FORMER HAITIAN OFFICIAL CONVICTED IN MIAMI FOR BRIBE LAUNDERING SCHEME

The following excerpt is from a Department of Justice website:
Tuesday, March 13, 2012
WASHINGTON – Jean Rene Duperval, a former director of international relations for Telecommunications D’Haiti S.A.M. (Haiti Teleco), a Haitian state-owned telecommunications company, has been convicted by a federal jury on all counts for his role in a scheme to launder bribes paid to him by two Miami-based telecommunications companies.  The jury reached its verdict late yesterday after less than three hours of deliberations, following a week-long trial.

The conviction was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; and Special Agent in Charge Jose A. Gonzalez of Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office.

“Mr. Duperval was convicted by a Miami jury of laundering $500,000 paid to him as part of an elaborate bribery scheme,” said Assistant Attorney General Breuer.  “As the director of international relations for Haiti’s state-owned telecommunications company, Duperval doled out business in exchange for bribes and then used South Florida shell companies to conceal his crimes.  This Justice Department is committed to stamping out corruption wherever we find it.”

“To conceal the payment and receipt of bribes, Duperval participated in a money laundering scheme to funnel about half a million dollars to two shell companies under his control,” said U.S. Attorney Ferrer.  “This verdict confirms that American taxpayers will not tolerate bribery, either at home or abroad,  to obtain unfair business advantages.”

“Today’s announcement sends a strong message to those hiding monies in bogus business entities: no matter how elaborate or complex the scheme, you will get caught,” said IRS Special Agent in Charge Gonzalez.  “IRS criminal investigators will continue to aggressively investigate bribery schemes to ensure that honest businesses have the benefit of a competitive market.”

Duperval, 45, of Miramar, Fla., was convicted of two counts of conspiracy to commit money laundering and 19 counts of money laundering.  According to the charges, the funds that were laundered were the proceeds of violations of the Foreign Corrupt Practices Act (FCPA), Haitian bribery law and the wire fraud statute.

Duperval was the director of international relations for Haiti Teleco, the sole provider of land line telephone service in Haiti.  According to the evidence presented at trial, two Miami-based telecommunications companies had a series of contracts with Haiti Teleco that allowed the companies’ customers to place telephone calls to Haiti.

Duperval was convicted for participating in a scheme to commit money laundering from 2003 to 2006, during which time the telecommunications companies collectively paid $500,000 to two shell companies to funnel the bribes to Duperval.  
 
The purpose of these bribes, according to the evidence presented at trial, was to obtain various business advantages from Duperval, including the issuance of preferred telecommunications rates, a continued telecommunications connection with Haiti and the continuation of a particularly favorable contract with Haiti Teleco.  To conceal the bribe payments, Duperval instructed the companies to forward the payments to the shell companies.  To support these payments, the companies and their executives created false documents claiming that the payments were for “consulting services” or for “international minutes from USA to Haiti.”  No actual services were performed.  The funds were then disbursed from the shell companies for the benefit of Duperval and his family.  To conceal the nature of these funds, Duperval falsely characterized these payments as “commissions” and “payroll.”

Duperval was remanded to the custody of the U.S. Marshals.  Sentencing is scheduled for May 21, 2012.  The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.  The money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.  The indictment also seeks forfeiture, which will be determined by the court at a later date.

Duperval was the eighth defendant involved in the corruption scheme to be convicted, which includes the following individuals:

On April 27, 2009, Antonio Perez, a former controller at one of the Miami-based telecommunications companies, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering.  On Jan. 12, 2010, he was sentenced to 24 months in prison, which he is currently serving.

On May 15, 2009, Juan Diaz, the president of J.D. Locator Services, pleaded guilty to one count of conspiracy to violate the FCPA and money laundering.   He admitted to receiving more than $1 million in bribe money from telecommunications companies.  On July 30, 2010, he was sentenced to 57 months in prison, which he is currently serving.

On Feb. 19, 2010, Jean Fourcand, the president and director of Fourcand Enterprises Inc., pleaded guilty to one count of money laundering for receiving and transmitting bribe monies in the scheme.  On May 5, 2010, he was sentenced to six months in prison.

On March 12, 2010, Robert Antoine, a former director of international affairs for Haiti Teleco, pleaded guilty to one count of conspiracy to commit money laundering.  He admitted to receiving more than $1 million in bribes from Miami-based telecommunications companies.  On June 2, 2010, he was sentenced to 48 months in prison, which he is currently serving.

On Aug. 4, 2011, Joel Esquenazi and Carlos Rodriguez, who were the former president and vice-president, respectively, of one of the telecommunications companies, were convicted by a federal jury of one count of conspiracy to violate the FCPA and wire fraud, seven counts of FCPA violations, one count of money laundering conspiracy and 12 counts of money laundering.  On Oct. 25, 2011, Esquenazi was sentenced to 15 years in prison, the longest sentence ever imposed in a case involving the FCPA.  On the same day, Rodriguez was sentenced to 84 months in prison for his role in the bribery scheme.  Both are currently serving their sentences.

In a second superseding indictment, Washington Vasconez Cruz, Amadeus Richers and Cecilia Zurita were charged in a related scheme to commit foreign bribery and money laundering from December 2001 through January 2006.  The defendants are fugitives.  An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

The Department of Justice is grateful to the government of Haiti for continuing to provide substantial assistance in gathering evidence during this investigation.   In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.

NEW YORK DISASTER AID FOR TROPICAL STORM LEE AND HURRICANE IRENE TOPS $1.3 BILLION

The following excerpt is from the U.S. FEMA website:

ALBANY, N.Y. -- Federal disaster assistance to New York communities recovering from floods caused by Hurricane Irene and Tropical Storm Lee is projected to top $1.3 billion, according to Federal Emergency Management Agency (FEMA) and New York State officials.

“These were huge storms which caused unprecedented damage to communities across the state,” said FEMA’s Federal Coordinating Officer Philip E. Parr. “FEMA continues to work aggressively to help these communities rebuild.”

Soon after Hurricane Irene hit, Public Assistance (PA) was federally approved for 31 counties from Long Island to the Canadian border. Tropical Storm Lee prompted a declaration that funded PA for 14 counties, eight of which had also been declared for Irene. To date, FEMA has reimbursed $32.2 million in PA funding for repairing roads, bridges, utilities, schools and other public facilities across the state. There are approximately 13,000 such repair projects from 1,974 eligible applicants in the 37 affected counties, and FEMA anticipates that its share of the cost of these projects will eventually exceed $1.3 billion.

During the height of the response effort last year, FEMA had 895 employees on the two disasters. At present, 485 FEMA employees are at work as recovery efforts continue. More than a fifth of the FEMA employees working on the two disasters today are local residents hired to help support the agency’s mission.

Helping the hardest-hit areas of the state recover continues to be a priority for FEMA. With the support of four other federal agencies, FEMA has three Long-Term Community Recovery teams engaged in 12 communities in Broome, Delaware, Greene, Schenectady, Schoharie and Tioga counties. The teams are focused on identifying any unmet needs in the wake of the storms and are assisting with developing long-term community recovery plans, strategies or technical assistance issues.

FEMA has also provided temporary housing units to 111 families and individuals who had no other housing alternatives while awaiting the repair or replacement of their storm-damaged residences.

Soon after Irene struck last year, FEMA and its state partners established a Joint Field Office in Albany. Temporary FEMA/state facilities were opened in Kirkwood, Lake Placid and Hewlett, N.Y.

Disaster assistance by the numbers

• To date, FEMA has approved a total of 33,073 registrations for Individual Assistance under the Individuals and Households Program, providing more than $155 million for housing grants, rental assistance, home repair costs and other disaster-related needs. Under Hurricane Irene, 28 counties were declared eligible for Individual Assistance; for Lee, 13 counties were receiving that assistance.
• Following Irene and Lee there were 743 claims for Disaster Unemployment Assistance, totaling $1,829,846.
• The Small Business Administration approved 2,501 applications for low-interest disaster loans totaling $136,537,300.
• Seventy-four temporary Disaster Recovery Centers were established at locations around the state to serve the needs of survivors.
• FEMA has approved more than $7.1 million in grants to provide crisis counseling to New York residents traumatized by the disasters.
• To facilitate its New York operations on both disasters, FEMA has signed 126 contracts worth approximately $12 million with nearly 100 suppliers and vendors, the great majority of which are local businesses.
• FEMA has provided $9 million so far in grant money to New York State to fund the Disaster Case Management mission to help survivors of Irene and Lee address their disaster-caused unmet needs.
• To date, 14,089 claims worth $417,002,602 have been paid under the National Flood Insurance Program for both disasters.

FEMA's mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.

SEC FILES CIVIL ACTION AGAINST SENIOR MANAGEMENT AT THORNBURG MORTGAGE, INC.

The following excerpt is from the SEC website: 
March 13, 2012
SEC Files Civil Injunctive Action Against Senior Management of Thornburg Mortgage, Inc. for Alleged Fraudulent Overstatement of Thornburg’s Income
On March 13, 2012, the Securities and Exchange Commission filed securities fraud charges in the United States District Court for the District of New Mexico against Larry Goldstone, the former chief executive officer and president, Clarence Simmons, the former chief financial officer and senior executive vice-president, and Jane Starrett, the former chief accounting officer of Thornburg Mortgage, Inc. (“Thornburg”), currently TMST, Inc., for allegedly materially misrepresenting the financial condition and liquidity of Thornburg, formerly the country’s second largest independent mortgage company. Goldstone, Simmons, and Starrett reside in Santa Fe, New Mexico.

The Complaint alleges that Thornburg, through Goldstone, Simmons, and Starrett, fraudulently overstated its quarterly income by more than $420 million in its 2007 annual report filed with the Commission. As a result, the Complaint alleges that Thornburg fraudulently reported a profit rather than a loss for the quarter. According to the Complaint, in the two weeks leading to the filing of its annual report, Thornburg received more than $300 million in margin calls from its lenders that severely drained its liquidity. The Complaint further alleges that, unable to meet its margin calls on a timely basis, Thornburg violated three of its lending agreements, and received a reservation of rights letter from one lender in which the lender reserved its right to declare Thornburg in default at any time. Accordingly, the Complaint alleges that in the days before Thornburg filed its annual report, the collateral it used for its lending agreements, adjustable rate mortgage (“ARM”) securities, was subject to being seized and sold by its lenders. According to the Complaint, given the circumstances of Thornburg’s liquidity crisis, circumstances that were misrepresented to, and concealed from, the company’s auditor, Goldstone, Simmons, and Starrett each knew, or was reckless in not knowing, that Thornburg did not have the intent or ability to hold its ARM securities until maturity or until their value recovered in the market. The Complaint concludes that the individual defendants also knew, or were reckless in not knowing, that this meant Thornburg was required to recognize on its income statement approximately $428 million of losses associated with the company’s ARM securities, and that the proper accounting treatment for these securities would have resulted in Thornburg reporting a loss rather than a profit for the quarter.

The Complaint claims that, based on this conduct, the defendants violated or aided and abetted the violation of, or in the case of Goldstone and Simmons are liable as control persons under Section 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) for Thornburg’s violation of, Section 17(a) of the Securities Act of 1933, and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13b2-1, and 13b2-2 thereunder. The Complaint also claims that Goldstone and Simmons violated Rule 13a-14 of the Exchange Act. As part of this action, the Commission seeks against each of the defendants an injunction against future violations of the provisions set forth above, officer and director bars, and third tier civil money penalties.

U.S. SOUTHERN COMMAND FOCUSES ON TRANSNATIONAL ORGANIZED CRIME

The following excerpt is from the Department of Defense American Forces Press Service:

Southern Command Targets Transnational Organized Crime

By Jim Garamone
American Forces Press Service

WASHINGTON, March 13, 2012 - U.S. Southern Command is focused on stopping transnational organized crime and building partners' capabilities, Air Force Gen. Douglas Fraser said here today.

Speaking before the Senate Armed Services Committee, the Southern Command commander detailed the challenges facing Southcom, which has responsibility for U.S. military relationships in Central and South America and the Caribbean.

Working with other U.S. federal agencies, the command has focused on a concern that permeates the region: transnational organized crime, which the general said "is seriously impacting citizen safety in Central America, especially Guatemala, El Salvador and Honduras."

Transnational crime rings "threaten to overwhelm law enforcement capacities, and in an effort to reduce violence and halt the spread of these criminal groups, these countries have deployed their militaries in support of law enforcement organizations," he said.

Disrupting these narcosyndicates is part of the overall strategy in the region, Fraser said. In the past year, the command developed and implemented Operation Martillo, a plan to disrupt illicit maritime traffic in the departure zones of South America and the arrival zones in Central America, the general said.

Southern Command personnel have helped train partner nations' military members to support local police, and provides "network analysis of transnational criminal organizations and their operations," Fraser said.

The command works in the Caribbean under the Caribbean Basin Security Initiative, which is developing the regional maritime interdiction plan to enhance the capabilities of Caribbean partners, Fraser said.

"In South America, we will sustain our support to Colombia and to Peru as they fight narcoterrorist groups in these countries," he said.

The command is working to build enduring international and interagency partnerships by promoting cooperation and information-sharing, Fraser said.

Personnel also are working through traditional military channels to strengthen disaster relief capabilities," he said. "We remain ready to respond should our assistance be requested," he said.

The command has been busy. In 2011, it conducted hundreds of training and educational events, 12 major multinational exercises with partner nations in the hemisphere and 56 medical readiness training exercises in 13 countries.

"This sustained engagement is yielding important benefits," Fraser said. "Last year, for the first time, Colombia assumed the land component commander role during Panamax, our annual multinational exercise focused on supporting the defense of the Panama Canal."

This year, Brazil will command the maritime component of the exercise, he said.

Threats are not limited to the homegrown varieties. Iran is very engaged in Latin America, the general said. "They have doubled their number of embassies in the last seven years," he said. "They now have 11 embassies. They have 40 cultural centers in 17 different countries throughout the region."

Southern Command officials see the Iranian activity as trying to build cultural awareness and awareness for Iran to circumvent international sanctions against Iran. "They are seeing an opportunity with some of the anti-U.S.-focused countries within the region as a method on being able to do that," he said.

The concern lies with Iran's connections with Hezbollah and Hamas terrorist groups, both of which have organizations in Latin America, Fraser said. "Those organizations are primarily focused on financial support to organizations back in the Middle East, but they are involved in illicit activity," he said.

GENDER VIOLENCE AND HIV

The following excerpt is from a U.S. State Department e-mail:
New Initiative Responds to Gender-Based Violence as Part of Global HIV Response
Media Note Office of the Spokesperson Washington, DC
March 14, 2012
On March 14 at the White House, Ambassador-at-Large for Global Women’s Issues Melanne Verveer and U.S. Global AIDS Coordinator Ambassador Eric Goosby announced a joint initiative to provide $4.65 million in small grants to grassroots organizations to address gender-based violence (GBV) issues. With funding from the President’s Emergency Plan for AIDS Relief (PEPFAR), the initiative supports programs that prevent and respond to GBV, with a link to HIV prevention, treatment and care. Grants of up to $100,000 for programs that leverage existing HIV/AIDS platforms will be awarded to organizations working in one of more than 80 PEPFAR countries. U.S. Embassies and Consulates will oversee and support these grants.

Addressing gender inequities and norms is essential to reducing the vulnerability of women and girls to HIV infection. One in three women worldwide will experience GBV in their lifetime, and in some countries, 70 percent of female populations are affected. Gender-based violence increases women and girls’ overall vulnerability to HIV, with country studies indicating an up to three-fold risk of HIV infection among women who experience violence. GBV also fosters the spread of HIV by limiting women’s ability to negotiate safe sexual practices, disclose HIV status and access services, due to fear of further violence. While women and girls are the most affected by GBV, men and boys are also victims of these abuses.

The U.S. Government, including the Secretary’s Office of Global Women’s Issues (S/GWI) at the Department of State and the interagency PEPFAR initiative, is committed to advancing women’s health and rights, a core principle of the U.S. Global Health Initiative. Through the GBV small grants program, grassroots organizations will receive support to prevent and respond to GBV, helping to address the structural drivers of both violence and HIV. In addition, the grants will strengthen the capacity of such organizations to access other sources of funding. This will contribute to a longer-term effort to create an AIDS-free generation and societies free of violence, where women and men can realize their full potential. The State Department and sister agencies across the U.S. Government stand with partners across the globe in expressing American values by responding to the global GBV pandemic.

SECRETARY OF DEFENSE SAYS PARTNERSHIP TESTED

T

he following excerpt is from a Department of Defense American Forces Press Service e-mail:

Panetta: Partnership Tested, Proven After Horrific Events

By Karen Parrish
American Forces Press Service

WASHINGTON, March 14, 2012 - Coalition forces are achieving their mission of helping Afghanistan transform its future, Defense Secretary Leon E. Panetta told a multinational military throng here today.

Coalition forces in Regional Command Southwest include 11 nations' troops, and Panetta's audience included U.S. Marines and soldiers, as well as dozens of British, Jordanian, Afghan and other nations' service members.

Panetta addressed the hundreds of troops inside an echoing space created by what appeared to be an acre of vinyl draped over tubular steel framing, floored with concrete and filled with metal folding chairs.

"I can't tell you how proud I am of the partnership that we have," Panetta told the troops.

The 50 nations that make up the NATO-led International Security Assistance Force represent "probably the broadest and deepest military coalition we've seen in a long, long time," he said.

Those countries' military members are working with Afghan security forces "... trying to bring peace, justice, and ... security to Afghanistan," the secretary added.

They are working and fighting for a common cause, he said, "to ensure that Afghanistan never again becomes a safe haven" from which terrorists can launch attacks against other nations.

In working "shoulder-to-shoulder" to help build an Afghanistan that can secure and govern itself, the secretary told the audience, they are helping to realize a dream that is often labeled American, but is common throughout the world -- a better life for the next generation.

"Achieving that dream depends on men and women who are willing to make the sacrifices, to step forward, to work with fellow citizens, and to forge a better, more secure life for our children," he said.

Coalition and Afghan forces alike have been tested time and again over a decade of war, and particularly over the last few weeks, he said.

"We've had protests and violence. We've had the burning of the Quran. ... We've had ISAF forces that have been ... murdered," Panetta said. "And last weekend we were shocked to learn about the tragic event ... in nearby Kandahar province that resulted in the death of so many Afghan civilians."

Those incidents are deeply troubling, but are not reflective of overall Afghan-coalition cooperation, he reiterated.

Enemy-initiated violence is trending down, Panetta said, and 2011 was a transitional year for the Afghanistan mission.

"All of you have the opportunity to make 2012 a decisive year in this campaign," he said.

Panetta touched down at Bastion Airfield here today for a two-day country visit that will take him from visiting troops and regional Afghan leaders in southern Afghanistan to high-level meetings in Kabul.

There, the secretary has meetings scheduled with Afghan President Hamid Karzai, Defense Minister Abdul Rahim Wardak and Interior Minister Gen. Bismillah Khan Mohammadi.

In a break with past practice, none of the forces -- including U.S. troops -- brought their weapons into the area where the secretary spoke. During past visits, Afghan forces would likely have been the only unarmed soldiers present, officials acknowledged.

U.S. officials said Marine Corps Maj. Gen. Charles M. Gurganus, who two days ago took command of Regional Command Southwest, made the decision yesterday that none of the troops meeting the secretary would carry weapons, so all service members present would be on an equal footing.

A senior defense official traveling with the secretary said yesterday that Panetta's Afghanistan visit was planned long before a U.S. service member allegedly killed a reported 16 Afghan civilians March 11 near Kandahar. The secretary's planned itinerary has not changed since that "isolated criminal attack," the official added.

Panetta told reporters traveling with him that along with thanking coalition forces for their service, he will focus during this visit on strategic issues -- the overall campaign against the Taliban and al-Qaida, the transition to Afghan security lead by the end of 2014, and the enduring partnership between the United States and Afghanistan.

Panetta left Kyrgyzstan's capital city of Bishkek this morning and visited U.S. service members at the Manas transit center before flying here. All U.S. service members coming into or leaving Afghanistan pass through Manas en route.

SOLDIER ACCUSED OF CIVILIAN SHOOTING AIRLIFTED OUT OF AFGHANISTAN

The following excerpt is from the Department of Defense American Forces Press Service:

Military Flies Shooting Suspect Out of Afghanistan

By Lisa Daniel
American Forces Press Service

WASHINGTON, March 14, 2012 - The military today airlifted out of Afghanistan the U.S. soldier accused of going on a shooting rampage targeting Afghan civilians earlier this week, a Pentagon spokesman said.

Navy Capt. John Kirby, in an interview with Fox News at the Pentagon, confirmed that the soldier was flown out of Afghanistan. He declined to say where he is being held.

The soldier, whom the military has yet to identify, was taken out of Afghanistan because there was no appropriate place to detain him there, Kirby said.

"This is in accordance with our own regulations and policies to have him in a proper detention facility and to continue to be interviewed and cared for appropriately," he said. "So we've moved him to an appropriate detention facility outside the country."

Kirby agreed with a reporter's assessment that Afghans are "understandably livid" about the soldier being taken out of Afghanistan, but he said U.S. military officials have been in close contact with Afghan officials.

"We have kept Afghan authorities, all the way up to President [Hamid] Karzai, informed of this transfer," he said. "They know we're doing this, and they know why we're doing this."

Army officials have identified the suspect only as a noncommissioned officer. He is accused of leaving his base in Kandahar province in the middle of the night March 11 and shooting Afghans in their homes nearby. Afghan officials say 17 were killed.

It is Defense Department policy to release a suspect's name after charges have been levied against him. That has not yet occurred, Kirby said.

Because of the "heinous nature of the crimes, and the scope and magnitude of the devastation," the captain said, military officials don't want to rush investigators.

Defense Secretary Leon E. Panetta has told Karzai the investigation will be done rapidly, Kirby said. "But more important," he added, "it will be done thoroughly."

BIZJET INTERNATIONAL SETTLES BRIBERY CHARGES

The following excerpt is from the U.S. Department of Justice website:
Wednesday, March 14, 2012
Bizjet International Sales and Support Inc., Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $11.8 Million Criminal Penalty

WASHINGTON – BizJet International Sales and Support Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has agreed to pay an $11.8 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for bribing government officials in Latin America to secure contracts to perform aircraft MRO services for government agencies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

The department filed a one-count criminal information today charging BizJet with conspiring to violate the FCPA’s anti-bribery provisions and a deferred prosecution agreement in U.S. District Court for the Northern District of Oklahoma.
 
According to court documents, BizJet paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil.  In many instances, BizJet paid the bribes directly to the foreign officials.  In other instances, BizJet funneled the bribes through a shell company owned and operated by a BizJet sales manager.  BizJet executives orchestrated, authorized and approved the unlawful payments.

Under the terms of the department’s agreement with BizJet, the department agreed to defer prosecution of BizJet for three years.  In addition to the monetary penalty, BizJet agreed to cooperate with the department in ongoing investigations, to report periodically to the department concerning BizJet’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.  If BizJet abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.
In addition, BizJet’s indirect parent company, Lufthansa Technik AG, itself a German provider of aircraft-related services, entered into an agreement with the department in connection with the unlawful payments by BizJet and its directors, officers, employees and agents.  The department has agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years.  Those obligations include ongoing cooperation and the continued implementation of rigorous internal controls.

The agreements acknowledge BizJet’s and Lufthansa Technik’s voluntary disclosure of the FCPA violations to the department and their extraordinary cooperation, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing and organizing voluminous evidence and information for the department.  In addition, BizJet and Lufthansa Technik engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments, enhancing their due-diligence protocol for third-party agents and consultants, and heightening review of proposals and other transactional documents for all BizJet contracts.

The case is being prosecuted by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section.  Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma has provided assistance in the case.  The department has also worked closely with its law-enforcement counterparts in Mexico and Panama in this matter and is grateful for their assistance.  The ongoing investigation is being assisted by the FBI’s Washington Field Office.

SEC CHARGES FIVE INDIVIDUALS FOR INSIDER TRADING INVOLVING AN INTERNATIONAL MERGER

The following excerpt is from an SEC e-mail: 

Washington, D.C., March 13, 2012 – The Securities and Exchange Commission today charged two financial advisors and three others in their circle of family and friends with insider trading for more than $1.8 million in illicit profits based on confidential information about a Philadelphia-based insurance holding company’s merger negotiations with a Japanese firm.

The SEC alleges that Timothy J. McGee and Michael W. Zirinsky, who are registered representatives at Ameriprise Financial Services, illegally traded in the stock of Philadelphia Consolidated Holding Corp. (PHLY) based on nonpublic information about the company’s impending merger with Tokio Marine Holdings. McGee obtained the inside information from a PHLY senior executive who was confiding in him through their relationship at Alcoholics Anonymous (AA) about pressures he was confronting at work. McGee then purchased PHLY stock in advance of the merger announcement on July 23, 2008, and made a $292,128 profit when the stock price jumped 64 percent that day.

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of Pennsylvania, McGee tipped Zirinsky, who purchased PHLY stock in his own trading account as well as those of his wife, sister, mother, and grandmother. Zirinsky tipped his father Robert Zirinsky and his friend Paulo Lam, a Hong Kong resident who in turn tipped another friend whose wife Marianna sze wan Ho also traded on the nonpublic information. The Zirinsky family collectively obtained illegal profits of $562,673 through their insider trading. Lam made an illicit profit of $837,975 and Ho, also a Hong Kong resident, profited by $110,580.

Lam and Ho each agreed to settle the SEC’s charges and pay approximately $1.2 million and $140,000 respectively.

“McGee stole information shared with him in the utmost confidence, and as securities industry professionals he and Zirinsky clearly knew better,” said Elaine C. Greenberg, Associate Director of the SEC’s Philadelphia Regional Office. “As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary.”

According to the SEC’s complaint, McGee met the PHLY executive at AA in 1999. By spring and early summer 2008, while the PHLY executive was participating in the merger negotiations and under significant pressure to ensure a successful sale, he and McGee had known each other for almost a decade and forged a close relationship in which they routinely shared confidences about each other’s personal lives and problems impacting them professionally. Their relationship eventually extended beyond AA as they occasionally trained together for triathlons, and McGee even suggested that the PHLY executive should invest his money with him because he knew his personal history. McGee, who lives in Malvern, Pa., assured the PHLY executive on many occasions that he would keep the information they discussed confidential.

The SEC alleges that in early July 2008, immediately after an AA meeting, the PHLY executive confided to McGee that he was under considerable pressure as a result of ongoing confidential negotiations to sell PHLY. In response, McGee expressed interest in the details of the PHLY sale and questioned him about the details of the impending deal. McGee learned that Tokio Marine would be the acquirer, the sale was getting close, and that the price would be approximately three times the book value of the company. McGee had successive conversations with the PHLY executive both face-to-face and by phone during this critical juncture of the negotiations. After learning about the impending merger on July 14, McGee entered an order for PHLY stock and bought additional shares on July 17, 18, and 22. McGee bought the majority of his PHLY stock on margin and funded the remaining purchases with sales of existing securities and money market funds. Two days after the public announcement, McGee sold approximately one-third of his PHLY stock and held the balance until the merger closed on December 1. Subsequent to the merger announcement, McGee admitted to the PHLY executive that he had traded on the basis of the confidential information told to him about the merger and made money as a result.

According to the SEC’s complaint, McGee has worked in the same office as Zirinsky for more than 15 years and they have become friends and business associates. McGee learned confidential information about the mergers and tipped Zirinsky with the details. For instance, after a brief conversation with the PHLY executive on July 16 at 5:09 p.m., McGee and Zirinsky spoke later that evening. The next morning at 8:26 a.m., McGee placed another call to the PHLY executive, and just several minutes after that conversation ended he called Zirinsky on his cell phone. Only seconds after that call between McGee and Zirinsky ended, Zirinsky attempted to reach his father at three different telephone numbers. He also called his sister. Later that morning, Zirinsky began purchasing PHLY stock in three of his Ameriprise accounts and the Ameriprise accounts of his wife, sister, mother, and grandmother. He also entered trades in IRA accounts held by his father and mother. Meanwhile, Robert Zirinsky, who lives in Quakertown, Pa., purchased additional shares of PHLY stock in an account at another broker. None of Michael Zirinsky’s family members had ever purchased PHLY shares prior to that day, when they bought more than $700,000 of stock in the company.

The SEC alleges that Zirinsky, who lives in Schwenksville, Pa., contacted Lam in Hong Kong via text message and two phone calls amid speaking with McGee on the morning of July 17. Within hours, Lam began buying shares in PHLY stock, which he had never previously owned. Lam also tipped a friend in Hong Kong, who is married to Marianna sze wan Ho. Shortly after that conversation, Ho made purchases of PHLY stock that were triple the value of any equities previously purchased in the account. She sold all of the PHLY shares on the day of the merger announcement.

The SEC’s complaint charges McGee, Michael Zirinsky, Robert Zirinsky, and Hong Kong residents Lam and Ho with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also names as relief defendants Zirinsky’s wife Kellie Zirinsky, sister Jillynn Zirinsky, mother Geraldine Zirinsky, and grandmother Mary Zirinsky for the purpose of recovering the illegal profits in their trading accounts. The complaint seeks a final judgment ordering disgorgement of ill-gotten gains together with prejudgment interest from the defendants and relief defendants, and permanent injunctions and penalties against the defendants.

Of the various defendants, two individuals who received the tips, Lam and Ho, each agreed to settle the case, without admitting or denying the allegations, by disgorging all their illicit gains and paying a penalty, as well as agreeing to the entry of a final judgment permanently enjoining them from violating Section 10(b) of the Exchange Act and Rule 10b-5. In particular, Lam agreed to pay $837,975 in disgorgement, $123,649 in prejudgment interest, and a penalty of $251,392. Ho has agreed to pay $110,580 in disgorgement, $16,317 in prejudgment interest, and a penalty of $16,587. The settlements are subject to court approval.

The SEC’s investigation was conducted by Philadelphia Regional Office enforcement staff Brendan P. McGlynn, Patricia A. Paw and Daniel L. Koster. The SEC’s litigation will be led by Scott A. Thompson, Nuriye C. Uygur, and G. Jeffrey Boujoukos.

The SEC acknowledges and appreciates the assistance of the Financial Industry and Regulatory Authority (FINRA).

SECRETARY OF DEFENSE PANETTA FINDS VALUE IN KYRGYZSTAN TRANSIT CENTER

The following Photo at left and excerpt below is from the Department of Defense American Forces Press Service website:

Panetta Cites Value of Transit Center in Kyrgyzstan

By Karen Parrish
American Forces Press Service

BISHKEK, Kyrgyzstan, March 13, 2012 - Defense Secretary Leon E. Panetta arrived here today on his first official visit to Kyrgyzstan, which is home to a transit center for all U.S. troops entering or leaving Afghanistan.

The Transit Center at Manas, near Kyrgyzstan's capital of Bishkek, is critical to the northern distribution network that funnels U.S. forces and equipment into Afghanistan, Panetta said.

That network has been "extremely important in recent months, since our [ground transit routes] have closed in Pakistan," the secretary added.

During his visit, Panetta is scheduled to meet with Kyrgyz President Almazbek Atambyev and Defense Minister Taalaybeck Omuraliev. The secretary also will visit U.S. troops at the transit center.

Panetta said he will thank the Kyrgyz leaders for their cooperation in allowing the United States to use the transit center and to ensure the relationship can continue into the future.

Officials traveling with Panetta said the Manas center has been the only air facility north of Afghanistan available to U.S. forces since 2001. A previous Kyrgyz administration threatened to oust the Americans in 2009, which led to some "pretty arduous negotiations" and a sharp increase in the amount the U.S. government pays for use of the facility, an official said. Before 2009, the payment was $17.4 million per year; it is now $60 million annually.

A senior defense official said that arrangement is in place through July 2014, and that the secretary will not negotiate any additional use of the facility on this trip. Rather, the official added, the visit is intended to underscore to the Kyrgyz government and to Atambyev, who was inaugurated in December, that the United States government views its relationship with Kyrgyzstan as central to Central Asian regional security.

In 2011, defense officials said, operations at the Transit Center at Manas included 4,800 air refueling sorties transferring 300 million pounds of fuel. The center also supported 3,500 aeromedical evacuations and managed a total flow of 580,000 air passengers traveling into or out of Afghanistan.

Deploying troops fly into Manas on commercial aircraft, then transfer to U.S. military "gray tail" planes for the final leg of their trip to Afghanistan, officials said.
 

DEVON ENERGY TO PAY NEARLY $3.5 MILLION TO RESOLVE ROYALTY UNDERPAYMENTS

The following excerpt is from the Department of Justice website:
Monday, March 12, 2012
Devon Energy to Pay U.S. $3.5 Million to Resolve Allegations of Royalty Underpayments from Federal and Indian Lands
Devon Energy Corporation and its affiliates have agreed to pay the United States $3,492,463 to resolve claims that PennzEnergy, a predecessor to Devon, violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian lands, the Justice Department announced today.   Devon is an independent oil and natural gas exploration and production company with operations focused onshore in the United States and Canada.

PennzEnergy, formerly known as Pennzoil Company, was acquired by Devon in May 1999.  Prior to the merger, PennzEnergy was involved in the production of natural gas from federal leases offshore in the Gulf of Mexico and onshore in the Gulf Coast.

 Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced.   Each month companies are required to report and pay to the U.S. Department of the Interior the amount of royalty that is due.   This settlement resolves claims by the United States under the False Claims Act that PennzEnergy improperly deducted from royalty values costs associated with boosting gas up to pipeline pressures and failed to report and pay royalties on gas used to fuel boosting compressors.

“Natural gas royalties are an important source of income for the United States, Native Americans, and various states, and they help support critical programs from which we all benefit,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “Through cases such as this, we continue to make certain that companies that lease public and Indian lands, and that extract non-renewable resources from those lands, pay their full share of royalties.”

“This settlement demonstrates that the Department remains committed to ensuring that energy companies accurately report production and pay the required royalties,” said Greg Gould, Interior’s Acting Deputy Assistant Secretary for Natural Resources Revenue.  Gould added that ONRR “will continue to pursue every dollar due to taxpayers and the Federal Government from extracting these precious natural resources from Federal and American Indian lands.”

The resolution of this matter is one of the last in a series of settlements arising out of qui tam, or whistleblower, litigation that has been pending for over a decade.

Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act.  Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens may file actions on behalf of the United States and share in any recovery.   Because Mr. Wright is deceased, his heirs will receive $908,040.38 or 26 percent of the settlement.

The United States has intervened against Devon for the purpose of completing this settlement.  The Department of Justice previously intervened against several other defendants in the Wrightlawsuit.   Settlements in the case to date exceed $300 million.   The claims in the complaint are merely allegations and do not constitute a determination of liability.

The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Texas and the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.  

NASA RELEASES NEW VIEW OF THE ORION NEBULA

The photo and excerpt below are from the NASA website:
This new view of the Orion Nebula highlights fledgling stars hidden in the gas and clouds. It shows infrared observations taken by NASA's Spitzer Space Telescope and the European Space Agency's Herschel mission, in which NASA plays an important role. Stars form as clumps of this gas and dust collapses, creating warm globs of material fed by an encircling disk. These dusty envelopes glow brightest at longer wavelengths, appearing as red dots in this image. In several hundred thousand years, some of the forming stars will accrete enough material to trigger nuclear fusion at their cores and then blaze into stardom. Spitzer is designed to see shorter infrared wavelengths than Herschel. By combining their observations, astronomers get a more complete picture of star formation. The colors in this image relate to the different wavelengths of light, and to the temperature of material, mostly dust, in this region of Orion. Data from Spitzer show warmer objects in blue, with progressively cooler dust appearing green and red in the Herschel datasets. The more evolved, hotter embryonic stars thus appear in blue. Infrared data at wavelengths of 8.0 and 24 microns from Spitzer are rendered in blue. Herschel data with wavelengths of 70 and 160 microns are represented in green and red, respectively. This image was released on Feb. 29, 2012. Image Credit: NASA/ESA/JPL-Caltech/IRAM