Thursday, December 20, 2012
CLINICAL DIRECTOR FOR HEALTH CARE CLINIC SENTENCED IN $50 MILLION MEDICARE FRAUD
FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, December 20, 2012
Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud Scheme
WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida. Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial. The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same. In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.
Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012. Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial. Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.
According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness. Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided. Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.
The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division. The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.
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.
Thursday, December 20, 2012
Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud Scheme
WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida. Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial. The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same. In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.
Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012. Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial. Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.
According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness. Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided. Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.
The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division. The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.
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.
OPERATION CHRISTMAS DROP
FROM: U.S. DEPARTMENT OF DEFENSE
Operation Christmas Drop Wraps Up in Pacific
By Donna Miles
American Forces Press Service
WASHINGTON, Dec. 19, 2012 - The world's longest-running humanitarian mission came to a close yesterday as U.S. military members and volunteers delivered more than 39,000 pounds of aid and holiday cheer to Pacific islanders during Operation Christmas Drop.
This year marked the 61st anniversary of the mission, providing support to more than 30,000 islanders from Chuuk, Palau, Yap, the Marshall Islands and the Commonwealth of the Northern Mariana Islands, officials reported.
Airmen from the 36th Wing at Andersen Air Force Base, Guam, as well as family members and local volunteers, and airmen from the 36th Airlift Squadron at Yokota Air Base, Japan, kicked off the mission Dec. 11, officials reported. Carefully preparing packages of toys, clothing, fishing equipment, sporting goods, food items, tools and other goods, they airdropped them from C-130 Hercules aircraft to 54 islands.
The mission, the oldest of U.S. Pacific Command's outreach activities across the Asia-Pacific region, dates back to 1952. An aircrew from the 54th Weather Reconnaissance Squadron, based at the time in Guam, noticed islanders waving to them as they flew over the Micronesian atoll of Kapingamarangi. The crewmembers gathered items from their WB-29 Superfortress aircraft, attached them to a parachute they had fashioned, and airdropped them from the plane.
The islanders -- who lived at the time without running water or electricity and had recently been hit by a string of ferocious typhoons -- scrambled to retrieve the gifts from above.
The tradition continues today, bringing together military members, students at the University of Guam, and local community and charitable organizations to support a common purpose.
"The time and dedication that people are willing to give is astounding," said Air Force Capt. Mitchell Foy, who led the Operation Christmas Drop committee. "It's amazing, watching everyone come together to make this humanitarian effort happen."
Air Force Col. David Gould, the 374th Operations Group commander, said he felt humbled to be part of the outpouring.
"When we all signed up to join the military, it was about service – not only service for our country, but service to the world," he said. "There are few operations on this planet that demonstrate as much commitment to service as Operation Christmas Drop."
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| Crew members on a C-130 Hercules from Yokota Air Base, Japan, push a donated bundle of humanitarian supplies and gifts out the side door of the aircraft over an island in Micronesia, Dec. 18, 2012. Each year, the C-130s fly to Guam to carry bundles to islands in need during Operation Christmas Drop. U.S. Air Force photo by Tech. Sgt. Samuel Morse. |
FROM: U.S. DEPARTMENT OF DEFENSE
Operation Christmas Drop Wraps Up in Pacific
By Donna Miles
American Forces Press Service
WASHINGTON, Dec. 19, 2012 - The world's longest-running humanitarian mission came to a close yesterday as U.S. military members and volunteers delivered more than 39,000 pounds of aid and holiday cheer to Pacific islanders during Operation Christmas Drop.
This year marked the 61st anniversary of the mission, providing support to more than 30,000 islanders from Chuuk, Palau, Yap, the Marshall Islands and the Commonwealth of the Northern Mariana Islands, officials reported.
Airmen from the 36th Wing at Andersen Air Force Base, Guam, as well as family members and local volunteers, and airmen from the 36th Airlift Squadron at Yokota Air Base, Japan, kicked off the mission Dec. 11, officials reported. Carefully preparing packages of toys, clothing, fishing equipment, sporting goods, food items, tools and other goods, they airdropped them from C-130 Hercules aircraft to 54 islands.
The mission, the oldest of U.S. Pacific Command's outreach activities across the Asia-Pacific region, dates back to 1952. An aircrew from the 54th Weather Reconnaissance Squadron, based at the time in Guam, noticed islanders waving to them as they flew over the Micronesian atoll of Kapingamarangi. The crewmembers gathered items from their WB-29 Superfortress aircraft, attached them to a parachute they had fashioned, and airdropped them from the plane.
The islanders -- who lived at the time without running water or electricity and had recently been hit by a string of ferocious typhoons -- scrambled to retrieve the gifts from above.
The tradition continues today, bringing together military members, students at the University of Guam, and local community and charitable organizations to support a common purpose.
"The time and dedication that people are willing to give is astounding," said Air Force Capt. Mitchell Foy, who led the Operation Christmas Drop committee. "It's amazing, watching everyone come together to make this humanitarian effort happen."
Air Force Col. David Gould, the 374th Operations Group commander, said he felt humbled to be part of the outpouring.
"When we all signed up to join the military, it was about service – not only service for our country, but service to the world," he said. "There are few operations on this planet that demonstrate as much commitment to service as Operation Christmas Drop."
U.S. JUSTICE REACHES SETTLEMENT WITH PUBLISHER REGARDING ALLEGED NON-COMPETITIVE PRICING OF E-BOOKS
FROM: U.S. DEPARTMENT OF JUSTICETuesday, December 18, 2012
Justice Department Reaches Settlement with Penguin Group (USA) Inc. in E-Books Case
Department Continues to Litigate Against Apple Inc. and Macmillan to Prevent Continued Restrictions on Price Competition
WASHINGTON – The Department of Justice announced today that it has reached a settlement with Penguin Group (USA) Inc.–one of the largest book publishers in the United States–and will continue to litigate against Apple Inc. and Holtzbrinck Publishers LLC, which does business as Macmillan, for conspiring to raise e-book prices to consumers.
Today’s proposed settlement was filed in the U.S. District Court for the Southern District of New York. If approved by the court, the settlement will resolve the department’s competitive concerns as to Penguin, ending Penguin’s role as a defendant in the civil antitrust lawsuit filed by the department on April 11, 2012.
The department’s Antitrust Division previously settled its claims against three book publishers–Hachette Book Group Inc., HarperCollins Publishers L.L.C. and Simon & Schuster Inc. The department said that the publishers eliminated retail price competition, resulting in consumers paying millions of dollars more for their e-books. The settlement with those three publishers was approved by the court in September 2012. A trial against Macmillan and Apple currently is scheduled to begin in June 2013.
"Since the department’s settlement with Hachette, HarperCollins and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers’ new releases and bestsellers," said Jamillia Ferris, Chief of Staff and Counsel at the Department of Justice’s Antitrust Division. "If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers’ anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin’s e-books."
According to the complaint, the five publishers and Apple were unhappy that competition among e-book sellers had reduced e-book prices and the retail profit margins of the book sellers to levels they thought were too low. To address these concerns, the department said the companies worked together to enter into contracts that eliminated price competition among bookstores selling e-books, substantially increasing prices paid by consumers. Before the companies began their conspiracy, retailers regularly sold e-book versions of new releases and bestsellers for, as described by one of the publisher’s CEO, the "wretched $9.99 price point." As a result of the conspiracy, consumers were typically forced to pay $12.99, $14.99, or more for the most sought-after e-books, the department said.
Under the proposed settlement agreement, Penguin will terminate its agreements with Apple and other e-books retailers and will be prohibited for two years from entering into new agreements that constrain retailers’ ability to offer discounts or other promotions to consumers to encourage the sale of the Penguin’s e-books. The proposed settlement agreement also will impose a strong antitrust compliance program on Penguin, which will include a requirement that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and that it regularly report to the department on any communications it has with other publishers. Also for five years, Penguin will be forbidden from agreeing to any kind of most favored nation (MFN) agreement that could undermine the effectiveness of the settlement.
The department is currently reviewing the proposed joint venture announced by Penguin and Random House Inc., the largest U.S. book publisher. Should the proposed joint venture proceed to consummation, the terms of Penguin’s settlement will apply to it.
Penguin Group (USA) Inc. has its principal place of business in New York City. It publishes e-books and print books through publishers such as The Viking press and Gotham Books. Penguin Group (USA) Inc. is the U.S. subsidiary of The Penguin Group, a division of Pearson plc, which has its principal place of business in London.
Hachette Book Group USA has its principal place of business in New York City. It publishes e-books and print books through its publishers such as Little, Brown and Company and Grand Central Publishing.
HarperCollins Publishers, L.L.C. has its principal place of business in New York City. It publishes e-books and print books through publishers such as Harper and William Morrow.
Macmillan has its principal place of business in New York City. It publishes e-books and print books through publishers such as Farrar, Straus and Giroux, and St. Martin’s Press. Verlagsgruppe Georg von Holtzbrinck GmbH owns Holtzbrinck Publishers LLC, which does business as Macmillan, and has its principal place of business in Stuttgart, Germany.
Simon & Schuster Inc. has its principal place of business in New York City. It publishes e-books and print books through publishers such as Free Press and Touchstone.
Apple Inc. has its principal place of business in Cupertino, Calif. Among many other businesses, Apple distributes e-books through its iBookstore.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, consistent with the requirements of the Antitrust Procedures and Penalties Act.
AU OPTRONICS CORPORATION EXECUTIVE CONVICTED FOR ROLE IN LCD PRICE-FIXING CONSPIRACY
FROM: U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISIONWASHINGTON — Following a three-week trial, a federal jury in San Francisco today convicted an executive of the largest Taiwan liquid crystal display (LCD) producer for his participation in a worldwide conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced.
Shiu Lung Leung, AU Optronics Corp.’s former senior manager in the Desktop Display Business Group, was found guilty today in U.S. District Court for the Northern District of California in San Francisco, of participating in a worldwide TFT-LCD price-fixing conspiracy from May 15, 2002 to Dec. 1, 2006.
AU Optronics Corp., based in Hsinchu, Taiwan, and its American subsidiary, AU Optronics Corp. America, headquartered in Houston, were found guilty on March 13, 2012, following an eight-week trial. Former AU Optronics Corp. president Hsuan Bin Chen and former AU Optronics Corp. executive vice president Hui Hsiung were also found guilty at that time. A mistrial was declared against Leung after that trial. Today’s verdict is the result of Leung’s retrial.
"This international price-fixing conspiracy impacted countless American consumers by raising the price of computer monitors, notebooks and televisions containing LCD panels," said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. "Today’s guilty verdict demonstrates that the Antitrust Division will continue to hold executives accountable for crimes that undermine a competitive marketplace."
The indictment charged that AU Optronics Corp. participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary joined the conspiracy as early as spring 2003. Today a jury found that Leung, along with the previously convicted companies and former executives, was guilty of fixing the prices of LCD panels sold in the United States. The conspirators fixed the prices of LCD panels during monthly meetings with their competitors, which were secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan.
LCD panels are used in computer monitors and notebooks, televisions and other electronic devices. By the end of the conspiracy, the worldwide market for LCD panels was valued at $70 billion annually. The LCD price-fixing conspiracy affected some of the largest computer manufacturers in the world, including Hewlett Packard, Dell and Apple.
The company and its U.S. subsidiary were sentenced on Sept. 20, 2012, before Judge Susan Illston, to pay a $500 million criminal fine, matching the largest fine imposed against a company for violating U.S. antitrust laws. Chen and Hsiung were each sentenced to serve three years in prison and to each pay a $200,000 criminal fine.
As a result of this ongoing investigation, eight companies have pleaded guilty or been convicted to date and have been sentenced to pay criminal fines totaling more than $1.39 billion. Of the 22 charged executives, 13 have pleaded guilty or have been convicted and seven remain fugitives. The executives who have been sentenced have been ordered to serve a combined total of 4,871 days in prison.
The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory fine.
HOUSING DEVELOPMENT OR, IS IT REDEVELOPMENT?
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| Early Settler Cabin In Lower Michigan. |
EPA Study Reveals Shift in Housing Developments Across the U.S.
More communities embrace redevelopment
WASHINGTON – The U.S. Environmental Protection Agency (EPA) released a new report examining residential construction trends in America’s metropolitan regions, which finds that nearly three out of four large metropolitan regions saw an increased share of new housing development in previously developed areas during 2005 - 2009 compared to 2000 - 2004.
Known as infill housing, this type of development provides economic and public health benefits to metropolitan areas while protecting the local environment. Infill housing saves money and energy by taking advantage of previous investments in existing infrastructure (such as water, sewer, and roads). This type of development can also help preserve open space, protect natural resources, and reduce transportation emissions and the amount of polluted stormwater washing off new roadways and other paved surfaces.
Infill housing has also been shown to help raise property values, increase a community’s tax base, and attract retail businesses to serve the larger residential population.
This report examines data on the location of new home development in metropolitan regions, as well as data on pre-existing land cover. The report also includes a listing of resources available to local, regional, and state leaders who wish to coordinate land use, housing, and transportation policies.
The findings of the report demonstrate that infill has become a significant portion of the U.S. housing market. Among all 209 metropolitan regions examined, 21 percent of new homes were infill, while the remaining share was built on undeveloped land outside existing communities. Seventy-one percent of large metropolitan regions saw an increased share of infill housing development. Among 51 large metropolitan regions examined in this study, 36 saw an increased share of infill housing development during 2005-2009 compared to 2000-2004. For example, eight out of ten new homes in San Jose, Calif. were infill. New York, Los Angeles, and San Francisco all saw a majority of new home construction in previously developed areas during the same time period.
EPA published the first and second editions of Residential Construction Trends in America's Metropolitan Regions in 2009 and 2010. This 2012 report builds on previous work with the HUD-DOT-EPA Partnership for Sustainable Communities to measure metropolitan development trends.
21ST CENTURY ENERGY DIPLOMACY
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| Photo: Wind Power Turbines. From U.S. Air Force. |
FROM: U.S. STATE DEPARTMENT
Energy Diplomacy in the 21st Century
Fact Sheet
Washington, DC
December 19, 2012
ENERGY DIPLOMACY IN THE 21st CENTURY
Energy cuts across the entirety of U.S. foreign policy. It’s a matter of national security and global stability. It’s at the heart of the global economy. It’s also an issue of democracy and human rights."
- Secretary of State Hillary Rodham Clinton
Energy is at the intersection of national security and economic prosperity. The Department of State’s efforts in bilateral and multilateral diplomacy, economic statecraft, security, and development are widely affected by energy concerns. Secretary Clinton created the Bureau of Energy Resources in 2011 to integrate energy security interests into foreign policy decision making, putting energy diplomacy at the forefront of U.S. foreign policy. We are working to advance U.S. energy policy goals along three main pillars:
Energy Diplomacy
To meet the need for the traditional hydrocarbon resources we predominantly rely upon today and to manage the implications those resources have on national wealth and geopolitical power and influence, we:
Continue to strengthen energy diplomacy efforts with new and emerging producers of all forms of energy by supporting the development of energy resources and transportation options.
Engage through international fora to build broad agreements on policies to boost global energy security.
Energy Transformation
To aid in the development of international markets that drive private demand and finance for the technologies and fuels that will transform the ways nations use and produce energy, we:
Create an enabling environment for U.S. companies to provide the technology, innovation, and capital to help guide the global transition to a twenty-first century energy economy estimated at $20 trillion in value through 2035.
Lead international efforts on energy transformation and clean energy, for example by working within the International Renewable Energy Agency to promote diffusion of renewable energy technologies and adoption of best practices.
Energy Governance and Access
To counter poverty and lack of development resulting from a lack of access to energy, poor resource management, or both, we:
Expand energy access through economic statecraft and partnerships with development agencies to help encourage creation of commercially viable models backed by private investment.
Examples of Energy Diplomacy in Action
There is a wide array of initiatives and practices underway that illustrate our focus on energy issues. Examples include:
Connecting the Americas 2022: This Presidential initiative seeks to enhance electrical interconnections across the Western Hemisphere to achieve universal access over the next decade for the more than 31 million people without electricity.
U.S. ASSISTANT ATTORNEY GENERAL BREUER COMMENTS ON UBS LIBOR MANIPULATION CASE
FROM: U.S. DEPARTMENT OF JUSTICE
Assistant Attorney General Lanny A. Breuer Speaks at the UBS Press Conference
Washington, D.C. ~ Wednesday, December 19, 2012
UBS Japan has agreed to plead guilty in connection with one of the most significant scandals ever to hit the global banking industry. For years, including at the height of the financial crisis, UBS manipulated its submissions to the British Bankers’ Association for calculation of the London Interbank Offered Rate, or LIBOR. UBS AG, the banking giant and parent company of UBS Japan, has also entered into a non-prosecution agreement with the Justice Department, agreeing together with UBS Japan to pay $500 million to resolve our allegations related to the bank’s manipulation of LIBOR. Together with approximately $1 billion in regulatory penalties and disgorgement, these criminal penalties bring the total amount of today’s resolution to $1.5 billion.
The bank’s conduct was simply astonishing. Hundreds of trillions of dollars in mortgages, student loans, credit card debt, financial derivatives, and other financial products worldwide are tied to LIBOR, which serves as the premier benchmark for short-term interest rates. In short, the global marketplace depends upon an accurate LIBOR. Yet UBS, like Barclays before it, sought repeatedly to fix LIBOR for its own ends – in this case, so UBS traders could maximize profit on their trading positions, and so the bank wouldn’t appear vulnerable to the public during the financial crisis.
In addition to UBS Japan’s agreement to plead guilty, two former UBS traders – Tom Alexander William Hayes and Roger Darin – have been charged, in a criminal complaint unsealed today, with conspiracy to manipulate LIBOR. Hayes has also been charged with wire fraud and an antitrust violation. There was nothing subtle about these traders’ alleged conduct. In one instance, according to the complaint, Hayes explained to a junior rate submitter that he and Darin "generally coordinate" and "skew the libors a bit." In another instance, according to the complaint, Hayes told a trader at another bank that, "3m libor is too high cause i have kept it artificially high."
The scope of the misconduct admitted to by UBS AG and UBS Japan is far-reaching. For years, traders at UBS sought to manipulate the bank’s LIBOR submissions for their own profit. The traders had positions in interest rate swaps that depended on UBS’s LIBOR submissions. And, on numerous occasions, they caused UBS to make LIBOR submissions that directly benefited their own trading books. UBS’s manipulation was extensive, and covered several currencies and interest rates.
Make no mistake: for UBS traders, the manipulation of LIBOR was about getting rich. As one broker told a UBS derivatives trader, according to the statement of facts appended to our agreement with the bank, "mate yur getting bloody good at this libor game . . . think of me when yur on yur yacht in monaco wont yu."
From 2006 to 2009, according to the complaint unsealed today against Hayes and Darin, Hayes arranged to move UBS’s Yen LIBOR submissions in directions that would maximize his profit on the trading positions he took for the bank; and Darin repeatedly made false Yen LIBOR submissions on behalf of Hayes. The complaint also alleges that Hayes contacted brokers to influence them to disseminate false information about LIBOR. Hayes further allegedly made efforts to coordinate with traders at other banks to try to move their banks’ LIBOR submissions in directions that would help his trading positions.
Since the government’s investigation began, UBS has changed its senior leadership and improved its compliance and training programs. UBS has also cooperated with the Justice Department, and has agreed to continue doing so, as we pursue our ongoing, and active investigation into the manipulation of LIBOR.
We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June. We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.
I want to thank the many tenacious prosecutors in the Criminal Division, as well as the Antitrust Division, who are working on the LIBOR investigation, as well as the many talented agents and analysts at the FBI who have worked so hard on this case. I would also like to thank our colleagues at the Commodity Futures Trading Commission, the United Kingdom Financial Services Authority, and the Securities and Exchange Commission for their important parallel investigations; and the Swiss Financial Market Supervisory Authority, the Japanese Ministry of Justice, and the Japan Financial Services Authority for their valuable assistance.
Thank you.
Assistant Attorney General Lanny A. Breuer Speaks at the UBS Press Conference
Washington, D.C. ~ Wednesday, December 19, 2012
UBS Japan has agreed to plead guilty in connection with one of the most significant scandals ever to hit the global banking industry. For years, including at the height of the financial crisis, UBS manipulated its submissions to the British Bankers’ Association for calculation of the London Interbank Offered Rate, or LIBOR. UBS AG, the banking giant and parent company of UBS Japan, has also entered into a non-prosecution agreement with the Justice Department, agreeing together with UBS Japan to pay $500 million to resolve our allegations related to the bank’s manipulation of LIBOR. Together with approximately $1 billion in regulatory penalties and disgorgement, these criminal penalties bring the total amount of today’s resolution to $1.5 billion.
The bank’s conduct was simply astonishing. Hundreds of trillions of dollars in mortgages, student loans, credit card debt, financial derivatives, and other financial products worldwide are tied to LIBOR, which serves as the premier benchmark for short-term interest rates. In short, the global marketplace depends upon an accurate LIBOR. Yet UBS, like Barclays before it, sought repeatedly to fix LIBOR for its own ends – in this case, so UBS traders could maximize profit on their trading positions, and so the bank wouldn’t appear vulnerable to the public during the financial crisis.
In addition to UBS Japan’s agreement to plead guilty, two former UBS traders – Tom Alexander William Hayes and Roger Darin – have been charged, in a criminal complaint unsealed today, with conspiracy to manipulate LIBOR. Hayes has also been charged with wire fraud and an antitrust violation. There was nothing subtle about these traders’ alleged conduct. In one instance, according to the complaint, Hayes explained to a junior rate submitter that he and Darin "generally coordinate" and "skew the libors a bit." In another instance, according to the complaint, Hayes told a trader at another bank that, "3m libor is too high cause i have kept it artificially high."
The scope of the misconduct admitted to by UBS AG and UBS Japan is far-reaching. For years, traders at UBS sought to manipulate the bank’s LIBOR submissions for their own profit. The traders had positions in interest rate swaps that depended on UBS’s LIBOR submissions. And, on numerous occasions, they caused UBS to make LIBOR submissions that directly benefited their own trading books. UBS’s manipulation was extensive, and covered several currencies and interest rates.
Make no mistake: for UBS traders, the manipulation of LIBOR was about getting rich. As one broker told a UBS derivatives trader, according to the statement of facts appended to our agreement with the bank, "mate yur getting bloody good at this libor game . . . think of me when yur on yur yacht in monaco wont yu."
From 2006 to 2009, according to the complaint unsealed today against Hayes and Darin, Hayes arranged to move UBS’s Yen LIBOR submissions in directions that would maximize his profit on the trading positions he took for the bank; and Darin repeatedly made false Yen LIBOR submissions on behalf of Hayes. The complaint also alleges that Hayes contacted brokers to influence them to disseminate false information about LIBOR. Hayes further allegedly made efforts to coordinate with traders at other banks to try to move their banks’ LIBOR submissions in directions that would help his trading positions.
Since the government’s investigation began, UBS has changed its senior leadership and improved its compliance and training programs. UBS has also cooperated with the Justice Department, and has agreed to continue doing so, as we pursue our ongoing, and active investigation into the manipulation of LIBOR.
We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June. We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.
I want to thank the many tenacious prosecutors in the Criminal Division, as well as the Antitrust Division, who are working on the LIBOR investigation, as well as the many talented agents and analysts at the FBI who have worked so hard on this case. I would also like to thank our colleagues at the Commodity Futures Trading Commission, the United Kingdom Financial Services Authority, and the Securities and Exchange Commission for their important parallel investigations; and the Swiss Financial Market Supervisory Authority, the Japanese Ministry of Justice, and the Japan Financial Services Authority for their valuable assistance.
Thank you.
Wednesday, December 19, 2012
THE 2012 DOOMSDAY PROPHECY NASA VIDEO
FROM: NASA
Beyond 2012: NASA Seeks to Debunk Doomsday Prophecy
As 2012 draws to a close, many websites, books and cable television shows are erroneously predicting the end of the world. These claims range from fears that a rogue planet is heading toward Earth, to solar flares torching our planet.
David Morrison, a senior scientist and astrobiologist at NASA's Ames Research Center is working to inform the public that each of the claims are false and there is no reason that December 21, 2012 will be different from any other day on Earth
Beyond 2012: NASA Seeks to Debunk Doomsday Prophecy
As 2012 draws to a close, many websites, books and cable television shows are erroneously predicting the end of the world. These claims range from fears that a rogue planet is heading toward Earth, to solar flares torching our planet.
David Morrison, a senior scientist and astrobiologist at NASA's Ames Research Center is working to inform the public that each of the claims are false and there is no reason that December 21, 2012 will be different from any other day on Earth
USO WRAPS-UP TOUR
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| Marine Corps Sgt. Maj. Bryan B. Battaglia, senior enlisted advisor to Army Gen. Martin E. Dempsey, hosts this year's final USO holiday tour show on behalf of the chairman at Patch Barracks in Stuttgart, Germany, Dec. 17, 2012. DOD photo by U.S. Army Sgt. 1st Class Tyrone C. Marshall Jr. |
USO Wraps-up Annual Holiday Tour Show in Germany
By Army Sgt. 1st Class Tyrone C. Marshall Jr.
American Forces Press Service
STUTTGART, Germany, Dec. 18, 2012 - Marine Corps Sgt. Maj. Bryan B. Battaglia, senior advisor to Chairman of the Joint Chiefs of Staff Army Gen. Martin E. Dempsey, hosted the final stop of this year's USO holiday tour show here yesterday on behalf of the chairman, the tour's sponsor.
Battaglia attended the show with his wife, Lisa.
Service members' wives, husbands, sons and daughters attended the event to see their favorite celebrities.
This year's USO holiday tour show featured Washington Nationals Major League Baseball players Ross Detwiler and Craig Stammen; Matt Hendricks from the National Hockey League's Washington Capitals; comedian Iliza Schlesinger, winner of NBC's Last Comic Standing and country music singer Kellie Pickler and her band.
And USO President Sloan D. Gibson and Shane Hudella of "Defending the Blue Line," an organization that donates hockey equipment to military families, accompanied the tour show.
"It was certainly a different sort of demographic, and dynamic [when compared] to the other shows that were more troop oriented because they were in-country, in Afghanistan," Battaglia said. "So, I think it provided the entertainers and athletes another side of their U.S. armed forces overseas, and [they saw] that protection and defense of the nation doesn't only come from the service member.
"It also comes from the sacrifice of the family, having to serve overseas and away from home as well," he added.
Lisa Battaglia, a former Marine herself enjoyed the family aspect of the final show.
"I liked it a lot, because most of the time we see the military members," she said. "I know they truly appreciate the USO, but [I enjoyed] being able to see these young kids out there, able to enjoy what's going to be a great holiday season ... [and] let their hair down and hang out with their friends.
"I think it was great, and a nice ending to the tour," she added.
The sergeant major deemed the USO tour a hit, with stops coming in Bahrain, Kyrgyzstan, Afghanistan and two stops in Germany -- Stuttgart and Landstuhl Regional Medical Center.
"It was a great success," he said. "Just having the opportunity to witness troops across the [area of responsibility] -- Afghanistan and beyond -- with smiles on their faces especially around this time with Christmas.
"You know, with a comedian telling a joke, or singing a country song that may be one of their favorites, or a sports fanatic getting an autograph or a handshake from one of the athletes," he continued. "Just seeing a smile on their faces is pretty invaluable, and it accomplishes the USO's mission, writ large, with providing morale to the troops."
The USO holiday tour's entertainers came all the way from the U.S. and maintained a strenuous schedule, the sergeant major said.
"The [itinerary's] ruggedness was only driven by trying to get them to as many [bases] as we possibly can, even if we had to split them up to see as many troops as we could so they could have that face-to-face engagement," Battaglia said.
"Nobody wants to watch this on AFN," he added. "They want to see it in person -- that was the objective, that was the goal, and it was accomplished."
U.S. DOL AWARDS $10 MILLION TO COMBAT CHILD LABOR IN TANZANIA
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| Photo: Site of former slave market, south of Stone Town. From: CIA World Factbook. |
FROM: U.S. DEPARTMENT OF LABOR
US Department of Labor awards $10 million to International Rescue Committee to combat child labor in Tanzania
WASHINGTON — The U.S. Department of Labor's Bureau of International Labor Affairs today awarded $10 million for a cooperative agreement with the International Rescue Committee to combat child labor in Tanzania. The project will target regions where there is a prevalence of child labor in agriculture and domestic service.
The International Rescue Committee will partner on this project with World Vision, the Foundation for Civil Society, Kiota Women's Health Development, the Tanga Youth Development Association and The Institute for Development Studies at the University of Dar es Salaam.
These organizations will help provide services to protect children from the worst forms of child labor. The project will get children into school, train youths in business and entrepreneurial skills, help raise household income, and link families to existing village community banks and social protection services. It also will work with local and national government to build their capacity to implement policies to eliminate child labor.
Since 1995, ILAB projects have rescued approximately 1.5 million children from exploitive child labor. The Labor Department has funded 260 such projects implemented by more than 65 organizations in 91 countries. ILAB currently oversees more than $210 million of active programming to combat the worst forms of child labor.
HUMAN RIGHTS IN BLEARUS
FROM: U.S. DEPARTMENT OF STATE
Human Rights in Belarus on the Anniversary of the December 19, 2010 Crackdown
Press Statement
Victoria Nuland
Department Spokesperson, Office of the Spokesperson
Washington, DC
December 18, 2012
Two years after the Belarusian Government launched its brutal crackdown on civil society, the democratic opposition, and independent media, we remember the political prisoners who remain in detention and reiterate our call for their immediate and unconditional release. We note the December 1, 2010 joint statement between our two countries, which affirmed that enhanced respect for democracy and human rights remains central to improving bilateral relations. We regret that Belarus’ leadership has instead followed a path of self-isolation by repressing its own people.
As we mark the second anniversary of the events of December 19, 2010, we note Belarus’ unfulfilled promise and reaffirm our readiness to help the people of Belarus build a democratic, prosperous, and truly independent European state.
ADDITONAL INFORMATION FROM CIA WORLD FACTBOOK
After seven decades as a constituent republic of the USSR, Belarus attained its independence in 1991. It has retained closer political and economic ties to Russia than any of the other former Soviet republics. Belarus and Russia signed a treaty on a two-state union on 8 December 1999 envisioning greater political and economic integration. Although Belarus agreed to a framework to carry out the accord, serious implementation has yet to take place. Since his election in July 1994 as the country's first president, Aleksandr LUKASHENKO has steadily consolidated his power through authoritarian means. Government restrictions on freedom of speech and the press, peaceful assembly, and religion remain in place.
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| Map: Belarus. Credit: CIA |
FROM: U.S. DEPARTMENT OF STATE
Human Rights in Belarus on the Anniversary of the December 19, 2010 Crackdown
Press Statement
Victoria Nuland
Department Spokesperson, Office of the Spokesperson
Washington, DC
December 18, 2012
Two years after the Belarusian Government launched its brutal crackdown on civil society, the democratic opposition, and independent media, we remember the political prisoners who remain in detention and reiterate our call for their immediate and unconditional release. We note the December 1, 2010 joint statement between our two countries, which affirmed that enhanced respect for democracy and human rights remains central to improving bilateral relations. We regret that Belarus’ leadership has instead followed a path of self-isolation by repressing its own people.
As we mark the second anniversary of the events of December 19, 2010, we note Belarus’ unfulfilled promise and reaffirm our readiness to help the people of Belarus build a democratic, prosperous, and truly independent European state.
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| Locator Map: Belarus. Credit: CIA |
ADDITONAL INFORMATION FROM CIA WORLD FACTBOOK
After seven decades as a constituent republic of the USSR, Belarus attained its independence in 1991. It has retained closer political and economic ties to Russia than any of the other former Soviet republics. Belarus and Russia signed a treaty on a two-state union on 8 December 1999 envisioning greater political and economic integration. Although Belarus agreed to a framework to carry out the accord, serious implementation has yet to take place. Since his election in July 1994 as the country's first president, Aleksandr LUKASHENKO has steadily consolidated his power through authoritarian means. Government restrictions on freedom of speech and the press, peaceful assembly, and religion remain in place.
INDIVIDUAL ARRESTED IN CONNECTION WITH BUSINESS OPPORTUNITY FRAUD VENTURES
FROM: U.S. DEPARTMENT OF JUSTICETuesday, December 18, 2012
Individual Arrested in Connection with Costa Rica-based Business Opportunity Fraud Ventures
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
A dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested today in Chicago following his indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced today. Sean Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
Prior to Rosales’ arrest, 11 other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica. Seven of those other individuals have been convicted in the United States.
"Business opportunity fraud imposes significant financial hardship on innocent, hardworking victims who are simply trying to make better lives for themselves and their families ," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "The Department of Justice will continue its push to prosecute those who defraud Americans to make a quick buck."
Beginning in May 2005, Rosales and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. The indictment alleges that potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The indictment also alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. According to the indictment, the companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchasers’ merchandise display racks.
The indictment alleges Rosales, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter, locator and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a fronter, locator and reference for Coffee Man, and a locator for Powerbrands.
According to the allegations in the indictment, each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wis., and Palm Beach Gardens, Fla.
The defendant was charged with conspiracy to commit mail and wire fraud, and with committing this offense via telemarketing. In addition, the defendant was charged with seven counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, Rosales faces a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. He also faces a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
"Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . "Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas."
"This international and domestic investigation illuminates the Postal Inspection Service’s resolve to protect the American public from business opportunity scams, and to ensure that the U.S. Mail is not used as a conduit for fraudsters to prey on the American public." said Tony Gomez, Acting U. S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
U.S. CHAIRMAN OF JOINT CHIEFS DISCUSSES FISCAL TIGHTENING, AND PROGRESS IN AFGHANISTAN
FROM: U.S. DEPARTMENT OF DEFENSEDempsey Discusses Fiscal Tightening, Progress in Afghanistan
By Jim Garamone
American Forces Press Service
WASHINGTON, Dec. 18, 2012 - U.S. Africa Command's ability to adapt to having fewer resources than its commander would like is an example of the thinking the entire military will need in an era of fiscal restraint, the chairman of the Joint Chiefs of Staff told service members yesterday during a town hall meeting in Stuttgart, Germany.
Army Gen. Martin E. Dempsey acknowledged that Army Gen. Carter F. Ham, commander of the Stuttgart-based command, would prefer to have more maritime support, as well as more aviation and intelligence, surveillance and reconnaissance assets.
"But you are getting it done," Dempsey said. "Africom is forced to network differently -- conventional, special operations forces, other agencies of government -- because of the limited resources." This, he said, means the service members and civilians assigned to the combatant command have to be creative.
The chairman emphasized that all segments of the military are going to have to perform their missions with less resources. The U.S. fiscal condition is changing, he said, and DOD must adapt.
"We don't have to be the solution, but we have to be part of the solution," he said. "We're going to have to think about how we take this wonderful instrument of military power and its most decisive instrument, which is human capital ... to use that capital to influence security around the world."
Just back from a trip to Afghanistan as well as other stops in the Middle East and Europe, the chairman told troops in Stuttgart that progress in Afghanistan has not always been easy to recognize.
"Afghanistan just happens to be one of the most-complex places on the face of the Earth," Dempsey said, noting Afghanistan likely will experience security challenges in the years ahead.
However, he added, Afghanistan also demonstrates signs of progress.
For example, in 2002 "approximately 800,000 boys were going to school in Afghanistan and zero women," the chairman said.
"Today the number is 8 million [Afghan students] and 35 percent of them are women," Dempsey said. "That's got to make a difference over time."
Also in 2002, 15 percent of Afghans had access to medical care, and today that number is 60 percent, he said.
"Child mortality rates are [now] on par with most nations of the world, which is incredible compared with what they were," Dempsey said.
COMPANY BASED IN JAPAN SETTLES FALSE CLAIMS ALLEGATIONS FOR $45 MILLION
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, December 17, 2012
Japanese-Based Toyo Ink and Affiliates in New Jersey and Illinois Settle False Claims Allegation for $45 Million
United States Alleges Companies Knowingly Evaded Import Duties
Japan-based Toyo Ink SC Holdings Co. Ltd. and various affiliated entities (collectively, Toyo Ink) have agreed to pay $45 million, plus interest, to settle allegations that they violated the False Claims Act by knowingly failing to pay antidumping and countervailing duties, the Justice Department announced today.
Toyo Ink, which has operations worldwide, is a leading provider of printing inks. The Toyo Ink parties to the agreement are the Japanese companies Toyo Ink SC Holdings Co. Ltd. (successor in interest to Toyo Ink Manufacturing Co. Ltd.), Toyocolor Co. Ltd., Toyo Ink Co. Ltd. and Toyochem Co. Ltd., and their United States affiliates Toyo Ink Mfg. America LLC (located in New Jersey), Toyo Ink International Corp. (located in New Jersey), and Toyo Ink America LLC (located in Illinois).
The Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. The duties are collected by U.S. Customs, which is an agency of the Department of Homeland Security. Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation. The government alleged that Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties, on imports of the colorant carbazole violet pigment number 23 (CVP-23) between April 2002 and March 2010.
Specifically, the government alleged that Toyo Ink misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports, rather than the People’s Republic of China (PRC) and India which were the company’s sources for raw CVP-23. Imports of CVP-23 from the PRC and India have been subject to these duties since 2004; there are no such duties on imports from Japan or Mexico. Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.
"Importers seeking access to United States markets must comply with the law, including the payment of customs duties meant to protect domestic companies from unfair competition abroad," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "This settlement demonstrates that the Department of Justice will zealously guard the public fisc – taking action not only against those who fraudulently obtain government funds, but also against those who inappropriately avoid paying money owed to the United States."
Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, stated that, "Fair and lawful trade requires importers to truthfully identify their products and pay the appropriate duties. Our office will vigorously investigate and prosecute importers who make false representations and claims designed to avoid the payment of lawful import duties."
The allegations resolved by today’s settlement were initially alleged in a whistleblower lawsuit filed under the False Claims Act by John Dickson, president of a domestic producer of CVP-23. Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery. Mr. Dickson will receive more than $7,875,000 as his share of the government’s recovery.
The investigation was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the Department of Homeland Security’s U.S. Customs and Border Protection and the Department of Commerce’s International Trade Administration. The claims settled by this agreement are allegations only; there has been no determination of liability.
The False Claims Act suit was filed in the U.S. District Court for the Western District of North Carolina, and is captioned United States ex rel. Dickson v. Toyo Ink Manufacturing Co., Ltd., et al., No. 09-CV-438 (W.D.N.C.).
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