FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23144 / November 26, 2014
Securities and Exchange Commission v. Paul R. Downey, et al., Civil Action No. 1:14-CV-00185-C (N.D. Tex. Abilene Division)
SEC Charges Principals of a Texas Oil and Gas Company with Conducting a Fraudulent Offering, and Charges Seller with Acting as an Unregistered Broker
On November 20, 2014, the Securities and Exchange Commission charged two principals of Quest Energy Management Group, Inc. (Quest), Paul Downey of Naples, Florida and Jeffry Downey of Abilene, Texas, with conducting a fraudulent offering of preferred stock and limited partnership interests. The SEC also charged John Leonard, a salesman residing in Naples and Chicago, with acting as an unregistered broker in offering and selling the investment.
The SEC alleges that between January 2010 and May 2011, the father-son duo of Paul and Jeffry Downey used Quest, an Albany, Texas-based oil and gas company, to fraudulently offer Quest preferred stock and limited partnership units in an entity called Permian Advanced Oil Recovery Investment Fund I, LP (PAOR). Investors were told that PAOR would acquire working interests in oil and gas leases from Quest and receive revenue from those leases. With assistance from unregistered salesman John Leonard, the Downeys raised $4.8 million from approximately 17 investors. The PAOR offering was fraudulent on account of blatantly deceptive misstatements about Quest and PAOR. More particularly, the Downeys made false statements in the private placement memorandum about the financial viability of Quest; the purchase debt and liens associated with certain leases in which PAOR was acquiring an interest; the current and projected petroleum production from the leases; the use of investor funds raised in the offering; independent audits of PAOR; and foreseeable litigation against Quest and the Downeys.
On May 24, 2013, the U. S. District Court for the Middle District of Florida, Tampa Division, appointed Burton Wiand, a Tampa attorney, as receiver over Quest, based on Quest's receipt of funds from a Ponzi scheme conducted by Arthur Nadel and others. In re Arthur Nadel, et al., Lit. Rel. No. 20858 (January 21, 2009). The receivership is ongoing.
The SEC's complaint against the Downeys and Leonard alleges that the Downeys violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and that Leonard violated Section 15(a) of the Exchange Act. The SEC's complaint seeks from the Downeys and Leonard disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctive relief, and additionally against the Downeys, officer and director bars.
The SEC's investigation was conducted by Jeffrey Cohen, Carol Hahn, and Joann Harris, and the SEC's litigation is being led by B. David Fraser. The SEC appreciates the assistance of the Texas State Securities Board.
Friday, November 28, 2014
LONG RUNNING CONFLICT IN SENEGAL
FROM: U.S. STATE DEPARTMENT
Sant'Egidio Playing Vital Role in Effort to End 30-Year Conflict in Senegal
Bureau of Conflict and Stabilization Operations
November 25, 2014
The insurgency in Senegal’s Casamance region is one of the longest-running conflicts in the world—and one of the least known. It began 32 years ago when the Movement of Democratic Forces of Casamance (MFDC) demanded that the area be granted independence. Geography is a critical factor in this standoff. Casamance is the southern-most portion of Senegal, but another country, The Gambia, runs east-to-west between the region and the northern areas of Senegal.
In January 2011 President M. Abdoulaye Wade stated his willingness to engage Sant'Egidio, a Catholic lay organization in Rome with experience in helping parties resolve conflicts
A few weeks later, the military wing of the MFDC agreed to participate. Little happened, however, until Macky Sall was elected president in 2012 and injected new energy into the quest for peace. “We saw an opportunity for the State Department to promote peace,” said CSO’s Rebecca Wall, who proposed that her bureau send a senior official to provide diplomatic support and international partner coordination for the peace process.
That official was retired Ambassador James Bullington, who had 12 years of Africa experience in hot spots such as Chad and Burundi, a great respect for local leadership, and plenty of Chattanooga charm.
“We can’t bring peace to the Casamance,” Ambassador Bullington said in late 2012, after his arrival in Dakar. “Only the Senegalese can do that. But we can provide political and material support for the peace process.” To build on the momentum and to keep this issue on the embassy’s radar screen despite competing priorities, Ambassador Bullington coordinated with Embassy Dakar staff and other U.S. government agencies to ensure a focused, interagency approach. He began speaking regularly with the Government of Senegal and Sant’Egidio, while encouraging regional neighbors, especially The Gambia, to cooperate in the peace initiative. In late 2013, Sue Ford Patrick served as the U.S. Casamance advisor, and in 2014, the State Department’s Africa Bureau deployed Ambassador Mark Boulware to continue this role. The UN and other international partners also made important contributions.
Sant'Egidio contacted MFDC leader Salif Sadio, and high-level delegations from MFDC visited the Community of Sant'Egidio in Rome three times between January and July 2012 to prepare the negotiations. “Sant’Egidio understands that negotiations take a long time and that relationship-building is the key to the ultimate success of a peace process,” said CSO’s Wall, who helped secure U.S. government funds to enlist Sant’Egidio.
The first round of talks between representatives of the MFDC and the government of Senegal took place that October. Sant’Egidio asked Sadiò to release eight hostages as a humanitarian gesture and as an act to promote a favorable climate for negotiations. On December 9, in Casamance, Sadio delivered the prisoners to an international delegation. At about the same time a de facto ceasefire took hold, and it remains in effect.
“Interreligious and ecumenical dialogue between Christian and Muslim community leaders and the political leaders promoted and created a positive synergy that is favourable to reconciliation,” Sant’Egidio said on its website. Negotiations in Rome and Senegal continue, in hopes that before long this conflict can be considered at an end.
Sant'Egidio Playing Vital Role in Effort to End 30-Year Conflict in Senegal
Bureau of Conflict and Stabilization Operations
November 25, 2014
The insurgency in Senegal’s Casamance region is one of the longest-running conflicts in the world—and one of the least known. It began 32 years ago when the Movement of Democratic Forces of Casamance (MFDC) demanded that the area be granted independence. Geography is a critical factor in this standoff. Casamance is the southern-most portion of Senegal, but another country, The Gambia, runs east-to-west between the region and the northern areas of Senegal.
In January 2011 President M. Abdoulaye Wade stated his willingness to engage Sant'Egidio, a Catholic lay organization in Rome with experience in helping parties resolve conflicts
A few weeks later, the military wing of the MFDC agreed to participate. Little happened, however, until Macky Sall was elected president in 2012 and injected new energy into the quest for peace. “We saw an opportunity for the State Department to promote peace,” said CSO’s Rebecca Wall, who proposed that her bureau send a senior official to provide diplomatic support and international partner coordination for the peace process.
That official was retired Ambassador James Bullington, who had 12 years of Africa experience in hot spots such as Chad and Burundi, a great respect for local leadership, and plenty of Chattanooga charm.
“We can’t bring peace to the Casamance,” Ambassador Bullington said in late 2012, after his arrival in Dakar. “Only the Senegalese can do that. But we can provide political and material support for the peace process.” To build on the momentum and to keep this issue on the embassy’s radar screen despite competing priorities, Ambassador Bullington coordinated with Embassy Dakar staff and other U.S. government agencies to ensure a focused, interagency approach. He began speaking regularly with the Government of Senegal and Sant’Egidio, while encouraging regional neighbors, especially The Gambia, to cooperate in the peace initiative. In late 2013, Sue Ford Patrick served as the U.S. Casamance advisor, and in 2014, the State Department’s Africa Bureau deployed Ambassador Mark Boulware to continue this role. The UN and other international partners also made important contributions.
Sant'Egidio contacted MFDC leader Salif Sadio, and high-level delegations from MFDC visited the Community of Sant'Egidio in Rome three times between January and July 2012 to prepare the negotiations. “Sant’Egidio understands that negotiations take a long time and that relationship-building is the key to the ultimate success of a peace process,” said CSO’s Wall, who helped secure U.S. government funds to enlist Sant’Egidio.
The first round of talks between representatives of the MFDC and the government of Senegal took place that October. Sant’Egidio asked Sadiò to release eight hostages as a humanitarian gesture and as an act to promote a favorable climate for negotiations. On December 9, in Casamance, Sadio delivered the prisoners to an international delegation. At about the same time a de facto ceasefire took hold, and it remains in effect.
“Interreligious and ecumenical dialogue between Christian and Muslim community leaders and the political leaders promoted and created a positive synergy that is favourable to reconciliation,” Sant’Egidio said on its website. Negotiations in Rome and Senegal continue, in hopes that before long this conflict can be considered at an end.
SONY COMPUTER ENTERTAINMENT AMERICA TO SETTLE FTC CHARGES OF PLACING MISLEADING ADS
FROM: U.S. FEDERAL TRADE COMMISSION
Sony Computer Entertainment America To Provide Consumer Refunds To Settle FTC Charges Over Misleading Ads For PlayStation Vita Gaming Console
FTC Also Charges Los Angeles Ad Agency with Promoting Console through Deceptive Twitter Endorsements
Sony Computer Entertainment America (“Sony”) has agreed to settle Federal Trade Commission charges that it deceived consumers with false advertising claims about the “game changing” technological features of its PlayStation Vita handheld gaming console during its U.S. launch campaign in late 2011 and early 2012.
As part of its settlement with the FTC, Sony is barred from making similarly misleading advertising claims in the future, and will provide consumers who bought a PS Vita gaming console before June 1, 2012, either a $25 cash or credit refund, or a $50 merchandise voucher for select video games, and/or services. Sony will provide notice via email to consumers who are eligible for redress after the settlement is finalized by the Commission.
“As we enter the year’s biggest shopping period, companies need to be reminded that if they make product promises to consumers -- as Sony did with the “game changing” features of its PS Vita -- they must deliver on those pledges,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to act on behalf of consumers when companies or advertisers make false product claims.”
As part of its launch campaign for the PS Vita, Sony claimed that the pocket-sized console would revolutionize gaming mobility by enabling consumers to play their PlayStation 3 games via “remote play,” and that they could engage in “cross platform” play by starting a game on a PS3 and then continuing it on the go, right where they left off, on a PS Vita. The FTC alleges that each of these claims was misleading.
In a related action, the Commission charged that Deutsch LA, Sony’s advertising agency for the PS Vita launch, knew or should have known that the advertisements it produced contained misleading claims about the console’s cross platform and 3G capabilities.
The FTC also alleges that Deutsch LA further misled consumers by urging its employees to create awareness and excitement about the PS Vita on Twitter, without instructing employees to disclose their connection to the advertising agency or its then-client Sony. Under a separate settlement order, Deutsch LA is barred from such conduct in the future.
The PS Vita is a handheld gaming console that Sony first sold in the United States in February 2012 for about $250. Unlike the PS3, which allows consumers to play video games on a television, the PS Vita is a portable device that enables gamers to play “on the go,” untethered to a television screen.
FTC Complaint Against Sony Computer Entertainment America
The FTC’s complaint against Sony charges the company with making false claims about the PS Vita’s “cross platform gaming” or “cross-save” feature. Sony claimed, for example, that PS Vita users could pause any PS3 game at any time and continue to play the game on their PS Vita from where they left off. This feature, however, was only available for a few PS3 games, and the pause-and-save capability described in the ads varied significantly from game to game. For example, with respect to “MLB 12: The Show,” consumers could only save the game to the PS Vita after finishing the entire nine-inning game on their PS3. In addition, Sony failed to inform consumers that to use this feature, purchasers had to buy two versions of the same game – one for their PS3 and one for the PS Vita.
The FTC’s complaint also alleges that Sony’s PS Vita ads falsely implied that consumers who owned the 3G version of the device (which cost an extra $50 plus monthly fees) could engage in live, multi-player gaming through a 3G network. In fact, consumers could not engage in live, multiplayer gaming.
The complaint further alleges that Sony also falsely claimed that with the “remote play” feature, PS Vita users could easily access their PS3 games on their handheld consoles. In reality, most PS3 games were not remote playable on the PS Vita. Sony also misled consumers by falsely claiming that PS Vita users could remotely play the popular PS3 game, Killzone 3, on the PS Vita. In fact, Sony never enabled remote play on its Killzone 3 game title, and very few, if any, PS3 games of similar size and complexity were remote playable on the PS Vita.
FTC Complaint Against Deutsch LA
The FTC’s complaint against Deutsch LA charges the company with similarly misleading consumers through ads that it created touting the PS Vita’s cross-platform gaming and 3G features.
The Commission also alleges that Deutsch LA misled consumers with deceptive product endorsements for the PS Vita. Specifically, the agency used the term “#gamechanger” in its ads to direct consumers to online conversations about Sony’s console on Twitter. About a month before the gaming console was launched, one of Deutsch LA’s assistant account executives sent a company-wide email to staff asking them to help with the ad campaign by posting comments about the PS Vita on Twitter and using the same “#gamechanger” hashtag, according to the complaint.
In response to the company-wide email, various Deutsch LA employees posted positive tweets about the PS Vita to their personal Twitter accounts, without disclosing their connection to Deutsch or Sony, the FTC alleged. The FTC has charged that the tweets were misleading, as they did not reflect the views of actual consumers who had used the PS Vita, and because they did not disclose that they were written by employees of Deutsch LA.
Proposed Settlement Orders
The proposed settlement orders prohibit both Sony and Deutsch LA from making similar misrepresentations in the future when promoting the features or capabilities of handheld gaming consoles. The proposed order against Deutsch LA also bars it from misrepresenting that an endorser of any game console product or video game product is an independent user or ordinary consumer of the product. In addition, the proposed order requires Deutsch LA to disclose a material connection, where one exists, between any endorser of a game console product or video game product and Deutsch LA or other entity involved in the manufacture or marketing of the product. These requirements are in line with the FTC’s Endorsement Guides,
The proposed order against Sony requires it to send email notifications to all consumers it can reasonably identify as having bought a PS Vita before June 1, 2012.
Information for Consumers
The FTC has information for consumers about how to detect and avoid advertisements that may be deceptive or misleading, including a new blog post, Sony Ads Shouldn’t Play Games.
The Commission vote to accept both proposed consent orders for public comment was 5-0.
Sony Computer Entertainment America To Provide Consumer Refunds To Settle FTC Charges Over Misleading Ads For PlayStation Vita Gaming Console
FTC Also Charges Los Angeles Ad Agency with Promoting Console through Deceptive Twitter Endorsements
Sony Computer Entertainment America (“Sony”) has agreed to settle Federal Trade Commission charges that it deceived consumers with false advertising claims about the “game changing” technological features of its PlayStation Vita handheld gaming console during its U.S. launch campaign in late 2011 and early 2012.
As part of its settlement with the FTC, Sony is barred from making similarly misleading advertising claims in the future, and will provide consumers who bought a PS Vita gaming console before June 1, 2012, either a $25 cash or credit refund, or a $50 merchandise voucher for select video games, and/or services. Sony will provide notice via email to consumers who are eligible for redress after the settlement is finalized by the Commission.
“As we enter the year’s biggest shopping period, companies need to be reminded that if they make product promises to consumers -- as Sony did with the “game changing” features of its PS Vita -- they must deliver on those pledges,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to act on behalf of consumers when companies or advertisers make false product claims.”
As part of its launch campaign for the PS Vita, Sony claimed that the pocket-sized console would revolutionize gaming mobility by enabling consumers to play their PlayStation 3 games via “remote play,” and that they could engage in “cross platform” play by starting a game on a PS3 and then continuing it on the go, right where they left off, on a PS Vita. The FTC alleges that each of these claims was misleading.
In a related action, the Commission charged that Deutsch LA, Sony’s advertising agency for the PS Vita launch, knew or should have known that the advertisements it produced contained misleading claims about the console’s cross platform and 3G capabilities.
The FTC also alleges that Deutsch LA further misled consumers by urging its employees to create awareness and excitement about the PS Vita on Twitter, without instructing employees to disclose their connection to the advertising agency or its then-client Sony. Under a separate settlement order, Deutsch LA is barred from such conduct in the future.
The PS Vita is a handheld gaming console that Sony first sold in the United States in February 2012 for about $250. Unlike the PS3, which allows consumers to play video games on a television, the PS Vita is a portable device that enables gamers to play “on the go,” untethered to a television screen.
FTC Complaint Against Sony Computer Entertainment America
The FTC’s complaint against Sony charges the company with making false claims about the PS Vita’s “cross platform gaming” or “cross-save” feature. Sony claimed, for example, that PS Vita users could pause any PS3 game at any time and continue to play the game on their PS Vita from where they left off. This feature, however, was only available for a few PS3 games, and the pause-and-save capability described in the ads varied significantly from game to game. For example, with respect to “MLB 12: The Show,” consumers could only save the game to the PS Vita after finishing the entire nine-inning game on their PS3. In addition, Sony failed to inform consumers that to use this feature, purchasers had to buy two versions of the same game – one for their PS3 and one for the PS Vita.
The FTC’s complaint also alleges that Sony’s PS Vita ads falsely implied that consumers who owned the 3G version of the device (which cost an extra $50 plus monthly fees) could engage in live, multi-player gaming through a 3G network. In fact, consumers could not engage in live, multiplayer gaming.
The complaint further alleges that Sony also falsely claimed that with the “remote play” feature, PS Vita users could easily access their PS3 games on their handheld consoles. In reality, most PS3 games were not remote playable on the PS Vita. Sony also misled consumers by falsely claiming that PS Vita users could remotely play the popular PS3 game, Killzone 3, on the PS Vita. In fact, Sony never enabled remote play on its Killzone 3 game title, and very few, if any, PS3 games of similar size and complexity were remote playable on the PS Vita.
FTC Complaint Against Deutsch LA
The FTC’s complaint against Deutsch LA charges the company with similarly misleading consumers through ads that it created touting the PS Vita’s cross-platform gaming and 3G features.
The Commission also alleges that Deutsch LA misled consumers with deceptive product endorsements for the PS Vita. Specifically, the agency used the term “#gamechanger” in its ads to direct consumers to online conversations about Sony’s console on Twitter. About a month before the gaming console was launched, one of Deutsch LA’s assistant account executives sent a company-wide email to staff asking them to help with the ad campaign by posting comments about the PS Vita on Twitter and using the same “#gamechanger” hashtag, according to the complaint.
In response to the company-wide email, various Deutsch LA employees posted positive tweets about the PS Vita to their personal Twitter accounts, without disclosing their connection to Deutsch or Sony, the FTC alleged. The FTC has charged that the tweets were misleading, as they did not reflect the views of actual consumers who had used the PS Vita, and because they did not disclose that they were written by employees of Deutsch LA.
Proposed Settlement Orders
The proposed settlement orders prohibit both Sony and Deutsch LA from making similar misrepresentations in the future when promoting the features or capabilities of handheld gaming consoles. The proposed order against Deutsch LA also bars it from misrepresenting that an endorser of any game console product or video game product is an independent user or ordinary consumer of the product. In addition, the proposed order requires Deutsch LA to disclose a material connection, where one exists, between any endorser of a game console product or video game product and Deutsch LA or other entity involved in the manufacture or marketing of the product. These requirements are in line with the FTC’s Endorsement Guides,
The proposed order against Sony requires it to send email notifications to all consumers it can reasonably identify as having bought a PS Vita before June 1, 2012.
Information for Consumers
The FTC has information for consumers about how to detect and avoid advertisements that may be deceptive or misleading, including a new blog post, Sony Ads Shouldn’t Play Games.
The Commission vote to accept both proposed consent orders for public comment was 5-0.
FDIC REPORTS COMMERCIAL BANK AND SAVINGS INSTITUTION NET INCOME FOR THIRD QUARTER
FROM: FEDERAL DEPOSIT INSURANCE CORPORATION
| November 25, 2014 | Media Contact: David Barr (202) 898-6992 dbarr@fdic.gov |
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $38.7 billion in the third quarter of 2014, up $2.6 billion (7.3 percent) from earnings of $36.1 billion the industry reported a year earlier. The increase in earnings was mainly attributable to a $7.8 billion (4.8 percent) increase in net operating revenue (the sum of net interest income and total noninterest income), the biggest since the fourth quarter of 2009. Almost two-thirds of the 6,589 insured institutions reporting (62.9 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the third quarter fell to 6.4 percent from 8.7 percent a year earlier.
"The banking industry had another positive quarter," FDIC Chairman Martin J. Gruenberg said. "Community banks, in particular, performed better than a year ago. Most importantly, third quarter income growth was based on revenue growth instead of lower loan-loss provisions. This can be a more sustainable foundation for continued earnings growth going forward."
Total loan and lease balances rose by $50.9 billion (0.6 percent) in the third quarter to $8.2 trillion. Commercial and industrial loans increased by $10.1 billion (0.6 percent), and auto loans grew by $9 billion (2.4 percent), while balances of one- to four-family mortgage loans declined by $6.7 billion (0.4 percent). Over the last 12 months, loan and lease balances increased by 4.6 percent.
Noninterest income was $5.4 billion (9.2 percent) higher than a year ago. Gains from loan sales were $1.2 billion (45.6 percent) higher, while trading income was up by $1.1 billion (25.3 percent). This is the first time in the last five quarters that noninterest income has increased year-over-year.
Net interest income was up $2.4 billion (2.3 percent) from a year ago, as interest-bearing assets were 5.9 percent higher. The average net interest margin (the difference between the average yield banks earn on loans and other investments and the average cost of funding those investments) was 3.14 percent, down from the 3.26 percent average in the third quarter of 2013. This is the lowest quarterly average margin since 3.11 percent in the third quarter of 1989, as larger institutions increased their holdings of low-yield, liquid investments.
Noninterest expenses for goodwill impairment were $1.1 billion higher than a year ago, while itemized litigation expenses were $1.6 billion lower. Expenses for salaries and employee benefits were $2.0 billion (4.3 percent) higher than in the third quarter of 2013. Banks set aside $7.2 billion in provisions for loan losses, up 23.9 percent from $5.8 billion a year earlier. This is the first time in five years that the industry has reported a year-over-year increase in loss provisions.
Asset quality indicators continued to improve as insured banks and thrifts charged off $9.2 billion in uncollectible loans during the quarter, down $2.4 billion (21.0 percent) from a year earlier. The amount of noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell by $9.7 billion (5.3 percent) during the quarter. The percentage of loans and leases that were noncurrent declined to 2.11 percent, the lowest level since the 2.09 percent posted at the end of the second quarter of 2008.
The average return on assets (ROA) rose slightly to 1.02 percent in the third quarter from 1.00 percent a year earlier. The average return on equity (ROE) rose from 8.94 percent to 9.04 percent.
Despite continued positive developments, Chairman Gruenberg noted: "Still, there are challenges ahead for the industry. Margins remain under pressure in this low interest rate environment. Institutions have responded by extending asset maturities, which raises concerns about interest-rate risk. And banks are increasing higher-risk loans to leveraged commercial borrowers. All of these issues continue to be matters of ongoing supervisory attention. Nevertheless, third quarter results were largely good news for community banks and for the entire banking industry."
Financial results for the third quarter of 2014 are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:
Community banks earned $4.9 billion during the quarter. Starting with the Quarterly Banking Profile released for the first quarter of 2014, the FDIC added a new section that reports on the performance of community banks – those institutions that provide traditional, relationship-based banking services in their local communities. Based on criteria developed for the FDIC Community Banking Study published in December 2012, there were 6,107 community banks (93.0 percent of all FDIC-insured institutions) in the third quarter of 2014 with assets of $2.0 trillion (13.0 percent of industry assets). Third quarter net income at community banks of $4.9 billion was up $351 million (7.8 percent) from a year earlier, driven by higher net interest income and lower loan-loss provisions. The report also found that loan balances at community banks in the third quarter grew at a faster pace than in the industry as a whole, asset quality indicators continued to show improvement, and community banks continued to account for 45 percent of small loans to businesses.
The number of "problem banks" fell for the 14th consecutive quarter. The number of banks on the FDIC's "Problem List" declined from 354 to 329 during the quarter, the lowest since the 305 in the first quarter of 2009. The number of "problem" banks now is 63 percent below the post-crisis high of 888 at the end of the first quarter of 2011. Two FDIC-insured institutions failed in the third quarter, compared to six in the third quarter of 2013.
The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance (the net worth of the Fund) rose to a record $54.3 billion as of September 30 from $51.1 billion at the end of June. The Fund balance increased primarily due to assessment income, recoveries from litigation settlements, and receivership asset recoveries that exceeded estimates. Estimated insured deposits increased by 0.4 percent, and the DIF reserve ratio (the Fund balance as a percentage of estimated insured deposits) rose to 0.89 percent as of September 30 from 0.84 percent as of June 30. A year ago, the DIF reserve ratio was 0.68 percent. By law, the DIF must achieve a minimum reserve ratio of 1.35 percent by September 30, 2020.
Thursday, November 27, 2014
EUROPA: THE JUPITER MOON
FROM: NASA
Caption credit: NASA. The puzzling, fascinating surface of Jupiter’s icy moon Europa looms large in this newly-reprocessed color view, made from images taken by NASA's Galileo spacecraft in the late 1990s. This is the color view of Europa from Galileo that shows the largest portion of the moon's surface at the highest resolution. The view was previously released as a mosaic with lower resolution and strongly enhanced color (see PIA02590). To create this new version, the images were assembled into a realistic color view of the surface that approximates how Europa would appear to the human eye. The scene shows the stunning diversity of Europa’s surface geology. Long, linear cracks and ridges crisscross the surface, interrupted by regions of disrupted terrain where the surface ice crust has been broken up and re-frozen into new patterns. Color variations across the surface are associated with differences in geologic feature type and location. For example, areas that appear blue or white contain relatively pure water ice, while reddish and brownish areas include non-ice components in higher concentrations.
The polar regions, visible at the left and right of this view, are noticeably bluer than the more equatorial latitudes, which look more white. This color variation is thought to be due to differences in ice grain size in the two locations. Images taken through near-infrared, green and violet filters have been combined to produce this view. The images have been corrected for light scattered outside of the image, to provide a color correction that is calibrated by wavelength. Gaps in the images have been filled with simulated color based on the color of nearby surface areas with similar terrain types. This global color view consists of images acquired by the Galileo Solid-State Imaging (SSI) experiment on the spacecraft's first and fourteenth orbits through the Jupiter system, in 1995 and 1998, respectively. Image scale is 2 miles (1.6 kilometers) per pixel. North on Europa is at right. The Galileo mission was managed by NASA's Jet Propulsion Laboratory in Pasadena, California, for the agency's Science Mission Directorate in Washington. JPL is a division of the California Institute of Technology, Pasadena.
SOYUZ TMA-15M ROCKET LAUNCHES FROM KAZAKHSTAN
The Soyuz TMA-15M rocket launches from the Baikonur Cosmodrome in Kazakhstan on Monday, Nov. 24, 2014 as seen in this long exposure carrying Expedition 42 Soyuz Commander Anton Shkaplerov of the Russian Federal Space Agency (Roscosmos), Flight Engineer Terry Virts of NASA, and Flight Engineer Samantha Cristoforetti of the European Space Agency (ESA) into orbit to begin their five and a half month mission on the International Space Station. Image Credit: NASA/Aubrey Gemignani
Wednesday, November 26, 2014
U.S. CONGRATULATES PEOPLE OF ALBANIA ON THEIR INDEPENDENCE DAY
FROM: U.S. STATE DEPARTMENT
Press Statement
John Kerry
Secretary of State
Washington, DC
November 26, 2014
On behalf of President Obama and the people of the United States, I congratulate the people of Albania as you celebrate your 102nd Independence Day on November 28.
Albania is a strong and reliable NATO ally and a force for stability in the Western Balkans. I thank the Albanian people for their support of the ISAF and Resolute Support missions in Afghanistan, as well as their immediate and valued contributions to the global coalition to counter ISIL.
The United States continues to actively support Albania’s efforts to meet the requirements for joining the European Union. I commend your progress on the path toward full Euro-Atlantic integration.
On this special occasion, the United States stands with you as a steadfast partner and ally.
Press Statement
John Kerry
Secretary of State
Washington, DC
November 26, 2014
On behalf of President Obama and the people of the United States, I congratulate the people of Albania as you celebrate your 102nd Independence Day on November 28.
Albania is a strong and reliable NATO ally and a force for stability in the Western Balkans. I thank the Albanian people for their support of the ISAF and Resolute Support missions in Afghanistan, as well as their immediate and valued contributions to the global coalition to counter ISIL.
The United States continues to actively support Albania’s efforts to meet the requirements for joining the European Union. I commend your progress on the path toward full Euro-Atlantic integration.
On this special occasion, the United States stands with you as a steadfast partner and ally.
U.S. FILES LAWSUIT CLAIMING COMPANY BILLED GOVERNMENT FOR INELIGIBLE PATIENTS
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, November 25, 2014
United States Files False Claims Act Lawsuit Against Las Vegas Hospice and Related Entities for Billing Medicare and Medicaid for Ineligible Patients
The United States has filed suit against Creekside Hospice II LLC, Skilled Healthcare Group Inc. (SKG), its holding company, and Skilled Healthcare LLC (SKH), an administrative services subsidiary of SKG that operates Creekside (collectively the Creekside entities), alleging that these entities knowingly submitted ineligible claims for hospice services and inflated claims for patient visits to government health care programs, the Justice Department announced today.
“The Medicare hospice benefit is intended to provide pain management and other palliative care to patients nearing the end of life, to help make them as comfortable as possible,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “Too often, however, companies abuse this critical service by using aggressive marketing tactics to pressure patients who do not need, and may be ill-served, by these services in order to get higher reimbursements from the government. The department will take swift action to protect taxpayer dollars and make sure that Medicare benefits are available to those who truly need them.”
The Medicare and Medicaid hospice benefits are available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain and stress) for a terminal illness and have a life expectancy of six months or less if their disease runs its normal course. When Medicare or Medicaid patients receive hospice services, they no longer receive services designed to cure their illnesses.
The government’s complaint alleges that the Creekside entities knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill. According to the complaint, the companies allegedly directed staff to enroll patients in the hospice program regardless of the patients’ eligibility for hospice benefits, sometimes by instructing staff to change records after the hospice submitted claims for payment to indicate that all requirements had been met. Management from Creekside, SKG and SKH also allegedly instructed employees to alter medical records to make it appear that doctors at the hospice had conducted personal visits with the patients, when in fact they had not occurred, in order to ensure reimbursement from Medicare and Medicaid. The complaint alleges that Creekside management aggressively discouraged staff from permitting patients or their families to revoke their elections to accept hospice benefits. The complaint also alleges that staff at Creekside were discouraged from documenting known improvements in a patient’s health in the medical record, called “Chart Killers” by the hospice, to ensure that Medicare or Medicaid would pay the hospice’s claim.
Further, the complaint alleges that the Creekside entities knowingly submitted or caused the submission of inflated claims to Medicare for services performed by the medical director. The government alleges that the companies repeatedly used billing codes that resulted in higher payment by Medicare than were justified by the services actually performed. As a result of the conduct alleged in the complaint, the government contends that the Creekside entities misspent tens of millions of taxpayer dollars from the Medicare and Medicaid programs.
“In order to protect the financial integrity of the Medicare and Medicaid programs, upon which so many of our senior American citizens rely, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have made combating healthcare fraud an enforcement priority,” said U.S. Attorney Daniel G. Bogden for the District of Nevada. “This type of fraud will not be tolerated and DOJ and HHS will act swiftly when it does occur to pursue False Claims Act suits against violators.”
The United States filed its complaint in two consolidated lawsuits brought under the whistleblower provisions of the False Claims Act and the Nevada False Claims Act by Joanne Cretney-Tsosie, a clinical manager for Creekside, and Veneta Lepera, a former clinical manager for Creekside. Under these statutes, a private citizen can sue for fraud on behalf of the United States and the state of Nevada, respectively, and share in any recovery. The federal and state governments are entitled to intervene in such a lawsuit, as they have done in this case.
The United States’ suit is part of the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.1 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Nevada, the Nevada Attorney General’s Office and the HHS Office of Inspector General. The claims asserted against Creekside Hospice, SKG and SKH are allegations only and there has been no determination of liability.
Tuesday, November 25, 2014
United States Files False Claims Act Lawsuit Against Las Vegas Hospice and Related Entities for Billing Medicare and Medicaid for Ineligible Patients
The United States has filed suit against Creekside Hospice II LLC, Skilled Healthcare Group Inc. (SKG), its holding company, and Skilled Healthcare LLC (SKH), an administrative services subsidiary of SKG that operates Creekside (collectively the Creekside entities), alleging that these entities knowingly submitted ineligible claims for hospice services and inflated claims for patient visits to government health care programs, the Justice Department announced today.
“The Medicare hospice benefit is intended to provide pain management and other palliative care to patients nearing the end of life, to help make them as comfortable as possible,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “Too often, however, companies abuse this critical service by using aggressive marketing tactics to pressure patients who do not need, and may be ill-served, by these services in order to get higher reimbursements from the government. The department will take swift action to protect taxpayer dollars and make sure that Medicare benefits are available to those who truly need them.”
The Medicare and Medicaid hospice benefits are available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain and stress) for a terminal illness and have a life expectancy of six months or less if their disease runs its normal course. When Medicare or Medicaid patients receive hospice services, they no longer receive services designed to cure their illnesses.
The government’s complaint alleges that the Creekside entities knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill. According to the complaint, the companies allegedly directed staff to enroll patients in the hospice program regardless of the patients’ eligibility for hospice benefits, sometimes by instructing staff to change records after the hospice submitted claims for payment to indicate that all requirements had been met. Management from Creekside, SKG and SKH also allegedly instructed employees to alter medical records to make it appear that doctors at the hospice had conducted personal visits with the patients, when in fact they had not occurred, in order to ensure reimbursement from Medicare and Medicaid. The complaint alleges that Creekside management aggressively discouraged staff from permitting patients or their families to revoke their elections to accept hospice benefits. The complaint also alleges that staff at Creekside were discouraged from documenting known improvements in a patient’s health in the medical record, called “Chart Killers” by the hospice, to ensure that Medicare or Medicaid would pay the hospice’s claim.
Further, the complaint alleges that the Creekside entities knowingly submitted or caused the submission of inflated claims to Medicare for services performed by the medical director. The government alleges that the companies repeatedly used billing codes that resulted in higher payment by Medicare than were justified by the services actually performed. As a result of the conduct alleged in the complaint, the government contends that the Creekside entities misspent tens of millions of taxpayer dollars from the Medicare and Medicaid programs.
“In order to protect the financial integrity of the Medicare and Medicaid programs, upon which so many of our senior American citizens rely, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have made combating healthcare fraud an enforcement priority,” said U.S. Attorney Daniel G. Bogden for the District of Nevada. “This type of fraud will not be tolerated and DOJ and HHS will act swiftly when it does occur to pursue False Claims Act suits against violators.”
The United States filed its complaint in two consolidated lawsuits brought under the whistleblower provisions of the False Claims Act and the Nevada False Claims Act by Joanne Cretney-Tsosie, a clinical manager for Creekside, and Veneta Lepera, a former clinical manager for Creekside. Under these statutes, a private citizen can sue for fraud on behalf of the United States and the state of Nevada, respectively, and share in any recovery. The federal and state governments are entitled to intervene in such a lawsuit, as they have done in this case.
The United States’ suit is part of the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.1 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Nevada, the Nevada Attorney General’s Office and the HHS Office of Inspector General. The claims asserted against Creekside Hospice, SKG and SKH are allegations only and there has been no determination of liability.
U.S. UNITED NATIONS REPRESENTATIVE POWERS MAKES REMARKS ON UN RESOLUTIONS CONDEMNING ISRAEL
FROM: U.S. STATE DEPARTMENT
Samantha Power
U.S. Permanent Representative to the United Nations
New York, NY
November 25, 2014
AS DELIVERED
Like everyone in this assembly hall, we are deeply concerned about the volatile situation in the Middle East. The United States has made an enormous effort, especially over the last year and a half, to work with the parties in trying to pave the road towards achieving a negotiated final-status agreement allowing two states to live side-by-side in peace and security.
In this context, the United States remains profoundly troubled by the repetitive and disproportionate number of one-sided General Assembly resolutions condemning Israel – a total of 18 this year. This grossly one-sided approach damages the prospects for peace by undermining trust between parties and damaging the kind of international support critical to achieving peace. All parties to the conflict have direct responsibilities for ending it, and we are disappointed that UN Members continually single out Israel without acknowledging the responsibilities and difficult steps that must be taken on all sides. These unbalanced, one-sided resolutions set back our collective efforts to advance a peaceful resolution to the conflict in the Middle East, and they damage the institutional credibility of the United Nations.
Of these annual resolutions, which unfairly single out one country and consistently lack balance, three are particularly troubling to the United States: the “Division for Palestinian Rights of the Secretariat;” the “Committee on the Exercise of the Inalienable Rights of the Palestinian People;” and the “Special Committee to Investigate Israeli Practices Affecting the Human Rights of the Palestinian People and Other Arabs of the Occupied Territories.” These resolutions renew mandates for UN bodies established decades ago, wasting valuable resources and reinforcing the perception of systematic UN bias against Israel. All member states should evaluate the effectiveness of supporting and funding these bodies.
I do want to add that our continued opposition to the resolution on “Israeli Settlements in the Occupied Palestinian Territory, including Jerusalem, and the Occupied Golan,” which will come up for a vote in this Assembly next month, should not be understood to mean that we support settlement activity. On the contrary, we reject in the strongest terms Israeli settlements in territories occupied in 1967. Settlements are illegitimate, and they damage Israel’s security and the hopes for peace.
Continued settlement activity is contrary to Israel’s stated goal of negotiating a permanent status agreement with the Palestinians and is inconsistent with Israel’s international commitments.
During the past year, we have been deeply concerned by Israel’s advancement of plans for thousands of additional housing units in the West Bank and East Jerusalem. We have made clear that such action only draws condemnation from the international community, poisons the atmosphere not only with the Palestinians but also with the very Arab governments with which the Israeli government says it wants to build relations, and undermines the prospect for a peaceful negotiated agreement with the Palestinians.
Both sides took unhelpful steps that undercut the most recent round of final status negotiations. The scale and timing of Israel’s settlement activities contributed significantly to the erosion of trust between the parties.
The United States is in full agreement about the urgent need to resolve the conflict between Israel and the Palestinians, based on the two-state solution and an agreement that establishes a viable, independent, and contiguous state of Palestine, once and for all. We’ve invested a tremendous amount of effort and resources in pursuit of this shared goal, and we firmly believe that the parties need to resolve the conflict through direct negotiations. If the parties are willing and ready to take that step, we stand ready to support them and to continue our efforts to advance the cause of peace.
In closing, while the United States unequivocally rejects Israeli settlements in territories occupied in 1967, they do not justify the repetitive, disproportionate, and one-sided General Assembly resolutions condemning Israel, which do not advance our collective efforts to advance a peaceful resolution to the conflict.
Thank you.
Samantha Power
U.S. Permanent Representative to the United Nations
New York, NY
November 25, 2014
AS DELIVERED
Like everyone in this assembly hall, we are deeply concerned about the volatile situation in the Middle East. The United States has made an enormous effort, especially over the last year and a half, to work with the parties in trying to pave the road towards achieving a negotiated final-status agreement allowing two states to live side-by-side in peace and security.
In this context, the United States remains profoundly troubled by the repetitive and disproportionate number of one-sided General Assembly resolutions condemning Israel – a total of 18 this year. This grossly one-sided approach damages the prospects for peace by undermining trust between parties and damaging the kind of international support critical to achieving peace. All parties to the conflict have direct responsibilities for ending it, and we are disappointed that UN Members continually single out Israel without acknowledging the responsibilities and difficult steps that must be taken on all sides. These unbalanced, one-sided resolutions set back our collective efforts to advance a peaceful resolution to the conflict in the Middle East, and they damage the institutional credibility of the United Nations.
Of these annual resolutions, which unfairly single out one country and consistently lack balance, three are particularly troubling to the United States: the “Division for Palestinian Rights of the Secretariat;” the “Committee on the Exercise of the Inalienable Rights of the Palestinian People;” and the “Special Committee to Investigate Israeli Practices Affecting the Human Rights of the Palestinian People and Other Arabs of the Occupied Territories.” These resolutions renew mandates for UN bodies established decades ago, wasting valuable resources and reinforcing the perception of systematic UN bias against Israel. All member states should evaluate the effectiveness of supporting and funding these bodies.
I do want to add that our continued opposition to the resolution on “Israeli Settlements in the Occupied Palestinian Territory, including Jerusalem, and the Occupied Golan,” which will come up for a vote in this Assembly next month, should not be understood to mean that we support settlement activity. On the contrary, we reject in the strongest terms Israeli settlements in territories occupied in 1967. Settlements are illegitimate, and they damage Israel’s security and the hopes for peace.
Continued settlement activity is contrary to Israel’s stated goal of negotiating a permanent status agreement with the Palestinians and is inconsistent with Israel’s international commitments.
During the past year, we have been deeply concerned by Israel’s advancement of plans for thousands of additional housing units in the West Bank and East Jerusalem. We have made clear that such action only draws condemnation from the international community, poisons the atmosphere not only with the Palestinians but also with the very Arab governments with which the Israeli government says it wants to build relations, and undermines the prospect for a peaceful negotiated agreement with the Palestinians.
Both sides took unhelpful steps that undercut the most recent round of final status negotiations. The scale and timing of Israel’s settlement activities contributed significantly to the erosion of trust between the parties.
The United States is in full agreement about the urgent need to resolve the conflict between Israel and the Palestinians, based on the two-state solution and an agreement that establishes a viable, independent, and contiguous state of Palestine, once and for all. We’ve invested a tremendous amount of effort and resources in pursuit of this shared goal, and we firmly believe that the parties need to resolve the conflict through direct negotiations. If the parties are willing and ready to take that step, we stand ready to support them and to continue our efforts to advance the cause of peace.
In closing, while the United States unequivocally rejects Israeli settlements in territories occupied in 1967, they do not justify the repetitive, disproportionate, and one-sided General Assembly resolutions condemning Israel, which do not advance our collective efforts to advance a peaceful resolution to the conflict.
Thank you.
DOD PHOTOS: NATIONAL GUARD HELPS REMOVE SNOW IN NEW YORK
FROM: U.S. DEFENSE DEPARTMENT
Soldiers help remove snow at a senior care center in Orchard Park, N.Y., Nov. 22, 2014 New York National Guard photo by U.S. Army Maj. Paul Hernandez
Soldiers use heavy equipment to assist with snow removal in Buffalo, N.Y., Nov. 22, 2014. The soldiers are assigned to the New York Army National Guard's 152nd and 827th engineer companies. New York National Guard photo by U.S. Army Maj. Paul Hernandez
SEC ANNOUNCES COURT ENTERS JUDGEMENT AGAINST BOILER ROOM OPERATOR
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23140 / November 24, 2014
Securities and Exchange Commission v. Edward M. Laborio, Jonathan Fraiman, Matthew K. Lazar, Envit Capital, LLC, Envit Capital Group, Inc., Envit Capital Holdings, Inc., Envit Capital Private Wealth Management, LLC, Envit Capital Multi Strategy Mixed Investment Fund I LP, Aetius Group PLC, and Aetius Group LLC, Civil Action No. 1:12-cv-11489-PBS, (District of Massachusetts, Complaint filed August 10, 2012)
United States v. Edward Laborio and Jonathan Fraiman, 12-cr-10238-FDS-JGD (District of Massachusetts)
Court Enters Judgments Against Former Massachusetts-Based Boiler Room Operator and His Companies, Also Indicted by Grand Jury
The Securities and Exchange Commission announced that on November 18, 2014, the federal court in Boston, Massachusetts, entered final judgments against defendant Edward M. Laborio and his group of related entities, most with the name "Envit," in a boiler room scheme case filed by the Commission in 2012. The judgments permanently enjoin Laborio and the Envit entities from violating various sections of the federal securities laws, bars Laborio from certain parts of the securities industry, and orders Laborio and the entities to pay a total of $37,006,590 in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
On August 10, 2012, the Commission filed a complaint against Laborio, Jonathan Fraiman, Matthew K. Lazar, and seven entities owned and controlled by Laborio, including a non-existent hedge fund, alleging that they participated in a boiler room scheme that raised more than $4 million from approximately 150 investors between October 2006 and late August 2009 through the use of false promises and pressurized sales tactics.
The court entered the judgments by default permanently enjoining:
Laborio, Envit Capital, LLC ("Envit LLC"), Envit Capital Group, Inc. ("Envit Group"), Envit Capital Holdings, Inc. ("Envit Holdings"), Envit Capital Private Wealth Management, LLC ("Envit Wealth"), Envit Capital Multi Strategy Mixed Investment Fund I LP ("Envit Fund"), Aetius Group, PLC ("Aetius PLC"), and Aetius Group, LLC ("Aetius LLC") from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder;
Laborio and Envit Wealth from future violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder;
Laborio, Envit LLC, Envit Group, Envit Holdings, and Aetius PLC from future violations of Section 5 of the Securities Act;
Envit Fund and Aetius LLC from future violations of Section 7(a) of the Investment Company Act of 1940; and
Laborio from future violations of Section 15(a)(1) and 16(a) of the Exchange Act and Rule 16a-3 thereunder.
The judgments also order civil penalties of $4 million against Laborio and each of the Envit entities, and orders Laborio and the entities to disgorge, jointly and severally, $5,006,590 in ill-gotten gains plus prejudgment interest. Laborio's judgment also bars him from serving as an officer or director of a public company and from participating in any offering of penny stock.
On October 8, 2013, the court entered a judgment against Fraiman, enjoining him from future violations of the antifraud provisions of the federal securities laws. On October 11, 2013, the Commission issued an Order barring Fraiman from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after ten years. Fraiman consented to both the judgment and the Commission Order.
On November 27, 2013, the court entered a judgment against Lazar, enjoining him from future violations of the antifraud provision of the federal securities laws. On December 11, 2013, the Commission issued an Order barring Lazar from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after three years. Lazar consented to both the judgment and the Commission Order.
In a parallel criminal case, on August 7, 2014, a federal Grand Jury in the District of Massachusetts indicted Laborio and Fraiman on one count of conspiracy and one count of mail fraud for their roles in the Envit boiler room scheme. Also on August 7, 2014, a Magistrate Judge of the United States District Court for the District of Massachusetts issued arrest warrants for Laborio and Fraiman. Fraiman was arrested on August 27, 2014. Laborio is currently a fugitive.
For more information, see Exchange Act Release No. 34-59900 (May 12, 2009) [Order suspending trading in Envit Group securities]; Initial Decision Release No. 385 (August 13, 2009) [Initial decision revoking registration of Envit Group securities]; Exchange Act Release No. 60658 (September 11, 2009) [Notice of final decision revoking registration of Envit Group securities]; Litigation Rel. No. 22444 (August 10, 2012) [Civil Complaint]; Litigation Rel. No. 22836 (October 8, 2013) [Fraiman settlement]; Exchange Act Release No. 70678 (October 11, 2013) [Fraiman Order]; Litigation Release No. 22881 (December 2, 2013) [Lazar settlement]; Exchange Act Release No. 71043 (December 11, 2013) [Lazar Order].
Litigation Release No. 23140 / November 24, 2014
Securities and Exchange Commission v. Edward M. Laborio, Jonathan Fraiman, Matthew K. Lazar, Envit Capital, LLC, Envit Capital Group, Inc., Envit Capital Holdings, Inc., Envit Capital Private Wealth Management, LLC, Envit Capital Multi Strategy Mixed Investment Fund I LP, Aetius Group PLC, and Aetius Group LLC, Civil Action No. 1:12-cv-11489-PBS, (District of Massachusetts, Complaint filed August 10, 2012)
United States v. Edward Laborio and Jonathan Fraiman, 12-cr-10238-FDS-JGD (District of Massachusetts)
Court Enters Judgments Against Former Massachusetts-Based Boiler Room Operator and His Companies, Also Indicted by Grand Jury
The Securities and Exchange Commission announced that on November 18, 2014, the federal court in Boston, Massachusetts, entered final judgments against defendant Edward M. Laborio and his group of related entities, most with the name "Envit," in a boiler room scheme case filed by the Commission in 2012. The judgments permanently enjoin Laborio and the Envit entities from violating various sections of the federal securities laws, bars Laborio from certain parts of the securities industry, and orders Laborio and the entities to pay a total of $37,006,590 in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
On August 10, 2012, the Commission filed a complaint against Laborio, Jonathan Fraiman, Matthew K. Lazar, and seven entities owned and controlled by Laborio, including a non-existent hedge fund, alleging that they participated in a boiler room scheme that raised more than $4 million from approximately 150 investors between October 2006 and late August 2009 through the use of false promises and pressurized sales tactics.
The court entered the judgments by default permanently enjoining:
Laborio, Envit Capital, LLC ("Envit LLC"), Envit Capital Group, Inc. ("Envit Group"), Envit Capital Holdings, Inc. ("Envit Holdings"), Envit Capital Private Wealth Management, LLC ("Envit Wealth"), Envit Capital Multi Strategy Mixed Investment Fund I LP ("Envit Fund"), Aetius Group, PLC ("Aetius PLC"), and Aetius Group, LLC ("Aetius LLC") from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder;
Laborio and Envit Wealth from future violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder;
Laborio, Envit LLC, Envit Group, Envit Holdings, and Aetius PLC from future violations of Section 5 of the Securities Act;
Envit Fund and Aetius LLC from future violations of Section 7(a) of the Investment Company Act of 1940; and
Laborio from future violations of Section 15(a)(1) and 16(a) of the Exchange Act and Rule 16a-3 thereunder.
The judgments also order civil penalties of $4 million against Laborio and each of the Envit entities, and orders Laborio and the entities to disgorge, jointly and severally, $5,006,590 in ill-gotten gains plus prejudgment interest. Laborio's judgment also bars him from serving as an officer or director of a public company and from participating in any offering of penny stock.
On October 8, 2013, the court entered a judgment against Fraiman, enjoining him from future violations of the antifraud provisions of the federal securities laws. On October 11, 2013, the Commission issued an Order barring Fraiman from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after ten years. Fraiman consented to both the judgment and the Commission Order.
On November 27, 2013, the court entered a judgment against Lazar, enjoining him from future violations of the antifraud provision of the federal securities laws. On December 11, 2013, the Commission issued an Order barring Lazar from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after three years. Lazar consented to both the judgment and the Commission Order.
In a parallel criminal case, on August 7, 2014, a federal Grand Jury in the District of Massachusetts indicted Laborio and Fraiman on one count of conspiracy and one count of mail fraud for their roles in the Envit boiler room scheme. Also on August 7, 2014, a Magistrate Judge of the United States District Court for the District of Massachusetts issued arrest warrants for Laborio and Fraiman. Fraiman was arrested on August 27, 2014. Laborio is currently a fugitive.
For more information, see Exchange Act Release No. 34-59900 (May 12, 2009) [Order suspending trading in Envit Group securities]; Initial Decision Release No. 385 (August 13, 2009) [Initial decision revoking registration of Envit Group securities]; Exchange Act Release No. 60658 (September 11, 2009) [Notice of final decision revoking registration of Envit Group securities]; Litigation Rel. No. 22444 (August 10, 2012) [Civil Complaint]; Litigation Rel. No. 22836 (October 8, 2013) [Fraiman settlement]; Exchange Act Release No. 70678 (October 11, 2013) [Fraiman Order]; Litigation Release No. 22881 (December 2, 2013) [Lazar settlement]; Exchange Act Release No. 71043 (December 11, 2013) [Lazar Order].
U.S. ACCUSES SANDWICH CO. OF DISTRIBUTING FOOD MADE IN INSANITARY CONDITIONS
FROM: U.S. JUSTICE DEPARTMENT
Friday, November 21, 2014
United States Files Enforcement Action Against Michigan Sandwich Company and Co-Owner to Stop Distribution of Adulterated Products
A civil complaint was filed in federal court in Michigan against Scotty’s Incorporated of Detroit and its co-owner and manager, Sandra Jackson, to prevent the distribution of adulterated sandwiches, the Department of Justice announced today.
According to the complaint, Scotty’s Incorporated, which does business as Bruce Enterprises and Bruce’s Fresh Products, prepares and distributes ready-to-eat (RTE) sandwiches, including RTE tuna sandwiches. The complaint alleges that the company’s sandwiches are manufactured in insanitary conditions, and that the company’s procedures are inadequate to ensure the safety of its products. Moreover, the company has failed to implement a written Hazard Analysis and Critical Control Point (HACCP) plan for handling seafood and minimizing the potential for harmful contamination in the company’s RTE tuna sandwiches. The Justice Department filed the injunction action in the Eastern District of Michigan at the request of the U.S. Food and Drug Administration (FDA).
“Seafood poses well-known risks when it is transported from ship to shore, but these risks can be effectively mitigated if companies handling seafood take proper precautions,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The Department of Justice will take all appropriate measures to protect the safety of the seafood consumers eat.”
According to the complaint, the FDA has performed five inspections of the defendants’ facility since 2006 and documented insanitary practices and/or seafood HACCP violations every time. These inspections revealed that the company’s RTE sandwiches are adulterated within the meaning of the Food, Drug, and Cosmetic Act because they are prepared, packed or held under insanitary conditions in which they may have become contaminated with filth or rendered injurious to health. The complaint alleges, for example, that since 2006, the company was repeatedly told to develop a written HACCP plan recognizing the inherent risks of toxin formation in tuna and enumerating plans to take corrective action when tuna is not properly handled.
Tuna that is not chilled rapidly or stored at sufficiently lower temperatures is at increased risk for the formation of scombrotoxin. The toxin can be adequately controlled when tuna is chilled after death and maintained at a cold temperature throughout storage and distribution. In the event that the tuna is not properly maintained, scombrotoxin readily forms and cannot be removed or destroyed through subsequent washing, freezing or cooking of the tuna. Consumption of fish containing high levels of scombrotoxin may cause scombrotoxin poisoning, the symptoms of which may include burning sensations in the mouth or throat, dizziness, nausea, vomiting, headaches, diarrhea, rashes, hives, a drop in blood pressure, constriction of the air passage, heart palpitations and respiratory distress.
According to the complaint, the FDA’s most recent inspection was conducted between January 14 and February 6. At the inspection, according to the complaint, the FDA found that the defendants failed to have and implement an HACCP plan for food safety hazards reasonably likely to occur. There were also no sanitation control records documenting the safety of, among other things, water used at the facility; the cleanliness of surfaces, utensils and equipment coming into contact with food; maintenance of hand-sanitizing machines and bathrooms; exclusion of pests from the facility; and control of employee health conditions such as the wearing of jewelry, hair nets or beard covers.
The government is represented by Trial Attorney Dan Baeza of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan, with the assistance of Assistant Chief Counsel for Enforcement Christopher Fanelli of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Friday, November 21, 2014
United States Files Enforcement Action Against Michigan Sandwich Company and Co-Owner to Stop Distribution of Adulterated Products
A civil complaint was filed in federal court in Michigan against Scotty’s Incorporated of Detroit and its co-owner and manager, Sandra Jackson, to prevent the distribution of adulterated sandwiches, the Department of Justice announced today.
According to the complaint, Scotty’s Incorporated, which does business as Bruce Enterprises and Bruce’s Fresh Products, prepares and distributes ready-to-eat (RTE) sandwiches, including RTE tuna sandwiches. The complaint alleges that the company’s sandwiches are manufactured in insanitary conditions, and that the company’s procedures are inadequate to ensure the safety of its products. Moreover, the company has failed to implement a written Hazard Analysis and Critical Control Point (HACCP) plan for handling seafood and minimizing the potential for harmful contamination in the company’s RTE tuna sandwiches. The Justice Department filed the injunction action in the Eastern District of Michigan at the request of the U.S. Food and Drug Administration (FDA).
“Seafood poses well-known risks when it is transported from ship to shore, but these risks can be effectively mitigated if companies handling seafood take proper precautions,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The Department of Justice will take all appropriate measures to protect the safety of the seafood consumers eat.”
According to the complaint, the FDA has performed five inspections of the defendants’ facility since 2006 and documented insanitary practices and/or seafood HACCP violations every time. These inspections revealed that the company’s RTE sandwiches are adulterated within the meaning of the Food, Drug, and Cosmetic Act because they are prepared, packed or held under insanitary conditions in which they may have become contaminated with filth or rendered injurious to health. The complaint alleges, for example, that since 2006, the company was repeatedly told to develop a written HACCP plan recognizing the inherent risks of toxin formation in tuna and enumerating plans to take corrective action when tuna is not properly handled.
Tuna that is not chilled rapidly or stored at sufficiently lower temperatures is at increased risk for the formation of scombrotoxin. The toxin can be adequately controlled when tuna is chilled after death and maintained at a cold temperature throughout storage and distribution. In the event that the tuna is not properly maintained, scombrotoxin readily forms and cannot be removed or destroyed through subsequent washing, freezing or cooking of the tuna. Consumption of fish containing high levels of scombrotoxin may cause scombrotoxin poisoning, the symptoms of which may include burning sensations in the mouth or throat, dizziness, nausea, vomiting, headaches, diarrhea, rashes, hives, a drop in blood pressure, constriction of the air passage, heart palpitations and respiratory distress.
According to the complaint, the FDA’s most recent inspection was conducted between January 14 and February 6. At the inspection, according to the complaint, the FDA found that the defendants failed to have and implement an HACCP plan for food safety hazards reasonably likely to occur. There were also no sanitation control records documenting the safety of, among other things, water used at the facility; the cleanliness of surfaces, utensils and equipment coming into contact with food; maintenance of hand-sanitizing machines and bathrooms; exclusion of pests from the facility; and control of employee health conditions such as the wearing of jewelry, hair nets or beard covers.
The government is represented by Trial Attorney Dan Baeza of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan, with the assistance of Assistant Chief Counsel for Enforcement Christopher Fanelli of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Tuesday, November 25, 2014
READOUT: VP'S CALL WITH ROMANIAN PRESIDENT-ELECT KLAUS IOHANNIS
FROM: THE WHITE HOUSE
November 25, 2014
Readout of the Vice President’s Call with Romanian President-elect Klaus Iohannis
Vice President Joe Biden called Romanian President-elect Klaus Iohannis to congratulate him on his election victory, noting the impressive voter turnout as a sign of a strong and healthy democracy. The Vice President underscored the strength of the bilateral relationship and expressed appreciation for Romania’s contributions to NATO, its support for Ukraine, and its efforts to degrade and defeat ISIL. The Vice President expressed his condolences for the loss of life in the November 21 helicopter accident and thanked Romania for its sacrifices as part of the International Security Assistance Force in Afghanistan. Finally, the Vice President and President-elect Iohannis discussed the critical importance of rule of law reforms, both as a driver of economic growth and as a national security issue.
November 25, 2014
Readout of the Vice President’s Call with Romanian President-elect Klaus Iohannis
Vice President Joe Biden called Romanian President-elect Klaus Iohannis to congratulate him on his election victory, noting the impressive voter turnout as a sign of a strong and healthy democracy. The Vice President underscored the strength of the bilateral relationship and expressed appreciation for Romania’s contributions to NATO, its support for Ukraine, and its efforts to degrade and defeat ISIL. The Vice President expressed his condolences for the loss of life in the November 21 helicopter accident and thanked Romania for its sacrifices as part of the International Security Assistance Force in Afghanistan. Finally, the Vice President and President-elect Iohannis discussed the critical importance of rule of law reforms, both as a driver of economic growth and as a national security issue.
SECRETARY KERRY'S REMARKS ON INTERNATIONAL DAY FOR THE ELIMINATION OF VIOLENCE AGAINST WOMEN
FROM: U.S. JUSTICE DEPARTMENT
International Day for the Elimination of Violence Against Women and 16 Days of Activism
Press Statement
John Kerry
Secretary of State
Washington, DC
November 25, 2014
Today, we mark the International Day for the Elimination of Violence Against Women, and the start of 16 Days of Activism Against Gender Violence. Over the next two weeks, U.S. embassies and missions around the world will all be working to raise awareness of the irreparable harm caused by gender-based violence.
This issue is seared into me. As a young prosecutor, I saw women and young girls whose lives and families were ripped apart by violence. I will never forget seeing women in dark glasses and long-sleeved shirts worn to cover up the black eyes and bruises of abuse. I couldn’t help but think about them as my two daughters went out into the world. As a Senator, working with Joe Biden and Cathy Russell, long before any of us were in the Administration, I helped pass the Violence Against Women Act.
In recent years, I’ve seen firsthand how much work remains to be done all across the globe, not just here at home. I saw it as a Senator, and I’ve seen it even more as Secretary. On my latest visit to Africa, while in Kinshasa, I toured a fistula clinic at St. Joseph’s Hospital. I spoke with doctors and activists alike who have devoted their life’s work to healing the scars left by sexual violence. And I listened to young women tell heartbreaking stories of their pain and ongoing recovery from the physical and emotional wounds left by their brutal assaults. These women were brave; they were extraordinarily strong. I came away inspired by their determination to make sure that no woman goes through the same ordeal as they did ever again.
Simply put, we must all do more to end violence against women in all its forms, wherever and whenever it occurs, and it starts by acknowledging it. There can be no conspiracy of silence.
The sad truth is that one in three women will experience gender-based violence in her lifetime. This violence knows no class, religious, or racial boundaries. And it comes at a terrible cost – not only for the woman or girl, but for families, communities, and entire countries. Preventing it is the only way to achieve a future of peace, stability, and prosperity.
Over the past year, the United States has worked to up our game battling gender-based violence across the globe. Through our Gender-based Violence Emergency Response and Protection Initiative, we help meet the immediate security needs of survivors. The Safe from the Start initiative is sending experts into the field to prevent gender-based violence in conflict zones and regions devastated by natural disasters. We are also working to address the scourge of early and forced marriage, most recently launching a program in Benin. And this past summer, I was proud to launch our partnership with Together for Girls to collect data on the consequences of sexual violence against children and provide a foundation to mobilize responses to new outbreaks of violence.
We will not turn away in the face of evil and brutality. We stand up, and we reaffirm that sexual violence will be not be tolerated. Not now, not ever.
International Day for the Elimination of Violence Against Women and 16 Days of Activism
Press Statement
John Kerry
Secretary of State
Washington, DC
November 25, 2014
Today, we mark the International Day for the Elimination of Violence Against Women, and the start of 16 Days of Activism Against Gender Violence. Over the next two weeks, U.S. embassies and missions around the world will all be working to raise awareness of the irreparable harm caused by gender-based violence.
This issue is seared into me. As a young prosecutor, I saw women and young girls whose lives and families were ripped apart by violence. I will never forget seeing women in dark glasses and long-sleeved shirts worn to cover up the black eyes and bruises of abuse. I couldn’t help but think about them as my two daughters went out into the world. As a Senator, working with Joe Biden and Cathy Russell, long before any of us were in the Administration, I helped pass the Violence Against Women Act.
In recent years, I’ve seen firsthand how much work remains to be done all across the globe, not just here at home. I saw it as a Senator, and I’ve seen it even more as Secretary. On my latest visit to Africa, while in Kinshasa, I toured a fistula clinic at St. Joseph’s Hospital. I spoke with doctors and activists alike who have devoted their life’s work to healing the scars left by sexual violence. And I listened to young women tell heartbreaking stories of their pain and ongoing recovery from the physical and emotional wounds left by their brutal assaults. These women were brave; they were extraordinarily strong. I came away inspired by their determination to make sure that no woman goes through the same ordeal as they did ever again.
Simply put, we must all do more to end violence against women in all its forms, wherever and whenever it occurs, and it starts by acknowledging it. There can be no conspiracy of silence.
The sad truth is that one in three women will experience gender-based violence in her lifetime. This violence knows no class, religious, or racial boundaries. And it comes at a terrible cost – not only for the woman or girl, but for families, communities, and entire countries. Preventing it is the only way to achieve a future of peace, stability, and prosperity.
Over the past year, the United States has worked to up our game battling gender-based violence across the globe. Through our Gender-based Violence Emergency Response and Protection Initiative, we help meet the immediate security needs of survivors. The Safe from the Start initiative is sending experts into the field to prevent gender-based violence in conflict zones and regions devastated by natural disasters. We are also working to address the scourge of early and forced marriage, most recently launching a program in Benin. And this past summer, I was proud to launch our partnership with Together for Girls to collect data on the consequences of sexual violence against children and provide a foundation to mobilize responses to new outbreaks of violence.
We will not turn away in the face of evil and brutality. We stand up, and we reaffirm that sexual violence will be not be tolerated. Not now, not ever.
U.S. ANNOUNCES TWO CHARGED WITH CONSPIRING TO PROVIDE MATERIAL SUPPORT TO ISIL
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, November 25, 2014
Two Minnesotans Charged with Conspiracy to Provide Material Support to the Islamic State of Iraq and the Levant
18-year-old Somali American Stopped at Minneapolis/Saint Paul Airport before Boarding Flight to Turkey
Assistant Attorney General for National Security John P. Carlin and United States Attorney for the District of Minnesota Andrew M. Luger today announced a criminal complaint charging Abdi Nur, 20, and Abdullah Yusuf, 18, with conspiracy to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL). Nur is additionally charged with providing material support to a foreign terrorist organization. Yusuf is expected to make an initial appearance at 2:00 p.m. today before Magistrate Judge Janie S. Mayeron in United States District Court in Minneapolis, Minnesota.
“More than 16,000 recruits from over 90 countries traveled to Syria to become foreign terrorist fighters with alarming consequences,” said Assistant Attorney General Carlin. “This is a global crisis and we will continue our efforts to prevent Americans from joining the fight and to hold accountable those who provide material support to foreign terrorist organizations. With these two defendants, we have now charged more than 15 individuals with offenses related to the foreign fighter threat in Syria.”
“As charged, these two young men conspired to join ISIL and travel from Minnesota to the Middle East to engage in a campaign of terror in support of a violent ideology,” said U.S. Attorney Luger. “Since al-Shabaab began recruiting young adults from the Twin Cities in 2007, our region has lost dozens of disaffected young people to terrorist organizations that would sooner see Somali Minnesotans die on foreign battlefields than prosper in peace and security in the United States. The law-abiding members of Minnesota’s Somali community are great partners in our fight against terror, and I am proud to work closely with community and religious leaders to lift up those Somali youth who remain vulnerable to terrorist recruiters. Unfortunately, Yusuf and Nur were not the first – and may not be the last – to conspire in support of ISIS. As we work with our many partners to improve the lives of Somali Minnesotans, we will continue to investigate and prosecute aggressively criminals who provide support for terror.”
“The FBI remains committed to both its community partners and to its law enforcement mandate concerning the detection and disruption of terrorist activity,” said FBI Special Agent in Charge Richard T. Thornton for the Minneapolis Division. “This complaint epitomizes the FBI's commitment to upholding the laws of the United States as they apply to those who would support terrorism.”
According to the criminal complaint and documents filed in court, on April 28, 2014, Abdullahi Yusuf applied for an expedited passport at the Minneapolis Passport Office. He told the passport specialist that he intended to travel to Turkey, but when asked, Yusuf could not specify his travel itinerary, travel companions, hotel location or the name or address of a friend in Turkey who he claimed to have met recently via Facebook. The passport specialist also asked Yusuf about the cost of his trip, which Yusuf reported as, “about $1,500.” However, Yusuf had no known source of income. Yusuf obtained his passport on May 5, 2014, and used it to open a checking account on the same day.
According to the criminal complaint and documents filed in court, on May 23, 2014, Yusuf deposited $1,500 in cash into his Wells Fargo checking account in four separate ATM deposits spread throughout the day. On May 24, 2014, Yusuf used a debit card associated with the same account to purchase a $1,417.05 airline ticket from Minneapolis/Saint Paul to Istanbul, Turkey. The ticket was for a flight scheduled to depart Minneapolis/Saint Paul on May 28, 2014. His parents did not know that Yusuf had obtained a passport and planned to travel to Turkey, nor did they know that he had acquired $1,500 and purchased an airline ticket.
Yusuf is associated with H.M., a former Minnesota resident now believed to be fighting in Syria, and who traveled from Minnesota to Turkey on March 9, 2014. The same debit card was used to purchase H.M.’s airline ticket as was used to purchase an airline ticket for a third man from Minnesota who later traveled to Syria to fight with ISIL. Yusuf exchanged several telephone calls and text messages with H.M. in the days before YUSUF attempted to depart for Turkey.
On the morning of May 28, 2014, Yusuf’s father drove him to school. Approximately one hour after arriving at school, Yusuf walked to a mosque near his school. Yusuf left the mosque and was driven to a light rail station from which Yusuf departed for the airport. At the airport, Yusuf was advised by agents from the Federal Bureau of Investigation (FBI) that he would not be permitted to travel to Turkey as he had planned.
According to the criminal complaint and documents filed in court, Abdi Nur departed from the Minneapolis/Saint Paul airport for Istanbul, Turkey on May 29, 2014. Prior to his departure, on April 24, 2014, Nur obtained an expedited U.S. passport. On May 24, 2014, Nur made an ATM deposit of $1,540 in cash to his checking account. On May 27, 2014, Nur purchased an airline ticket for $1,619.30, using a debit card associated with the same checking account. Like Yusuf, Nur was unemployed when he purchased his airline ticket. Nur successfully boarded a flight for Turkey on May 29, 2014. He was scheduled to return to the United States on June 16, 2014, but did not.
According to the criminal complaint and documents filed in court, Nur had become “much more religious,” in the two months preceding his departure, including talking about how his family needed to pray more and wear more traditional clothing. Nur began to talk about jihad during this time period.
According to the criminal complaint and documents filed in court, Nur has communicated via Facebook with an individual in the United States after his departure for Turkey. During those communications, Nur stated that he has gone “to the brothers,” and that we “will see each other in the afterlife inshallah,” and “im not coming back” (sic). Nur has also communicated with a separately charged defendant, Mohamed Abdullahi Hassan, aka “Miski.”
According to the criminal complaint and documents filed in court, after asking Nur if he knew “Duale” (a U.S. citizen known to have traveled to Syria), Miski advised Nur “…Being connected in Jihad make you stronger and you can all help each other by fulfilling the duties that Allah swt (sic) put over you…Like us in Somalia the brothers from mpls are well connected so try to do the same….It is something we have learned after 6 years in Jihad.”
This case is the result of an investigation conducted by the FBI. The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Tuesday, November 25, 2014
Two Minnesotans Charged with Conspiracy to Provide Material Support to the Islamic State of Iraq and the Levant
18-year-old Somali American Stopped at Minneapolis/Saint Paul Airport before Boarding Flight to Turkey
Assistant Attorney General for National Security John P. Carlin and United States Attorney for the District of Minnesota Andrew M. Luger today announced a criminal complaint charging Abdi Nur, 20, and Abdullah Yusuf, 18, with conspiracy to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL). Nur is additionally charged with providing material support to a foreign terrorist organization. Yusuf is expected to make an initial appearance at 2:00 p.m. today before Magistrate Judge Janie S. Mayeron in United States District Court in Minneapolis, Minnesota.
“More than 16,000 recruits from over 90 countries traveled to Syria to become foreign terrorist fighters with alarming consequences,” said Assistant Attorney General Carlin. “This is a global crisis and we will continue our efforts to prevent Americans from joining the fight and to hold accountable those who provide material support to foreign terrorist organizations. With these two defendants, we have now charged more than 15 individuals with offenses related to the foreign fighter threat in Syria.”
“As charged, these two young men conspired to join ISIL and travel from Minnesota to the Middle East to engage in a campaign of terror in support of a violent ideology,” said U.S. Attorney Luger. “Since al-Shabaab began recruiting young adults from the Twin Cities in 2007, our region has lost dozens of disaffected young people to terrorist organizations that would sooner see Somali Minnesotans die on foreign battlefields than prosper in peace and security in the United States. The law-abiding members of Minnesota’s Somali community are great partners in our fight against terror, and I am proud to work closely with community and religious leaders to lift up those Somali youth who remain vulnerable to terrorist recruiters. Unfortunately, Yusuf and Nur were not the first – and may not be the last – to conspire in support of ISIS. As we work with our many partners to improve the lives of Somali Minnesotans, we will continue to investigate and prosecute aggressively criminals who provide support for terror.”
“The FBI remains committed to both its community partners and to its law enforcement mandate concerning the detection and disruption of terrorist activity,” said FBI Special Agent in Charge Richard T. Thornton for the Minneapolis Division. “This complaint epitomizes the FBI's commitment to upholding the laws of the United States as they apply to those who would support terrorism.”
According to the criminal complaint and documents filed in court, on April 28, 2014, Abdullahi Yusuf applied for an expedited passport at the Minneapolis Passport Office. He told the passport specialist that he intended to travel to Turkey, but when asked, Yusuf could not specify his travel itinerary, travel companions, hotel location or the name or address of a friend in Turkey who he claimed to have met recently via Facebook. The passport specialist also asked Yusuf about the cost of his trip, which Yusuf reported as, “about $1,500.” However, Yusuf had no known source of income. Yusuf obtained his passport on May 5, 2014, and used it to open a checking account on the same day.
According to the criminal complaint and documents filed in court, on May 23, 2014, Yusuf deposited $1,500 in cash into his Wells Fargo checking account in four separate ATM deposits spread throughout the day. On May 24, 2014, Yusuf used a debit card associated with the same account to purchase a $1,417.05 airline ticket from Minneapolis/Saint Paul to Istanbul, Turkey. The ticket was for a flight scheduled to depart Minneapolis/Saint Paul on May 28, 2014. His parents did not know that Yusuf had obtained a passport and planned to travel to Turkey, nor did they know that he had acquired $1,500 and purchased an airline ticket.
Yusuf is associated with H.M., a former Minnesota resident now believed to be fighting in Syria, and who traveled from Minnesota to Turkey on March 9, 2014. The same debit card was used to purchase H.M.’s airline ticket as was used to purchase an airline ticket for a third man from Minnesota who later traveled to Syria to fight with ISIL. Yusuf exchanged several telephone calls and text messages with H.M. in the days before YUSUF attempted to depart for Turkey.
On the morning of May 28, 2014, Yusuf’s father drove him to school. Approximately one hour after arriving at school, Yusuf walked to a mosque near his school. Yusuf left the mosque and was driven to a light rail station from which Yusuf departed for the airport. At the airport, Yusuf was advised by agents from the Federal Bureau of Investigation (FBI) that he would not be permitted to travel to Turkey as he had planned.
According to the criminal complaint and documents filed in court, Abdi Nur departed from the Minneapolis/Saint Paul airport for Istanbul, Turkey on May 29, 2014. Prior to his departure, on April 24, 2014, Nur obtained an expedited U.S. passport. On May 24, 2014, Nur made an ATM deposit of $1,540 in cash to his checking account. On May 27, 2014, Nur purchased an airline ticket for $1,619.30, using a debit card associated with the same checking account. Like Yusuf, Nur was unemployed when he purchased his airline ticket. Nur successfully boarded a flight for Turkey on May 29, 2014. He was scheduled to return to the United States on June 16, 2014, but did not.
According to the criminal complaint and documents filed in court, Nur had become “much more religious,” in the two months preceding his departure, including talking about how his family needed to pray more and wear more traditional clothing. Nur began to talk about jihad during this time period.
According to the criminal complaint and documents filed in court, Nur has communicated via Facebook with an individual in the United States after his departure for Turkey. During those communications, Nur stated that he has gone “to the brothers,” and that we “will see each other in the afterlife inshallah,” and “im not coming back” (sic). Nur has also communicated with a separately charged defendant, Mohamed Abdullahi Hassan, aka “Miski.”
According to the criminal complaint and documents filed in court, after asking Nur if he knew “Duale” (a U.S. citizen known to have traveled to Syria), Miski advised Nur “…Being connected in Jihad make you stronger and you can all help each other by fulfilling the duties that Allah swt (sic) put over you…Like us in Somalia the brothers from mpls are well connected so try to do the same….It is something we have learned after 6 years in Jihad.”
This case is the result of an investigation conducted by the FBI. The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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