FROM: U.S. DEPARTMENT OF JUSTICE
Monday, August 5, 2013
Former Federal Fugitive Sentenced in California for Nationwide Foreclosure Scam
Collected More Than $1.2 Million from More Than 800 Distressed Homeowners
Glen Alan Ward, 48, a former Los Angeles resident who fled to Canada and was a federal fugitive for 12 years, was sentenced today to serve 132 months in prison for aggravated identity theft and bankruptcy fraud in connection with his leading role in a nearly 15-year foreclosure-rescue scam that fraudulently postponed foreclosure sales for more than 800 distressed homeowners.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, U.S. Attorney for the Northern District of California Melinda Haag, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office and Special Inspector General for the Troubled Asset Relief Program Christy Romero made the announcement.
Ward was sentenced by U.S. District Judge Dale S. Fischer in the Central District of California. In addition to his prison term, Ward was sentenced to serve three years of supervised release and ordered to pay approximately $60,000 in restitution.
Ward pleaded guilty on April 8, 2013, in connection with three separate sets of charges in the Central and Northern Districts of California, all stemming from Ward’s 15-year fraud. In 2000, Ward became a federal fugitive when he failed to appear in court after signing a plea agreement, which arose out of federal charges in 2000 in the Central District of California related to Ward’s early conduct in the scheme. In 2002, Ward was indicted on multiple counts of bankruptcy fraud in the Northern District of California for continuing the scheme in and around San Francisco. On Aug. 17, 2012, Ward was indicted on mail fraud, aggravated identity theft, and additional bankruptcy fraud counts in the Central District of California after fleeing to Canada and continuing his fraud from there. While in Canada, Ward recruited Frederic Alan Gladle, who was indicted in the Central District of California for bankruptcy fraud and identity theft in 2011, and was sentenced in 2012 on his guilty plea to 61 months in custody for engaging in similar conduct.
On April 5, 2012, Ward was arrested in Canada by the Royal Canadian Mounted Police and the Waterloo Regional Police Service based on a U.S. provisional arrest warrant. On Dec. 21, 2012, Ward was extradited to the United States to answer all three sets of charges.
According to the plea agreement, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure. Ward promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee. Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy. Ward admitted that he obtained copies of unsuspecting debtors’ bankruptcy petitions and directed his clients to execute, notarize and record a grant deed transferring generally a 1/100th fractional interest in their distressed home into the name of the debtor that Ward provided. Then, after stealing the debtor’s identity, Ward faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy.
Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money for months and even years. In addition, if a distressed homeowner wanted to complete a loan modification or short sale, they were left to the mercy of Ward to send them forged deeds, supposedly signed by the debtors, to re-unify their title as required by most lenders.
As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country. During that same period, Ward admitted to collecting from his clients who paid for his illegal foreclosure-delay services more than $1.2 million.
The investigation was conducted by the Office of the Special Inspector General for the Troubled Asset Relief Program and the FBI, which received substantial assistance from the U.S. Trustee’s Office. In addition, the Office of International Affairs of the Department of Justice, Canadian Waterloo Regional Police Service and Royal Canadian Mounted Police provided exceptional support and assistance in connection with Ward’s arrest and extradition.
This case was prosecuted by Assistant U.S. Attorney Evan Davis of the U.S. Attorney’s Office for the Central District of California with assistance from the Criminal Division’s Fraud Section. Assistant U.S. Attorney Jonathan Schmidt is prosecuting the charges in the Northern District of California, which were transferred to the Central District of California for entry of the guilty pleas.
This prosecution is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.
Thursday, August 8, 2013
STATE DEPARTMENT PROGRAM PROMOTING GOVERNMENT ACCOUNTABILITY
FROM U.S. DEPARTMENT OF STATE
Promoting Greater Government Accountability Through the Extractive Industries Transparency Initiative
POSTED BY ROBERT F. CEKUTA
AUGUST 2, 2013
Last week was an important one here in Washington for the Extractive Industries Transparency Initiative (EITI), an international group that countries can join to promote accountability in the management of payments countries receive from oil, gas, and mining activities. While the United States has long supported the EITI as a donor, we have committed to joining the initiative as an implementing member and taking on the same obligations to boost transparency as other countries around the globe (USEITI). This step by the United States is a strong sign of the growing momentum towards greater transparency and accountability apparent in the world today.
The team of U.S. government, civil society, and company representatives that is charged with implementing USEITI met last week and discussed these developments with Clare Short, Chair of the international EITI Board (and former UK Development Minister).
I have the great pleasure of serving with Clare on the international EITI Board, where we worked hard to develop a set of changes in the EITI rules to enable the Initiative to have a greater impact benefiting citizens of the 39 member countries. It was not easy for the Board to agree on these changes and there were many strongly held points of view. After months of work and debate, we succeeded and the resulting consensus sets out a strong sense of what EITI should stand for and how to put in place systems to boost the government transparency and accountability that EITI seeks to promote.
In June, President Obama and all the G8 Leaders strongly supported this work. Their Lough Erne Summit statement references the EITI eleven times, which is a remarkable sign not only of how truly widely supported the EITI has become, but also of the growing awareness of the connection between sound governance, the ability of countries to attract capital, and economic prosperity. Several of our G8 partners – the UK, France, Germany, and Italy – are following the United States’ example by committing to implement or pilot the EITI at home. Other countries that have recently committed, including Colombia and Papua New Guinea, will also be looking to our domestic USEITI process for lessons learned.
So it is in this context that it was truly special to have Clare join us to see the USEITI process in action. Just as the international EITI Board discussed EITI’s goals at an international level, the USEITI representatives are working through what meaning EITI will have inside the United States. This group representing various American stakeholders is showing the Initiative’s goals are important and applicable to countries that already consider themselves quite transparent.
The work here underlines that EITI is about much more than just meeting the Initiative’s core requirement to publish reports matching company payments to government receipts. The USEITI discussions are highlighting that it is about bringing diverse groups together to identify what additional information the partners can make available to be even more transparent, and how to communicate accurate and timely information to the public about how the government is managing our oil, gas, and mining resources. In many cases it is even about pulling together and putting into context information that is already available, in order to help the average citizen hold their government accountable for responsible extractive sector management. And it will be important in many countries around in the world in seeing that the development of their natural resources benefits their people.
Promoting Greater Government Accountability Through the Extractive Industries Transparency Initiative
POSTED BY ROBERT F. CEKUTA
AUGUST 2, 2013
Last week was an important one here in Washington for the Extractive Industries Transparency Initiative (EITI), an international group that countries can join to promote accountability in the management of payments countries receive from oil, gas, and mining activities. While the United States has long supported the EITI as a donor, we have committed to joining the initiative as an implementing member and taking on the same obligations to boost transparency as other countries around the globe (USEITI). This step by the United States is a strong sign of the growing momentum towards greater transparency and accountability apparent in the world today.
The team of U.S. government, civil society, and company representatives that is charged with implementing USEITI met last week and discussed these developments with Clare Short, Chair of the international EITI Board (and former UK Development Minister).
I have the great pleasure of serving with Clare on the international EITI Board, where we worked hard to develop a set of changes in the EITI rules to enable the Initiative to have a greater impact benefiting citizens of the 39 member countries. It was not easy for the Board to agree on these changes and there were many strongly held points of view. After months of work and debate, we succeeded and the resulting consensus sets out a strong sense of what EITI should stand for and how to put in place systems to boost the government transparency and accountability that EITI seeks to promote.
In June, President Obama and all the G8 Leaders strongly supported this work. Their Lough Erne Summit statement references the EITI eleven times, which is a remarkable sign not only of how truly widely supported the EITI has become, but also of the growing awareness of the connection between sound governance, the ability of countries to attract capital, and economic prosperity. Several of our G8 partners – the UK, France, Germany, and Italy – are following the United States’ example by committing to implement or pilot the EITI at home. Other countries that have recently committed, including Colombia and Papua New Guinea, will also be looking to our domestic USEITI process for lessons learned.
So it is in this context that it was truly special to have Clare join us to see the USEITI process in action. Just as the international EITI Board discussed EITI’s goals at an international level, the USEITI representatives are working through what meaning EITI will have inside the United States. This group representing various American stakeholders is showing the Initiative’s goals are important and applicable to countries that already consider themselves quite transparent.
The work here underlines that EITI is about much more than just meeting the Initiative’s core requirement to publish reports matching company payments to government receipts. The USEITI discussions are highlighting that it is about bringing diverse groups together to identify what additional information the partners can make available to be even more transparent, and how to communicate accurate and timely information to the public about how the government is managing our oil, gas, and mining resources. In many cases it is even about pulling together and putting into context information that is already available, in order to help the average citizen hold their government accountable for responsible extractive sector management. And it will be important in many countries around in the world in seeing that the development of their natural resources benefits their people.
FORMER FBI SPECIAL AGENT CHARGED WITH BRIBERY
FROM: U.S. JUSTICE DEPARTMENT
Friday, August 2, 2013
Former FBI Special Agent and Two Co-Conspirators Charged with Bribery Scheme
A former FBI agent and two others have been charged in the Southern District of New York with engaging in a bribery scheme to secure confidential, internal law enforcement documents about a prominent individual in Bangladesh.
Acting Assistant U.S. Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York, and Inspector General Michael E. Horowitz of the Department of Justice made the announcement.
Robert Lustyik, 50, a former FBI special agent in the White Plains Resident Agency, is accused in a criminal complaint of conspiring with his friend, Johannes Thaler, 49, of soliciting cash payments from Thaler’s acquaintance, Rizve Ahmed, 34, aka “Caesar,” in exchange for confidential, internal law enforcement documents and information that Lustyik could access by virtue of his position at the FBI. Ahmed and Thaler were arrested today on the charges in the complaint and will be presented later today before U.S. Magistrate Judge George A. Yanthis in the federal court in White Plains. Lustyik is currently detained in connection with an unrelated indictment in U.S. District Court for the District of Utah, where he will be initially presented on the charges in the complaint.
Lustyik, Thaler, and Ahmed are each charged in a four-count complaint. Count one charges Lustyik, Thaler, and Ahmed with conspiring to bribe a public official. Count two charges Lustyik and Thaler with soliciting and receiving bribes. Count three charges Ahmed with bribing a public official and offering to bribe a public official. Count four charges Lustyik with unlawfully disclosing a Suspicious Activity Report.
If convicted, Lustyik, of Westchester County, faces a maximum sentence of 25 years in prison. Thaler, of Fairfield County, Conn., faces a maximum sentence of 20 years in prison. Ahmed, of Fairfield County, faces a maximum sentence of 20 years in prison.
According to allegations in the complaint unsealed today in the White Plains federal courthouse, from about September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme on behalf of Ahmed, a native of Bangladesh who sought confidential law enforcement information pertaining to a prominent citizen of Bangladesh who was affiliated with an opposing political party (Individual 1). Ahmed sought, among other things, to obtain information about Individual 1, to locate Individual 1, and to harm Individual 1 and others associated with Individual 1.
As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information. For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.” Thaler responded, “I know. It’s all right there in front of us. Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .” As another example, in or about late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, texted Thaler, “I want to kill [Ahmed] . . . . I hung my [***] out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to [Individual 1].”
According to the complaint, Lustyik and Thaler accepted at least $1,000 from Ahmed in exchange for confidential FBI information, including a Suspicious Activity Report. The complaint also alleges that Lustyik and Thaler schemed to obtain monthly cash bribes from Ahmed, in increments of tens of thousands of dollars, in exchange for the provision of additional confidential law enforcement information about Individual 1 and for assistance in having criminal charges against a Bangladeshi political figure dismissed.
This case was investigated by the Department of Justice’s Office of Inspector General. The prosecution is being handled by the U.S. Attorney’s Office for the Southern District of New York’s White Plains Division and by the Public Integrity Section of the U.S. Department of Justice’ Criminal Division. Assistant U. S. Attorney Benjamin Allee and Trial Attorney Emily Rae Woods are in charge of the prosecution.
The charges in the complaint are merely accusations, and the defendants are presumed innocent until and unless proven guilty.
Friday, August 2, 2013
Former FBI Special Agent and Two Co-Conspirators Charged with Bribery Scheme
A former FBI agent and two others have been charged in the Southern District of New York with engaging in a bribery scheme to secure confidential, internal law enforcement documents about a prominent individual in Bangladesh.
Acting Assistant U.S. Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York, and Inspector General Michael E. Horowitz of the Department of Justice made the announcement.
Robert Lustyik, 50, a former FBI special agent in the White Plains Resident Agency, is accused in a criminal complaint of conspiring with his friend, Johannes Thaler, 49, of soliciting cash payments from Thaler’s acquaintance, Rizve Ahmed, 34, aka “Caesar,” in exchange for confidential, internal law enforcement documents and information that Lustyik could access by virtue of his position at the FBI. Ahmed and Thaler were arrested today on the charges in the complaint and will be presented later today before U.S. Magistrate Judge George A. Yanthis in the federal court in White Plains. Lustyik is currently detained in connection with an unrelated indictment in U.S. District Court for the District of Utah, where he will be initially presented on the charges in the complaint.
Lustyik, Thaler, and Ahmed are each charged in a four-count complaint. Count one charges Lustyik, Thaler, and Ahmed with conspiring to bribe a public official. Count two charges Lustyik and Thaler with soliciting and receiving bribes. Count three charges Ahmed with bribing a public official and offering to bribe a public official. Count four charges Lustyik with unlawfully disclosing a Suspicious Activity Report.
If convicted, Lustyik, of Westchester County, faces a maximum sentence of 25 years in prison. Thaler, of Fairfield County, Conn., faces a maximum sentence of 20 years in prison. Ahmed, of Fairfield County, faces a maximum sentence of 20 years in prison.
According to allegations in the complaint unsealed today in the White Plains federal courthouse, from about September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme on behalf of Ahmed, a native of Bangladesh who sought confidential law enforcement information pertaining to a prominent citizen of Bangladesh who was affiliated with an opposing political party (Individual 1). Ahmed sought, among other things, to obtain information about Individual 1, to locate Individual 1, and to harm Individual 1 and others associated with Individual 1.
As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information. For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.” Thaler responded, “I know. It’s all right there in front of us. Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .” As another example, in or about late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, texted Thaler, “I want to kill [Ahmed] . . . . I hung my [***] out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to [Individual 1].”
According to the complaint, Lustyik and Thaler accepted at least $1,000 from Ahmed in exchange for confidential FBI information, including a Suspicious Activity Report. The complaint also alleges that Lustyik and Thaler schemed to obtain monthly cash bribes from Ahmed, in increments of tens of thousands of dollars, in exchange for the provision of additional confidential law enforcement information about Individual 1 and for assistance in having criminal charges against a Bangladeshi political figure dismissed.
This case was investigated by the Department of Justice’s Office of Inspector General. The prosecution is being handled by the U.S. Attorney’s Office for the Southern District of New York’s White Plains Division and by the Public Integrity Section of the U.S. Department of Justice’ Criminal Division. Assistant U. S. Attorney Benjamin Allee and Trial Attorney Emily Rae Woods are in charge of the prosecution.
The charges in the complaint are merely accusations, and the defendants are presumed innocent until and unless proven guilty.
LABOR DEPARTMENT, WAL-MART RESOLVE OSHA CITATIONS
FROM: U.S. DEPARTMENT OF LABOR
Wal-Mart signs corporate-wide settlement with US Labor Department
Agreement resolves OSHA citations at Rochester, N.Y., store following 2011 inspections
WASHINGTON —Wal-Mart Stores, Inc., has entered into a corporate-wide settlement agreement with the U.S. Department of Labor to improve safety and health conditions in all 2,857 Wal-Mart and Sam’s Club stores under federal jurisdiction. The settlement, which resolves two enforcement cases that began in 2011, includes provisions for the Bentonville, Ark.-based retailer to enhance safety and health practices and training related to trash compactors, cleaning chemicals and hazard communications corporate-wide.
“This settlement will help to keep thousands of exposed Wal-Mart workers safe and healthy on the job,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “We hope this sends a strong message that the law requires employers to provide safe working conditions, and OSHA will use all the tools at our disposal to ensure that all employers follow the law.”
Under the settlement, trash compactors must remain locked while not in use, and may not be operated except under the supervision of a trained manager or other trained, designated monitor. Wal-Mart will also improve its hazard communications training; and, for cleaning chemicals, will enhance its procedures to ensure that employees do not handle undiluted chemicals. Also, the company must ensure that a protective protocol is in place in case of any malfunctions with a store’s cleaning chemicals dispensing equipment. Wal-Mart will ensure employees are trained on the new procedures in a language, format, and vocabulary that the workers can understand.
For the safety citations pertinent to the corporate-wide trash compactor abatement, the settlement affirms one repeat lockout/tagout citation, two serious lockout/tagout citations, two serious confined space citations, and one serious machine guarding citation.
For the health citations pertinent to the corporate-wide cleaning chemical and hazard communication abatement, the settlement affirms two serious citations related to personal protective equipment, and two serious hazard communication citations.
A summary of the agreement will be posted in each affected store.
Settlement negotiations followed issuance of citations from two separate inspections conducted at the Wal-Mart Supercenter store in Rochester, N.Y. A safety inspection was initiated on Aug. 2, 2011, and a health inspection began Aug. 17, 2011. As part of the settlement, Wal-Mart has also agreed to abate other hazards in the Rochester store unrelated to the corporate-wide remedy, and will pay $190,000 in civil penalties.
For the citations not related to the corporate-wide abatement, citations affirmed in the settlement include one repeat electrical hazard citation, one serious citation for obstructed exit routes, two serious machine guarding citations, one repeat other-than-serious platform fall hazard citation, and 11 serious blood borne pathogens citations.
Wal-Mart signs corporate-wide settlement with US Labor Department
Agreement resolves OSHA citations at Rochester, N.Y., store following 2011 inspections
WASHINGTON —Wal-Mart Stores, Inc., has entered into a corporate-wide settlement agreement with the U.S. Department of Labor to improve safety and health conditions in all 2,857 Wal-Mart and Sam’s Club stores under federal jurisdiction. The settlement, which resolves two enforcement cases that began in 2011, includes provisions for the Bentonville, Ark.-based retailer to enhance safety and health practices and training related to trash compactors, cleaning chemicals and hazard communications corporate-wide.
“This settlement will help to keep thousands of exposed Wal-Mart workers safe and healthy on the job,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “We hope this sends a strong message that the law requires employers to provide safe working conditions, and OSHA will use all the tools at our disposal to ensure that all employers follow the law.”
Under the settlement, trash compactors must remain locked while not in use, and may not be operated except under the supervision of a trained manager or other trained, designated monitor. Wal-Mart will also improve its hazard communications training; and, for cleaning chemicals, will enhance its procedures to ensure that employees do not handle undiluted chemicals. Also, the company must ensure that a protective protocol is in place in case of any malfunctions with a store’s cleaning chemicals dispensing equipment. Wal-Mart will ensure employees are trained on the new procedures in a language, format, and vocabulary that the workers can understand.
For the safety citations pertinent to the corporate-wide trash compactor abatement, the settlement affirms one repeat lockout/tagout citation, two serious lockout/tagout citations, two serious confined space citations, and one serious machine guarding citation.
For the health citations pertinent to the corporate-wide cleaning chemical and hazard communication abatement, the settlement affirms two serious citations related to personal protective equipment, and two serious hazard communication citations.
A summary of the agreement will be posted in each affected store.
Settlement negotiations followed issuance of citations from two separate inspections conducted at the Wal-Mart Supercenter store in Rochester, N.Y. A safety inspection was initiated on Aug. 2, 2011, and a health inspection began Aug. 17, 2011. As part of the settlement, Wal-Mart has also agreed to abate other hazards in the Rochester store unrelated to the corporate-wide remedy, and will pay $190,000 in civil penalties.
For the citations not related to the corporate-wide abatement, citations affirmed in the settlement include one repeat electrical hazard citation, one serious citation for obstructed exit routes, two serious machine guarding citations, one repeat other-than-serious platform fall hazard citation, and 11 serious blood borne pathogens citations.
Wednesday, August 7, 2013
SEC OBTAINS COURT ORDER TO HALT ALLEGED HEDGE FUND FRAUD TARGETING MILITARY PERSONNEL
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Halts Ex-Marine’s Hedge Fund Fraud Targeting Fellow Military
FOR IMMEDIATE RELEASE
2013-149
Washington D.C., Aug. 6, 2013 —
The Securities and Exchange Commission today obtained an emergency court order to halt a hedge fund investment scheme by a former Marine living in the Chicago area who has been masquerading as a successful trader to defraud fellow veterans, current military, and other investors.
The SEC alleges that Clayton A. Cohn and his hedge fund management firm Market Action Advisors raised nearly $1.8 million from investors through a hedge fund he managed. Cohn lied to investors about his success as a trader, the performance of the hedge fund, his use of investor proceeds, and his personal stake in the hedge fund. Cohn only invested less than half of the money raised from investors and instead used more than $400,000 for such personal expenses as a Hollywood mansion, luxury automobile, and extravagant tabs at high-end nightclubs. He used his lavish lifestyle to carefully contrive the image of a successful trader and investor, when in reality he lost nearly all of the money invested through the hedge fund. In order to cover up his fraud and continue raising money from investors, Cohn generated phony hedge fund account statements showing annual returns exceeding 200 percent.
“Cohn lured fellow military and other investors into his hedge fund by portraying himself as a successful trader who generated massive returns for his investors,” said Timothy L. Warren, Acting Director of the Chicago Regional Office. “But Cohn’s hedge fund investors didn’t have a chance to make a profit since he never invested most of their money and promptly lost the portion he did invest.”
According to the SEC’s complaint filed in federal court in Chicago, Cohn targets mostly unsophisticated investors and has solicited friends, family members, and fellow veterans to invest in his hedge fund. Cohn controls a so-called charity called the Veterans Financial Education Network (VFEN) that purports to teach veterans how to understand and manage their money. Cohn has touted his Marine Corps pedigree in VFEN press releases and encourages veterans to find “a money-manager who is both trustworthy and knows what he is doing.” VFEN’s website identifies Cohn as a money manager who “manages millions of dollars.”
According to the SEC’s complaint, Cohn managed his hedge fund Market Action Capital Management through his investment advisory firm Market Action Advisors, which is registered with the state of Illinois. Cohn solicited investments by falsely claiming that he had major success as a personal trader and invested $1.5 million of his own money in the hedge fund. He also misrepresented that an accounting firm would audit the hedge fund’s financial statements.
The SEC alleges that Cohn had a record of trading losses, invested no more than $4,000 of his own money, and absconded with far more money for his personal expenses. The audit firm named by Cohn never agreed to audit the fund’s financial statements. Cohn continued to deceive investors after their initial investment by issuing account statements that showed annual returns of more than 200 percent for 2012 when the hedge fund actually lost money.
The SEC’s complaint charges Cohn and Market Action Advisors with violating the antifraud provisions of the federal securities laws. The court granted the SEC’s request for emergency relief including a temporary restraining order and asset freeze. The SEC further seeks permanent injunctions, disgorgement of ill-gotten gains, and financial penalties from Cohn and Market Action Advisors.
The SEC’s investigation was conducted by John J. Sikora, Jr. and Jason A. Howard, and the litigation will be led by Jonathan S. Polish.
SEC Halts Ex-Marine’s Hedge Fund Fraud Targeting Fellow Military
FOR IMMEDIATE RELEASE
2013-149
Washington D.C., Aug. 6, 2013 —
The Securities and Exchange Commission today obtained an emergency court order to halt a hedge fund investment scheme by a former Marine living in the Chicago area who has been masquerading as a successful trader to defraud fellow veterans, current military, and other investors.
The SEC alleges that Clayton A. Cohn and his hedge fund management firm Market Action Advisors raised nearly $1.8 million from investors through a hedge fund he managed. Cohn lied to investors about his success as a trader, the performance of the hedge fund, his use of investor proceeds, and his personal stake in the hedge fund. Cohn only invested less than half of the money raised from investors and instead used more than $400,000 for such personal expenses as a Hollywood mansion, luxury automobile, and extravagant tabs at high-end nightclubs. He used his lavish lifestyle to carefully contrive the image of a successful trader and investor, when in reality he lost nearly all of the money invested through the hedge fund. In order to cover up his fraud and continue raising money from investors, Cohn generated phony hedge fund account statements showing annual returns exceeding 200 percent.
“Cohn lured fellow military and other investors into his hedge fund by portraying himself as a successful trader who generated massive returns for his investors,” said Timothy L. Warren, Acting Director of the Chicago Regional Office. “But Cohn’s hedge fund investors didn’t have a chance to make a profit since he never invested most of their money and promptly lost the portion he did invest.”
According to the SEC’s complaint filed in federal court in Chicago, Cohn targets mostly unsophisticated investors and has solicited friends, family members, and fellow veterans to invest in his hedge fund. Cohn controls a so-called charity called the Veterans Financial Education Network (VFEN) that purports to teach veterans how to understand and manage their money. Cohn has touted his Marine Corps pedigree in VFEN press releases and encourages veterans to find “a money-manager who is both trustworthy and knows what he is doing.” VFEN’s website identifies Cohn as a money manager who “manages millions of dollars.”
According to the SEC’s complaint, Cohn managed his hedge fund Market Action Capital Management through his investment advisory firm Market Action Advisors, which is registered with the state of Illinois. Cohn solicited investments by falsely claiming that he had major success as a personal trader and invested $1.5 million of his own money in the hedge fund. He also misrepresented that an accounting firm would audit the hedge fund’s financial statements.
The SEC alleges that Cohn had a record of trading losses, invested no more than $4,000 of his own money, and absconded with far more money for his personal expenses. The audit firm named by Cohn never agreed to audit the fund’s financial statements. Cohn continued to deceive investors after their initial investment by issuing account statements that showed annual returns of more than 200 percent for 2012 when the hedge fund actually lost money.
The SEC’s complaint charges Cohn and Market Action Advisors with violating the antifraud provisions of the federal securities laws. The court granted the SEC’s request for emergency relief including a temporary restraining order and asset freeze. The SEC further seeks permanent injunctions, disgorgement of ill-gotten gains, and financial penalties from Cohn and Market Action Advisors.
The SEC’s investigation was conducted by John J. Sikora, Jr. and Jason A. Howard, and the litigation will be led by Jonathan S. Polish.
U.S. EXPORT-IMPORT BANK SAYS EXPORTS REACH ALL-TIME HIGH
FROM: EXPORT-IMPORT BANK
U.S. Exports Reach All-Time High of $191.2 Billion in June
Exports Up 41.5 Percent Since 2009
WASHINGTON, D.C. – The United States exported a record $191.2 billion of goods and services in June 2013, according to trade data was released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.
U.S. exports in June 2013 reached an all-time high, exceeding the previous record of $188.7 billion set in December 2012. The June export level is also 2.2 percent higher than that of the previous month.
“Today’s announcement of record-level U.S. exports in June is a testament to the strength of American exports. Increased exports mean more jobs here at home – the goal of President Obama’s National Export Initiative. We at Ex-Im Bank work every day to help American exporters and their workers succeed in selling their products and services in an increasingly competitive global marketplace,” said Ex-Im Bank Chairman and President Fred P. Hochberg.
Exports of goods and services over the past twelve months totaled $2.2 trillion, which is 41.5 percent above the level of exports in 2009. Exports have been growing at an annualized rate of 10.4 percent when compared to the same period in 2009.
Over the last twelve months, among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (28.6 percent), United Arab Emirates (23.1 percent), Russia (22.6 percent), Peru (21.9 percent), Chile (21.4 percent), Colombia (19.5 percent), Hong Kong (19.2 percent), Argentina (18.5 percent), South Africa (18.3 percent) and Venezuela (18.1 percent).
U.S. Exports Reach All-Time High of $191.2 Billion in June
Exports Up 41.5 Percent Since 2009
WASHINGTON, D.C. – The United States exported a record $191.2 billion of goods and services in June 2013, according to trade data was released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.
U.S. exports in June 2013 reached an all-time high, exceeding the previous record of $188.7 billion set in December 2012. The June export level is also 2.2 percent higher than that of the previous month.
“Today’s announcement of record-level U.S. exports in June is a testament to the strength of American exports. Increased exports mean more jobs here at home – the goal of President Obama’s National Export Initiative. We at Ex-Im Bank work every day to help American exporters and their workers succeed in selling their products and services in an increasingly competitive global marketplace,” said Ex-Im Bank Chairman and President Fred P. Hochberg.
Exports of goods and services over the past twelve months totaled $2.2 trillion, which is 41.5 percent above the level of exports in 2009. Exports have been growing at an annualized rate of 10.4 percent when compared to the same period in 2009.
Over the last twelve months, among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (28.6 percent), United Arab Emirates (23.1 percent), Russia (22.6 percent), Peru (21.9 percent), Chile (21.4 percent), Colombia (19.5 percent), Hong Kong (19.2 percent), Argentina (18.5 percent), South Africa (18.3 percent) and Venezuela (18.1 percent).
SECRETARY OF STATE KERRY'S STATEMENT ON THE FOUNDING OF ASEAN
FROM: U.S. STATE DEPARTMENT
Marking the Anniversary of the Founding of ASEAN
Press Statement
John Kerry
Secretary of State
Washington, DC
August 6, 2013
On behalf of President Obama and the people of the United States, we join the 600 million people of the member states of the Association of Southeast Asian Nations (ASEAN) - Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People's Democratic Republic, Malaysia, the Republic of the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Vietnam - in marking the 46th anniversary of the founding of ASEAN.
ASEAN plays a critical and growing role in Asia through promoting regional integration and maintaining regional security. As the central regional organization in Asia, ASEAN is the keystone for Asia’s multilateral architecture, including the ASEAN Regional Forum and the East Asia Summit.
The United States is deeply committed to supporting and partnering with ASEAN. The United States was the first dialogue partner nation to establish a dedicated mission to ASEAN. Our engagement with ASEAN has led to collaboration on everything from maritime security to investing in sustainable energy resources to development in the Lower Mekong sub-region.
I was privileged to participate in my first ASEAN-U.S. Ministerial meeting just last month in Brunei to advance our cooperation on this wide range of shared interests, and I look forward to deepening and broadening our cooperation in the coming years. And I know that President Obama looks forward to participating in the East Asia Summit and the ASEAN-U.S. Summit in Brunei in October.
As we celebrate the anniversary of the founding of ASEAN, know that the United States stands with you as a steadfast partner.
Marking the Anniversary of the Founding of ASEAN
Press Statement
John Kerry
Secretary of State
Washington, DC
August 6, 2013
On behalf of President Obama and the people of the United States, we join the 600 million people of the member states of the Association of Southeast Asian Nations (ASEAN) - Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People's Democratic Republic, Malaysia, the Republic of the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Vietnam - in marking the 46th anniversary of the founding of ASEAN.
ASEAN plays a critical and growing role in Asia through promoting regional integration and maintaining regional security. As the central regional organization in Asia, ASEAN is the keystone for Asia’s multilateral architecture, including the ASEAN Regional Forum and the East Asia Summit.
The United States is deeply committed to supporting and partnering with ASEAN. The United States was the first dialogue partner nation to establish a dedicated mission to ASEAN. Our engagement with ASEAN has led to collaboration on everything from maritime security to investing in sustainable energy resources to development in the Lower Mekong sub-region.
I was privileged to participate in my first ASEAN-U.S. Ministerial meeting just last month in Brunei to advance our cooperation on this wide range of shared interests, and I look forward to deepening and broadening our cooperation in the coming years. And I know that President Obama looks forward to participating in the East Asia Summit and the ASEAN-U.S. Summit in Brunei in October.
As we celebrate the anniversary of the founding of ASEAN, know that the United States stands with you as a steadfast partner.
FTC SEEKS CONTEMPT RULING AGAINST DEFENDANTS WHO VIOLATED A PERMANENT INJUNCTION
FROM: U.S. FEDERAL TRADE COMMISSION
FTC Seeks Contempt Ruling Against Suntasia Telemarketing Defendants
Defendants Ordered to Pay Over $11 Million in 2008
The Federal Trade Commission is seeking a contempt order in federal court against defendants previously involved in a massive, Florida-based marketing scheme, alleging that they violated the terms of a court-ordered permanent injunction by engaging in some of the same deceptive tactics that led to the FTC’s prior charges against them.
In 2007, the FTC took action against the defendants behind Suntasia Marketing, Inc., charging them with deceptively marketing negative option programs to consumers nationwide. According to the agency, the defendants defrauded consumers and charged their bank accounts without consent for various negative option programs, including memberships in discount buyer’s and travel clubs. In a negative option program, a company takes consumers’ silence or failure to cancel the program as acceptance of the offer and permission to debit funds from their accounts.
The defendants agreed to the 2008 injunction in order to settle the FTC’s charges. Under the settlement, 14 defendants involved in the scheme were required to pay more than $16 million. In particular, defendants Bryon Wolf and Roy Eliasson were required to pay over $11 million, and were barred from misrepresenting material facts regarding an offer, failing to disclose material terms of what they sell, debiting consumers’ accounts without their consent, and other unlawful acts.
But according to the FTC, within months of the court’s 2008 order, defendants Bryon Wolf and Roy Eliasson, and their firm Membership Services, LLC, which Wolf and Eliasson control, devised a new plan to defraud consumers. In this scheme, they targeted recent loan applicants with deceptive phone and Internet solicitations that misled consumers to believe the defendants would provide them with cash advances or loans, or general lines of credit. Instead of providing these services, the defendants debited consumers’ accounts for membership in a continuity program. Very few consumers used the program and many cancelled upon discovering their account had been debited by defendants. The continuity plans go under the names “Monster Rewards,” “Mongo,” and “Money on the Go.”
Based on this conduct, the FTC charged the defendants with violating the permanent injunction by making misrepresentations to consumers about their programs, by failing to make key disclosures, by failing to get express informed consent before debiting consumers’ accounts, and by failing to disclose clearly and promptly their programs during telemarketed solicitations. According to the FTC, through their deceptive actions, the defendants have netted over $9 million.
The civil contempt action was filed under seal in the U.S. District Court for the Middle District of Florida, Tampa Division on May 22, 2013, and unsealed by the Court on July 31, 2013. It names as defendants Bryon Wolf, Roy Eliasson, and Membership Services, LLC.
FTC Seeks Contempt Ruling Against Suntasia Telemarketing Defendants
Defendants Ordered to Pay Over $11 Million in 2008
The Federal Trade Commission is seeking a contempt order in federal court against defendants previously involved in a massive, Florida-based marketing scheme, alleging that they violated the terms of a court-ordered permanent injunction by engaging in some of the same deceptive tactics that led to the FTC’s prior charges against them.
In 2007, the FTC took action against the defendants behind Suntasia Marketing, Inc., charging them with deceptively marketing negative option programs to consumers nationwide. According to the agency, the defendants defrauded consumers and charged their bank accounts without consent for various negative option programs, including memberships in discount buyer’s and travel clubs. In a negative option program, a company takes consumers’ silence or failure to cancel the program as acceptance of the offer and permission to debit funds from their accounts.
The defendants agreed to the 2008 injunction in order to settle the FTC’s charges. Under the settlement, 14 defendants involved in the scheme were required to pay more than $16 million. In particular, defendants Bryon Wolf and Roy Eliasson were required to pay over $11 million, and were barred from misrepresenting material facts regarding an offer, failing to disclose material terms of what they sell, debiting consumers’ accounts without their consent, and other unlawful acts.
But according to the FTC, within months of the court’s 2008 order, defendants Bryon Wolf and Roy Eliasson, and their firm Membership Services, LLC, which Wolf and Eliasson control, devised a new plan to defraud consumers. In this scheme, they targeted recent loan applicants with deceptive phone and Internet solicitations that misled consumers to believe the defendants would provide them with cash advances or loans, or general lines of credit. Instead of providing these services, the defendants debited consumers’ accounts for membership in a continuity program. Very few consumers used the program and many cancelled upon discovering their account had been debited by defendants. The continuity plans go under the names “Monster Rewards,” “Mongo,” and “Money on the Go.”
Based on this conduct, the FTC charged the defendants with violating the permanent injunction by making misrepresentations to consumers about their programs, by failing to make key disclosures, by failing to get express informed consent before debiting consumers’ accounts, and by failing to disclose clearly and promptly their programs during telemarketed solicitations. According to the FTC, through their deceptive actions, the defendants have netted over $9 million.
The civil contempt action was filed under seal in the U.S. District Court for the Middle District of Florida, Tampa Division on May 22, 2013, and unsealed by the Court on July 31, 2013. It names as defendants Bryon Wolf, Roy Eliasson, and Membership Services, LLC.
IMMUNITY GENES FOUND IN SEA FANS
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| Photo Shows Sea Fan In Back. Credit: U.S. NOAA |
Sick Sea Fans: Undersea "Doctors" to the Rescue
Scientists discover genes involved in immunity of sea fans to coral diseases
Like all of us, corals get sick. They respond to pathogens (disease-causing microbes) and recover or die. But unlike us, they can't call a doctor for treatment.
Instead, help has arrived in the form of scientists who study the causes of the corals' disease, and the immune factors that might be important in their response and resistance.
With support from the National Science Foundation (NSF), scientists Drew Harvell and Colleen Burge of Cornell University and their colleagues have developed a catalog of genes that, the researchers say, will allow us to better understand the immune systems of corals called sea fans.
The marine ecologists have trained their undersea eyes on a particular sea fan species, Gorgonia ventalina, or the purple sea fan, found in the western Atlantic Ocean and the Caribbean Sea.
The team has monitored sea fan health in the Florida Keys, Mexican Yucatan and Puerto Rico for the past 15 years. The most recent research, in collaboration with Ernesto Weil of the University of Puerto Rico, is underway on reefs at La Parguera, Puerto Rico.
Gorgonia ventalina is a fan-shaped coral with several main branches and a latticework of smaller branches. Its skeleton is composed of calcite and gorgonian, a collagen-like compound. Purple sea fans often have smaller, accessory fans growing sideways out of their main fans.
These large sea fans fare best near shore in shallow waters with strong waves and on deeper outer reefs with strong currents, down to a depth of about 50 feet. Small polyps on the graceful fans catch plankton drifting by on fast-flowing currents.
Turning (more) purple
Life as a purple sea fan isn't always easy. The coral may be attacked by the fungus Aspergillus sydowii, which causes the disease aspergillosis.
It results in damaged patches on the fan, extreme purpling of tissues and sometimes death. Several outbreaks of aspergillosis have occurred in the Caribbean; corals in stressful conditions such as warming waters may be especially susceptible.
"Diseases and climate change are very tightly linked," says Mike Lesser, program director in NSF's Division of Ocean Sciences, which funds the research along with the joint NSF-National Institutes of Health Evolution and Ecology of Infectious Diseases (EEID) Program.
"The role of climate change in diseases is important," Lesser says, "for understanding the spread of infectious diseases in every corner of the globe, including the oceans."
Adds Sam Scheiner, NSF EEID program director, "Human-induced climate change is having profound effects on many parts of the world. As this research shows, coral reefs are being decimated by the combination of climate change and infectious diseases."
Undersea "doctors" come to sea fans' aid
Harvell agrees.
In a paper published earlier this year in The Annual Review of Marine Science, Harvell, Burge and other scientists reviewed climate change influences on marine infectious diseases.
Now the scientists are using the purple sea fan as a model for studying ocean diseases. "We're looking at microbial infection, pathways of defense and the health of this sea fan in the face of warming waters and climate change," says Harvell.
"All animals on Earth--from humans to fish to corals--are susceptible to infection by pathogens that cause illness," she says. "What we hope to answer is: How widespread are these infections? Why do they happen? And, what can we do about them?"
Coral reefs are declining worldwide. Even very old coral colonies in remote locations are dying. "Disease-related deaths are caused in part by pathogens alone and in part by interactions between pathogens and climate change," says Burge.
Many of these pathogens are unidentified, leaving sea fans and their coral relatives at high risk.
But the mystery is slowly being solved.
The scientists have discovered two pathogens in purple sea fans. The microbes are being cultured and used to examine how sea fans' immune systems work.
Past is prologue?
A look back a decade or more may provide clues to the present--and the future--for sea fans.
From 1996 through 2004, thousands of sea fans in the Caribbean died of aspergillosis. Many survived, however, and appear resistant to further attack.
But they're far from home free.
Purple sea fans are now being infected by a new pathogen, called Aplanochytrium. Burge was the first to isolate and culture the microbe from a sick sea fan.
Aplanochytrium is a member of an order of lethal microbes known as Labyrinthulomycetes. It grows faster at warmer temperatures, leaving sea fans in "hot water."
Corals don't have "immune memory," such as the T cells and antibodies found in humans. Instead they have an ancient defense system called the innate immune system.
Studying sea fans' immunity through their genes is an important step in protecting them, says Burge.
"We used molecular biology and bioinformatics--a combination of biology, computer science and information technology--to make a set of the genes' messages, called transcripts," she says. "Then we characterized these messages, which are known collectively as a transcriptome."
The results, reported this month in a paper in the journal Frontiers in Physiology, are the first to show which genes are activated in response to pathogens in sea fans. Co-authors of the paper are Burge, Harvell and Morgan Mouchka of Cornell, and Steven Roberts of the University of Washington.
Message in a (genetic) bottle
The purple sea fan may hold messages for the oceans, and for us, but the messages come in a genetic bottle.
The scientists studied what's called messenger RNA, which transfers genetic messages, in sea fans exposed to Aplanochytrium, comparing it with that of unexposed sea fans.
They found that the sea fans' genes hold clues to questions such as how the fans recognize and kill pathogens, and how they repair injured tissues.
The scientists are increasing the sea fan genetic "catalog" by adding genes expressed, or turned on, in response to record-breaking Caribbean Sea temperatures in 2010.
The researchers, working in Puerto Rico with Weil and Laura Mydlarz of the University of Texas at Arlington, assessed the effect of the 2010 Caribbean coral bleaching event, as it's known, on sea fans' genes and immune function.
The study compared immune system genes in a heat-sensitive coral species, Orbicella annularis, the boulder star coral, with that of Gorgonia ventalina.
The purple sea fan was thought to be resilient to the stresses of warming waters. But Gorgonia ventalina, the scientists found, is also susceptible to the double whammy of disease and warming.
-- Cheryl Dybas, NSF
Tuesday, August 6, 2013
SECRETARY OF DEFENSE HAGEL'S MESSAGE ON CIVILIAN FURLOUGHS
FROM: U.S. DEPARTMENT OF DEFENSE
SECRETARY OF DEFENSE CHUCK HAGEL MESSAGE ON REDUCING CIVILIAN FURLOUGHS
When I announced my decision on May 14 to impose furloughs of up to 11 days on civilian employees to help close the budget gap caused by sequestration, I also said we would do everything possible to find the money to reduce furlough days for our people. With the end of the fiscal year next month, managers across the DoD are making final decisions necessary to ensure we make the $37 billion spending cuts mandated by sequestration, while also doing everything possible to limit damage to military readiness and our workforce. We are joined in this regard by managers in non-defense agencies who are also working to accommodate sequestration cuts while minimizing mission damage. As part of that effort at the Department of Defense, I am announcing today that, thanks to the DoD's efforts to identify savings and help from Congress, we will reduce the total numbers of furlough days for DoD civilian employees from 11 to six.
When sequestration took effect on March 1, DoD faced shortfalls of more than $30 billion in its budget for day-to-day operating costs because of sequestration and problems with wartime funding. At that point we faced the very real possibility of unpaid furloughs for civilian employees of up to 22 days.
As early as January, DoD leaders began making painful and far reaching changes to close this shortfall: civilian hiring freezes, layoffs of temporary workers, significant cuts in facilities maintenance, and more. We also sharply cut training and maintenance. The Air Force stopped flying in many squadrons, the Navy kept ships in port, and the Army cancelled training events. These actions have seriously reduced military readiness.
By early May, even after taking these steps, we still faced day-to-day budgetary shortfalls of $11 billion. At that point I decided that cutting any deeper into training and maintenance would jeopardize our core readiness mission and national security, which is why I announced furloughs of 11 days.
Hoping to be able to reduce furloughs, we submitted a large reprogramming proposal to Congress in May, asking them to let us move funds from acquisition accounts into day-to-day operating accounts. Congress approved most of this request in late July, and we are working with them to meet remaining needs. We are also experiencing less than expected costs in some areas, such as transportation of equipment out of Afghanistan. Where necessary, we have taken aggressive action to transfer funds among services and agencies. And the furloughs have saved us money.
As a result of these management initiatives, reduced costs, and reprogramming from Congress, we have determined that we can make some improvements in training and readiness and still meet the sequestration cuts. The Air Force has begun flying again in key squadrons, the Army has increased funding for organizational training at selected units, and the Navy has restarted some maintenance and ordered deployments that otherwise would not have happened. While we are still depending on furlough savings, we will be able to make up our budgetary shortfall in this fiscal year with fewer furlough days than initially announced.
This has been one of the most volatile and uncertain budget cycles the Department of Defense has ever experienced. Our fiscal planning has been conducted under a cloud of uncertainty with the imposition of sequestration and changing rules as Congress made adjustments to our spending authorities.
As we look ahead to fiscal year 2014, less than two months away, the Department of Defense still faces major fiscal challenges. If Congress does not change the Budget Control Act, DoD will be forced to cut an additional $52 billion in FY 2014, starting on October 1. This represents 40 percent more than this year's sequester-mandated cuts of $37 billion. Facing this uncertainty, I cannot be sure what will happen next year, but I want to assure our civilian employees that we will do everything possible to avoid more furloughs.
I want to thank our civilian workers for their patience and dedication during these extraordinarily tough times, and for their continued service and devotion to our department and our country. I know how difficult this has been for all of you and your families. Your contribution to national security is invaluable, and I look forward to one day putting this difficult period behind us. Thank you and God Bless you and your families.
SECRETARY OF DEFENSE CHUCK HAGEL MESSAGE ON REDUCING CIVILIAN FURLOUGHS
When I announced my decision on May 14 to impose furloughs of up to 11 days on civilian employees to help close the budget gap caused by sequestration, I also said we would do everything possible to find the money to reduce furlough days for our people. With the end of the fiscal year next month, managers across the DoD are making final decisions necessary to ensure we make the $37 billion spending cuts mandated by sequestration, while also doing everything possible to limit damage to military readiness and our workforce. We are joined in this regard by managers in non-defense agencies who are also working to accommodate sequestration cuts while minimizing mission damage. As part of that effort at the Department of Defense, I am announcing today that, thanks to the DoD's efforts to identify savings and help from Congress, we will reduce the total numbers of furlough days for DoD civilian employees from 11 to six.
When sequestration took effect on March 1, DoD faced shortfalls of more than $30 billion in its budget for day-to-day operating costs because of sequestration and problems with wartime funding. At that point we faced the very real possibility of unpaid furloughs for civilian employees of up to 22 days.
As early as January, DoD leaders began making painful and far reaching changes to close this shortfall: civilian hiring freezes, layoffs of temporary workers, significant cuts in facilities maintenance, and more. We also sharply cut training and maintenance. The Air Force stopped flying in many squadrons, the Navy kept ships in port, and the Army cancelled training events. These actions have seriously reduced military readiness.
By early May, even after taking these steps, we still faced day-to-day budgetary shortfalls of $11 billion. At that point I decided that cutting any deeper into training and maintenance would jeopardize our core readiness mission and national security, which is why I announced furloughs of 11 days.
Hoping to be able to reduce furloughs, we submitted a large reprogramming proposal to Congress in May, asking them to let us move funds from acquisition accounts into day-to-day operating accounts. Congress approved most of this request in late July, and we are working with them to meet remaining needs. We are also experiencing less than expected costs in some areas, such as transportation of equipment out of Afghanistan. Where necessary, we have taken aggressive action to transfer funds among services and agencies. And the furloughs have saved us money.
As a result of these management initiatives, reduced costs, and reprogramming from Congress, we have determined that we can make some improvements in training and readiness and still meet the sequestration cuts. The Air Force has begun flying again in key squadrons, the Army has increased funding for organizational training at selected units, and the Navy has restarted some maintenance and ordered deployments that otherwise would not have happened. While we are still depending on furlough savings, we will be able to make up our budgetary shortfall in this fiscal year with fewer furlough days than initially announced.
This has been one of the most volatile and uncertain budget cycles the Department of Defense has ever experienced. Our fiscal planning has been conducted under a cloud of uncertainty with the imposition of sequestration and changing rules as Congress made adjustments to our spending authorities.
As we look ahead to fiscal year 2014, less than two months away, the Department of Defense still faces major fiscal challenges. If Congress does not change the Budget Control Act, DoD will be forced to cut an additional $52 billion in FY 2014, starting on October 1. This represents 40 percent more than this year's sequester-mandated cuts of $37 billion. Facing this uncertainty, I cannot be sure what will happen next year, but I want to assure our civilian employees that we will do everything possible to avoid more furloughs.
I want to thank our civilian workers for their patience and dedication during these extraordinarily tough times, and for their continued service and devotion to our department and our country. I know how difficult this has been for all of you and your families. Your contribution to national security is invaluable, and I look forward to one day putting this difficult period behind us. Thank you and God Bless you and your families.
TWO SENTENCED FOR DUMPING TONS OF ASBESTOS IN VIOLATION OF CLEAN WATER ACT
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, August 2, 2013
Two Sentenced in New York State for Dumping Thousands of Tons of Asbestos in Violation of the Clean Water Act
Two individuals, Donald Torriero and Julius DeSimone, were sentenced in federal court in Utica, N.Y., for illegally dumping thousands of tons of asbestos-contaminated construction debris on a 28-acre piece of property on the Mohawk River in upstate New York, the Justice Department announced.
U.S. District Judge David N. Hurd sentenced Torriero to serve 36 months in prison followed by three years of supervised release. Torriero was immediately remanded into custody of the U.S. Marshals. DeSimone was sentenced to five years’ probation, including six months of home confinement. Both were ordered to pay $492,000 in restitution for, among other things, cleanup expenses at the site.
The two pleaded guilty to conspiring to violate the Clean Water Act, the Superfund statute, wire fraud and to defrauding the United States. In addition, Torriero pleaded guilty to substantive wire fraud charges, and DeSimone was convicted of making false statements to law enforcement in connection with a fabricated "permit letter" the conspirators created and used to dump at the site.
According to the evidence, Torriero, DeSimone and others conspired to fill in the entire property over the course of five years with pulverized construction and demolition debris that was processed at New Jersey solid waste management facilities and then transported to open property in Frankfort, N.Y. The plot was uncovered by law enforcement just months after the operation began, but not before the conspirators had already dumped at least 400 truckloads of debris at the site. Much of the material that was dumped was placed in and around waters of the United States and some of the material was found to be contaminated with asbestos. The conspirators then concealed the illegal dumping and recruited others to join in the illegal dumping by fabricating a New York State Department of Environmental Conservation (DEC) permit and forged the name of a DEC official on the fraudulent permit.
“Torriero and DeSimone endangered the health of both their fellow citizens and sensitive wetlands by violating numerous laws meant to ensure the proper disposal of toxic materials. They also committed other criminal acts in their attempts to cover up their misdeeds,” stated Acting Assistant Attorney General Robert Dreher of the Justice Department’s Environment and Natural Resources Division. “Holding these men responsible for their criminal activities will serve as notice to others involved in similar schemes that the Justice Department will not tolerate such flagrant disregard for the law and the environment.”
“Asbestos can cause cancer and other serious respiratory diseases; there is no safe level of exposure to it,” said Vernesa Jones-Allen, Acting Special Agent in Charge of EPA’s Criminal Investigation Division in New York. “The defendants in this case conspired to illegally dispose asbestos containing material. This case demonstrates that the American people will not tolerate those who make money by breaking the law and damage the environment.”
“This case demonstrates the commitment of local, state and federal law enforcement agencies to work together to protect the environment and the health of the citizens we serve,” said Richard S. Hartunian, U.S. Attorney for the Northern District of New York. “I commend all the law enforcement officers involved in this case for their hard work in bringing Torriero and DeSimone to justice.”
“The disposal of hazardous materials is closely regulated in New York State to protect public health and our environment,” said New York State Department of Environmental Conservation (DEC) Commissioner Joe Martens. “The forgery of permits by the defendants in this case was a blatant and potentially dangerous criminal act that undermined the integrity of the permit system. I applaud the collaborative work of DEC investigators and partners to halt this illegal dumping, apprehend the perpetrators, and bring them to justice.”
This case is related to the guilty pleas and sentencings associated with Eagle Recycling, Mazza & Sons Inc., Dominick Mazza, Cross Nicastro and Jon Deck. Mr. Deck is the last remaining individual awaiting sentencing.
This case was investigated by the New York State Environmental Conservation Police, Bureau of Environmental Crimes, EPA’s Criminal Investigation Division, Internal Revenue Service, New Jersey State Police Office of Business Integrity Unit, New Jersey Department of Environmental Protection, and Ohio Department of Environmental Protection. The case is being prosecuted by Assistant U.S. Attorney Craig A. Benedict of the Northern District of New York, and Trial Attorneys Todd W. Gleason and Gary Donner of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Friday, August 2, 2013
Two Sentenced in New York State for Dumping Thousands of Tons of Asbestos in Violation of the Clean Water Act
Two individuals, Donald Torriero and Julius DeSimone, were sentenced in federal court in Utica, N.Y., for illegally dumping thousands of tons of asbestos-contaminated construction debris on a 28-acre piece of property on the Mohawk River in upstate New York, the Justice Department announced.
U.S. District Judge David N. Hurd sentenced Torriero to serve 36 months in prison followed by three years of supervised release. Torriero was immediately remanded into custody of the U.S. Marshals. DeSimone was sentenced to five years’ probation, including six months of home confinement. Both were ordered to pay $492,000 in restitution for, among other things, cleanup expenses at the site.
The two pleaded guilty to conspiring to violate the Clean Water Act, the Superfund statute, wire fraud and to defrauding the United States. In addition, Torriero pleaded guilty to substantive wire fraud charges, and DeSimone was convicted of making false statements to law enforcement in connection with a fabricated "permit letter" the conspirators created and used to dump at the site.
According to the evidence, Torriero, DeSimone and others conspired to fill in the entire property over the course of five years with pulverized construction and demolition debris that was processed at New Jersey solid waste management facilities and then transported to open property in Frankfort, N.Y. The plot was uncovered by law enforcement just months after the operation began, but not before the conspirators had already dumped at least 400 truckloads of debris at the site. Much of the material that was dumped was placed in and around waters of the United States and some of the material was found to be contaminated with asbestos. The conspirators then concealed the illegal dumping and recruited others to join in the illegal dumping by fabricating a New York State Department of Environmental Conservation (DEC) permit and forged the name of a DEC official on the fraudulent permit.
“Torriero and DeSimone endangered the health of both their fellow citizens and sensitive wetlands by violating numerous laws meant to ensure the proper disposal of toxic materials. They also committed other criminal acts in their attempts to cover up their misdeeds,” stated Acting Assistant Attorney General Robert Dreher of the Justice Department’s Environment and Natural Resources Division. “Holding these men responsible for their criminal activities will serve as notice to others involved in similar schemes that the Justice Department will not tolerate such flagrant disregard for the law and the environment.”
“Asbestos can cause cancer and other serious respiratory diseases; there is no safe level of exposure to it,” said Vernesa Jones-Allen, Acting Special Agent in Charge of EPA’s Criminal Investigation Division in New York. “The defendants in this case conspired to illegally dispose asbestos containing material. This case demonstrates that the American people will not tolerate those who make money by breaking the law and damage the environment.”
“This case demonstrates the commitment of local, state and federal law enforcement agencies to work together to protect the environment and the health of the citizens we serve,” said Richard S. Hartunian, U.S. Attorney for the Northern District of New York. “I commend all the law enforcement officers involved in this case for their hard work in bringing Torriero and DeSimone to justice.”
“The disposal of hazardous materials is closely regulated in New York State to protect public health and our environment,” said New York State Department of Environmental Conservation (DEC) Commissioner Joe Martens. “The forgery of permits by the defendants in this case was a blatant and potentially dangerous criminal act that undermined the integrity of the permit system. I applaud the collaborative work of DEC investigators and partners to halt this illegal dumping, apprehend the perpetrators, and bring them to justice.”
This case is related to the guilty pleas and sentencings associated with Eagle Recycling, Mazza & Sons Inc., Dominick Mazza, Cross Nicastro and Jon Deck. Mr. Deck is the last remaining individual awaiting sentencing.
This case was investigated by the New York State Environmental Conservation Police, Bureau of Environmental Crimes, EPA’s Criminal Investigation Division, Internal Revenue Service, New Jersey State Police Office of Business Integrity Unit, New Jersey Department of Environmental Protection, and Ohio Department of Environmental Protection. The case is being prosecuted by Assistant U.S. Attorney Craig A. Benedict of the Northern District of New York, and Trial Attorneys Todd W. Gleason and Gary Donner of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
READOUT: SECRETARY HAGEL'S CALL WITH EGYPTIAN DEFENSE MINISTER GENERAL AL-SISI
FROM: U.S. DEFENSE DEPARTMENT
Readout of Secretary Hagel's Call with Egyptian Defense Minister Gen. Abdul Fatah al-Sisi
Pentagon Press Secretary George Little issued the following readout:
"Secretary Hagel spoke with his Egyptian counterpart, Defense Gen. Abdul Fatah Al-Sisi this afternoon via telephone.
"Secretary Hagel and Minister Al-Sisi discussed progress in U.S. and EU mediation efforts led by Deputy Secretary of State Bill Burns and EU Special Representative Bernadino Leon.
"Minister Al-Sisi underscored his commitment to peaceful resolution of the ongoing protests, and thanked Secretary Hagel for U.S. support.
"Minister Al-Sisi affirmed the commitment of the interim civilian government to an inclusive political roadmap for all Egyptians."
Readout of Secretary Hagel's Call with Egyptian Defense Minister Gen. Abdul Fatah al-Sisi
Pentagon Press Secretary George Little issued the following readout:
"Secretary Hagel spoke with his Egyptian counterpart, Defense Gen. Abdul Fatah Al-Sisi this afternoon via telephone.
"Secretary Hagel and Minister Al-Sisi discussed progress in U.S. and EU mediation efforts led by Deputy Secretary of State Bill Burns and EU Special Representative Bernadino Leon.
"Minister Al-Sisi underscored his commitment to peaceful resolution of the ongoing protests, and thanked Secretary Hagel for U.S. support.
"Minister Al-Sisi affirmed the commitment of the interim civilian government to an inclusive political roadmap for all Egyptians."
READOUT OF SECRETARY HAGEL'S MEETING WITH AZERBAIJAN'S MINISTER OF DEFENSE
FROM: U.S. DEFENSE DEPARTMENT
Readout of Secretary Hagel's Meeting with Azerbaijan's Minister of Defense Safar Abiyev
Pentagon Press Secretary George Little provided the following readout:
"Secretary of Defense Chuck Hagel met with Azerbaijan's Minister of Defense Safar Abiyev today at the Pentagon.
"Secretary Hagel praised Azerbaijan for its support to efforts in Afghanistan, to include their sustained deployment with the International Security Assistance Force. In addition, he thanked Minister Abiyev for the valuable role Azerbaijan plays in providing ground, air and sea transit access for logistical support to Afghanistan.
"The two leaders agreed to continue to work together on issues to include North Atlantic Treaty Organization interoperability, counterterrorism, defense transformation and maritime security.
"Secretary Hagel and Minister Abiyev also discussed the regional situation. Secretary Hagel raised the recent inauguration of Iranian President Hassan Rouhani and reiterated that it is imperative that Iran take quick steps to resolve the international community's deep concerns over its nuclear program.
"Secretary Hagel recognizes Azerbaijan's role in fostering regional security and stability, and he looks forward to continuing the strategic partnership."
Readout of Secretary Hagel's Meeting with Azerbaijan's Minister of Defense Safar Abiyev
Pentagon Press Secretary George Little provided the following readout:
"Secretary of Defense Chuck Hagel met with Azerbaijan's Minister of Defense Safar Abiyev today at the Pentagon.
"Secretary Hagel praised Azerbaijan for its support to efforts in Afghanistan, to include their sustained deployment with the International Security Assistance Force. In addition, he thanked Minister Abiyev for the valuable role Azerbaijan plays in providing ground, air and sea transit access for logistical support to Afghanistan.
"The two leaders agreed to continue to work together on issues to include North Atlantic Treaty Organization interoperability, counterterrorism, defense transformation and maritime security.
"Secretary Hagel and Minister Abiyev also discussed the regional situation. Secretary Hagel raised the recent inauguration of Iranian President Hassan Rouhani and reiterated that it is imperative that Iran take quick steps to resolve the international community's deep concerns over its nuclear program.
"Secretary Hagel recognizes Azerbaijan's role in fostering regional security and stability, and he looks forward to continuing the strategic partnership."
SEC CHARGES FORMER OFFICERS AND INVESTOR IN DEFUNCT COMPANY FOR ROLES IN PENNY STOCK SCHEME
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Former Officers and Investor in Houston Company in Fraudulent Penny Stock Scheme
The Securities and Exchange Commission today charged two former officers of now-defunct PGI Energy, Inc., as well as an investor in the company, for their roles in a fraudulent penny stock scheme to issue purportedly unrestricted PGI Energy shares in the public markets.
The SEC's complaint, filed in U.S. District Court for the Southern District of Texas, alleges that starting in 2011, PGI Energy's former Chief Investment Officer Robert Gandy and former CEO and Chairman Marcellous McZeal engaged in a scheme that included creating false promissory notes, signing misleading certifications, and altering the company's balance sheet to cause its transfer agent to issue millions of PGI Energy common stock shares without restrictive legends. The SEC also charged investor Alvin Ausbon for his role in the scheme, which included signing false promissory notes and diverting proceeds from the sale of PGI Energy stock back to the company and Gandy.
Gandy is also the CEO of Houston-based Pythagoras Group, which purports to be an "investment banking firm." McZeal is an attorney licensed in Texas. The complaint alleges that Gandy and McZeal made material misstatements and provided false documents to attorneys and a transfer agent who relied on them to conclude that PGI Energy shares could be issued without restrictive legends. The SEC alleges that Gandy and McZeal backdated promissory notes that purported to memorialize debt supposedly owed by PGI Energy and a prior business venture. They also are alleged to have added false debt to PGI Energy's balance sheet, and signed bogus "gift" letters and certifications of non-shell status, all in an effort to get unrestricted, free-trading PGI Energy shares unlawfully released into the market. Ausbon is charged with furthering the scheme by signing bogus promissory notes and remitting proceeds from the sale of PGI Energy shares back to the company and Gandy.
According to the complaint, the scheme collapsed in February 2012 when the SEC ordered a temporary suspension of trading in PGI Energy's securities, due to questions regarding the accuracy and adequacy of the company's representations in press releases and other public statements.
The SEC's complaint charges all defendants with violating Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, a financial penalty, and penny stock bars against all three defendants and officer and director bars against Gandy and McZeal.
Without admitting or denying the allegations in the SEC's complaint, McZeal has consented to the entry of a final judgment enjoining him from future violations of Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. He has also agreed to pay disgorgement plus prejudgment interest thereon of $19,919.37 and a civil penalty of $70,000. In addition, McZeal has agreed to permanent officer and director and penny stock bars. This settlement is subject to court approval. Subject to final settlement of the district court proceeding, McZeal has also agreed to the institution of a settled administrative proceeding pursuant to Rule 102(e) of the SEC's Rules of Practice, pursuant to which he would be barred from appearing before the SEC as an attorney.
SEC Charges Former Officers and Investor in Houston Company in Fraudulent Penny Stock Scheme
The Securities and Exchange Commission today charged two former officers of now-defunct PGI Energy, Inc., as well as an investor in the company, for their roles in a fraudulent penny stock scheme to issue purportedly unrestricted PGI Energy shares in the public markets.
The SEC's complaint, filed in U.S. District Court for the Southern District of Texas, alleges that starting in 2011, PGI Energy's former Chief Investment Officer Robert Gandy and former CEO and Chairman Marcellous McZeal engaged in a scheme that included creating false promissory notes, signing misleading certifications, and altering the company's balance sheet to cause its transfer agent to issue millions of PGI Energy common stock shares without restrictive legends. The SEC also charged investor Alvin Ausbon for his role in the scheme, which included signing false promissory notes and diverting proceeds from the sale of PGI Energy stock back to the company and Gandy.
Gandy is also the CEO of Houston-based Pythagoras Group, which purports to be an "investment banking firm." McZeal is an attorney licensed in Texas. The complaint alleges that Gandy and McZeal made material misstatements and provided false documents to attorneys and a transfer agent who relied on them to conclude that PGI Energy shares could be issued without restrictive legends. The SEC alleges that Gandy and McZeal backdated promissory notes that purported to memorialize debt supposedly owed by PGI Energy and a prior business venture. They also are alleged to have added false debt to PGI Energy's balance sheet, and signed bogus "gift" letters and certifications of non-shell status, all in an effort to get unrestricted, free-trading PGI Energy shares unlawfully released into the market. Ausbon is charged with furthering the scheme by signing bogus promissory notes and remitting proceeds from the sale of PGI Energy shares back to the company and Gandy.
According to the complaint, the scheme collapsed in February 2012 when the SEC ordered a temporary suspension of trading in PGI Energy's securities, due to questions regarding the accuracy and adequacy of the company's representations in press releases and other public statements.
The SEC's complaint charges all defendants with violating Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, a financial penalty, and penny stock bars against all three defendants and officer and director bars against Gandy and McZeal.
Without admitting or denying the allegations in the SEC's complaint, McZeal has consented to the entry of a final judgment enjoining him from future violations of Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. He has also agreed to pay disgorgement plus prejudgment interest thereon of $19,919.37 and a civil penalty of $70,000. In addition, McZeal has agreed to permanent officer and director and penny stock bars. This settlement is subject to court approval. Subject to final settlement of the district court proceeding, McZeal has also agreed to the institution of a settled administrative proceeding pursuant to Rule 102(e) of the SEC's Rules of Practice, pursuant to which he would be barred from appearing before the SEC as an attorney.
VAN ALLEN SPEED
FROM: LOS ALAMOS NATIONAL LABORATORY
Van Allen Probes Pinpoint Driver of Speeding Electrons
Research team solves decades-old mystery that threatens satellites
LOS ALAMOS, N.M., July 25, 2013—Researchers believe they have solved a lingering mystery about how electrons within Earth’s radiation belt can suddenly become energetic enough to kill orbiting satellites. Thanks to data gathered from an intrepid pair of NASA probes roaming the harsh space environment within the Van Allen radiation belts, scientists have identified an internal electron accelerator operating within the belts.
"For years we thought the Van Allen belts were pretty well behaved and changed slowly," said Geoffrey Reeves of Los Alamos National Laboratory’s Intelligence and Space Research Division. "With more measurements, however, we realized how quickly and unpredictably the radiation belts change, and now we have real evidence that the changes originate from within the belts themselves."
In a paper released today in Science Express, Reeves and colleagues from the University of New Hampshire, University of Colorado at Boulder, NASA Goddard Flight Center, Aerospace Corporation, University of California-Los Angeles, and University of Iowa, describe a mechanism by which electrons suddenly accelerate to fantastic speeds within the Van Allen belts— a pair of donut shaped zones of charged particles that surround Earth and occupy the inner region of our planet’s Magnetosphere.
Traveling at 99 percent the speed of light, the super-fast electrons are among the speediest particles naturally produced by Earth, and have energies so high that they can penetrate and destroy satellite components. The research paves the way for scientists to possibly predict hazardous space weather and allow satellite operators to potentially prepare for the ravages of sudden space storms.
The radiation belts, named after their discoverer, James Van Allen, are comprised of an outer region of extremely high-energy electrons, with an inner region of energetic protons and electrons. The belts have been studied extensively since the dawn of the Space Age, because the high-energy particles in the outer ring can cripple or disrupt spacecraft. Long-term observation of the belts have hinted that the belts can act as efficient and powerful particle accelerators; recent observations by the Van Allen Probes (formerly known as the Radiation Belt Storm Probes)—a pair of spacecraft launched in August 2012—now seem to confirm this.
On October 9, 2012, while flying through the radiation belts, the Van Allen Probes measured a sudden, nearly thousand-fold increase in the energy of electrons within the outer belt. The rapid increase came on the heels of a period of waning energies the week before. The October 9 event mimicked an observed, but poorly understood event measured in 1997 by another spacecraft. Ever since the 1997 event, scientists have pondered whether the increase in electron energy was the result of forces outside of the belts, a mechanism known as "radial acceleration," or from forces within the belts, known as "local acceleration." Data from the Van Allen Probes seems to put this question to rest.
Because the twin Van Allen Probes follow each other and cut through the belts at different times, researchers were able to see that the October 9 increase originated from within the heart of the belts, indicative of local acceleration. The data also showed that higher electron fluxes did not move from a region outside of the belts slowly toward our planet, a detail corroborated by other geosynchronous satellites located outside of the belts.
"In the October 9, 2012, event, all of the acceleration took place in about 12 hours," said Reeves, a space physicist and principal author of the Science paper. "With previous measurement, a satellite might have only been able to fly through such an event once and not get a chance to witness the changes actually happening."
The researchers are now trying to understand exactly how the acceleration took place. Right now, the team believes that electromagnetic radio waves somehow excite the electrons into a higher-energy state, much like a microwave oven excites and heats water molecules. Members of the team are looking hard at waves known as "Chorus Waves" that are often observed in the region of the belts where the local acceleration was strongest. Chorus Waves are a type of electromagnetic radio wave with frequencies within the range of human hearing. Chorus Waves provide a haunting cacophony like a flock of extraterrestrial birds.
"We don’t know whether it is Chorus Waves or some other type of electromagnetic wave that’s behind the electron acceleration we are seeing," said Reeves, "but the Van Allen Probes are also equipped with instruments that should help us figure that out as well. Each of these discoveries take us a step closer to the goal of forecasting these extreme space weather events and making space safer for satellites."
Van Allen Probes Pinpoint Driver of Speeding Electrons
Research team solves decades-old mystery that threatens satellites
LOS ALAMOS, N.M., July 25, 2013—Researchers believe they have solved a lingering mystery about how electrons within Earth’s radiation belt can suddenly become energetic enough to kill orbiting satellites. Thanks to data gathered from an intrepid pair of NASA probes roaming the harsh space environment within the Van Allen radiation belts, scientists have identified an internal electron accelerator operating within the belts.
"For years we thought the Van Allen belts were pretty well behaved and changed slowly," said Geoffrey Reeves of Los Alamos National Laboratory’s Intelligence and Space Research Division. "With more measurements, however, we realized how quickly and unpredictably the radiation belts change, and now we have real evidence that the changes originate from within the belts themselves."
In a paper released today in Science Express, Reeves and colleagues from the University of New Hampshire, University of Colorado at Boulder, NASA Goddard Flight Center, Aerospace Corporation, University of California-Los Angeles, and University of Iowa, describe a mechanism by which electrons suddenly accelerate to fantastic speeds within the Van Allen belts— a pair of donut shaped zones of charged particles that surround Earth and occupy the inner region of our planet’s Magnetosphere.
Traveling at 99 percent the speed of light, the super-fast electrons are among the speediest particles naturally produced by Earth, and have energies so high that they can penetrate and destroy satellite components. The research paves the way for scientists to possibly predict hazardous space weather and allow satellite operators to potentially prepare for the ravages of sudden space storms.
The radiation belts, named after their discoverer, James Van Allen, are comprised of an outer region of extremely high-energy electrons, with an inner region of energetic protons and electrons. The belts have been studied extensively since the dawn of the Space Age, because the high-energy particles in the outer ring can cripple or disrupt spacecraft. Long-term observation of the belts have hinted that the belts can act as efficient and powerful particle accelerators; recent observations by the Van Allen Probes (formerly known as the Radiation Belt Storm Probes)—a pair of spacecraft launched in August 2012—now seem to confirm this.
On October 9, 2012, while flying through the radiation belts, the Van Allen Probes measured a sudden, nearly thousand-fold increase in the energy of electrons within the outer belt. The rapid increase came on the heels of a period of waning energies the week before. The October 9 event mimicked an observed, but poorly understood event measured in 1997 by another spacecraft. Ever since the 1997 event, scientists have pondered whether the increase in electron energy was the result of forces outside of the belts, a mechanism known as "radial acceleration," or from forces within the belts, known as "local acceleration." Data from the Van Allen Probes seems to put this question to rest.
Because the twin Van Allen Probes follow each other and cut through the belts at different times, researchers were able to see that the October 9 increase originated from within the heart of the belts, indicative of local acceleration. The data also showed that higher electron fluxes did not move from a region outside of the belts slowly toward our planet, a detail corroborated by other geosynchronous satellites located outside of the belts.
"In the October 9, 2012, event, all of the acceleration took place in about 12 hours," said Reeves, a space physicist and principal author of the Science paper. "With previous measurement, a satellite might have only been able to fly through such an event once and not get a chance to witness the changes actually happening."
The researchers are now trying to understand exactly how the acceleration took place. Right now, the team believes that electromagnetic radio waves somehow excite the electrons into a higher-energy state, much like a microwave oven excites and heats water molecules. Members of the team are looking hard at waves known as "Chorus Waves" that are often observed in the region of the belts where the local acceleration was strongest. Chorus Waves are a type of electromagnetic radio wave with frequencies within the range of human hearing. Chorus Waves provide a haunting cacophony like a flock of extraterrestrial birds.
"We don’t know whether it is Chorus Waves or some other type of electromagnetic wave that’s behind the electron acceleration we are seeing," said Reeves, "but the Van Allen Probes are also equipped with instruments that should help us figure that out as well. Each of these discoveries take us a step closer to the goal of forecasting these extreme space weather events and making space safer for satellites."
Monday, August 5, 2013
USDA'S ONGOING EFFORTS TO ASSIST DROUGHT IMPACTED RANCHERS
FROM: U.S. DEPARTMENT OF AGRICULTURE
USDA Announces Ongoing Efforts to Assist Ranchers Impacted by Drought
WASHINGTON, Aug. 5, 2013 - As severe drought conditions persist in certain regions throughout the country, the U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) Administrator Juan M. Garcia today announced temporary assistance to livestock producers through FSA's Conservation Reserve Program (CRP). Under limited conditions, farmers and ranchers affected by drought will be allowed to use certain additional CRP acres for haying or grazing under emergency conditions while maintaining safeguards to the conservation and wildlife benefits provided by CRP. In addition, USDA announced that the reduction to CRP annual rental payments related to emergency haying or grazing will be reduced from 25 percent to 10 percent. Further, the sale of hay will be allowed under certain conditions. These measures take into consideration the quality losses of the hay and will provide needed assistance to livestock producers.
"Beginning today, state FSA offices are authorized, under limited conditions, to expand opportunities for haying and grazing on certain additional lands enrolled in CRP," said Garcia. "This local approach provides both the appropriate flexibility and ability to tailor safeguards specific to regional conditions. States must adhere to specific guidelines to ensure that additional haying and grazing still maintains the important environmental and wildlife benefits of CRP. These safeguards will be determined through consultation with the state conservationist, state fish and wildlife agency and stakeholders that comprise the state technical committee."
CRP is a voluntary program that provides producers annual rental payments on their land in exchange for planting resource-conserving vegetation on cropland to help prevent erosion, provide wildlife habitat and improve the environment. CRP acres enrolled under certain practices can already be used for emergency haying and grazing during natural disasters to provide much-needed feed to livestock. FSA state offices have already opened haying, grazing or both in 432 counties in response to natural disaster this year.
Given the continued multi-year drought in some regions, forage for livestock is already substantially reduced. The action today will allow lands that are not typically eligible for emergency haying and grazing to be used with appropriate protections to maintain the CRP environmental and wildlife benefits. The expanded haying and grazing will only be allowed following the local primary nesting season, which already has passed in many areas. Especially sensitive lands such as stream buffers are generally not eligible.
FSA also has taken action under the Emergency Conservation Program to authorize additional expenditures related to drought response to be eligible for cost share, including connection to rural water systems and installation of permanent pipelines. In addition, given the limited budgetary resources and better long term benefits, FSA has increased the maximum cost share rates for permanent practices relative to temporary measures.
FSA encourages all farmers and ranchers to contact their local USDA Farm Service Agency Service Center to report damage to crops or livestock loss. In addition, USDA reminds livestock producers to keep thorough records of losses, including additional expenses for such things as feed purchased due to lost supplies.
USDA Announces Ongoing Efforts to Assist Ranchers Impacted by Drought
WASHINGTON, Aug. 5, 2013 - As severe drought conditions persist in certain regions throughout the country, the U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) Administrator Juan M. Garcia today announced temporary assistance to livestock producers through FSA's Conservation Reserve Program (CRP). Under limited conditions, farmers and ranchers affected by drought will be allowed to use certain additional CRP acres for haying or grazing under emergency conditions while maintaining safeguards to the conservation and wildlife benefits provided by CRP. In addition, USDA announced that the reduction to CRP annual rental payments related to emergency haying or grazing will be reduced from 25 percent to 10 percent. Further, the sale of hay will be allowed under certain conditions. These measures take into consideration the quality losses of the hay and will provide needed assistance to livestock producers.
"Beginning today, state FSA offices are authorized, under limited conditions, to expand opportunities for haying and grazing on certain additional lands enrolled in CRP," said Garcia. "This local approach provides both the appropriate flexibility and ability to tailor safeguards specific to regional conditions. States must adhere to specific guidelines to ensure that additional haying and grazing still maintains the important environmental and wildlife benefits of CRP. These safeguards will be determined through consultation with the state conservationist, state fish and wildlife agency and stakeholders that comprise the state technical committee."
CRP is a voluntary program that provides producers annual rental payments on their land in exchange for planting resource-conserving vegetation on cropland to help prevent erosion, provide wildlife habitat and improve the environment. CRP acres enrolled under certain practices can already be used for emergency haying and grazing during natural disasters to provide much-needed feed to livestock. FSA state offices have already opened haying, grazing or both in 432 counties in response to natural disaster this year.
Given the continued multi-year drought in some regions, forage for livestock is already substantially reduced. The action today will allow lands that are not typically eligible for emergency haying and grazing to be used with appropriate protections to maintain the CRP environmental and wildlife benefits. The expanded haying and grazing will only be allowed following the local primary nesting season, which already has passed in many areas. Especially sensitive lands such as stream buffers are generally not eligible.
FSA also has taken action under the Emergency Conservation Program to authorize additional expenditures related to drought response to be eligible for cost share, including connection to rural water systems and installation of permanent pipelines. In addition, given the limited budgetary resources and better long term benefits, FSA has increased the maximum cost share rates for permanent practices relative to temporary measures.
FSA encourages all farmers and ranchers to contact their local USDA Farm Service Agency Service Center to report damage to crops or livestock loss. In addition, USDA reminds livestock producers to keep thorough records of losses, including additional expenses for such things as feed purchased due to lost supplies.
JUSTICE DEPARTMENT SUBMITTED REMEDY TO SETTLE E-BOOK PRICE-FIXING CASE
FROM: U.S. DEPARTMENT OF JUSTICE
Remedy Would Require Apple to Terminate Agreements with Five Publishers; Provide for a Court-Appointed External Monitor; Allow Competitors to Provide Links from Their E-Book Apps to Their E-Bookstores
WASHINGTON — The Department of Justice and 33 State Attorneys General today submitted to the court a proposed remedy to address Apple Inc.’s illegal conduct, following the July 10, 2013, U.S. District Court for the Southern District of New York decision finding that Apple conspired to fix the prices of e-books in the United States. The proposed relief is intended to halt Apple’s anticompetitive conduct, restore lost competition and prevent a recurrence of the illegal activities.
“The court found that Apple’s illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay substantially higher prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Under the department’s proposed order, Apple’s illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future.”
The department's proposal, if approved by the court, will require Apple to terminate its existing agreements with the five major publishers with which it conspired – Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC, which does business as Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc. – and to refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price. Under the department’s proposed remedy, Apple will be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms. Apple will also be prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content. To reset competition to the conditions that existed before the conspiracy, Apple must also for two years allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.
Additionally, the Department of Justice is asking the court to appoint an external monitor to ensure that Apple's internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers. The monitor, whose salary and expenses will be paid by Apple, will work with an internal antitrust compliance officer who will be hired by and report exclusively to the outside directors comprising Apple’s audit committee. The antitrust compliance officer will be responsible for training Apple’s senior executives and other employees about the antitrust laws and ensuring that Apple abides by the relief ordered by the court.
On April 11, 2012, the department filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, for conspiring to end e-book retailers' freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for e-books.
At the same time that it filed the lawsuit, the department reached settlements with three of the publishers – Hachette, HarperCollins and Simon & Schuster. Those settlements were approved by the court in September 2012. The department settled with Penguin on Dec. 18, 2012, and with Macmillan on Feb. 8, 2013. The Penguin settlement was approved by the court in May 2013. Final approval of the Macmillan settlement is pending before the court. Under the settlements, each publisher was required to terminate agreements that prevented e-book retailers from lowering the prices at which they sell e-books to consumers and to allow for retail price competition in renegotiated e-book distribution agreements.
The department's trial against Apple, which was overseen by Judge Denise Cote, began on June 3, 2013. The trial lasted for three weeks, with closing arguments taking place on June 20, 2013. The court issued its opinion that Apple Inc. violated Section 1 of the Sherman Act on July 10, 2013. The court will hold a hearing on remedies on Aug. 9, 2013.
Remedy Would Require Apple to Terminate Agreements with Five Publishers; Provide for a Court-Appointed External Monitor; Allow Competitors to Provide Links from Their E-Book Apps to Their E-Bookstores
WASHINGTON — The Department of Justice and 33 State Attorneys General today submitted to the court a proposed remedy to address Apple Inc.’s illegal conduct, following the July 10, 2013, U.S. District Court for the Southern District of New York decision finding that Apple conspired to fix the prices of e-books in the United States. The proposed relief is intended to halt Apple’s anticompetitive conduct, restore lost competition and prevent a recurrence of the illegal activities.
“The court found that Apple’s illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay substantially higher prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Under the department’s proposed order, Apple’s illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future.”
The department's proposal, if approved by the court, will require Apple to terminate its existing agreements with the five major publishers with which it conspired – Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC, which does business as Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc. – and to refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price. Under the department’s proposed remedy, Apple will be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms. Apple will also be prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content. To reset competition to the conditions that existed before the conspiracy, Apple must also for two years allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.
Additionally, the Department of Justice is asking the court to appoint an external monitor to ensure that Apple's internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers. The monitor, whose salary and expenses will be paid by Apple, will work with an internal antitrust compliance officer who will be hired by and report exclusively to the outside directors comprising Apple’s audit committee. The antitrust compliance officer will be responsible for training Apple’s senior executives and other employees about the antitrust laws and ensuring that Apple abides by the relief ordered by the court.
On April 11, 2012, the department filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, for conspiring to end e-book retailers' freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for e-books.
At the same time that it filed the lawsuit, the department reached settlements with three of the publishers – Hachette, HarperCollins and Simon & Schuster. Those settlements were approved by the court in September 2012. The department settled with Penguin on Dec. 18, 2012, and with Macmillan on Feb. 8, 2013. The Penguin settlement was approved by the court in May 2013. Final approval of the Macmillan settlement is pending before the court. Under the settlements, each publisher was required to terminate agreements that prevented e-book retailers from lowering the prices at which they sell e-books to consumers and to allow for retail price competition in renegotiated e-book distribution agreements.
The department's trial against Apple, which was overseen by Judge Denise Cote, began on June 3, 2013. The trial lasted for three weeks, with closing arguments taking place on June 20, 2013. The court issued its opinion that Apple Inc. violated Section 1 of the Sherman Act on July 10, 2013. The court will hold a hearing on remedies on Aug. 9, 2013.
SATELLITE VIEW OF LOW PRESSURE SYSTEM OFF SOUTHEAST COAST OF AUSTRALIA
FROM: NASA
In late July 2013, a low pressure system off Australia’s southeast coast and moist onshore winds combined to create unsettled weather across central Australia – and a striking image of a broad cloud band across the stark winter landscape. The Moderate Resolution Imaging Spectroradiometer (MODIS) aboard NASA’s Terra satellite captured this true-color image on July 22 at 01:05 UTC (10:35 a.m. Australian Central Standard Time). To the west of the low pressure trough the skies are clear and dry. To the east, the broad band of bright white clouds obscures the landscape. The system brought wind, precipitation and cooler temperatures to the region. Image Credit: NASA/Jeff Schmaltz, MODIS Land Rapid Response Team, NASA GSFC
LABOR DEPARTMENT OBTAINS INJUNCTION AGAINST PENSION PLAN FIDUCIARIES
FROM: U.S. DEPARTMENT OF LABOR
US Labor Department obtains preliminary injunction against Kentucky-based plan fiduciaries, alleging improper use of retirement funds
LEXINGTON, Ky. — The U.S. District Court for the Eastern District of Kentucky on July 26 granted in part the U.S. Department of Labor's motion for a preliminary injunction against George S. Hofmeister and Bernard Tew, former fiduciaries of four Lexington-based pension plans: the Hillsdale Salaried, Hillsdale Hourly, Revstone Casting Fairfield GMP Local 359, and Fourslides Inc.
The department previously filed lawsuits in the same court that named Hofmeister and Tew, among others. Hofmeister was the trustee of the four pension plans, and Tew was managing director of their investment service provider, Bluegrass Investment Management LLC. The court's order removes Hofmeister as a fiduciary of the plans and prohibits him from taking any actions with respect to the pensions plans or their assets. Tew resigned as fiduciary of the plans a few days before a hearing regarding the department's motion.
The lawsuits alleged that the defendants engaged in a series of prohibited transactions resulting in the misuse of approximately $12.1 million from the Hillsdale Salaried pension plan, approximately $22.5 million from the Hillsdale Hourly pension plan, approximately $4.4 million from the Revstone Casting Fairfield GMP Local 359 pension plan, and approximately $500,000 from the Fourslides Inc. pension plan. The four plan sponsors are closely affiliated with Lexington-based Revstone Industries LLC and Spara LLC.
"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money for their retirement," said Phyllis C. Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration. "Our aim is to make this right for those workers."
The suits follow an EBSA investigation that found violations of the Employee Retirement Income Security Act, including prohibited loans to related companies, prohibited use of plan assets for the purchase and lease of employer property, prohibited purchase of customer notes from affiliated companies, prohibited transfer of assets in favor of parties-in-interest, payment of excessive fees to services providers, and payment of fees on behalf of the companies.
According to the brief filed on behalf of the department by the Cleveland Regional Solicitor's Office, Hofmeister, Tew and Bluegrass have repeatedly violated ERISA, using nearly $40 million in pension plan assets to benefit themselves or related parties.
The department's investigation of these pension plans revealed a pattern of prohibited transactions involving the use of these plans' assets by Hofmeister, Tew and investment adviser firms. Alleged improper use of the plans' assets began within days or months of Hofmeister assuming control of the pension plans. The department contends that Hofmeister has placed millions of dollars in pension plan assets at risk and has consistently failed to act to protect these assets when required.
The court has appointed Fiduciary Counselors Inc. to administer the four pension plans. Fiduciary Counselors is an investment adviser firm in Washington, D.C., that has extensive experience acting as an independent fiduciary for employee benefit plans.
US Labor Department obtains preliminary injunction against Kentucky-based plan fiduciaries, alleging improper use of retirement funds
LEXINGTON, Ky. — The U.S. District Court for the Eastern District of Kentucky on July 26 granted in part the U.S. Department of Labor's motion for a preliminary injunction against George S. Hofmeister and Bernard Tew, former fiduciaries of four Lexington-based pension plans: the Hillsdale Salaried, Hillsdale Hourly, Revstone Casting Fairfield GMP Local 359, and Fourslides Inc.
The department previously filed lawsuits in the same court that named Hofmeister and Tew, among others. Hofmeister was the trustee of the four pension plans, and Tew was managing director of their investment service provider, Bluegrass Investment Management LLC. The court's order removes Hofmeister as a fiduciary of the plans and prohibits him from taking any actions with respect to the pensions plans or their assets. Tew resigned as fiduciary of the plans a few days before a hearing regarding the department's motion.
The lawsuits alleged that the defendants engaged in a series of prohibited transactions resulting in the misuse of approximately $12.1 million from the Hillsdale Salaried pension plan, approximately $22.5 million from the Hillsdale Hourly pension plan, approximately $4.4 million from the Revstone Casting Fairfield GMP Local 359 pension plan, and approximately $500,000 from the Fourslides Inc. pension plan. The four plan sponsors are closely affiliated with Lexington-based Revstone Industries LLC and Spara LLC.
"Those entrusted with managing these pension funds have shown an utter disregard for the workers, who are relying on the money for their retirement," said Phyllis C. Borzi, the assistant secretary of labor who heads the Employee Benefits Security Administration. "Our aim is to make this right for those workers."
The suits follow an EBSA investigation that found violations of the Employee Retirement Income Security Act, including prohibited loans to related companies, prohibited use of plan assets for the purchase and lease of employer property, prohibited purchase of customer notes from affiliated companies, prohibited transfer of assets in favor of parties-in-interest, payment of excessive fees to services providers, and payment of fees on behalf of the companies.
According to the brief filed on behalf of the department by the Cleveland Regional Solicitor's Office, Hofmeister, Tew and Bluegrass have repeatedly violated ERISA, using nearly $40 million in pension plan assets to benefit themselves or related parties.
The department's investigation of these pension plans revealed a pattern of prohibited transactions involving the use of these plans' assets by Hofmeister, Tew and investment adviser firms. Alleged improper use of the plans' assets began within days or months of Hofmeister assuming control of the pension plans. The department contends that Hofmeister has placed millions of dollars in pension plan assets at risk and has consistently failed to act to protect these assets when required.
The court has appointed Fiduciary Counselors Inc. to administer the four pension plans. Fiduciary Counselors is an investment adviser firm in Washington, D.C., that has extensive experience acting as an independent fiduciary for employee benefit plans.
FLORIDA RESIDENT CHARGED WITH UNREGISTERED SALES OF SECURITIES
FROM: SECURITIES AND EXCHANGE COMMISSION
SEC Charges Florida Resident with Unregistered Sales of Securities
On July 23, 2013, the Securities and Exchange Commission filed settled charges against Florida resident Jorge Bravo, Jr., for unlawful sales of millions of shares of a microcap company to the public without complying with the registration requirements of the Securities Act of 1933.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, from April 2009 until May 2010, Bravo unlawfully sold approximately 93 million shares of stock of AVVAA World Health Care Products, Inc. in unregistered transactions for proceeds of approximately $523,000. The complaint alleges that Bravo obtained the shares through three "wrap around agreements." The wrap around agreements involved debts that AVVAA supposedly owed to its officers, affiliates, or other persons closely associated with the company ("Affiliates") for unpaid compensation for services rendered. Under the wrap around agreements, the Affiliates assigned to Bravo the debts that AVVAA purportedly owed to them, and AVVAA consented to the assignment and agreed to modify the terms of the original debt obligation so that the debts now owed to Bravo were immediately convertible into shares of AVVAA common stock. According to the complaint, within weeks of entering into the first two agreements, and approximately four months after the execution of the third, Bravo began selling the shares he obtained under the agreements to the public. He then used some of the proceeds of the stock sales to pay the amounts owed to the Affiliates under the wrap around agreements. The complaint further alleges that Bravo had previously been involved in wrap around agreements, in his capacity as of president and chief executive of Cross Atlantic Commodities, Inc., a public company located in Weston, Florida, and that those wrap around agreements were subjects of a prior Commission enforcement action, SEC v. K&L International Enterprises, Inc., 6:09-cv-1638-GAP-KRS (M.D. Fla. Sept. 24, 2009). Bravo was not charged in that matter.
Without admitting or denying the SEC's allegations, Bravo agreed to settle the case against him by consenting to the entry of a final judgment permanently enjoining him from future violations of Sections 5(a) and 5(c) of the Securities Act; permanently enjoining him from participating in any offering of penny stock; and requiring him to pay disgorgement of $ 392,000, the amount of his ill-gotten gains, plus prejudgment interest of $ 53,866 and a civil penalty in the amount of $150,000. The settlement must be approved by the court.
The SEC's investigation was conducted by New York Regional Office Enforcement staff Karen Lee, Christopher Ferrante, and Leslie Kazon. The Commission acknowledges the assistance of FINRA, the British Columbia Securities Commission, and the Ontario Securities Commission in this matter.
SEC Charges Florida Resident with Unregistered Sales of Securities
On July 23, 2013, the Securities and Exchange Commission filed settled charges against Florida resident Jorge Bravo, Jr., for unlawful sales of millions of shares of a microcap company to the public without complying with the registration requirements of the Securities Act of 1933.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, from April 2009 until May 2010, Bravo unlawfully sold approximately 93 million shares of stock of AVVAA World Health Care Products, Inc. in unregistered transactions for proceeds of approximately $523,000. The complaint alleges that Bravo obtained the shares through three "wrap around agreements." The wrap around agreements involved debts that AVVAA supposedly owed to its officers, affiliates, or other persons closely associated with the company ("Affiliates") for unpaid compensation for services rendered. Under the wrap around agreements, the Affiliates assigned to Bravo the debts that AVVAA purportedly owed to them, and AVVAA consented to the assignment and agreed to modify the terms of the original debt obligation so that the debts now owed to Bravo were immediately convertible into shares of AVVAA common stock. According to the complaint, within weeks of entering into the first two agreements, and approximately four months after the execution of the third, Bravo began selling the shares he obtained under the agreements to the public. He then used some of the proceeds of the stock sales to pay the amounts owed to the Affiliates under the wrap around agreements. The complaint further alleges that Bravo had previously been involved in wrap around agreements, in his capacity as of president and chief executive of Cross Atlantic Commodities, Inc., a public company located in Weston, Florida, and that those wrap around agreements were subjects of a prior Commission enforcement action, SEC v. K&L International Enterprises, Inc., 6:09-cv-1638-GAP-KRS (M.D. Fla. Sept. 24, 2009). Bravo was not charged in that matter.
Without admitting or denying the SEC's allegations, Bravo agreed to settle the case against him by consenting to the entry of a final judgment permanently enjoining him from future violations of Sections 5(a) and 5(c) of the Securities Act; permanently enjoining him from participating in any offering of penny stock; and requiring him to pay disgorgement of $ 392,000, the amount of his ill-gotten gains, plus prejudgment interest of $ 53,866 and a civil penalty in the amount of $150,000. The settlement must be approved by the court.
The SEC's investigation was conducted by New York Regional Office Enforcement staff Karen Lee, Christopher Ferrante, and Leslie Kazon. The Commission acknowledges the assistance of FINRA, the British Columbia Securities Commission, and the Ontario Securities Commission in this matter.
Sunday, August 4, 2013
SECRETARY OF STATE KERRY'S STATEMENT ON THE ELECTION IN ZIMBABWE
FROM: U.S. STATE DEPARTMENT
Zimbabwe's Presidential Election
Press Statement
John Kerry
Secretary of State
Washington, DC
August 3, 2013
Zimbabweans voted in their country’s first national elections this week since the violent and disputed polls in 2008. These elections were an opportunity for Zimbabwe to move forward on a democratic path and provide a foundation for growth and prosperity.
The people of Zimbabwe should be commended for rejecting violence and showing their commitment to the democratic process. But make no mistake: in light of substantial electoral irregularities reported by domestic and regional observers, the United States does not believe that the results announced today represent a credible expression of the will of the Zimbabwean people.
Though the United States was restricted from monitoring these elections, the balance of evidence indicates that today’s announcement was the culmination of a deeply flawed process. There were irregularities in the provision and composition of the voters roll. The parties had unequal access to state media. The security sector did not safeguard the electoral process on an even-handed basis. And the government failed to implement the political reforms mandated by Zimbabwe’s new constitution, the Global Political Agreement, and the region.
We urge the Southern African Development Community and the African Union to address their concerns with the electoral process, as well as those raised by domestic monitoring groups. The Government of Zimbabwe needs to chart a way forward that will give the people of Zimbabwe the opportunity to express their most fundamental democratic right in a free and fair environment. We further call on all parties to refrain from violence during this period.
The United States shares the same fundamental interests as the Zimbabwean people: a peaceful, democratic, prosperous Zimbabwe that reflects the will of its people and provides opportunities for them to flourish. For that to happen, the Government of Zimbabwe should heed the voices of its citizens and implement the democratic reforms mandated by the country’s new constitution.
Only then will Zimbabwe truly embark on a path towards democracy that reflects the aspirations of its people.
Zimbabwe's Presidential Election
Press Statement
John Kerry
Secretary of State
Washington, DC
August 3, 2013
Zimbabweans voted in their country’s first national elections this week since the violent and disputed polls in 2008. These elections were an opportunity for Zimbabwe to move forward on a democratic path and provide a foundation for growth and prosperity.
The people of Zimbabwe should be commended for rejecting violence and showing their commitment to the democratic process. But make no mistake: in light of substantial electoral irregularities reported by domestic and regional observers, the United States does not believe that the results announced today represent a credible expression of the will of the Zimbabwean people.
Though the United States was restricted from monitoring these elections, the balance of evidence indicates that today’s announcement was the culmination of a deeply flawed process. There were irregularities in the provision and composition of the voters roll. The parties had unequal access to state media. The security sector did not safeguard the electoral process on an even-handed basis. And the government failed to implement the political reforms mandated by Zimbabwe’s new constitution, the Global Political Agreement, and the region.
We urge the Southern African Development Community and the African Union to address their concerns with the electoral process, as well as those raised by domestic monitoring groups. The Government of Zimbabwe needs to chart a way forward that will give the people of Zimbabwe the opportunity to express their most fundamental democratic right in a free and fair environment. We further call on all parties to refrain from violence during this period.
The United States shares the same fundamental interests as the Zimbabwean people: a peaceful, democratic, prosperous Zimbabwe that reflects the will of its people and provides opportunities for them to flourish. For that to happen, the Government of Zimbabwe should heed the voices of its citizens and implement the democratic reforms mandated by the country’s new constitution.
Only then will Zimbabwe truly embark on a path towards democracy that reflects the aspirations of its people.
DOD RECRUITING AND RETENTION NUMBERS FOR FISCAL 2013
FROM: U.S. DEPARTMENT OF DEFENSE
DOD Announces Recruiting and Retention Numbers for Fiscal 2013, Through June 2013
The Department of Defense announced today recruiting and retention statistics for the active and reserve components for fiscal 2013, through June.
Active Component.
Recruiting. All four active services met or exceeded their numerical accession goals for fiscal 2013, through June.
• Army – 49,273 accessions, with a goal of 48,690; 101 percent
• Navy – 28,482 accessions, with a goal of 28,482; 100 percent
• Marine Corps – 21,001 accessions, with a goal of 20,960; 100 percent
• Air Force – 20,154 accessions, with a goal of 20,154; 100 percent
Retention. The Army, Air Force, and Marine Corps exhibited strong retention numbers for the ninth month of fiscal 2013. The Navy exhibited strong retention numbers in the mid-career and career categories. However, the Navy's achievement of 89 percent in the initial category relates to reduced accessions from four to six years ago.
Reserve Component.
Recruiting. Five of the six reserve components met or exceeded their fiscal-year-to-date 2013 numerical accession goals. The Army Reserve finished June 2,572 accessions short of its goal.
• Army National Guard – 38,002 accessions, with a goal of 37,669; 101 percent
• Army Reserve – 19,779 accessions, with a goal of 22,351; 88 percent
• Navy Reserve – 4,138 accessions, with a goal of 4,138; 100 percent
• Marine Corps Reserve – 6,891 accessions, with a goal of 6,804; 101 percent
• Air National Guard – 7,788 accessions, with a goal of 7,788; 100 percent
• Air Force Reserve – 5,515 accessions, with a goal of 4,835; 114 percent
Attrition – All Reserve Components have met their attrition goals. Current trends are expected to continue. (This indicator lags by one month due to data availability.)
DOD Announces Recruiting and Retention Numbers for Fiscal 2013, Through June 2013
The Department of Defense announced today recruiting and retention statistics for the active and reserve components for fiscal 2013, through June.
Active Component.
Recruiting. All four active services met or exceeded their numerical accession goals for fiscal 2013, through June.
• Army – 49,273 accessions, with a goal of 48,690; 101 percent
• Navy – 28,482 accessions, with a goal of 28,482; 100 percent
• Marine Corps – 21,001 accessions, with a goal of 20,960; 100 percent
• Air Force – 20,154 accessions, with a goal of 20,154; 100 percent
Retention. The Army, Air Force, and Marine Corps exhibited strong retention numbers for the ninth month of fiscal 2013. The Navy exhibited strong retention numbers in the mid-career and career categories. However, the Navy's achievement of 89 percent in the initial category relates to reduced accessions from four to six years ago.
Reserve Component.
Recruiting. Five of the six reserve components met or exceeded their fiscal-year-to-date 2013 numerical accession goals. The Army Reserve finished June 2,572 accessions short of its goal.
• Army National Guard – 38,002 accessions, with a goal of 37,669; 101 percent
• Army Reserve – 19,779 accessions, with a goal of 22,351; 88 percent
• Navy Reserve – 4,138 accessions, with a goal of 4,138; 100 percent
• Marine Corps Reserve – 6,891 accessions, with a goal of 6,804; 101 percent
• Air National Guard – 7,788 accessions, with a goal of 7,788; 100 percent
• Air Force Reserve – 5,515 accessions, with a goal of 4,835; 114 percent
Attrition – All Reserve Components have met their attrition goals. Current trends are expected to continue. (This indicator lags by one month due to data availability.)
TELEMARKETER BANNED FROM SELLING DEBT RELIEF SERVICES
FROM: FEDERAL TRADING COMMISSION
FTC Settlement Bans Marketer from Selling Debt Relief Services, Telemarketing, and Robocalling
Under a settlement with the Federal Trade Commission, a telemarketer who allegedly defrauded consumers with false promises of debt relief and charged them without their consent is banned from selling debt relief services, telemarketing, and making robocalls.
The settlement resolves a complaint the FTC filed last year against Jeremy R. Nelson and four companies he controlled. The agency alleged that they violated federal law by making false claims, causing unauthorized debits from consumers’ bank accounts, and illegally charging advance fees.
The FTC also alleged that the defendants called phone numbers on the National Do Not Call Registry, called consumers who had told them not to call, failed to transmit caller identification to consumers’ caller ID service, delivered pre-recorded messages without prior written consent, repeatedly called consumers to annoy them, and delivered pre-recorded messages that failed to identify the seller, the call’s purpose, and the product or service.
In addition to the ban on debt relief sales, telemarketing, and robocalls, the proposed settlement order permanently prohibits the defendants from misrepresenting material facts about any products and services, making unsubstantiated claims, charging consumers’ accounts without their express informed consent, collecting money from customers who agreed to purchase debt relief products or services from the defendants, selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.
The order imposes a judgment of more than $4.6 million against the defendants. The judgment against Nelson will be suspended, based on his inability to pay, after he surrenders to the FTC bank accounts and investment assets frozen by the court. The full judgment will become due immediately if he is found to have misrepresented his financial condition.
For information on dealing with debt, read the FTC’s Knee Deep In Debt.
The Commission vote authorizing the staff to file the proposed consent order was 4-0. The consent order was filed in the U.S. District Court for the Central District of California.
NOTE: Consent orders have the force of law when approved and signed by the District Court judge.
FTC Settlement Bans Marketer from Selling Debt Relief Services, Telemarketing, and Robocalling
Under a settlement with the Federal Trade Commission, a telemarketer who allegedly defrauded consumers with false promises of debt relief and charged them without their consent is banned from selling debt relief services, telemarketing, and making robocalls.
The settlement resolves a complaint the FTC filed last year against Jeremy R. Nelson and four companies he controlled. The agency alleged that they violated federal law by making false claims, causing unauthorized debits from consumers’ bank accounts, and illegally charging advance fees.
The FTC also alleged that the defendants called phone numbers on the National Do Not Call Registry, called consumers who had told them not to call, failed to transmit caller identification to consumers’ caller ID service, delivered pre-recorded messages without prior written consent, repeatedly called consumers to annoy them, and delivered pre-recorded messages that failed to identify the seller, the call’s purpose, and the product or service.
In addition to the ban on debt relief sales, telemarketing, and robocalls, the proposed settlement order permanently prohibits the defendants from misrepresenting material facts about any products and services, making unsubstantiated claims, charging consumers’ accounts without their express informed consent, collecting money from customers who agreed to purchase debt relief products or services from the defendants, selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.
The order imposes a judgment of more than $4.6 million against the defendants. The judgment against Nelson will be suspended, based on his inability to pay, after he surrenders to the FTC bank accounts and investment assets frozen by the court. The full judgment will become due immediately if he is found to have misrepresented his financial condition.
For information on dealing with debt, read the FTC’s Knee Deep In Debt.
The Commission vote authorizing the staff to file the proposed consent order was 4-0. The consent order was filed in the U.S. District Court for the Central District of California.
NOTE: Consent orders have the force of law when approved and signed by the District Court judge.
WYETH PHARMACEUTICALS AGREES TO PAY $490.9 MILLION FOR MARKETING DRUG FOR UNAPPROVED USES
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, July 30, 2013
Wyeth Pharmaceuticals Agrees to Pay $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses
Wyeth Pharmaceuticals Inc., a pharmaceutical company acquired by Pfizer, Inc. in 2009, has agreed to pay $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drug Rapamune for uses not approved as safe and effective by the U.S. Food and Drug Administration (FDA), the Justice Department announced today. Rapamune is an “immunosuppressive” drug that prevents the body’s immune system from rejecting a transplanted organ.
“FDA’s drug approval process ensures companies market their products for uses proven safe and effective,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “We will hold accountable those who put patients’ health at risk in pursuit of financial gain.”
The Federal Food, Drug and Cosmetic Act (FDCA) requires a company such as Wyeth to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. In 1999, Wyeth received approval from the FDA for Rapamune use in renal (kidney) transplant patients. However, the information alleges, Wyeth trained its national Rapamune sales force to promote the use of the drug in non-renal transplant patients. Wyeth provided the sales force with training materials regarding non-renal transplant use and trained them on how to use these materials in presentations to transplant physicians. Then, Wyeth encouraged sales force members, through financial incentives, to target all transplant patient populations to increase Rapamune sales.
“The FDA approves drugs for certain uses after lengthy clinical trials,” said Sanford Coats, U.S. Attorney for the Western District of Oklahoma. “Compliance with these approved uses is important to protect patient safety, and drug companies must only market and promote their drugs for FDA-approved uses. The FDA approved Rapamune for limited use in renal transplants and required the label to include a warning against certain uses. Yet, Wyeth trained its sales force to promote Rapamune for off-label uses not approved by the FDA, including ex-renal uses, and even paid bonuses to incentivize those sales. This was a systemic, corporate effort to seek profit over safety. Companies that ignore compliance with FDA regulations will face criminal prosecution and stiff penalties.”
Wyeth has pleaded guilty to a criminal information charging it with a misbranding violation under the FDCA. The resolution includes a criminal fine and forfeiture totaling $233.5 million. Under a plea agreement, which has been accepted by the U.S. District Court in Oklahoma City, Wyeth has agreed to pay a criminal fine of $157.58 million and forfeit assets of $76 million.
The resolution also includes civil settlements with the federal government and the states totaling $257.4 million. Wyeth has agreed to settle its potential civil liability in connection with its off-label marketing of Rapamune. The government alleged that Wyeth violated the False Claims Act, from 1998 through 2009, by promoting Rapamune for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by Medicare, Medicaid and other federal health care programs. These unapproved uses included non-renal transplants, conversion use (switching a patient from another immunosuppressant to Rapamune) and using Rapamune in combination with other immunosuppressive agents not listed on the label. The government alleged that this conduct resulted in the submission of false claims to government health care programs. Of the amounts to resolve the civil claims, Wyeth will pay $230,112,596 to the federal government and $27,287,404 to the states.
“Wyeth’s conduct put profits ahead of the health and safety of a highly vulnerable patient population dependent on life-sustaining therapy,” said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. “FDA OCI is committed to working with the Department of Justice and our law enforcement counterparts to protect public health.”
Pfizer is currently subject to a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services’ Office of Inspector General that it entered in connection with another matter in 2009, shortly before acquiring Wyeth. The CIA covers former Wyeth employees who now perform sales and marketing functions at Pfizer. Under the CIA, Pfizer is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA, and the company is subject to monetary penalties for less significant breaches.
“We are committed to enforcing the laws protecting public health, taxpayers and government health programs, and to promoting effective compliance programs,” said Daniel R. Levinson, Inspector General, Department of Health and Human Services. “Our integrity agreement with Pfizer, which acquired Wyeth, includes required risk assessments, a confidential disclosure program, and auditing and monitoring to help prospectively identify improper marketing.”
The civil settlement resolves two lawsuits pending in federal court in the Western District of Oklahoma under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and share in any recovery. The first action was filed by a former Rapamune sales representative, Marlene Sandler, and a pharmacist, Scott Paris. The second action was filed by a former Rapamune sales representative, Mark Campbell. The whistleblowers’ share of the civil settlement has not been resolved.
"The success obtained in this case is an excellent example of how we address the threats to our nation’s health care system; the importance of the public reporting of fraud, waste, or abuse; and the significant results that can be obtained through multiple agencies cooperating in investigations,” said James E. Finch, Special Agent in Charge of the Oklahoma City Division of the FBI.
The criminal case was handled by the U.S. Attorney’s Office for the Western District of Oklahoma (USAO) and the Justice Department’s Civil Division, Consumer Protection Branch. The civil settlement was handled by USAO and the Justice Department’s Civil Division, Commercial Litigation Branch. The Department of Health and Human Services’ (HHS) Office of Counsel to the Inspector General; the HHS Office of General Counsel, Center for Medicare and Medicaid Services; the FDA’s Office of Chief Counsel; and the National Association of Medicaid Fraud Control Units. These matters were investigated by the FBI; the FDA’s Office of Criminal Investigation; HHS’ Office of Inspector General, Office of Investigations and Office of Audit Services; the Defense Criminal Investigative Service; the Office of Personnel Management’s Office of Inspector General and Office of Audit Services; the Department of Veterans’ Affairs’ Office of Inspector General; and TRICARE Program Integrity.
Except for conduct admitted in connection with the criminal plea, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Sandler et al v. Wyeth Pharmaceuticals, Inc., Case No. 05-6609 (E.D. Pa.) and United States ex rel. Campbell v. Wyeth, Inc., Case No. 07-00051 (W.D. Okla.).
Tuesday, July 30, 2013
Wyeth Pharmaceuticals Agrees to Pay $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses
Wyeth Pharmaceuticals Inc., a pharmaceutical company acquired by Pfizer, Inc. in 2009, has agreed to pay $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drug Rapamune for uses not approved as safe and effective by the U.S. Food and Drug Administration (FDA), the Justice Department announced today. Rapamune is an “immunosuppressive” drug that prevents the body’s immune system from rejecting a transplanted organ.
“FDA’s drug approval process ensures companies market their products for uses proven safe and effective,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “We will hold accountable those who put patients’ health at risk in pursuit of financial gain.”
The Federal Food, Drug and Cosmetic Act (FDCA) requires a company such as Wyeth to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. In 1999, Wyeth received approval from the FDA for Rapamune use in renal (kidney) transplant patients. However, the information alleges, Wyeth trained its national Rapamune sales force to promote the use of the drug in non-renal transplant patients. Wyeth provided the sales force with training materials regarding non-renal transplant use and trained them on how to use these materials in presentations to transplant physicians. Then, Wyeth encouraged sales force members, through financial incentives, to target all transplant patient populations to increase Rapamune sales.
“The FDA approves drugs for certain uses after lengthy clinical trials,” said Sanford Coats, U.S. Attorney for the Western District of Oklahoma. “Compliance with these approved uses is important to protect patient safety, and drug companies must only market and promote their drugs for FDA-approved uses. The FDA approved Rapamune for limited use in renal transplants and required the label to include a warning against certain uses. Yet, Wyeth trained its sales force to promote Rapamune for off-label uses not approved by the FDA, including ex-renal uses, and even paid bonuses to incentivize those sales. This was a systemic, corporate effort to seek profit over safety. Companies that ignore compliance with FDA regulations will face criminal prosecution and stiff penalties.”
Wyeth has pleaded guilty to a criminal information charging it with a misbranding violation under the FDCA. The resolution includes a criminal fine and forfeiture totaling $233.5 million. Under a plea agreement, which has been accepted by the U.S. District Court in Oklahoma City, Wyeth has agreed to pay a criminal fine of $157.58 million and forfeit assets of $76 million.
The resolution also includes civil settlements with the federal government and the states totaling $257.4 million. Wyeth has agreed to settle its potential civil liability in connection with its off-label marketing of Rapamune. The government alleged that Wyeth violated the False Claims Act, from 1998 through 2009, by promoting Rapamune for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by Medicare, Medicaid and other federal health care programs. These unapproved uses included non-renal transplants, conversion use (switching a patient from another immunosuppressant to Rapamune) and using Rapamune in combination with other immunosuppressive agents not listed on the label. The government alleged that this conduct resulted in the submission of false claims to government health care programs. Of the amounts to resolve the civil claims, Wyeth will pay $230,112,596 to the federal government and $27,287,404 to the states.
“Wyeth’s conduct put profits ahead of the health and safety of a highly vulnerable patient population dependent on life-sustaining therapy,” said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. “FDA OCI is committed to working with the Department of Justice and our law enforcement counterparts to protect public health.”
Pfizer is currently subject to a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services’ Office of Inspector General that it entered in connection with another matter in 2009, shortly before acquiring Wyeth. The CIA covers former Wyeth employees who now perform sales and marketing functions at Pfizer. Under the CIA, Pfizer is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA, and the company is subject to monetary penalties for less significant breaches.
“We are committed to enforcing the laws protecting public health, taxpayers and government health programs, and to promoting effective compliance programs,” said Daniel R. Levinson, Inspector General, Department of Health and Human Services. “Our integrity agreement with Pfizer, which acquired Wyeth, includes required risk assessments, a confidential disclosure program, and auditing and monitoring to help prospectively identify improper marketing.”
The civil settlement resolves two lawsuits pending in federal court in the Western District of Oklahoma under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and share in any recovery. The first action was filed by a former Rapamune sales representative, Marlene Sandler, and a pharmacist, Scott Paris. The second action was filed by a former Rapamune sales representative, Mark Campbell. The whistleblowers’ share of the civil settlement has not been resolved.
"The success obtained in this case is an excellent example of how we address the threats to our nation’s health care system; the importance of the public reporting of fraud, waste, or abuse; and the significant results that can be obtained through multiple agencies cooperating in investigations,” said James E. Finch, Special Agent in Charge of the Oklahoma City Division of the FBI.
The criminal case was handled by the U.S. Attorney’s Office for the Western District of Oklahoma (USAO) and the Justice Department’s Civil Division, Consumer Protection Branch. The civil settlement was handled by USAO and the Justice Department’s Civil Division, Commercial Litigation Branch. The Department of Health and Human Services’ (HHS) Office of Counsel to the Inspector General; the HHS Office of General Counsel, Center for Medicare and Medicaid Services; the FDA’s Office of Chief Counsel; and the National Association of Medicaid Fraud Control Units. These matters were investigated by the FBI; the FDA’s Office of Criminal Investigation; HHS’ Office of Inspector General, Office of Investigations and Office of Audit Services; the Defense Criminal Investigative Service; the Office of Personnel Management’s Office of Inspector General and Office of Audit Services; the Department of Veterans’ Affairs’ Office of Inspector General; and TRICARE Program Integrity.
Except for conduct admitted in connection with the criminal plea, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Sandler et al v. Wyeth Pharmaceuticals, Inc., Case No. 05-6609 (E.D. Pa.) and United States ex rel. Campbell v. Wyeth, Inc., Case No. 07-00051 (W.D. Okla.).
SEC ANNOUNCES INSIDER TRADING CHARGES AGAINST SYSTEMS ADMINISTRATOR AT GREEN MOUNTAIN COFFEE ROASTERS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today announced insider trading charges against a former systems administrator at Vermont-based Green Mountain Coffee Roasters who repeatedly obtained quarterly earnings data and traded in advance of its public release. The SEC also charged his friend who illegally traded along with him.
In a complaint unsealed July 31 in U.S. District Court for the District of Connecticut, the SEC alleges that Chad McGinnis of Morrisville, Vermont purchased Green Mountain securities - typically out-of-the-money options - shortly before earnings announcements were made. McGinnis also tipped his longtime friend and business associate Sergey Pugach of Hamden, Connecticut, who illegally traded in his own account and his mother's trading account. Together, McGinnis and Pugach garnered $7 million in illegal profits by using inside information to correctly predict the reaction of Green Mountain's stock price to 12 of the past 13 quarterly earnings announcements since 2010.
The SEC alleges that as an information technology employee, McGinnis had access to shared folders on Green Mountain's computer server where drafts of pending press releases and earnings announcements were stored. He also had access to other employees' e-mail accounts. Both sources provided McGinnis with details about upcoming Green Mountain earnings announcements before they became public.
The SEC's complaint was filed under seal on July 24, when the court granted the Commission's motion seeking a temporary restraining order, asset freeze, and other emergency relief. A hearing has been set for August 7.
The SEC's complaint alleges that McGinnis and Pugach violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Pugach's mother Bella Pugach is named as a relief defendant in the SEC's complaint for the purpose of recovering ill-gotten gains in her trading account.
The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Connecticut, the Federal Bureau of Investigation, and the Options Regulatory Surveillance Agency.
The Securities and Exchange Commission today announced insider trading charges against a former systems administrator at Vermont-based Green Mountain Coffee Roasters who repeatedly obtained quarterly earnings data and traded in advance of its public release. The SEC also charged his friend who illegally traded along with him.
In a complaint unsealed July 31 in U.S. District Court for the District of Connecticut, the SEC alleges that Chad McGinnis of Morrisville, Vermont purchased Green Mountain securities - typically out-of-the-money options - shortly before earnings announcements were made. McGinnis also tipped his longtime friend and business associate Sergey Pugach of Hamden, Connecticut, who illegally traded in his own account and his mother's trading account. Together, McGinnis and Pugach garnered $7 million in illegal profits by using inside information to correctly predict the reaction of Green Mountain's stock price to 12 of the past 13 quarterly earnings announcements since 2010.
The SEC alleges that as an information technology employee, McGinnis had access to shared folders on Green Mountain's computer server where drafts of pending press releases and earnings announcements were stored. He also had access to other employees' e-mail accounts. Both sources provided McGinnis with details about upcoming Green Mountain earnings announcements before they became public.
The SEC's complaint was filed under seal on July 24, when the court granted the Commission's motion seeking a temporary restraining order, asset freeze, and other emergency relief. A hearing has been set for August 7.
The SEC's complaint alleges that McGinnis and Pugach violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Pugach's mother Bella Pugach is named as a relief defendant in the SEC's complaint for the purpose of recovering ill-gotten gains in her trading account.
The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Connecticut, the Federal Bureau of Investigation, and the Options Regulatory Surveillance Agency.
THREE SENTENCED IN PUERTO RICO IN OPERATION GUARD SHACK DRUG SECURITY PROSECUTION
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, July 31, 2013
Three Men Sentenced in Puerto Rico in Operation Guard Shack Prosecution
131 Defendants Have Pleaded Guilty or Been Convicted After Trial
Two former officers with the Police of Puerto Rico and another individual were sentenced to prison late yesterday for their roles in providing security for drug transactions.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement after sentencing by U.S. District Judge Carmen Consuelo Cerezo in the District of Puerto Rico.
Former Police of Puerto Rico officers Daviel Salinas-Acevedo, 29, of Bayamon, Puerto Rico, and Miguel Santiago-Cordero, 30, of Lares, Puerto Rico, were each sentenced on July 30, 2013, to serve 181 months in prison. In addition, Wendell Rivera-Ruperto, 38, of Las Marias, Puerto Rico, was also sentenced yesterday to 420 months in prison.
On Jan. 10, 2013, Salinas-Acevedo and Santiago-Cordero were each convicted at trial of one count of conspiring to possess with intent to distribute more than five kilograms of cocaine and one count of possessing a firearm in furtherance of a drug transaction. Rivera-Ruperto was convicted of one count of conspiring to possess with intent to distribute more than five kilograms of cocaine, attempting to possess with the intent to distribute more than five kilograms of cocaine and possessing a firearm in furtherance of a drug transaction. Rivera-Ruperto had been convicted previously of 15 other counts arising from his participation in other, related drug transactions.
The case against the three defendants arose from the FBI’s undercover operation known as “Operation Guard Shack.” To date, 131 defendants have pleaded guilty or been convicted at trial, and 123 defendants have been sentenced as a result of the operation.
According to the evidence presented in court, Salinas-Acevedo, Santiago-Cordero and Rivera-Ruperto each provided security for what they believed were illegal cocaine deals that occurred on March 24, April 9 and July 8, 2010, respectively. In fact, each purported drug transaction was one of dozens of simulated transactions conducted as part of the undercover FBI operation. The three men performed armed security for the multi-kilogram cocaine deals by frisking the buyer, standing guard as the kilos were counted and inspecting and escorting the buyer in and out of the transaction.
In return for the security they provided, Salinas-Acevedo, Santiago-Cordero and Rivera-Ruperto each received a cash payment of $2,000. The money was never returned by any of the defendants, and none of the defendants ever reported the transactions.
The case was investigated by the FBI. The Puerto Rico Department of Justice also provided assistance in this case.
The case was prosecuted by Trial Attorneys Anthony J. Phillips and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The U.S. Attorney’s Office for the District of Puerto Rico participated in the investigation and prosecution of this case.
Wednesday, July 31, 2013
Three Men Sentenced in Puerto Rico in Operation Guard Shack Prosecution
131 Defendants Have Pleaded Guilty or Been Convicted After Trial
Two former officers with the Police of Puerto Rico and another individual were sentenced to prison late yesterday for their roles in providing security for drug transactions.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement after sentencing by U.S. District Judge Carmen Consuelo Cerezo in the District of Puerto Rico.
Former Police of Puerto Rico officers Daviel Salinas-Acevedo, 29, of Bayamon, Puerto Rico, and Miguel Santiago-Cordero, 30, of Lares, Puerto Rico, were each sentenced on July 30, 2013, to serve 181 months in prison. In addition, Wendell Rivera-Ruperto, 38, of Las Marias, Puerto Rico, was also sentenced yesterday to 420 months in prison.
On Jan. 10, 2013, Salinas-Acevedo and Santiago-Cordero were each convicted at trial of one count of conspiring to possess with intent to distribute more than five kilograms of cocaine and one count of possessing a firearm in furtherance of a drug transaction. Rivera-Ruperto was convicted of one count of conspiring to possess with intent to distribute more than five kilograms of cocaine, attempting to possess with the intent to distribute more than five kilograms of cocaine and possessing a firearm in furtherance of a drug transaction. Rivera-Ruperto had been convicted previously of 15 other counts arising from his participation in other, related drug transactions.
The case against the three defendants arose from the FBI’s undercover operation known as “Operation Guard Shack.” To date, 131 defendants have pleaded guilty or been convicted at trial, and 123 defendants have been sentenced as a result of the operation.
According to the evidence presented in court, Salinas-Acevedo, Santiago-Cordero and Rivera-Ruperto each provided security for what they believed were illegal cocaine deals that occurred on March 24, April 9 and July 8, 2010, respectively. In fact, each purported drug transaction was one of dozens of simulated transactions conducted as part of the undercover FBI operation. The three men performed armed security for the multi-kilogram cocaine deals by frisking the buyer, standing guard as the kilos were counted and inspecting and escorting the buyer in and out of the transaction.
In return for the security they provided, Salinas-Acevedo, Santiago-Cordero and Rivera-Ruperto each received a cash payment of $2,000. The money was never returned by any of the defendants, and none of the defendants ever reported the transactions.
The case was investigated by the FBI. The Puerto Rico Department of Justice also provided assistance in this case.
The case was prosecuted by Trial Attorneys Anthony J. Phillips and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The U.S. Attorney’s Office for the District of Puerto Rico participated in the investigation and prosecution of this case.
STOCK PROMOTER TO PAY OVER $1.6 MILLION FOR INFORMATION ISSUED IN PENNY STOCK PUBLICATIONS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Massachusetts-Based Penny Stock Promoter Ordered to Pay Over $1.6 Million in Penny Stock Fraud Case
The Securities and Exchange Commission announced today that on July 24, 2013, a final judgment was entered by default against Massachusetts-based National Financial Communications, Inc. ("NFC"). NFC is a defendant in an action filed by the Commission in the U.S. District Court for the District of Massachusetts on December 12, 2011, alleging that Massachusetts resident Geoffrey J. Eiten and NFC made material misrepresentations and omissions in penny stock publications they issued.
The judgment enjoins NFC from further violations of the antifraud provisions of the federal securities laws (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder) and from certain specified activities related to penny stocks, including the promotion of a penny stock or deriving compensation from the promotion of a penny stock. The judgment also imposed a penny stock bar against NFC which permanently bars it from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for the purpose of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock. The judgment orders NFC to pay disgorgement of $605,262, representing NFC's ill-gotten gains, plus prejudgment interest of $38,819 and a civil penalty of $1 million.
The Commission's complaint alleged that Eiten and NFC issued a penny stock promotional publication called the "OTC Special Situations Reports." According to the complaint, the defendants promoted penny stocks in this publication on behalf of clients in order to increase the price per share and/or volume of trading in the market for the securities of penny stock companies. The complaint alleged that Eiten and NFC made misrepresentations in these reports about the penny stock companies they promoted. For example, the Commission's complaint alleged that during 2010, Eiten and NFC issued reports promoting four penny stock companies: (1) Clean Power Concepts, Inc., based in Regina, Saskatchewan, Canada, a purported manufacturer and distributor of various fuel additives and lubrication products made from crushed seed oil; (2) Endeavor Power Corp., based in Robesonia, Pennsylvania, a purported recycler of value metals from electronic waste; (3) Gold Standard Mining, based in Agoura Hills, California, a purported owner of Russia gold mining operations; and (4) Nexaira Wireless Corp., based in Vancouver, British Columbia, Canada, a purported developer and seller of wireless routers. The Commission's complaint alleged that in these four reports, Eiten and NFC made material misrepresentations and omissions, concerning, among other things, the companies' financial condition, future revenue projections, intellectual property rights, and Eiten's interaction with company management as a basis for his statements.
According to the complaint, Eiten and NFC were hired to issue the above reports and used false information provided by their clients, without checking the accuracy of the information with the companies in question or otherwise ensuring that the statements they were making in the OTC Special Situations Report were true.
Massachusetts-Based Penny Stock Promoter Ordered to Pay Over $1.6 Million in Penny Stock Fraud Case
The Securities and Exchange Commission announced today that on July 24, 2013, a final judgment was entered by default against Massachusetts-based National Financial Communications, Inc. ("NFC"). NFC is a defendant in an action filed by the Commission in the U.S. District Court for the District of Massachusetts on December 12, 2011, alleging that Massachusetts resident Geoffrey J. Eiten and NFC made material misrepresentations and omissions in penny stock publications they issued.
The judgment enjoins NFC from further violations of the antifraud provisions of the federal securities laws (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder) and from certain specified activities related to penny stocks, including the promotion of a penny stock or deriving compensation from the promotion of a penny stock. The judgment also imposed a penny stock bar against NFC which permanently bars it from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for the purpose of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock. The judgment orders NFC to pay disgorgement of $605,262, representing NFC's ill-gotten gains, plus prejudgment interest of $38,819 and a civil penalty of $1 million.
The Commission's complaint alleged that Eiten and NFC issued a penny stock promotional publication called the "OTC Special Situations Reports." According to the complaint, the defendants promoted penny stocks in this publication on behalf of clients in order to increase the price per share and/or volume of trading in the market for the securities of penny stock companies. The complaint alleged that Eiten and NFC made misrepresentations in these reports about the penny stock companies they promoted. For example, the Commission's complaint alleged that during 2010, Eiten and NFC issued reports promoting four penny stock companies: (1) Clean Power Concepts, Inc., based in Regina, Saskatchewan, Canada, a purported manufacturer and distributor of various fuel additives and lubrication products made from crushed seed oil; (2) Endeavor Power Corp., based in Robesonia, Pennsylvania, a purported recycler of value metals from electronic waste; (3) Gold Standard Mining, based in Agoura Hills, California, a purported owner of Russia gold mining operations; and (4) Nexaira Wireless Corp., based in Vancouver, British Columbia, Canada, a purported developer and seller of wireless routers. The Commission's complaint alleged that in these four reports, Eiten and NFC made material misrepresentations and omissions, concerning, among other things, the companies' financial condition, future revenue projections, intellectual property rights, and Eiten's interaction with company management as a basis for his statements.
According to the complaint, Eiten and NFC were hired to issue the above reports and used false information provided by their clients, without checking the accuracy of the information with the companies in question or otherwise ensuring that the statements they were making in the OTC Special Situations Report were true.
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