PFIZER WILL PAY $55 MILLION FOR ILLEGAL PROMOTION OF PROTONIX FOR OFF-LABEL USE

FROM: U.S. DEPARTMENT OF JUSTICE

Wednesday, December 12, 2012
Pfizer Agrees to Pay $55 Million for Illegally Promoting Protonix for Off-Label Use

Pfizer Inc. will pay $55 million plus interest to resolve allegations that Wyeth LLC illegally introduced and caused the introduction into interstate commerce of a misbranded drug, Protonix, between February 2000 and June 2001, the Justice Department announced today.

Wyeth manufactured and promoted Protonix tablets. Protonix is a proton pump inhibitor (PPI) that was used by physicians to treat various forms of gastro-esophageal reflux disease (GERD). Wyeth sought and obtained approval from the Food and Drug Administration (FDA) to promote Protonix for short-term treatment of erosive esophagitis–a condition associated with GERD that can only be diagnosed with an invasive endoscopy. However, the government alleges that Wyeth fully intended to, and did, promote Protonix for all forms of GERD, including symptomatic GERD, which was far more common and could be diagnosed without an endoscopy.

Under the Federal Food Drug and Cosmetic Act, manufacturers must obtain FDA approval for any indication for use for which a manufacturer intends to market a drug. A drug is misbranded if its labeling does not bear adequate directions for use by a layman safely and for the purposes for which it is intended. A prescription drug must be prescribed by a physician and is only exempt from the adequate directions for use requirement if a number of conditions are met, including that the manufacturer only intended to sell that drug for an FDA-approved use. A prescription drug marketed for unapproved off-label uses does not qualify for the exemption and is misbranded.

As alleged in the government’s complaint, Wyeth’s illegal promotional campaign for Protonix was multi-faceted. Before Wyeth even began promoting Protonix, the FDA warned Wyeth that its proposed promotional materials were misleading because Wyeth had "overstated" its "erosive esophagitis indication" by "suggesting that Protonix is safe and effective in the treatment of patients with . . . GERD. Protonix is not indicated for treatment of GERD symptoms that occur in the absence of esophageal erosions." Despite the FDA’s admonishment, the government alleges that Wyeth trained its sales force to promote Protonix for all forms of GERD, beyond its limited erosive esophagitis indication, and that Wyeth sales representatives frequently promoted Protonix to physicians for unapproved uses, such as symptomatic GERD.

In addition, Wyeth allegedly promoted Protonix as the "best PPI for nighttime heartburn." even though there was never any clinical evidence that Protonix was more effective than any other PPI for nighttime heartburn. The allegations in the complaint are that this superiority slogan was formulated at the highest levels of the company. Wyeth retained an outside market research firm, at the cost of tens of thousands of dollars, to ensure that sales representatives delivered that misleading superiority message.

Finally, the government alleges that Wyeth used continuing medical education (CME) programs to promote Protonix for unapproved uses. CME programs are sponsored by accredited independent providers, such as universities, nonprofit organizations, or specialty societies. Pharmaceutical companies are permitted to provide financial support for CME programs, but they are not permitted to use CME programs as promotional vehicles for off-label indications. According to the complaint, Wyeth spent millions of dollars providing "unrestricted educational grants" to CME providers, and these grants invariably included promises that Wyeth would not attempt to influence the content of the program in any way. Nevertheless, the government alleges that one of Wyeth’s core marketing tactics for Protonix was to use CME programs to drive off-label use of the drug. According to the complaint, the Protonix "brand team" influenced virtually every aspect of these CME programs: program topics, speaker selection, organization, and content. In addition, the government alleges that Wyeth even insisted that the CME program materials use the same color and appearance as Protonix promotional materials–a tactic that Wyeth and the vendor called "branducation."

"Today’s settlement once again demonstrates our commitment to making sure drug manufacturers follow the rules," said Stuart Delery, Principal Deputy Assistant Attorney General of the Department of Justice’s Civil Division. "Drug manufacturers should not be permitted to profit from misbranding their products; the disgorgement remedy here ensures that this does not happen in this case."

"Wyeth tried to cheat the system by obtaining a limited FDA approval for Protonix, fully intending to promote this drug for additional, unapproved uses," said U.S. Attorney Carmen M. Ortiz. "Wyeth ignored the FDA’s warning not to promote Protonix off-label, and then went so far as to contaminate CME programs that physicians rely on for unbiased, independent scientific information. Today’s settlement reinforces this office’s historic commitment to holding drug companies responsible for their misconduct."

This case was litigated by Assistant U.S. Attorneys David Schumacher and Susan Winkler of Ortiz’s Health Care Fraud Unit, together with former Trial Attorney Kevin Larsen and Deputy Director Jill Furman in the Department of Justice Consumer Protection Branch. This case was investigated by the FDA’s Office of Criminal Investigations; the Office of Inspector General of the Department of Health and Human Services, the Department of Veterans’ Affairs, and the FBI.

This civil complaint and settlement resolve the United States’ investigation of Wyeth related to the promotion of Protonix for unapproved uses. The claims settled by this agreement are allegations only, allegations which Pfizer denies; there has been no determination of liability. Pfizer acquired Wyeth in October 2009. Since August 2009, Pfizer has been under a Corporate Integrity Agreement with the Department of Health and Human Services, which agreement remains in effect.

U.S. AND CANADA EXPAND ARTIC COOPERATION

U.S. Army Gen. Charles Jacoby Jr., left, at table, commander of NORAD and U.S. Northern Command, and Canadian Army Lt. Gen. Stuart Beare, Canadian Joint Operations Command commander, sign the Tri-Command Framework for Arctic Cooperation and the Tri-Command Training and Exercise Statement of Intent during the 230th meeting of the Canada-U.S. Permanent Joint Board on Defense at the U.S. Air Force Academy in Colorado Springs, Colo., Dec. 11, 2012. Photo by Doug Sanderson

FROM: U.S. DEFENSE DEPARTMENT

U.S., Canada Expand Arctic Cooperation, Military Training
By Donna Miles
American Forces Press Service

WASHINGTON, Dec. 11, 2012 - The United States and Canada entered into two new agreements today that expanded their security relationship by promoting closer cooperation in peacefully opening the Arctic and in expanding their bilateral military training and exercise program.

Army Gen. Charles Jacoby Jr., commander of North American Aerospace Defense Command and U.S. Northern Command, joined Canadian Army Lt. Gen. Stuart Beare, commander of Canadian Joint Operations Command, in signing the Tri-Command Framework for Arctic Cooperation during a meeting of the Permanent Joint Board of Defense at the U.S. Air Force Academy in Colorado Springs, Colo.

The agreement emphasizes that the Arctic is not a region of conflict, but rather a place where nations can work together peacefully and the U.S. and Canadian militaries will support other departments and agencies in response to regional threats and hazards when requested and directed, officials said.

The goal is to promote enhanced military cooperation in the Arctic, particularly in support of safety, security and defense operations.

During today's session, the participants agreed to collaborate more closely in a host of areas, including training, capabilities, research and development, science and technology, domain awareness, communications and operations, all to promote a safe and secure Arctic region, Royal Canadian Air Force Brig. Gen. A.D. "Al" Meinzinger, deputy director of NORAD's and Northcom's strategy, policy and plans directorate, told American Forces Press Service.

DOD's unified defense plan, which President Barack Obama signed in April 2011, designated Northcom as the department's advocate for Arctic capabilities.

The designation recognizes that the opening of the polar icecap -- and the increased presence of human activity -- has important strategic implications, Meinzinger said. "With an opening Arctic, we see more vessel traffic, and obviously see a greater need for a deeper understanding of the domain there," he said.

"We have common interests," he said. "The eight [Arctic] nations understand that this is a fragile environment, and we have a mutual interest in ensuring the Arctic opens in a peaceful manner and that conflict is not on anybody's priority list."

Another agreement signed today expands cooperation in the training and exercise realm and recognizes the shared security interests and budget constraints facing both militaries, Royal Canadian Navy Cmdr. Darren Rich, Canadian Joint Operations Command's representative to NORAD and Northcom, told American Forces Press Service.

The Tri Command Training and Exercise Statement is aimed at enhancing joint and combined readiness in support of safety, security and defense missions between the Canadian and U.S. militaries.

As examples, Rich noted the Vigilant Shield and Determined Dragon exercises, which bring the three commands together to exercise their ability to protect the U.S. and Canadian homelands and support civil authorities in the event of a natural or manmade disaster.

The new agreement will formalize these exchanges and encourage more cross-border training in ways that strengthen both countries' defense plans, he said.

"We hope to work through this in an exercise format to find out where the seams and capabilities are," Rich said. "What we all expect are better planned processes that help us define training objectives far enough in advance to develop the scenarios to test the training objectives. Then, through the [after action review] process, we can see if we met the objectives, where the gaps are, what worked well and what we need to fix."

The signing "further codifies the bilateral relationship" and helps the two countries' militaries work together more closely and leverage their resources, Rich said. "It postures us so we can both work together for the safety, security and defense of both our nations' populations," he said.

This week's meeting is the 230th for the Permanent Joint Board of Defense, which stood up after President Franklin Roosevelt and Canadian Prime Minister Mackenzie King solidified the two countries' military-to-military relationship with the signing of the Ogdensburg Agreement in August 1940. The board is the highest-level bilateral defense and security forum between the United States and Canada. Its collaboration ultimately led to the establishment of what is now the bi-national North American Aerospace Defense Command in 1958.

"This is a wonderful forum where Canadians and Americans discuss issues of common necessity," Meinzinger said. "We use this venue to put in motion action plans and to work together to address the challenges of the day."

This week's Permanent Joint Board of Defense forum follows the signing of a new Combined Defense Plan between the two countries last January.

During the session in Ottawa, Jacoby joined Canadian Army Lt. Gen. Walter Semianiw, commander of the former Canada Command that became part of Canadian Joint Operations Command in October, and established a planning framework to enhance defense cooperation in the event the U.S. or Canadian governments need each other's assistance, such as during a natural disaster or attack.

Jacoby and Semianiw also renewed for the next two years the Civil Assistance Plan that allows the military from one nation to support the armed forces of the other during a civil emergency. That agreement, in effect since 2008, recognizes the role of each nation's lead federal agency for emergency preparedness, but facilitates military support of civil authorities once government authorities have agreed on an appropriate response, officials said. In the United States, the Department of Homeland Security would be the lead agency. In Canada, it would be Public Safety Canada.

A third document, the Information Sharing Memorandum of Understanding, was signed last January, and updated existing arrangements to promote information-sharing among the three organizations, officials said.

Diabetes, 24-7

Diabetes, 24-7

THE MARTIAN ATMOSPHERE, GONE WITH THE WIND

FROM: NASA

Billions of years ago, Mars had a lot more air than it does today. (Note: Martian "air" is primarily carbon dioxide, not the nitrogen-oxygen mix we breathe on Earth.) Ancient martian lake-beds and river channels tell the tale of a planet covered by abundant water and wrapped in an atmosphere thick enough to prevent that water from evaporating into space. Some researchers believe the atmosphere of Mars was once as thick as Earth's. Today, however, all those lakes and rivers are dry and the atmospheric pressure on Mars is only 1% that of Earth at sea-level. A cup of water placed almost anywhere on the Martian surface would quickly and violently boil away—a result of the super-low air pressure.

 

Mars Atmosphere Loss

This video illustration shows how Mars may have lost its atmosphere to the solar wind after the Red Planet's magnetic field died.

 

SOCIAL MEDIA AND LEGAL RESPONSIBILITY REGARDING TERRORIST ORGANIZATIONS

Credit:  Wikimedia Commons.

FROM: U.S. STATE DEPARTMENT
FTOs Use of Social Media
Taken Question
Office of the Spokesperson
Washington, DC
December 11, 2012

QUESTION: Do ‘U.S. based’ social media companies violate sanctions if Foreign Terrorists Organizations (FTOs) agree to their company’s contractual agreement before establishing an account?

ANSWER: This is an issue governed by U.S. law, including laws that regulate interactions with designated entities. For example, persons subject to U.S. jurisdiction are prohibited from knowingly providing material support or resources to an entity that has been designated as Foreign Terrorist Organizations under section 219 of the Immigration and Nationality Act.

Additionally, it is illegal for persons subject to U.S. jurisdiction to engage in transactions with an entity that has been designated a Specially Designated Global Terrorist under Executive Order 13224.

We would refer you to the Department of Justice and the Department of the Treasury, respectively for any questions about how these are enforced in specific civil and criminal cases.

 

U.S. Department of Defense Armed with Science Update: THE NAME "ENTERPRISE" LIVES ON WITH NEW SHIP

U.S. Department of Defense Armed with Science Update

NIC FORECASTS THE FUTURE



PHOTO CREDIT:  NASA.

FROM: U.S. DEPARTMENT OF DEFENSE

National Intelligence Council Forecasts Megatrends
By Jim Garamone
American Forces Press Service

WASHINGTON, Dec. 11, 2012 – The American Century is drawing to a close, and the U.S. Defense Department will have to be more flexible in dealing with a faster-paced multipolar world, according to the Global Trends 2030 report released yesterday.

The National Intelligence Council has looked to the future to jumpstart the conversation about what U.S. policy should be, given world-wide trends.

In the annual report, the NIC makes its best guesses about several "megatrends" that will shape the world in 2030.

The first is individual empowerment. The council believes there will be a significant decrease in poverty in the world and a concomitant increase in the middle class. The council says this represents a "tectonic shift," as for the first time in history "a majority of the world’s population will not be impoverished."

The NIC expects the global economy to expand and the new members of the middle class will be able to harness new communications and manufacturing technologies.

The council sees this megatrend as the key to solving global challenges over the next 15 to 20 years. But the results of this expanded economy aren’t all rosy. The trend could also give individuals and small groups access to lethal and disruptive technologies and capabilities once only held by nation states.

The second megatrend NIC predicts is the diffusion of power. The council posits that by 2030, Asia will surpass the West in gross domestic production, population size, military spending and technology investment. If this occurs, China would become the world’s largest economy, with India and Brazil close behind. Other rising nations could include Colombia, Indonesia, Nigeria, South Africa and Turkey, while Russia, Europe and Japan could continue their declines.

But, according to the council, more important than who is up or down is that the nature of power will change. "Enabled by communications technologies, power will shift toward multifaceted and amorphous networks that will form to influence state and global actions," the report says. Countries unable to understand or use these new technologies "will not be able to punch their weight."

Demographic changes will transform the world of 2030, the report said. NIC estimates that the world population will grow from 7.1 billion today to 8.3 billion in 2030. Aging, migration and urbanization will push this megatrend. Its most noticeable manifestation will be the continued growth of cities, the report predicts, spurring economic growth, but potentially straining food and water resources.

The report said developing countries could become demographically "older," while the demand for labor drives migration. "Owing to rapid urbanization in the developing world, the volume of urban construction … over the next 40 years could roughly equal the entire volume of such construction to date in world history," the report says.

Finally, NIC predicts that "demand for food, water and energy will grow by approximately 35, 40 and 50 percent respectively." The growing population and expanded middle class will trigger that growth, the report said.

At the same time, the council wrote, climate change will accelerate, amplifying existing weather patterns -- meaning that wet areas become wetter and dry areas become drier. The council said this does not necessarily mean a world of scarcity, but stressed that world leaders must collaborate to tackle the problem.

 

REPUBLIC OF KENYA'S NATIONAL DAY



KENYA MAP.  CREDIT:  CIA WORLD FACTBOOK

FROM: U.S. DEPARTMENT OF STATE

On the Occasion of the Republic of Kenya's National Day
Press Statement
Hillary Rodham Clinton
Secretary of State
Washington, DC
December 11, 2012

On behalf of President Obama and the people of the United States, I am delighted to send best wishes to the people of Kenya as you celebrate 49 years of independence this December 12. Jamhuri Day is an opportunity for Kenyans to honor your commitment to liberty, democracy, and statehood and to look toward the historic challenges and opportunities of the year ahead.

Kenya's national elections on March 4, 2013, are an opportunity for Kenya to take another bold step in implementing its new constitution and strengthening its democracy. We hope that all Kenyans, no matter their gender, ethnicity, religion, or geographic affiliation, will exercise their right to vote and help ensure Kenya’s elections are free, fair, and peaceful. The United States is a friend and partner, and we stand together with all Kenyans committed to the promise of the new constitution.

Congratulations on this special day, and best wishes for a year filled with peace and prosperity.

 

KENYA LOCATOR MAP.  CREDIT:  CIA WORLD FACTBOOK.

ADDITIONAL INFORMATION FROM CIA WORLD FACTBOOK.

Founding president and liberation struggle icon Jomo KENYATTA led Kenya from independence in 1963 until his death in 1978, when President Daniel Toroitich arap MOI took power in a constitutional succession. The country was a de facto one-party state from 1969 until 1982 when the ruling Kenya African National Union (KANU) made itself the sole legal party in Kenya. MOI acceded to internal and external pressure for political liberalization in late 1991. The ethnically fractured opposition failed to dislodge KANU from power in elections in 1992 and 1997, which were marred by violence and fraud, but were viewed as having generally reflected the will of the Kenyan people. President MOI stepped down in December 2002 following fair and peaceful elections. Mwai KIBAKI, running as the candidate of the multiethnic, united opposition group, the National Rainbow Coalition (NARC), defeated KANU candidate Uhuru KENYATTA and assumed the presidency following a campaign centered on an anticorruption platform. KIBAKI's NARC coalition splintered in 2005 over a constitutional review process. Government defectors joined with KANU to form a new opposition coalition, the Orange Democratic Movement (ODM), which defeated the government's draft constitution in a popular referendum in November 2005. KIBAKI's reelection in December 2007 brought charges of vote rigging from ODM candidate Raila ODINGA and unleashed two months of violence in which as many as 1,500 people died. UN-sponsored talks in late February 2008 produced a power-sharing accord bringing ODINGA into the government in the restored position of prime minister. Kenya in August 2010 adopted a new constitution that eliminates the role of prime minister after the next presidential election.

 

AMERICAN SOMOA GETS $100 MILLION INVESTMENT FROM FEMA

American Samoa, Sep. 28, 2012 -- Rev. Dr. Faatauvaa A Talamoni speaks at the TsunamiReady Ceremony for American Samoa.

FROM: U.S. FEDERAL EMERGENCY MANAGEMENT AGENCY

FEMA Invests $100 Million in Post-Tsunami Disaster Relief, Emergency Preparedness Improvements for American Samoa

Honolulu, Hawaii -- The Federal Emergency Management Agency has awarded nearly $100 Million dollars in Post-Tsunami improvements to American Samoa for lifesaving emergency management systems that include an early warning siren system, 9-1-1 emergency call center and the completion of a formal tsunami hazard plan that proved instrumental in helping the island achieve the coveted status of TsunamiReady.

To be recognized as TsunamiReady, a community must establish a 24 hour warning point and emergency operations center, develop multiple ways to receive tsunami warnings and alert the public, develop a formal tsunami hazard plan, conduct emergency exercises and promote public readiness through community education. Given that American Samoa is located 120 miles away from the Tonga Trench, one of the fastest moving subduction zones in the world, tsunmi readiness is paramount to the island’s safety posture.

After meeting all federal requirements, this week the islands of Tutuila, Aunuu, Ofu, Olosega and Tau and all of the National Park of American Samoa have attained the federal NOAA/NWS designation of TsunamiReady and will be officially designated as TsunamiReady in a ceremony with senior American Samoan Government, NOAA and FEMA officials.

"This subduction zone will continue to produce earthquakes and potentially damaging tsunamis," said Regional Administrator Nancy Ward. "American Samoa Government officials have truly made preparedness one of their most important priorities. Their training and outreach programs have achieved remarkable results that will help save future lives."

On September 29, 2009 the South Pacific Tsunami was generated by a series of earthquakes that took place at possibly the closest point of this trench to American Samoa, causing fatalities and regional devastation. Resources have been invested by federal, territorial, voluntary and private sectors partners since the killer wave came ashore in 2009 that have helped the territory to achieve a heightened level of preparedness.

The whole community of American Samoa has come together during the past three years to make the citizens of the islands safer and better prepared to meet a wide variety of threats.

"This is a perfect example of the resilience of the Pacific Islanders and the value of government coordination and cooperation. Everyone met this disaster head on and never stopped moving forward. This recognition is something that the people of American Samoa and their many partners can be very proud of," said Jeff LaDouce, Director of NOAA’s National Weather Service Pacific Region.

Post-Tsunami FEMA funded projects include: the purchase of a generator and two ambulances for LBJ hospital and establishing an Emergency 9-1-1 Call Center. In addition, funds were used to purchase and install an early warning siren system complete with 48 sirens throughout American Samoa. Funds were also used to improve airport security and to purchase equipment for American Samoa Department of Homeland Security’s Emergency Operation Center. Communications equipment and Official vehicles for the American Samoa Department of Homeland Security were also acquired. The Land-Mobile-Radio project contract has been awarded and is the next phase to be implemented to improve communication capability on the island.

FEMA’s aggregated financial assistance to long term recovery have included:

• Awarding more than $37 million in FEMA’s Individual Assistance programs. This includes assistance under various FEMA programs, including Housing Assistance, Other Needs Assistance that provided support for dental, medical, moving, storage and a variety of other needs

• The award of more than $54 million to the ASG to rebuild public infrastructure, mitigate against future disasters and reimburse the American Samoa government for some of the money spent during the initial response.

• In consultation with the American Samoan Government, FEMA has rebuilt and turned over 39 permanent replacement homes to deserving American Samoan families who lost their homes as a result of the devastating tsunami.

• The award of more than $8 Million in Homeland Security Grant Program funds and Public Safety Interoperable Communications funding used for planning and to help American Samoa to be more prepared for natural disasters, train first responders and citizens of American Samoa and provide much needed communication equipment.

The TsunamiReady program is administered by the National Weather Service as a way to increase and strengthen the ability of communities to prepare for, mitigate, and recover from natural hazards. The TsunamiReady ceremony for the Territory of American Samoa and the National Park of American Samoa, will be held at 10:30 a.m. at the Maota Samoa at Utulei Beach on Friday, September 28, 2012, one day before the 3rd anniversary of the devastating 2009 South Pacific Tsunami.

An American Samoa Tsunami Study was conducted by the U.S. Army Corps of Engineers, Honolulu District in cooperation with the American Samoa Government to help strengthen American Samoa's ability to prepare for, respond to, and recover from tsunami hazards. To view the study visit: astsunamiresilience.org/reports/

U.S. SECRETARY OF DEFENSE PANETTA MEETS WITH KUWAIT'S AMIR

U.S. Defense Secretary Leon E. Panetta meets with Kuwaiti heads of state before a meeting with Kuwait’s Amir in Kuwait City, Kuwait, Dec. 11, 2012. DOD photo by Erin A. Kirk-Cuomo

FROM: U.S. DEPARTMENT OF DEFENSE

Panetta Meets With Kuwait’s Amir, Stresses Strong Relationship
American Forces Press Service

WASHINGTON, Dec. 11, 2012 – In a meeting with Kuwait’s amir in Kuwait City today, Defense Secretary Leon E. Panetta expressed strong confidence in the longstanding U.S.-Kuwaiti defense relationship and in the ability of both countries to work together to address common security challenges in the Gulf region and beyond.

Pentagon Press Secretary George Little said in a statement that in the meeting with Amir Sheikh Sabah al-Ahmad al-Jabir al-Sabah, Panetta underscored the importance the U.S. defense strategy places on the Middle East, and commended the emir for Kuwait's leadership role in fostering peace and security in the region.

The secretary and the amir also discussed the crisis in Syria, the problem of cyber threats, and Kuwait's recently completed parliamentary elections and ongoing commitment to the rule of law, Little added.

Panetta’s first official visit to Kuwait is also the first for a U.S. defense secretary in five years.

Black risk of heart death

Black risk of heart death

HSBC BANK TO FORFEIT $1.256 BILLION

FROM: U.S. DEPARTMENT OF JUSTICE

Tuesday, December 11, 2012
HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement

Bank Agrees to Enhanced Compliance Obligations, Oversight by Monitor in Connection with Five-year Agreement

WASHINGTON – HSBC Holdings plc (HSBC Group) – a United Kingdom corporation headquartered in London – and HSBC Bank USA N.A. (HSBC Bank USA) (together, HSBC) – a federally chartered banking corporation headquartered in McLean, Va. – have agreed to forfeit $1.256 billion and enter into a deferred prosecution agreement with the Justice Department for HSBC’s violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). According to court documents, HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and to conduct appropriate due diligence on its foreign correspondent account holders. The HSBC Group violated IEEPA and TWEA by illegally conducting transactions on behalf of customers in Cuba, Iran, Libya, Sudan and Burma – all countries that were subject to sanctions enforced by the Office of Foreign Assets Control (OFAC) at the time of the transactions.

The announcement was made by Lanny A. Breuer, Assistant Attorney General of the Justice Department’s Criminal Division; Loretta Lynch, U.S. Attorney for the Eastern District of New York; and John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); along with numerous law enforcement and regulatory partners. The New York County District Attorney’s Office worked with the Justice Department on the sanctions portion of the investigation. Treasury Under Secretary David S. Cohen and Comptroller of the Currency Thomas J. Curry also joined in today’s announcement.

A four-count felony criminal information was filed today in federal court in the Eastern District of New York charging HSBC with willfully failing to maintain an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent affiliates, violating IEEPA and violating TWEA. HSBC has waived federal indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees.

"HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries," said Assistant Attorney General Breuer. "The record of dysfunction that prevailed at HSBC for many years was astonishing. Today, HSBC is paying a heavy price for its conduct, and, under the terms of today’s agreement, if the bank fails to comply with the agreement in any way, we reserve the right to fully prosecute it."

"Today we announce the filing of criminal charges against HSBC, one of the largest financial institutions in the world," said U.S. Attorney Lynch. "HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system. HSBC’s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions. Today’s historic agreement, which imposes the largest penalty in any BSA prosecution to date, makes it clear that all corporate citizens, no matter how large, must be held accountable for their actions."

"Cartels and criminal organization are fueled by money and profits," said ICE Director Morton. "Without their illicit proceeds used to fund criminal activities, the lifeblood of their operations is disrupted. Thanks to the work of Homeland Security Investigations and our El Dorado Task Force, this financial institution is being held accountable for turning a blind eye to money laundering that was occurring right before their very eyes. HSI will continue to aggressively target financial institutions whose inactions are contributing in no small way to the devastation wrought by the international drug trade. There will be also a high price to pay for enabling dangerous criminal enterprises."

In addition to forfeiting $1.256 billion as part of its deferred prosecution agreement (DPA) with the Department of Justice, HSBC has also agreed to pay $665 million in civil penalties – $500 million to the Office of the Comptroller of the Currency (OCC) and $165 million to the Federal Reserve – for its AML program violations. The OCC penalty also satisfies a $500 million civil penalty of the Financial Crimes Enforcement Network (FinCEN). The bank’s $375 million settlement agreement with OFAC is satisfied by the forfeiture to the Department of Justice. The United Kingdom’s Financial Services Authority (FSA) is pursuing a separate action.

As required by the DPA, HSBC also has committed to undertake enhanced AML and other compliance obligations and structural changes within its entire global operations to prevent a repeat of the conduct that led to this prosecution. HSBC has replaced almost all of its senior management, "clawed back" deferred compensation bonuses given to its most senior AML and compliance officers, and has agreed to partially defer bonus compensation for its most senior executives – its group general managers and group managing directors – during the period of the five-year DPA. In addition to these measures, HSBC has made significant changes in its management structure and AML compliance functions that increase the accountability of its most senior executives for AML compliance failures.

The AML Investigation

According to court documents, from 2006 to 2010, HSBC Bank USA severely understaffed its AML compliance function and failed to implement an anti-money laundering program capable of adequately monitoring suspicious transactions and activities from HSBC Group Affilliates, particularly HSBC Mexico, one of HSBC Bank USA’s largest Mexican customers. This included a failure to monitor billions of dollars in purchases of physical U.S. dollars, or "banknotes," from these affiliates. Despite evidence of serious money laundering risks associated with doing business in Mexico, from at least 2006 to 2009, HSBC Bank USA rated Mexico as "standard" risk, its lowest AML risk category. As a result, HSBC Bank USA failed to monitor over $670 billion in wire transfers and over $9.4 billion in purchases of physical U.S. dollars from HSBC Mexico during this period, when HSBC Mexico’s own lax AML controls caused it to be the preferred financial institution for drug cartels and money launderers.

A significant portion of the laundered drug trafficking proceeds were involved in the Black Market Peso Exchange (BMPE), a complex money laundering system that is designed to move the proceeds from the sale of illegal drugs in the United States to drug cartels outside of the United States, often in Colombia. According to court documents, beginning in 2008, an investigation conducted by ICE Homeland Security Investigation’s (HSI’s) El Dorado Task Force, in conjunction with the U.S. Attorney’s Office for the Eastern District of New York, identified multiple HSBC Mexico accounts associated with BMPE activity and revealed that drug traffickers were depositing hundreds of thousands of dollars in bulk U.S. currency each day into HSBC Mexico accounts. Since 2009, the investigation has resulted in the arrest, extradition, and conviction of numerous individuals illegally using HSBC Mexico accounts in furtherance of BMPE activity.

As a result of HSBC Bank USA’s AML failures, at least $881 million in drug trafficking proceeds – including proceeds of drug trafficking by the Sinaloa Cartel in Mexico and the Norte del Valle Cartel in Colombia – were laundered through HSBC Bank USA. HSBC Group admitted it did not inform HSBC Bank USA of significant AML deficiencies at HSBC Mexico, despite knowing of these problems and their effect on the potential flow of illicit funds through HSBC Bank USA.

The Sanctions Investigation

According to court documents, from the mid-1990s through September 2006, HSBC Group allowed approximately $660 million in OFAC-prohibited transactions to be processed through U.S. financial institutions, including HSBC Bank USA. HSBC Group followed instructions from sanctioned entities such as Iran, Cuba, Sudan, Libya and Burma, to omit their names from U.S. dollar payment messages sent to HSBC Bank USA and other financial institutions located in the United States. The bank also removed information identifying the countries from U.S. dollar payment messages; deliberately used less-transparent payment messages, known as cover payments; and worked with at least one sanctioned entity to format payment messages, which prevented the bank’s filters from blocking prohibited payments.

Specifically, beginning in the 1990s, HSBC Group affiliates worked with sanctioned entities to insert cautionary notes in payment messages including "care sanctioned country," "do not mention our name in NY," or "do not mention Iran." HSBC Group became aware of this improper practice in 2000. In 2003, HSBC Group’s head of compliance acknowledged that amending payment messages "could provide the basis for an action against [HSBC] Group for breach of sanctions." Notwithstanding instructions from HSBC Group Compliance to terminate this practice, HSBC Group affiliates were permitted to engage in the practice for an additional three years through the granting of dispensations to HSBC Group policy.

Court documents show that as early as July 2001, HSBC Bank USA’s chief compliance officer confronted HSBC Group’s Head of Compliance on the issue of amending payments and was assured that "Group Compliance would not support blatant attempts to avoid sanctions, or actions which would place [HSBC Bank USA] in a potentially compromising position." As early as July 2001, HSBC Bank USA told HSBC Group’s head of compliance that it was concerned that the use of cover payments prevented HSBC Bank USA from confirming whether the underlying transactions met OFAC requirements. From 2001 through 2006, HSBC Bank USA repeatedly told senior compliance officers at HSBC Group that it would not be able to properly screen sanctioned entity payments if payments were being sent using the cover method. These protests were ignored.

"Today HSBC is being held accountable for illegal transactions made through the U.S. financial system on behalf of entities subject to U.S. economic sanctions," said Debra Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office. "The FBI works closely with partner law enforcement agencies and federal regulators to ensure compliance with federal banking laws to promote integrity across financial institutions worldwide."

"Banks are the first layer of defense against money launderers and other criminal enterprises who choose to utilize our nation’s financial institutions to further their criminal activity," said Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI). "When a bank disregards the Bank Secrecy Act’s reporting requirements, it compromises that layer of defense, making it more difficult to identify, detect and deter criminal activity. In this case, HSBC became a conduit to money laundering. The IRS is proud to partner with the other law enforcement agencies and share its world-renowned financial investigative expertise in this and other complex financial investigations."

Manhattan District Attorney Cyrus R. Vance Jr., said, "New York is a center of international finance, and those who use our banks as a vehicle for international crime will not be tolerated. My office has entered into Deferred Prosecution Agreements with two different banks in just the past two days, and with six banks over the past four years. Sanctions enforcement is of vital importance to our national security and the integrity of our financial system. The fight against money laundering and terror financing requires global cooperation, and our joint investigations in this and other related cases highlight the importance of coordination in the enforcement of U.S. sanctions. I thank our federal counterparts for their ongoing partnership."

Queens County District Attorney Richard A. Brown said, "No corporate entity should ever think itself too large to escape the consequences of assisting international drug cartels. In particular, banks have a special responsibility to use appropriate due diligence in monitoring the cash transactions flowing through their financial system and identifying the sources of that money in order not to assist in criminal activity. By allowing such illicit transactions to occur, HSBC failed in its global responsibility to us all. Hopefully, as a result of this historical settlement, we have gained the attention of not only HSBC but that of every other major financial institution so that they cannot turn a blind eye to the crime of money laundering."

U.S. State Department Daily Press Briefing - December 11, 2012

Daily Press Briefing - December 11, 2012

DOCTOR AND CLINIC PRESIDENT PLEAD GUILTY TO ROLES IN $11.7 MILLION MEDICARE FRAUD SCHEME

FROM: U.S. DEPARTMENT OF JUSTICE

Monday, December 10, 2012
Brooklyn, N.Y., Physician and Clinic President Pleads Guilty to Medicare Fraud Scheme
WASHINGTON – A medical doctor and the president of two Brooklyn, N.Y., medical clinics pleaded guilty today for his role in a scheme resulting in more than $11.7 million in fraudulent Medicare claims, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

According to court documents, Ho Yon Kim, 86, of Flushing, N.Y., was the president of URI Medical Service PC and Sarang Medical PC, both doing business in Flushing, and purportedly providing physical therapy and electric stimulation treatment. He was also a rendering physician at both clinics. Kim pleaded guilty in Brooklyn federal court before U.S. Magistrate Judge Marilyn D. Go to a superseding information charging him with conspiracy to commit health care fraud.

During today’s plea hearing, Kim admitted that, from approximately March 2007 to October 2011, he conspired with others to induce Medicare beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided or were not medically necessary. In exchange, the conspirators provided the beneficiaries with a variety of spa services such as massages, facials, lunches and dancing classes.

At sentencing, Kim faces a maximum penalty of 10 years in prison. A sentencing date has not yet been set.

Also charged by indictment in the scheme were medical doctors Hoi Yat Kam and Peter Lu, who await trial. The charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.

The case is being prosecuted by Trial Attorneys Nicholas S. Acker and Bryan D. Fields of the Criminal Division’s Fraud section. The case was investigated by the FBI and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

U.S. CONDEMNS FORCED RESIGNATION OF MALI'S INTERIM PRIME MINISTER

Credit:  CIA World Factbook.

FROM: U.S. STATE DEPARTMENT

Statement on the Forced Resignation of Interim Prime Minister Diarra
Press Statement
Victoria Nuland
Department Spokesperson, Office of the Spokesperson
Washington, DC
December 11, 2012
　

The United States condemns the arbitrary arrest and forced resignation of Mali’s Interim Prime Minister, Cheikh Modibo Diarra, by members of the military junta and reiterates the demand by the international community for an end to the junta’s interference in Mali’s political affairs. These events endanger the anticipated national dialogue and unhelpfully delay a return to constitutional order, and the restoration of the territorial integrity of Mali. They are a clear reminder of the need to hold elections to restore a democratically elected government by April 2013 or as soon as technically feasible. We underline the importance of the respect for rule of law and the guarantee of personal security for all political actors and members of government.

NEWS FROM AFGHANISTAN FOR DECEMBER 11, 2012

Credit:  U.S. DOD 

FROM: U.S. DEPARTMENT OF DEFeNSE

Combined Force Arrests Taliban Facilitator
From an International Security Assistance Force Joint Command News Release

KABUL, Afghanistan, Dec. 11, 2012 - An Afghan and coalition security force arrested a Taliban facilitator and detained two suspected insurgents during an operation in the Nad 'Ali district of Afghanistan's Helmand province today, military officials reported.

The detained facilitator oversaw the shipment and transfer of weapons and ammunition and procured and distributed improvised explosive devices to insurgents in the district.

In an operation yesterday, a combined force killed the Taliban leader, Allah Nur, detained three suspects and seized homemade explosives, other IED-making materials and several rocket-propelled grenades in the Baghlan-e-Jadid district of Baghlan province. Allah Nur had controlled more than a dozen insurgents and was responsible for IED attacks in the district. He also oversaw the transportation and distribution of insurgent weapons and ammunition.

And, during a Dec. 9 security operation in the Qarghahi district of Laghman province, a combined force killed the Taliban leader, Amin Jan, and three other insurgents. Amin Jan was directly involved in the Dec. 5 kidnapping of an American aid worker in Kabul.

U.S. AND RUSSIAN FEDERATION TEAM CONCLUDE ANTARTICA INSPECTION

Gentoo penguins nesting. The distinguishing feature of these penguins is the wide white stripe across the top of the head that in some ways resembles a bonnet. From: CIA World Factbook.

.
.FROM: U.S. DEPARTMENT OF STATE

United States and Russian Federation Conclude Joint Inspection in Antarctica
Media Note
Office of the Spokesperson
Washington, DC
December 10, 2012
　

A joint team from the United States and the Russian Federation concluded a 10-day inspection of foreign research stations, installations and equipment in Antarctica on December 8, 2012. The team inspected the following stations: Bharati (India), Maitri (India), Princess Elisabeth (Belgium), Syowa (Japan), Troll (Norway) and Zhongshan (China). The United States appreciates the assistance provided by the personnel at all of the visited stations.

The joint inspection was conducted pursuant to the Antarctic Treaty of 1959 and its Environmental Protocol, and was designed to review compliance with Antarctic Treaty system rules and regulations. This included verification that the stations are implementing relevant environmental rules and that facilities are used only for peaceful purposes -- honoring the Treaty’s prohibition on measures of a military nature. This inspection effort was facilitated by a Memorandum of Understanding on Cooperation in Antarctica signed by Secretary of State Hillary Rodham Clinton and Foreign Minister of the Russian Federation Sergey Lavrov on September 8, 2012.

Officials from the U.S. Department of State and the Russian Federation Ministry of Foreign Affairs led the inspection, which is the second phase of a two-phase process. A report will be jointly presented by the United States and Russia at the next Antarctic Treaty Consultative Meeting, to be held in Brussels, Belgium, in May 2013.

The United States and Russia were architects of the Antarctic Treaty of 1959 and today conduct some of the most extensive and diverse scientific activities in Antarctica. Working closely with our Russian counterparts provides an excellent opportunity to reinforce our shared objectives for the peaceful use of Antarctica - and further expands our diplomatic cooperation.

U.S. CRITICAL OF CUBA FOR DETAINING DEMOCRACY ACTIVISTS

Map:  Cuba.  Credit:  CIA World Factbook.  

FROM: U.S. DEPARTMENT OF STATE

Scores of Cuban Democracy Activists Detained on the Eve of Human Rights Day
Press Statement
Victoria Nuland
Department Spokesperson, Office of the Spokesperson
Washington, DC
December 10, 2012
　

We are deeply concerned by the Cuban Government’s repeated use of arbitrary detention and violence to silence critics, disrupt peaceful assembly, and intimidate independent civil society.

We understand that across Cuba, 94 members of the peaceful pro-democracy group - The Ladies in White - were reportedly beaten and detained on December 9. Just ahead of Human Rights Day, the women had used their weekly gathering, church attendance, and peaceful march to focus attention on continued human rights abuses in Cuba.

We call on the Cuban Government to end the increasingly common practice of arbitrary and extrajudicial detentions, and we look forward to the day when all Cubans can freely express their ideas, assemble freely, and express their opinions peacefully.
　

Cuba Locator Map.  Credit:  CIA World Factbook

ADDITIONAL INFORMATION FROM CIA WORLD FACTBOOK
The native Amerindian population of Cubanbegan to decline after the European discovery of the island by Christopher COLUMBUS in 1492 and following its development as a Spanish colony during the next several centuries. Large numbers of African slaves were imported to work the coffee and sugar plantations, and Havana became the launching point for the annual treasure fleets bound for Spain from Mexico and Peru. Spanish rule eventually provoked an independence movement and occasional rebellions that were harshly suppressed. US intervention during the Spanish-American War in 1898 assisted the Cubans in overthrowing Spanish rule. The Treaty of Paris established Cuban independence from the US in 1902 after which the island experienced a string of governments mostly dominated by the military and corrupt politicians. Fidel CASTRO led a rebel army to victory in 1959; his iron rule held the subsequent regime together for nearly five decades. He stepped down as president in February 2008 in favor of his younger brother Raul CASTRO. Cuba's Communist revolution, with Soviet support, was exported throughout Latin America and Africa during the 1960s, 1970s, and 1980s. The country faced a severe economic downturn in 1990 following the withdrawal of former Soviet subsidies worth $4 billion to $6 billion annually. Cuba at times portrays the US embargo, in place since 1961, as the source if its difficulties. Illicit migration to the US - using homemade rafts, alien smugglers, air flights, or via the southwest border - is a continuing problem. The US Coast Guard intercepted some 1,000 individuals attempting to cross the Straits of Florida in fiscal year 2011.
 

TWINS AND THE MARINE CORPS

Marine Corps Pvts. Shaun and Gabe Vanderwall are identical twins who went through recruit training together at Marine Corps Recruit Depot San Diego. Marine Corps Pvts. Shaun and Gabe Vanderwall are identical twins who went through recruit training together at Marine Corps Recruit Depot San Diego. U.S. Marine Corps photo by Lance Cpl. Bridget Keane

FROM:  U.S. DEPARTMENT OF DEFENSE

Face of Defense: Twins Complete Recruit Training Together
By Marine Corps Lance Cpl. Bridget Keane
Marine Corps Recruit Depot San Diego


SAN DIEGO, Dec. 10, 2012 - Born four minutes apart, Marine Corps Pvts. Shaun and Gabe Vanderwall, Platoon 1035, Company B, 1st Recruit Training Battalion, grew up nearly inseparable.

The 21-year-old identical twins from Ludington, Mich., were always together and enrolled in the same activities since they were children.

"I guess it made it easier for our mother so she didn't have to be in two places at once," Shaun said. "That's where our competitiveness came from."

The twins would hold "friendly competitions" with each other during sporting events, trying to beat each other's times and scores. As they moved on to high school, they both joined track and swim and continued in their competitive nature.

Although the boys' friendly rivalry was taken light-heartedly, they still pushed each other to excel in any activity.

"We're brothers, we wouldn't want to see each other fail at anything," Shaun said.

After graduating from Ludington High School in 2009 and receiving scholarships for their performance in track and swim, both soon realized how expensive college would be even with scholarships.

"Since we were good at swimming, we decided it would be a good idea to join the Coast Guard," Shaun said. "We wanted to do something in search and rescue."

The two went to speak with a recruiter, but were discouraged by the news they received.

"We were told that we'd have to wait two years before we could join," Shaun said. "We decided we were going to wait."

But the Vanderwall twins grew tired of their work at a local retirement home as servers and cooks. Gabe said they didn't want to wait any longer and went back to the recruiting center to look at a different branch of service. He spoke with a Marine Corps recruiter and was pleased to hear that he and his brother would be able to leave sooner. He returned home with the good news to Shaun, and the two enlisted in April.

"We both wanted to get on with our lives, and the Marine Corps gave us so many options with jobs and benefits," said Gabe.

The brothers shipped off to recruit training here Sept. 10 and were placed in the same platoon. Like most recruits, they had a hard time adjusting to the first few weeks of recruit training, they said, but the one thing they had was each other.

The brothers said they motivated each other when times became tough and even kept up with their competitive games during training events such as the combat fitness test.

"We both received a 300 on our CFTs and our times were close," Gabe said. "We both did 100 ammunition can lifts, our 880 was 2 minutes 29 seconds, but I beat Shaun by seven seconds on the maneuver under fire -- I got a minute 50 seconds and he got 57 seconds."

Knowing that they could always rely on each other, they continued to push through training and were noticed individually in the platoon.

"Shaun was more of a natural leader when he arrived, and Gabe was more reserved and quiet," said Marine Corps Sgt. Brandon Rogers, drill instructor. "Gabe is actually the most improved recruit in our platoon."

Rogers, a 25-year-old Fairfield, Calif., native, explained that while Gabe struggled in the beginning but soon started to volunteer more and take charge, both developed into good leaders, morally and physically.

"They motivated the platoon through their actions," he said. "When there was a task that needed to be done, they'd always get it taken care of."

Though the Vanderwall twins now hold the title Marine, their Marine Corps journey isn't over yet. They are scheduled to continue Marine Combat Training at the School of Infantry at Marine Corps Base Camp Pendleton, Calif., Jan 8.

Once they finish training there, they will go separate ways for the first time in their lives. It's going to be a big change in their lives, they said, but they're ready to experience it.

"I think it will be a good experience for them," Rogers said. "I'm confident that they'll be fine on their own."

U.S. DEPARTMENT OF JUSTICE ANNOUNCES TAKEDOWN OF INTERNATIONAL CYBER-FRAUD RING

FROM: U.S. DEPARTMENT OF JUSTICE

Wednesday, December 5, 2012
International Cyber-Fraud Ring Responsible for Millions of Dollars in Fraud Dismantled

WASHINGTON – In a coordinated international takedown, law enforcement officials in Romania, the Czech Republic, the United Kingdom and Canada, acting on provisional arrest requests made by the United States, arrested six Romanian nationals today for their alleged involvement in a sophisticated multimillion dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and FBI Assistant Director in Charge George Venizelos of the New York Field Office.

"As a result of extensive cooperation between U.S. and European law enforcement officials, the defendants have been charged with a scheme to defraud unsuspecting Americans of millions of dollars," said Assistant Attorney General Breuer. "The Department of Justice is committed to finding and prosecuting Internet fraud aggressively, wherever it happens and however hard the perpetrators work to conceal their crimes."

"Thanks to our international law enforcement partnerships, even the most sophisticated criminal organizations are not beyond our reach, and we will continue our efforts to protect American consumers from these fraud schemes on Internet marketplace websites," said U.S. Attorney Lynch.

"The FBI is committed to protecting the American public from predatory conduct whether it originates here or abroad," said FBI Assistant Director in Charge Venizelos. "The international nature of many organized crime groups makes it essential for us to work with our partners here and overseas – as we did in this investigation – to rein in the alleged criminals."

A criminal complaint unsealed today in U.S. District Court in the Eastern District of New York charges Romanian nationals Emil Butoi, 34, Aurel Cojorcaru, 43, Nicolae Ghebosila, 43, Cristea Mircea, 30, Ion Pieptea, 36, and Nicolae Simion, 37, and Albanian national Fabian Meme, 42, each with one count of wire fraud conspiracy and one count of money laundering conspiracy. Butoi, Cojocaru, Meme, Mircea, Pieptea and Simion are also each charged with one count of passport fraud conspiracy.

Butoi, Cojorcaru, Ghebosila, Mircea, Pieptea and Simion were arrested today. Meme is already incarcerated in the Czech Republic.

The government will seek the defendants’ extradition to the United States pursuant to the relevant international treaties.

As alleged in the complaint, the defendants were responsible for saturating Internet marketplace websites including eBay, Cars.com, AutoTrader.com and CycleTrader.com with detailed advertisements for cars, motorcycles, boats and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The defendants allegedly employed co-conspirators who corresponded with victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, the defendants allegedly pretended to sell cars from nonexistent auto dealerships in the United States and even created phony websites for these fictitious dealerships. In at least one transaction involving Ghebosila, the "seller" allegedly pretended to be the widow of an Iraq war veteran who was selling her family’s mobile home so that she could care for her children. In other transactions, the defendants allegedly duped victims into sending tens of thousands of dollars for non-existent vehicles, including Lexus, Audi, Ford, Chevrolet, Dodge, Toyota, Mercedes, Porsche and BMW cars; Big Dog Mastiff and Ninja motorcycles; a Fleetwood Storm motor home; and boats.

As part of the scheme, Cojocaru, Meme, Butoi and others produced high-quality fake passports so that foreign national co-conspirators in the United States, known as "arrows," could use the passports as identification to open American bank accounts. The complaint alleges that Cojocaru was recorded on video during the investigation displaying new holograms that he was using to create more authentic-looking passports.

According to the complaint, after the "sellers" reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal or other online payment services, with wire transfer instructions. However, the defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to the American bank accounts that had been opened by the "arrows." Finally, the arrows would allegedly collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the arrows allegedly forwarded Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers. Other arrows allegedly used the proceeds to purchase expensive Audemars Piguet watches, and then sent the watches to the defendants abroad.

According to the complaint, it is estimated that the defendants earned over $3 million from the fraudulent scheme.

If convicted, the defendants each face a maximum sentence of 20 years in prison on the wire fraud conspiracy and money laundering conspiracy counts, and 10 years in prison on the passport fraud conspiracy count.

The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant U.S. Attorneys Cristina Posa, Vamshi Reddy and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section.

The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the Justice Department Criminal Division’s Office of International Affairs worked with its counterparts in these countries to effect the provisional arrests and requests for mutual legal assistance, including the forfeiture of illegal proceeds of these crimes. The Department of Justice’s Asset Forfeiture and Money Laundering Section also provided assistance in the forfeitures.

The U.S. government thanks the Romanian government, in particular the Ministry of Justice, the Directorate for Combating Organized Crime and the Romanian Intelligence Service, for their collaborative efforts throughout this long-term investigation, as well as the Czech National Police, Hungarian National Bureau of Investigation, Metropolitan Police Service in England, Montreal Police Service, Royal Canadian Mounted Police, International Organized Crime Intelligence and Operations Center, Internet Crime Complaint Center, Costa Mesa, Calif., Police Department, Orange County, Calif., District Attorney’s Office and the New York City Police Department for their assistance.