the organization’s websites, using the “SirCharlie57” and “Fairbusinessman” nicknames.  While acting as a vendor under those online monikers, Smith sold counterfeit credit cards to an undercover special agent.  Those counterfeit credit cards were successfully processed for fingerprints, identifying Smith as the true user of the online screennames.  In addition to the sale of the counterfeit credit cards, Smith admitted that he possessed over 2,150 stolen credit and debit card account numbers.

While on pretrial release in this case, Smith removed an electronic monitoring device from his person and fled to Jamaica.  He was arrested four months later and returned to Nevada.

Fifty-six individuals were charged in four separate indictments in Operation Open Market, which targeted the Carder.su organization.  To date, 26 individuals have been convicted and the rest are either fugitives or are pending trial.  

The cases were investigated by ICE-HSI and the U.S. Secret Service, and are being prosecuted by Trial Attorney Jonathan Ophardt of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Kimberly M. Frayn and Andrew W. Duncan of the District of Nevada.

This prosecution is in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

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

FORMER FBI SPECIAL AGENT PLEADS GUILTY IN BRIBERY TO OBSTRUCT A GRAND JURY CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, October 1, 2014

Former FBI Special Agent and Co-Defendant Plead Guilty to Conspiracy, Bribery, and Obstruction of Justice Scheme

A former FBI special agent and a conspirator pleaded guilty in the District of Utah yesterday and today to participating in a bribery scheme to obstruct a grand jury investigation in exchange for the promise of cash and multimillion dollar business contracts offered by a businessman under investigation.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah and Justice Department Inspector General Michael E. Horowitz made the announcement after the guilty pleas were accepted by U.S. District Judge Tena Campbell.

“No one is above the law, no matter what rank or badge a person might hold,” said Assistant Attorney General Caldwell.  “Corruption by those entrusted to enforce the law strikes at the heart of our criminal justice system, and it will not be tolerated.  This case lays bare a disgraceful attempt by a veteran FBI agent to get rich by thwarting an ongoing investigation.  The Justice Department will fight corruption wherever we find it, even within the ranks of federal law enforcement.”

“These plea agreements demonstrate that Federal law enforcement officers who sell their badges for cash and frustrate the administration of justice will be held accountable for their actions,” said Inspector General Horowitz.  “Department employees are held to the highest standards, and we cannot permit our criminal justice system to be stained by such bribery and corruption.”

“When a law enforcement officer violates his oath and the public’s trust by breaking the law, he must be held accountable,” said Acting U.S. Attorney Christensen.  “In this case, former Agent Lustyik’s decision to enter into a conspiracy to obstruct a significant fraud investigation in Utah is a troubling reminder that corruption may exist even among those we entrust with protecting our citizens and upholding our laws.”

A 24-year veteran of the FBI, Robert Lustyik Jr., 51, of Sleepy Hollow, New York, pleaded guilty on Sept. 30, 2014, to an 11-count indictment charging him with conspiracy, eight counts of honest services wire fraud, obstruction of a grand jury proceeding, and obstruction of an agency proceeding.  A childhood friend of Lustyik, Johannes Thaler, 50, of New Fairfield, Connecticut, pleaded guilty today to conspiracy to commit bribery, obstruction of a grand jury proceeding and obstruction of an agency proceeding.  Sentencing is scheduled for Jan. 5, 2015.

In court documents and at the plea hearings, Lustyik and Thaler admitted that from October 2011 to September 2012, Lustyik, while employed as an FBI counterintelligence special agent, and Thaler conspired to use Lustyik’s official position to obstruct a criminal investigation into Michael Taylor, a businessman who owned and operated American International Security Corporation and was under investigation for paying kickbacks to obtain a series of contracts from the Department of Defense worth approximately $54 million.  Taylor promised Lustyik and Thaler that in exchange for their help, he would provide them cash and multimillion dollar business contracts.  Taylor told the two men: “I’ll make you guys more money than you can believe, provided they don’t think I’m a bad guy and put me in jail.”

Court documents state that Lustyik attempted to obstruct the investigation into Taylor by opening Taylor as an official FBI source in an effort to persuade the FBI, the Justice Department and the prosecutors and law enforcement agents investigating Taylor that Taylor’s usefulness as a source outweighed the government’s interest in prosecuting him.  Lustyik also advocated on Taylor’s behalf directly to the prosecutors and law enforcement agents, urging them to use Taylor as a cooperating witness and emphasizing that indicting Taylor would threaten the nation’s security.

According to court documents, while Lustyik was obstructing the investigation into Taylor, Lustyik suggested that Thaler “blatantly” ask Taylor for money, emphasizing “he knows we are keeping him outta jail.”  Lustyik explained to Thaler that on his upcoming trip to meet Taylor in Lebanon, “Taylor is gonna hand you cash in Lebanon,” “[l]ike 150 gs.”  When Thaler asked Lustyik how he was supposed to bring that much cash back to the United States, Lustyik instructed him “[i]n your pants.  Or wire it?  They won’t stop 2 white guys at customs without a reason, [o]r I meet you at customs at JFK and cred you in.”

Court records state that during the conspiracy, Lustyik and Thaler acknowledged that Taylor was probably guilty, but they boasted about their success in using Lustyik’s official position to obstruct the investigation into Taylor, with Lustyik texting Thaler, “at this point IF he is indicted there is NO WAY he gets convicted even though he Prob did it.”  During the conspiracy, Lustyik texted Thaler, “I think we are rich by Christmas!!”  When Thaler asked why, Lustyik responded, “he [Taylor] is gonna be free!!!!!!!!”

Taylor pleaded guilty in the District of Utah to honest services wire fraud for his role in the scheme on Nov. 27, 2013.  He is scheduled for sentencing on Jan. 5, 2015.

The investigation was conducted by Assistant Special Agent in Charge Tom Hopkins of the U.S. Department of Justice Office of Inspector General.  The case is being prosecuted by Deputy Chief Peter Koski and Trial Attorney Maria Lerner of the Criminal Division’s Public Integrity Section, and Trial Attorney Ann Marie Blaylock of the Criminal Division’s Asset Forfeiture and Money Laundering Section.  Scott Ferber of the Counterespionage Section of the National Security Division also assisted in the prosecution.

MAN PLEADS GUILTY FOR FALSELY FILING MULTI-BILLION LIENS AGAINST TWO FEDERAL JUDGES

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, July 18, 2014

Illinois Man Pleads Guilty to Obstruction of Justice and Filing False Multi-Billion Dollar Liens Against Two Federal Judges and Other Government Employees
Tyree Davis Sr., 42, of Flossmoor, Illinois, pleaded guilty to two counts of obstruction of justice and two counts of filing false retaliatory liens against government officials, the Justice Department announced today.

Davis pleaded guilty earlier today before U.S. District Judge Michael M. Mihm of the Central District of Illinois.  Davis faces a statutory maximum sentence of 10 years in prison for each of the obstruction of justice charges as well as a statutory maximum sentence of 10 years in prison for each of the filing false retaliatory liens charges at his sentencing on Oct. 15.

A federal grand jury in Chicago returned an eight count federal indictment on July 24, 2013, charging Davis with obstruction of justice and filing fraudulent multi-billion dollar liens against government employees.  According to the court documents, Davis obstructed justice by sending correspondence threatening to arrest two federal judges, including the judge who presided over the 2010 criminal tax trial of LaShawn Littrice.  Littrice, whom Davis refers to as his wife, was convicted by a jury in June 2010 and sentenced to serve 42 months in prison in December 2010.  Davis also filed false liens, titled Notice of Maritime Liens, claiming that each judge owed Littrice $100 billion.  Davis then notified others, including credit bureaus, that he had filed the multi-billion dollar liens.  In addition, Davis filed false liens against the U.S. Attorney and Clerk of Court for the Northern District of Illinois, an Assistant U.S. Attorney and an Internal Revenue Service (IRS)-Criminal Investigation special agent.  The liens were all publicly filed with the Cook County Recorder’s Office and claimed that each individual owed Littrice $100 billion.  Each of the liens were re-recorded in order to add real property descriptions.

The case was investigated by the U.S. Treasury Inspector General for Tax Administration and the FBI, and prosecuted by Senior Litigation Counsel Jen E. Ihlo and Trial Attorney Matthew J. Kluge of the Tax Division.

AUTO PARTS PRICE FIXING CONSPIRACY RESULTS IN EXECUTIVE INDICTMENT

FROM:  U.S. JUSTICE DEPARTMENT 

JAPANESE AUTOMOTIVE PARTS MANUFACTURER EXECUTIVE INDICTED FOR

ROLE IN CONSPIRACY TO FIX PRICES AND FOR OBSTRUCTION OF JUSTICE

WASHINGTON — A Detroit federal grand jury returned a two-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of heater control panels 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 Hitoshi Hirano with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of heater control panels sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. (collectively, Toyota) for installation in vehicles manufactured and sold in the United States and elsewhere.  Hirano, who served as an executive managing director at Tokai Rika Co. Ltd., was also charged with knowingly and corruptly persuading, and attempting to persuade, employees of Tokai Rika to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.

“The Antitrust Division will not tolerate executives directing their subordinates to engage in illegal cartels and conspiracies,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Attempts to then obstruct justice and destroy evidence will give rise to additional charges.”

The indictment alleges, among other things, that from at least as early as October 2003 and continuing until at least February 2010, Hirano and others attended conspiratorial meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices for heater control panels sold to Toyota.  According to the indictment, Hirano participated directly in the conspiratorial conduct, and directed, authorized and consented to his subordinates’ participation.  In addition, the indictment charges that in February 2010, after Hirano learned that the FBI had searched Tokai Rika’s U.S. subsidiary, he knowingly and corruptly persuaded employees at Tokai Rika to destroy paper documents and delete electronic data intending to prevent the grand jury from obtaining evidence of antitrust crimes.

Tokai Rika is a manufacturer of automotive parts, including heater control panels, based in Nagoya, Japan.  Tokai Rika pleaded guilty on Dec. 12, 2012, for its role in the conspiracy and to obstruction of justice, and was sentenced to pay a $17.7 million criminal fine.

Heater control panels are located in the center console of an automobile and control the temperature of the passenger compartment of a vehicle.  Heater control panels differ by function and design for a particular vehicle model.  Examples include automatic heater control panels, which maintain the temperature within the vehicle to a designated temperature point, and manual heater control panels, which regulate the temperature through manual controls operated by vehicle occupants.

Including Hirano, 34 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty.  Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.

Hirano 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.  The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.

This 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 charges were 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.

FORMER ALABAMA KKK LEADER PLEADS GUILTY IN CROSS BURNING CASE

FROM:  JUSTICE DEPARTMENT 
Monday, February 3, 2014
Former Alabama KKK Leader Pleads Guilty to Cross Burning and Obstruction of Justice

Steven Joshua Dinkle, 28, former Exalted Cyclops of the Ozark, Ala., chapter of the International Keystone Knights of the Ku Klux Klan (KKK), pleaded guilty in federal court today to hate crime and obstruction of justice charges for his role in a 2009 cross burning, the Justice Department and the U.S. Attorney’s Office for the Middle District of Alabama announced.

According to documents filed with the court, Dinkle and one of his KKK recruits, Thomas Windell Smith, met at Dinkle’s home on May 8, 2009, and decided to burn a cross in a local African-American neighborhood.

Dinkle constructed a wooden cross about six feet tall, wrapped jeans and a towel around it to make it more flammable and loaded it into Smith’s truck.  Around 8:00 p.m., Dinkle and Smith drove to an African-American neighborhood in Ozark.  Dinkle unloaded the cross at the entrance to the community and dug a hole in the ground, then poured fuel on the cross, stood it up in the hole in view of several houses and set it on fire.  Dinkle and Smith then drove away.

When questioned by local investigators, Dinkle falsely denied his involvement in the incident and stated that he had resigned his office and withdrawn from the KKK months before the cross burning.  When approached by the FBI, Dinkle again lied and told a special agent that he had been at home with his girlfriend when the cross burning occurred.  He further claimed that he did not know one of his superiors in the KKK at the time of the cross burning.  During the plea hearing, Dinkle admitted that in burning the cross, he intended to scare and intimidate residents of the African-American community by threatening the use of force against them.  He further admitted that he burned the cross because of the victims’ race and color and because they were occupying homes in that area.

Dinkle pleaded guilty to one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing and two counts of obstruction of justice.  

Dinkle faces a statutory maximum sentence of 10 years in prison and a $250,000 maximum fine on the conspiracy and criminal interference counts and a statutory maximum sentence of 25 years in prison and a $500,000 maximum fine for obstructing justice by making false statements to both local investigators and federal agents.  Sentencing for Dinkle has not yet been scheduled.

Dinkle’s co-conspirator, Smith, pleaded guilty to one count of conspiracy to violate housing rights in December 2013.  He is scheduled to be sentenced on March 11, 2014.

“By targeting the victims with a blazing cross in the night, one of the most threatening racial symbols in our nation’s history, the defendant attempted to terrorize a neighborhood because of the color of the residents’ skin,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “Prosecuting these racially motivated crimes will continue to be a priority for the Department of Justice.”

“ As a society we hope to never see this type of hate,” said U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.  “We will continue to prosecute those that commit these horrible acts of hate to the fullest extent of the law.”

This case was investigated by the FBI, with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department.  The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.

ROXBURY CORRECTIONAL SERGEANT CONVICTED OF OBSTRUCTING JUSTICE

FROM:  JUSTICE DEPARTMENT
Friday, January 31, 2014

Roxbury Correctional Institution Sergeant Convicted of Obstructing Justice
The Justice Department, the U.S. Attorney’s Office for the District of Maryland and the FBI announced that Josh Hummer, a sergeant at the Roxbury Correctional Institution (RCI) in Hagerstown, Md., was convicted today by a federal jury of obstructing justice during the investigation of an assault against an inmate.

Hummer faces a statutory maximum of 20 years when he is sentenced by U.S. District Judge James K. Bredar.  The assault against the inmate occurred on March 9, 2008.

In related cases, Judge Bredar has accepted guilty pleas from former RCI officers Ryan Lohr, Dustin Norris, Tyson Hinckle, Reginald Martin, Michael Morgan, Edwin Stigile, Lanny Harris, Philip Mayo, Jeremy McCusker, Walter Steele, Keith Morris and Robert Harvey.  Two former RCI officers previously pleaded guilty in state court.

Two current or former RCI officers still face federal charges in connection with this incident.  The officers, who are presumed innocent until proven guilty, will stand trial in February.

The investigation by the Fredrick Resident Agency of the FBI is ongoing.  The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorneys Christine Siscaretti and Sanjay Patel for the Civil Rights Division.  

AN AMERICAN AND AN AUSTRAILIAN CHARGED IN BIOFUELS FRAUD SCHEME

FROM:  JUSTICE DEPARTMENT 
Thursday, January 16, 2014
Two Men Charged in Las Vegas with Biofuels Fraud Scheme

Two men have been indicted by a federal grand jury in Las Vegas for offenses involving the federal renewable fuel program that allegedly netted them more than $37 million, announced the Justice Department’s Environment and Natural Resources Division, Criminal Division, and the U.S. Attorney’s Office for the District of Nevada.   The 57-count indictment against James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia, includes allegations of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice and conspiracy to engage in money laundering.

The indictment was unsealed late Wednesday following Jariv’s initial appearance in federal court in Las Vegas, which followed his arrest on Tuesday.   Stoliar resides in Australia.

The Energy Independence and Security Act of 2007 created a number of federally-funded programs that provided monetary incentives for the production of biodiesel and to encourage biodiesel use in the United States.   Biodiesel producers and importers could generate and attach credits known as “renewable identification numbers” or RINs to biodiesel they produced or imported.   Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value.   In addition, in order to create an incentive for biodiesel in the United States to be used in the United States, anyone who exports biodiesel is required to obtain these valuable RINs and provide them to EPA.   The market price charged for exported biodiesel therefore includes the value an exporter is required to later spend to acquire these RINs.

The indictment alleges that beginning around June of 2009, the two defendants, James Jariv and Nathan Stoliar, operated and controlled a company -- City Farm Biofuel in Vancouver, British Columbia, Canada -- that held itself out as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils.   Jariv also operated and controlled a company based in Las Vegas, Nevada, called Global E Marketing.   The government alleges that these defendants claimed to produce biodiesel at the City Farm facility, claimed to import and sell biodiesel to Global E Marketing, and then generated and sold RINs based upon this claimed production, sale and importation.   In reality, little to no biodiesel produced at City Farm was ever imported and sold to Global E Marketing as claimed.   The indictment alleges that the defendants’ scheme allowed them to generate approximately $7 million in RINs that were fraudulent, which were then sold to companies that needed to obtain them.

The indictment also alleges that, beginning around the same time period and continuing through Dec. 31, 2013, the defendants, using their company MJ Biodfuels, bought over 23 million gallons of RIN-less biodiesel that had been blended with small amounts of petroleum diesel, known as B99, from companies in the United States.   The defendants sold some of this biodiesel to purchasers in the United States, claiming it was pure biodiesel, known as B100, produced at the City Farm facility and imported into the United States.   By claiming this biodiesel was B100 and not RIN-less B99, the defendants were able to claim the fuel was eligible to be used to generate credits and incentives, and were able to sell the fuel for significantly more than they otherwise would have been able.   The defendants also exported the RIN-less B99 they bought in the United States to Canada.   The defendants then sold the biodiesel in Canada, and conspired not to acquire and provide RINs for these exports to the United States as they were required to do, but instead to keep the money they received from the sales for themselves.   The indictment alleges that, in doing so, the defendants failed to give to the United States RINs worth in excess of $30 million, keeping this money for themselves instead.

The indictment alleges that the defendants created false records and made false statements to conceal their fraudulent claims of biodiesel production, importation, sale and fraudulent RIN generation.   Finally, the indictment alleges that the defendants engaged in a conspiracy to launder the proceeds of their crimes, utilizing foreign banking institutions and complex financial transactions to conceal the illegal nature of the funds they received, and to attempt to protect these funds from government enforcement.   Today the United States also seized and restrained the assets contained in a number bank accounts utilized by the defendants, as well as several pieces of real and personal property in Las Vegas, Nevada.

An indictment is only a charge and is not evidence of guilt.   All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

The collaborative investigation that led to today’s arrest and seizures was the result of work by the EPA’s Criminal Investigation Division and the FBI, with assistance from the United States Secret Service and the Department of Homeland Security.

The case is being prosecuted by Senior Trial Attorney Wayne D. Hettenbach of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division , Assistant U.S. Attorneys Crane M. Pomerantz and Daniel D. Hollingsworth of the U.S. Attorney’s Office in Nevada, and Trial Attorney Darrin L. McCullough of the Justice Department’s Criminal Division, Asset Forfeiture and Money Laundering Section, with the assistance of the Justice Department’s Office of International Affairs.

FEDERAL GRAND JURY INDICTS FORMER KKK LEADER IN CONNECTION TO CROSS BURNING IN ALABAMA

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, November 29, 2013
Former KKK Leader Indicted for Cross Burning in Alabama; Second KKK Member Indicted for Perjury

Steven Joshua Dinkle, former Exalted Cyclops of a chapter of the Ku Klux Klan (KKK) in Ozark, Ala., was arrested on Wednesday, Nov. 27, in Mississippi for burning a cross at the entrance to a predominantly African-American neighborhood and for obstructing the investigation into the offense.  Pamela Morris, Dinkle’s mother and the former secretary of the KKK chapter, was arrested on Nov. 21, 2013, for committing perjury before the grand jury investigating the cross burning.

Dinkle, 28, was charged in a five-count indictment returned by a federal grand jury in the Middle District of Alabama that was unsealed on Nov. 27.  The indictment charges him with one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing, one count of using fire to commit a federal felony and two counts of obstruction of justice.

The indictment alleges that on May 8, 2009, Dinkle conspired with another person to burn a cross in an African-American neighborhood to threaten and intimidate residents of that neighborhood and thereby interfere with their federally protected housing rights.  Dinkle allegedly constructed a six-foot cross, wrapping jeans and a towel around it.  He and his co-conspirator drove the cross to an African-American community near Johntown Road in Ozark where Dinkle poured fuel on the cross, erected it in the ground and set it on fire.  The indictment further contends that Dinkle obstructed justice by lying to local investigators in 2009, and federal investigators in 2012.  Dinkle claimed he had withdrawn from the KKK months before the cross burning, provided a false alibi and denied knowing a person who was, in fact, his superior in the KKK.

The grand jury returned a separate indictment against Morris, 45, charging her with two counts of perjury.  The indictment alleges that Morris made multiple false statements to the grand jury investigating the cross burning when she denied her own involvement in the KKK and knowing that Dinkle was also involved.

If convicted, Dinkle could face a maximum statutory sentence of 10 years in prison and a $250,000 fine on the conspiracy and criminal-interference counts; sentence maximum of 10 years in prison for the use-of-fire; a maximum of 20 years in prison and a $250,000 fine for obstructing justice by making false statements to local investigators; and a maximum of five years in prison and a $250,000 fine for making false statements to the FBI.

If convicted, Morris could face a maximum statutory sentence of five years in prison and a $250,000 fine on each count of perjury.

This case is being investigated by the FBI, with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department.  The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Justice Department’s Civil Rights Division.

An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.

SHIPPING COMPANY AND ENGINEERS CONVICTED IN "MAGIC PIPE CASE"

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, August 8, 2013
Shipping Corporation and Two Engineers Convicted in ‘Magic Pipe’ Case in Norfolk, Va.

Diana Shipping Services S.A., a Panamanian corporation headquartered in Greece,  Ioannis Prokakis and Antonios Boumpoutelos, both citizens of Greece, were convicted today after an 12-day bench trial  on charges related to the illegal discharge of waste oil and oil-contaminated waste water from the M/V Thetis, a cargo vessel operated by Diana Shipping Services, announced Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, Otis E. Harris, Jr., Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region, and David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States.

All the defendants were convicted of conspiracy, knowing failure to fully maintain an oil record book, falsification of records and concealing tangible objects in a federal investigation.  In addition, Prokakis was also convicted of obstruction of justice for ordering crewmembers to lie to U.S. Coast Guard inspectors on board the ship.  The guilty verdicts were handed down by U.S. District Judge Mark S. Davis of the Eastern District of Virginia.

“The pollution of our oceans, the falsification of environmental records, and lying to the U.S. Coast Guard are serious crimes,” said Acting Assistant Attorney General Dreher.  “Companies and individuals that intentionally attempt to cover up these crimes and obstruct U.S. Coast Guard investigations, will be prosecuted to the fullest extent of the law.”

“These defendants not only violated the law when they illegally discharged contaminated waste into our waters, but then conspired to cover up their nefarious conduct,” said United States Attorney Neil H. MacBride.  “Those who choose to continue to violate the law, even after being confronted, will find themselves in the same, serious trouble as these defendants.”

“The Coast Guard protects not only the environment of our nation, but the world’s,” said Capt. John Little, Commander of Coast Guard Sector Hampton Roads.  “Our Port State Control Teams board thousands of vessels annually to ensure compliance with U.S. law, regulations, and international treaties on pollution prevention.  This case affirms the strength of our partnerships with the Department of Justice, the U.S. Attorney’s Office and our Coast Guard Investigative Service in holding accountable those vessel operators who deliberately discharge oil and falsify ship records.”
“The oceans must be protected from shipping companies that cut corners and dump waste improperly,” said David G. McLeod, Jr., Special Agent in Charge of EPA’s criminal enforcement program for the Middle Atlantic States.  “The defendants conspired to discharge oily waste from the M/V Thetis into the open water, falsified the ship’s record books and attempted to thwart the investigation.  Today's guilty verdict should send a clear message that our collaborative efforts will lead to the vigorous prosecution of those who despoil our oceans and violate our nation’s environmental laws.”

Diana Shipping Services, S.A. faces a maximum fine of $5.5 million and five years of probation.  Prokakis and Boumpoutelos face a maximum sentence of five years for the conspiracy conviction, six years per failure to maintain an oil record book conviction, and 20 years per falsification of record conviction.  Prokakis faces an additional five year sentence for obstruction of justice.  All three defendants will be sentenced on Nov. 8, 2013.

Diana Shipping Services S.A., Prokakis, and Boumpoutelos, were indicted on May 22, 2013, in an 11-count superseding indictment alleging the illegal discharging of waste oil and oil-contaminated waste water in violation of the Act to Prevent Pollution from Ships. In September 2012, crewmembers of the M/V Thetis, a cargo vessel operated by Diana Shipping Services, reported that the vessel was discharging its bilge waste and sludge illegally by various means, including a “magic pipe” that bypassed the oily water separator.  Coast Guard inspectors boarded the vessel when it entered port in Norfolk and discovered the “magic pipe” and that the oily water separator was non-functioning.  The inspectors were also presented with an oil record book that contained false entries made by the ship’s Chief Engineer, Ioannis Prokakis and the Second Engineer Antonios Boumpoutelos.  During the inspection, Prokakis lied to inspectors about the “magic pipe” and told other members of the engineering crew to not disclose its existence to the Coast Guard inspectors.

This case was investigated by the Coast Guard Investigative Service and the EPA’s Criminal Investigations Division.  Assistant U.S. Attorney Joseph L. Kosky of the Eastern District of Virginia and Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division are prosecuting the case on behalf of the United States.

FORMER CIO OF STANFORD FINANCIAL GROUP SENTENCED TO THREE YEARS IN PRISON

FROM: U.S. DEPARTMENT OF JUSTICE

Thursday, September 13, 2012

Former Chief Investment Officer of Stanford Financial Group Sentenced to Three Years in Prison for Obstruction of Justice

WASHINGTON – Laura Pendergest-Holt, 39, the former chief investment officer of Houston-based Stanford Financial Group, was sentenced today to 36 months in prison for her role in obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Ronald T. Hosko of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell from the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber, Internal Revenue Service-Criminal Investigation (IRS-CI).

The sentence was imposed by U.S. District Judge David Hittner in the Southern District of Texas. In addition to her prison term, Holt was sentenced to three years of supervised release. Judge Hittner noted that Holt did not have the ability to pay a fine.

In January 2009, the SEC sought testimony and documents related to SIB’s entire investment portfolio. Although she was incapable of testifying about the vast majority of that portfolio, Holt nevertheless agreed to testify before the SEC. In her guilty plea, Holt acknowledged that her eventual appearance and sworn testimony before the SEC was a stall tactic designed to frustrate the SEC’s efforts to obtain important information about SIB’s investment portfolio. Holt admitted she took this action intentionally and corruptly, knowing that her testimony would impede the SEC’s investigation and help SIB continue operating.

Holt was remanded into custody today.

The investigation was conducted by the FBI’s Houston Field Office, USPIS, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case against Holt is being prosecuted by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas, Deputy Chief Jeffrey Goldberg of the Criminal Division’s Fraud Section and Fraud Section Trial Attorney Andrew Warren. Former Assistant U.S. Attorney Gregg Costa of the Southern District of Texas and Fraud Section Deputy Chief William Stellmach were also involved in this case.

The Justice Department thanks the SEC for their assistance and cooperation in this matter.

FORMER CIO OF STANFORD FINANCIAL GROUP GETS PRISON TERM FOR OBSTRUCTION OF JUSTICE

FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, September 13, 2012

Former Chief Investment Officer of Stanford Financial Group Sentenced to Three Years in Prison for Obstruction of Justice

WASHINGTON – Laura Pendergest-Holt, 39, the former chief investment officer of Houston-based Stanford Financial Group, was sentenced today to 36 months in prison for her role in obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Ronald T. Hosko of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell from the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber, Internal Revenue Service-Criminal Investigation (IRS-CI).

The sentence was imposed by U.S. District Judge David Hittner in the Southern District of Texas. In addition to her prison term, Holt was sentenced to three years of supervised release. Judge Hittner noted that Holt did not have the ability to pay a fine.

In January 2009, the SEC sought testimony and documents related to SIB’s entire investment portfolio. Although she was incapable of testifying about the vast majority of that portfolio, Holt nevertheless agreed to testify before the SEC. In her guilty plea, Holt acknowledged that her eventual appearance and sworn testimony before the SEC was a stall tactic designed to frustrate the SEC’s efforts to obtain important information about SIB’s investment portfolio. Holt admitted she took this action intentionally and corruptly, knowing that her testimony would impede the SEC’s investigation and help SIB continue operating.

Holt was remanded into custody today.

ROAD PATROL ROBBER SENTENCED TO PRISON

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, August 28, 2012

Former Alabama Police Officer Sentenced to Prison for Stealing Money and Property from Highway Motorists

Jessie Alan Fuller, 25, of Pensacola, Fla., was sentenced today by U.S. District Judge W. Keith Watkins to 37 months in prison and two years supervised release, the Justice Department announced. Fuller pleaded guilty on April 26, 2012, to one count of conspiracy against rights, a felony, and one count of deprivation of rights under color of law, a misdemeanor. These charges stemmed from Fuller’s stealing money and property from motorists on Interstate 65 in central Alabama while he was a police officer with the Fort Deposit Police Department.

During his plea, Fuller admitted that he and another former Fort Deposit police officer agreed to pull over vehicles under the guise of legitimate law enforcement activity and to steal cash from drivers and passengers. Fuller further admitted that between May and June 2009, he and the other officer committed numerous thefts together, including thefts of $200 each from two separate victims and $120 from a third victim. In each of these incidents, Fuller and the other officer worked together, acting with each other’s knowledge and cooperation, and shared the stolen money. In each incident, the two officers used a marked patrol car, wore police clothing and carried a firearm. Fuller also admitted to stealing a GPS device from a driver whom he pulled over and arrested on March 14, 2009.

"This defendant abused his power as a law enforcement officer for his own financial gain. He violated not only the law, but also the public trust," said Thomas E. Perez, Assistant Attorney General for Civil Rights Division. "The Department of Justice is committed to holding those who abuse their authority and prey on members of the community accountable for their illegal actions."

"It is terrible to see those sworn to uphold the law, break the law and prey on the public," stated George L. Beck, U.S. Attorney for the Middle District of Alabama. "While it is always difficult to prosecute a member of our law enforcement community, my office is dedicated to protecting the community and seeking justice for all."

On June 12, 2012, an eight-count indictment was unsealed charging Carlos Tyson Bennett, of Greenville, Ala., as the other officer. Bennett was charged with one count of conspiracy against rights, four counts of deprivation of rights under color of law, and three counts of obstruction of justice. An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty. Trial is scheduled to begin in Bennett’s case on Sept. 10, 2012.

This case is being investigated by the Alabama Bureau of Investigation; the Butler County, Ala., Sheriff’s Office; and the Lowndes County, Ala., Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Gray Borden for the Middle District of Alabama and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.

NEW ZEALAND FISHING COMPANY FOUND GUILTY OF ENVIRONMENTAL AND OTHER CRIMES

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, August 15, 2012
New Zealand Fishing Company Found Guilty in Washington, D.C., of Environmental Crimes and Obstruction of Justice
Chief Engineer Also Found Guilty of Charges

WASHINGTON –A federal jury in Washington, D.C., today returned guilty verdicts against Sanford Ltd., a New Zealand fishing company, on six counts of conspiracy, obstruction of justice, and violating the Act to Prevent Pollution from Ships (APPS). The jury also found a company employee guilty of two other charges.
　
The verdicts, following a two-week trial in the U.S. District Court for the District of Columbia, were announced by Assistant Attorney General Ignacia S. Moreno of the Department of Justice’s Environment and Natural Resources Division and U.S. Attorney for the District of Columbia Ronald C. Machen Jr.
　
Judge Beryl A. Howell scheduled sentencing for Nov. 16, 2012. Sanford faces a maximum fine of up to $500,000 on each count, for a total potential penalty of $3.0 million. Sanford’s primary chief engineer, James Pogue, 52, faces up to up to 20 years for obstruction of justice and six years for knowingly failing to maintain an accurate oil record book.
Acc
ording to the government’s evidence, in July 2011, the U.S. Coast Guard conducted a Port State Control examination on the Fishing Vessel (F/V) San Nikunau, when the vessel entered port in Pago Pago, American Samoa. The examination revealed that the vessel had been making false entries and omissions in its oil record book that vessels are required to maintain accurately in order to account for their handling of oil waste generated by the vessel.
　
According to evidence presented at trial, Sanford operates the San Nikunau a vessel that routinely delivers tuna to a cannery in Pago Pago. Over the past five years, Sanford was paid over $24 million for tuna deliveries. Sanford was convicted of numerous charges, including conspiracy and causing the vessel to enter to the port of Pago Pago with a falsified oil record book that failed to accurately account for how the vessel was managing its bilge waste and for obstruction of justice for falsely stating in the oil record book that required pollution prevention equipment had been used when it had not. Sanford was also convicted of discharging machinery space bilge waste into the port of Pago Pago without using required pollution prevention equipment including the oil water separator.
　
Pogue, of Idaho, served as the chief engineer on the vessel between 2001 and 2010. Pogue was convicted of failing to maintain an oil record book for the vessel that accurately accounted for how the vessel was managing its bilge waste. In addition, Pogue was convicted of obstruction of justice for falsely stating in the oil record book that required pollution prevention equipment had been used when it had not.
　
Prior to the trial, Rolando Ong Vano, 51, of the Philippines, another chief engineer who worked on the vessel, pleaded guilty to charges in the case. He is to be sentenced Sept. 7, 2012.
　
"These verdicts hold a company and one of its chief engineers accountable for polluting the waters off American Samoa with oily waste, and then trying to cover up their acts," said U.S. Attorney Machen. "The prosecution demonstrates our commitment to enforcing environmental laws and protecting our precious natural resources."
　
This case was investigated by the U.S. Coast Guard and the Coast Guard Investigative Service. The case was prosecuted by Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Department of Justice and Assistant U.S. Attorney Frederick W. Yette of the U.S. Attorney's Office for the District of Columbia.

DEFENSE ATTORNEY AND TWO INVESTIGATORS FOUND GUILTY OF OBSTRUCTION OF JUSTICE

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 22, 2012
Veteran D.C. Defense Attorney Charles F. Daum and Two Investigators Found Guilty of Obstruction of Justice Charges

Veteran District of Columbia defense attorney Charles F. Daum, 66, of Arnold, Md., was found guilty today of one count of conspiracy to obstruct justice, three counts of obstruction of justice and two counts of subornation of perjury, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Chief Cathy L. Lanier of the Washington, D.C., Metropolitan Police Department; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Daum’s co-defendants, private investigators Daaiyah Pasha, 62, of Washington, D.C., and Iman Pasha, 32, of Springfield, Va., were also found guilty today on one count of conspiracy to obstruct justice.

After a six-week bench trial, Senior U.S District Judge Gladys Kessler of the U.S. District Court for the District of Columbia issued her verdict today.   Daum was acquitted on one charge of witness tampering.

The charges resulted from Daum’s representation of Delante White, who was indicted in March 2008 by the U.S. Attorney’s Office for the District of Columbia on federal drug trafficking charges following the execution of a search warrant on Feb. 23, 2008.

“In his zeal to defend his client, Mr. Daum betrayed his profession and obstructed justice,” said Assistant Attorney General Breuer.  “He and his co-conspirators fabricated evidence to submit in his client’s criminal trial, and he further suborned perjury from two defense witnesses.  It’s astounding that a lawyer could commit these crimes, which undermine the integrity of our criminal justice system.  The court found Mr. Daum guilty beyond a reasonable doubt, and he now faces prison time as a result.”

Judge Kessler found beyond a reasonable doubt that Daum, after entering his notice of appearance in the White case, devised a plan to obtain and produce false evidence designed to convince the jury that the drugs seized by the police on Feb. 23, 2008, did not belong to White.  Daum enlisted the help of Daaiyah and Iman Pasha, whom Daum had hired as investigators, and others to help carry out his scheme.   Following Daum’s directions, the co-conspirators obtained duplicates of several items that were seized as evidence during the execution of the search warrant, including a digital scale, a razor blade, plates, an Adidas shoe box and a pair of Gucci boots.   Once those items were obtained, Daaiyah and Iman Pasha made arrangements to take staged photographs of another individual depicted with the items, while apparently “cutting” “rock cocaine” in order to make it appear as though the seized drugs actually belonged to the other individual.   Daum later submitted the staged photographs, as well as other fabricated items, as evidence during White’s criminal trial.

Judge Kessler also found that Daum solicited and presented the perjured testimony of two witnesses, to further obstruct and impede the administration of justice.

The defendants face a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge.   Daum faces an additional maximum penalty of 10 years in prison and a $250,000 fine for each count of obstruction.   Daum also faces a maximum penalty of five years in prison and a $250,000 fine for each charge of subornation of perjury.   Sentencing is scheduled for Nov. 19, 2012.

The case was prosecuted by Trial Attorneys Donnell Turner, Darrin L. McCullough and Tritia Yuen of the Narcotic and Dangerous Drug Section in the Justice Department’s Criminal Division.  The case was investigated by the Washington, D.C., Metropolitan Police Department, the FBI’s Washington Field Office and the U.S. Attorney’s Office for the District of Columbia.