READOUT: 5 LEADER TELECONFERENCE ON UKRAINE, GAZA AND LIBYA

FROM:  THE WHITE HOUSE

Readout of the President’s Video Teleconference with Prime Minister Cameron of the United Kingdom, President Hollande of France, Chancellor Merkel of Germany, and Prime Minister Renzi of Italy

President Obama spoke today with Prime Minister Cameron of the United Kingdom, President Hollande of France, Chancellor Merkel of Germany, and Prime Minister Renzi of Italy.  The five leaders discussed next steps concerning the crisis in Ukraine, efforts to achieve a ceasefire in Gaza, and also the situations in Iraq and Libya.  On Ukraine, the leaders stressed the continued need for unrestricted access to the shoot-down site of Malaysia Airlines Flight 17 to allow for recovery of victims’ remains and for international investigators to proceed with their efforts.  They agreed on the importance of coordinated sanctions measures on Russia for its continued transfer of arms, equipment, and fighters into eastern Ukraine, including since the crash, and to press Russia to end its efforts to destabilize the country and instead choose a diplomatic path for resolving the crisis.  Concerning the situation in Gaza, the President noted that Israel has the right to take action to defend itself.  The leaders agreed on the need for an immediate, unconditional humanitarian ceasefire, noting shared concern about the risk of further escalation and the loss of more innocent life.  On Iraq, they discussed the security challenges, welcomed developments in the political process, and urged the swift completion of the formation of an inclusive government.  With respect to Libya, they agreed on the need for an immediate ceasefire among militias in Tripoli, called for the seating of the newly elected Council of Representatives, and underscored support for the UN in seeking a resolution to this conflict.  They condemned any use of violence to attack civilians, intimidate officials, or disrupt the political process. 

U.S. DEFENSE DEPARTMENT CONTRACTS FOR JULY 18, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

ARMY

Exelis Systems Corp., Colorado Springs, Colorado, was awarded a $445,107,802 modification (P00083) to contract W52P1J-10-C-0062 for base operations at Camp Arifjan, Camp Buehring, Udairi Range and Camp Patriot in Kuwait and the aerial port of debarkation, and sea port of debarkation in Kuwait. Fiscal 2014 other funds in the amount of $445,107,802 were obligated at the time of the award. Estimated completion date is Sept. 28, 2015. Work will be performed in Kuwait. Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity.

SAIC, McLean, Virginia, was awarded an $89,526,485 cost-plus-incentive fee, incrementally- funded contract with options, for management and technical support for high performance computing services, capabilities, infrastructure, and technologies. Work will be performed at Wright-Patterson Air Force Base, Ohio; Aberdeen Proving Ground, Maryland; Stennis Space Center, Mississippi; Vicksburg, Mississippi; Kihei, Hawaii; Lorton, Virginia; and McLean, Virginia, with an estimated completion date of July 28, 2019. Bids were solicited via the Internet with four received. Research, development, testing and evaluation fiscal 2013 ($18,230,430) and fiscal 2014 ($5,770,000) funds are being obligated at the time of the award. U.S. Army Corps of Engineers, Huntsville, Alabama, is the contracting activity (W912DY-14-F-0103).

Jacobs Technology Inc., Tullahoma, Tennessee, was awarded a $63,375,000 time and materials contract with options for support services to the Aberdeen Test Center, Aberdeen Proving Ground, Maryland. Funding and work location will be determined with each order with an estimated completion date of July 31, 2015. One bid was solicited with one received. Army Contracting Command, Aberdeen Proving Ground, Maryland, is the contracting activity (W91CRB-14-D-0017).

Northrop Grumman, Herndon, Virginia, was awarded an $11,410,533 modification (P00022) to contract W91WAW-12-C-0047 for the oversight of all information technology requirements for developing, administering, maintaining, and enhancing automated data and information systems. Fiscal 2014 operations and maintenance (Army) funds in the amount of $11,410,328 were obligated at the time of the award. Estimated completion date is July 28, 2015. Work will be performed in Washington, District of Columbia. Army Contracting Command, Aberdeen, Maryland, is the contracting activity.

Accenture Federal Services, Reston, Virginia, was awarded an $11,112,066 modification (D00353) to contract N00104-04-A-ZF12 for general fund enterprise business systems onsite support and change requests. Fiscal 2014 other procurement (Army) funds in the amount of $1,200,000 were obligated at the time of the award. Estimated completion date is June 26, 2015. Work will be performed in Alexandria, Virginia. Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity.

FLIR Systems, Inc., Wilsonville, Oregon, was awarded a $7,171,955 firm-fixed-price, foreign military sales (Austria) contract for seven Star Safire 380-High Definition Thermal Imaging Systems, with accessories, training and extended warranty. Work will be performed in Wilsonville, Oregon, with an estimated completion date of Aug. 1, 2016. One bid was solicited with one received. Fiscal 2014 other procurement funds in the amount of $7,151,174 are being obligated at the time of the award. Army Contracting Command, Aberdeen Proving Ground, Maryland, is the contracting activity (W15P7T-14-C-D058).

AIR FORCE

Herman Construction Group, Inc., San Diego, California (FA4887-14-D-0002); Rore, Inc., San Diego, California (FA4887-14-D-0003); M & M, Tempe, Arizona (FA4887-14-D-0004); and Premier Civil Construction, Chandler, Arizona (FA4887-14-D-0005), have been awarded a ceiling $95,000,000 multiple-award, firm-fixed-price, indefinite-delivery/indefinite-quantity contract with a minimum guarantee of $2,000. This contracting vehicle will be used to award multi-discipline construction requirements (i.e. civil, mechanical, electrical, demolition, etc.), with additional capability to perform large scale design build projects necessary to support larger requirements at Luke Air Force Base, Arizona. Contractors shall furnish all plant, labor, material, equipment, transportation, and supervision necessary to accomplish each task order in accordance with the contract, specifications, and additional terms and conditions. The location of performance is to be determined per each task order, but will be limited to Luke Air Force Base, Arizona; Fort Tuthill, Arizona; and Gila Bend Air Force Auxiliary Field, Arizona, and work is expected to be completed by July 31, 2015, for the base year, and a maximum time period to fulfill orders by July 31, 2019. These awards are the result of an 8(a) competitive acquisition and 25 offers were received. Fiscal 2014 operations and maintenance funds for task orders will be used during the base year. 56 Contracting Squadron/LGCB, Luke Air Force Base, Arizona, is the contracting activity.

Arcadis U.S., Inc., Highlands Ranch, Colorado, has been awarded a $27,055,427 firm-fixed-price contract for performance-based remediation (PBR). The work includes a full range of construction and engineering activities necessary for investigation, design, remedial action, remedial construction, and environmental remediation activities to achieve minimum performance objectives and stretch goals and support progress to site closeout at 107 Installation Restoration Program sites under this PBR effort. Work will be performed at Vandenberg Air Force Base, California, and is expected to be completed July 28, 2024. This award is a result of a competitive acquisition on FedBizOpps and three proposals were received. Fiscal 2014 Air Force defense environmental restoration account funds in the amount of $27,055,427 are being obligated at time of award. 772d Enterprise Sourcing Squadron/PKB, Joint Base San Antonio, Lackland, San Antonio, Texas, is the contracting activity (FA8903-14-C-0010).

Edaptive Computing Inc.,* Dayton, Ohio, has been awarded a ceiling $20,000,000, indefinite-delivery/indefinite-quantity contract for the Large Aircraft Infrared Countermeasures (LAIRCM) Program Office in evaluating and analyzing its acquisition, logistics, and sustainment operations to optimize their performance. The effort will encompass traditional study and analysis techniques as well as quantitative and model-based techniques for improving analysis and decision support. Work will be performed at Dayton, Ohio, and is expected to be completed by July 2019. This award is the result of a successful, competitive technology advancement effort; it is the third phase of a Small Business Innovative Research (SBIR) effort. Fiscal 2014 research and development funds in the amount of $496,000 will be obligated at time of award and $2,600,000 will be obligated incrementally during performance of delivery order 0001. Air Force Life Cycle Management Center, Aircraft Survivability Division, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8625-14-D-6456).

NAVY

EJB Facilities Services, Arlington, Virginia, is being awarded a $12,122,891 modification under a previously awarded firm-fixed-price, indefinite-delivery indefinite-quantity contract (N44255-05-D-5103) to exercise option 8c for base operations support at various installations in the Naval Facilities Engineering Command (NAVFAC) Northwest area of responsibility (AOR). The work to be performed provides for, but is not limited to, all management and administration, visual services, security, housing, facilities support (excluding grounds and janitorial services), pavement clearance, utilities, base support vehicles and equipment, and environmental services to provide base operations support services. The total contract amount after exercise of this modification will be $583,089,713. Work will be performed at various installations in the NAVFAC Northwest AOR including but not limited to: Washington (95 percent); Alaska (1 percent); Idaho (1 percent); Montana (1 percent); Oregon (1 percent); and Wyoming (1 percent). Work for this option period is expected to be completed September 2014. Fiscal 2014 operation and maintenance (Navy); fiscal 2014 Navy working capital funds; fiscal 2014 defense health program funds; and fiscal 2014 non-appropriated funds in the amount of $7,645,688 are obligated on this award and will not expire at the end of the current fiscal year. The Naval Facilities Engineering Command, Northwest, Silverdale, Washington, is the contracting activity.

Science Applications International Corp., McLean, Virginia, is being awarded a $10,437,025 modification under a previously awarded indefinite-delivery/indefinite-quantity contract (N00033-10-D-6506) with firm-fixed-price and/or firm, fixed-price, level-of-effort task orders for information technology ashore operations support services in support of Military Sealift Command’s Command, Control, Communications and Computer Systems directorate. Work will be performed in Washington, District of Columbia (74.7 percent); Norfolk, Virginia (16.9 percent); San Diego, California (5.9 percent); Pensacola, Florida (2.4 percent); Scott Air Force Base, Illinois (less than 1 percent); Yokohama, Japan (less than 1 percent); and Naples, Italy (less than 1 percent), and is expected to be completed by July 2015. Fiscal 2015 working capital funds in the amount of $10,437,025 will be obligated on individual task orders subject to the availability of fiscal 2015 funds, and will not expire at the end of that fiscal year. The U.S. Navy’s Military Sealift Command, Washington, District of Columbia, is the contracting activity (N00033-10-D-6506).

DEFENSE LOGISTICS AGENCY

The Boeing Company, St. Louis, Missouri, has been awarded a maximum $6,969,157 firm-fixed-price contract for Radome (structural, weatherproof enclosures for radar antenna protection). This contract was a sole-source acquisition. This is a three-year base contract with no option periods. Location of performance is Missouri with an Aug. 28, 2017, performance completion date. Using military service is Navy. Type of appropriation is fiscal 2014 through fiscal 2017 Navy working capital funds. The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania (SPE4A1-14-G-0007-THBJ).

Golden State Medical Supply,* Camarillo, California, has been awarded a maximum $6,590,033 firm-fixed-price contract for medical supplies. This contract was a competitive acquisition with three offers received. This is a four-year base contract with four one-year option periods. Locations of performance are California and West Virginia, with a July 27, 2015, performance completion date. Using services are eligible military and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE2D2-14-D-0005).

*Small business

PERU'S INDEPENDENCE DAY

FROM:  U.S. STATE DEPARTMENT 

Peru's Independence Day

Press Statement

John Kerry

Secretary of State

Washington, DC

July 28, 2014

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On behalf of President Obama and the people of the United States, I send best wishes to the people of Peru as you celebrate your independence July 28.

The United States has called Peru a friend since soon after José de San Martín crossed the Andes and swept into Lima to proclaim freedom and independence for all Peruvians.
Today, our two countries are working to address the challenges and opportunities of the 21^st century. Our joint efforts promote economic prosperity, education, science and technology, environmental protection, social inclusion, and citizen security.

We celebrate the 5th anniversary of the U.S.-Peru Trade Promotion Agreement this year as well. It has been an unqualified success that has bolstered the economic prosperity of both our nations.

Peru and the United States share a long tradition of academic and cultural exchange and partnership. Nearly 1,000 Peruvians have pursued degrees in the United States through funding from the William J. Fulbright Fellowship program.

Our cooperation on environmental protection helps to preserve Peru’s incredible biodiversity and fight climate change across the globe. We look forward to working with Peru as it prepares to host the December 2014 “20th Conference of Parties” meeting (COP-20) under the United Nations Framework Convention on Climate Change.

On this day of celebration, the United States looks forward to continued friendship and successful collaboration with Peru in the years to come.

NASA VIDEO: APOLLO 11 CELEBRATION, NEXT GIANT LEAP

ADM. GEENERT SAYS CHINA RAPIDLY MODERNIZING NAVY

FROM:  U.S. DEFENSE DEPARTMENT 

Greenert: China Moving Quickly to Modernize Navy

By Claudette Roulo

DoD News, Defense Media Activity

ASPEN, Colo., July 26, 2014 – China’s naval modernization program is moving at a rapid pace, the chief of U.S. naval operations said here yesterday.
Navy Adm. Jonathan W. Greenert spoke at the Aspen Security Forum on his way home from meetings with his Chinese counterpart, Adm. Wu Shengli.

China is participating in this year’s Rim of the Pacific Exercises. “They're doing about average compared to all the other fleets, which is interesting,” Greenert said. “… Average is good -- it's good enough; it's not what they thought. It's a little difficult, multinational exercises.”

China expressed interest in continuing to develop the military-to-military relationship through exercises and personnel exchanges, he said.

The two leaders discussed the need for developing maritime protocols for their navies and civilian mariners, the admiral said.

“It was a good visit, it was frank, it was respectful,” he said.

Greenert said he was the first U.S. service member to be allowed aboard China’s first aircraft carrier, the Liaoning, something he wasn’t sure would happen on this trip. He also met with some of the carrier’s crew.

The Liaoning is a refitted Russian aircraft carrier.

“We went, not stem-to-stern, but throughout a lot of it,” Greenert said. “Then we went to a submarine. Then we went to a destroyer -- about a 2,000-ton ... almost the length of a football field -- and then on one of their patrol craft.”
The Chinese aircraft carrier is “very Russian,” Greenert said.

“That means it's big, it's heavy and it's onerous,” he explained.

But, the admiral said, the Chinese have completely upgraded their carrier. They stripped out all the old Russian-style equipment “and everything they put in is very modern and Chinese.”

The carrier is still being worked on at a shipyard in Dalian, in northeast China, he said.

China will build another carrier like the Liaoning relatively soon, Greenert said.
“It'll look just like this one, they said -- ski ramp, about the same tonnage, 65,000-70,000 tons. … They're moving on a pace that is extraordinary,” the admiral said.
Greenert said Wu told him the ship is the basis for research and development of what will be a blue-water, aircraft-carrier-focused navy.

"I think that he may be wanting to do this on his watch,” he said. “He's got about four-and-a-half more years to ... have this carrier out to sea like we do, with a series of destroyers around it and the ability to launch and recover aircraft in the tens and maybe twenties. But I'm not overly concerned right now, they have a lot of work to do."

FORMER U.S. HOUSE OFFICE MANAGER PLEADS GUILTY FOR PADDING OWN SALARY, TRAVEL EXPENSES

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, July 25, 2014

Former U.S. House of Representatives Employee Pleads Guilty to Theft of Government Property

Brian Prokes, 28, a former office manager in the U.S. House of Representatives, pleaded guilty today for causing the House of Representatives to pay more than $19,000 in excess salary and unauthorized travel expenses, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

According to court documents, Prokes worked as the office manager for a U.S. Congressman.   Prokes’s responsibilities included transmitting salary and bonus information to the House of Representatives’ Office of Payroll and Benefits in order to adjust the pay of employees in the Congressman’s office.   Prokes admitted that, between April 2012 and March 2013, he submitted unauthorized paperwork to the Office of Payroll and Benefits to pay himself larger salary and bonus than he had been approved to receive.

In addition, Prokes admitted that, between February 2012 and December 2012, he charged unauthorized, personal travel expenses for himself and an acquaintance to a government credit card used by the Congressman’s office.   The excess salary payments and unauthorized travel expenses amounted to more than $19,000.

Prokes, of Atlanta, Georgia, is scheduled to be sentenced on Oct. 14, 2014, before U.S. District Judge Rudolph Contreras in the District of Columbia.

This case was investigated by the FBI.   This case is being prosecuted by Trial Attorneys Kevin O. Driscoll and Sean F. Mulryne of the Criminal Division’s Public Integrity Section.

BNP PARIBAS TO PAY $80 MILLION JUDGEMENT FOR FALSE CLAIMS TO USDA

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, July 24, 2014

$80 Million Judgment Entered Against BNP Paribas for False Claims to the U.S. Department of Agriculture

The Department of Justice announced today that an $80 million False Claims Act judgment was entered against BNP Paribas for submitting false claims for payment guarantees issued by the U.S. Department of Agriculture (USDA).  BNP Paribas is a global financial institution headquartered in Paris.    

 “We will not tolerate the misuse of taxpayer funded programs designed to help American businesses,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Companies that abuse these programs will be held accountable.”

The United States filed a lawsuit against BNP Paribas in connection with its receipt of payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program.  The program provided payment guarantees to U.S.-based exporters for their sales of grain and other agricultural commodities to importers in foreign countries.  The program encouraged American exporters to sell American agricultural commodities to foreign importers and covered part of the losses if the foreign importers failed to pay.  The SCG Program regulations provided that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control.
         
The judgment entered by the court resolves the government’s allegations that, from 1998 to 2005, BNP Paribas participated in a sustained scheme to defraud the SCG Program.  In furtherance of the scheme, American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the affiliated exporters and importers.  In some cases, the underlying transactions were shams and did not involve any real shipment of grain.  BNP Paribas accepted assignment of the credit guarantees from the American exporters, even though it knew that the affiliated exporters and importers were ineligible for SCG Program financing, and a BNP Paribas vice-president, Jerry Cruz, received bribes from the exporters.  Beginning in April 2005, when the Mexican importers began defaulting on their payment obligations, BNP Paribas submitted claims to the USDA for the resulting losses.

On Jan. 20, 2012, Cruz pleaded guilty to conspiracy to commit bank fraud, mail fraud and wire fraud, and conspiracy to commit money laundering.  

“I would like to thank the Department of Justice and the USDA General Counsel’s office for their collaboration in recovering $80 million under this judgment,” said Administrator of USDA’s Foreign Agricultural Service Phil Karsting.  “This illustrates the importance USDA and this administration places on protecting the integrity of our programs.”

The resolution of this matter was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the USDA, the USDA Office of Inspector General, the U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigation.

WHITE HOUSE VIDEO: WEST WING WEEK 07/25/14

THE F-35 LIGHTNING II: U.S. DEFENSE DEPARTMENTS NEWEST FIGHTER PROGRAM

FROM:  U.S. DEFENSE DEPARTMENT 

Right:  Defense Secretary Chuck Hagel speaks with reporters after touring the 33rd Fighter Wing and the F-35 Lightning II integrated training center at Eglin Air Force Base, Fla., July 10, 2014. During his visit, Hagel met with Eglin service members for 45 minutes to praise their work in the Defense Department’s newest fighter program. U.S. Air Force photo by Samuel King Jr.  

Kendall: F-35 Rollout Marks U.S.-Australia Partnership Milestone
By Cheryl Pellerin
DoD News, Defense Media Activity

WASHINGTON, July 25, 2014 – The official rollout of the first two F-35 Lightning II joint strike fighter aircraft for the Royal Australian Air Force is a milestone in the U.S.-Australia partnership, the undersecretary of defense for acquisition, technology and logistics said yesterday.

Frank Kendall spoke during a ceremony held on the flightline at the Lockheed Martin aviation facility in Fort Worth, Texas.

"We join Australia, as one of our original partners, to celebrate this delivery and the numerous Australian contributions to the joint strike fighter program," Kendall said.

"For both our nations," he added, "this program represents an exponential leap in capability on the cutting edge of technology, and an integral component of our ongoing joint commitment to stability and peace in the Asia-Pacific."
The two F-35A aircraft, known as AU-1 and AU-2, are scheduled for delivery to the Australian air force later this year. They will be based at Luke Air Force Base in Arizona and used for Australian and partner-country pilot training beginning next year. The first F-35s to operate in Australia are expected by 2017.
The F-35 Lightning II program consists of a series of single-seat, single-engine, multirole fighters designed with stealth capability to perform ground attack, reconnaissance and air defense missions. The three variants of the F-35 include the F-35A, a conventional takeoff and landing variant; the F-35B, a short take-off and vertical-landing variant; and the F-35C, a carrier-based variant.
Joining Kendall as members of the official party were Australian Finance Minister and Senator Matthias Cormann, Air Marshal Geoff Brown, chief of the Royal Australian Air Force, and Lockheed Martin CEO Marillyn Hewson.
Kendall told an audience of about 300 that it takes a community to accomplish something as significant as the F-35.

"In this case it takes a community of nations, it takes a community of companies, it takes a community of militaries and departments within the U.S. and around the world, and all of our partners. It takes a community of industry to come together," the undersecretary added. "This aircraft is a testimony to our ability to do that."
Kendall described a time two decades ago when he served at the Pentagon as director of tactical warfare programs under then-Deputy Defense Secretary John M. Deutch.

"John got a number of us together one day,” he recalled, “and said that he'd decided [to] start a new technology program called the joint strike technology program that would lead to a common set of aircraft, of which there would be three variants: one for the Marine Corps, one for the Air Force and one for the Navy."
Kendall said he didn't think it would work, because the communities would never agree on what to do, or stay together on the agreement long enough to develop three such aircraft.
"Now if John had said, 'Also, we're going to make it a little more interesting by bringing on eight international partners at the same time,' I would have just thrown my hands up in the air and said, 'Forget about it.'" he added.

Admitting he was wrong, Kendall said the “fundamental reason [for the program’s success] is the capability that we've been able to develop and the cutting-edge capability we're offering to all the partners, all the services, all the nations involved in the F-35."

The program's eight partner nations and two Foreign Military Sales countries already have announced plans to procure nearly 700 F-35s. The program of record outlines the acquisition of more than 3,000 aircraft, defense officials say.
Many partners have ordered their first aircraft, and pilots and maintainers from the United Kingdom and the Netherlands have taken delivery of their first F-35 aircraft at Eglin Air Force Base in Florida, where they're training with U.S. counterparts.

The communities supporting the F-35 have stayed together because of common values and shared interests, Kendall said, and because they are committed to having next-generation capability and a multirole fighter that all partners need and will be able to depend on for decades.

In his remarks, Kendall explored the nature of the F-35, which has overcome many issues since its first flight in 2006, by discussing the 1981 nonfiction book he's reading, author

Tracy Kidder's “The Soul of a New Machine.”

The Pulitzer Prize- and American Book Award-winning story is an account of the efforts of a team of researchers at now-defunct Data General, one of the first late-1960s microcomputer firms, to create a new 32-bit superminicomputer.
"At the time, Data General was in trouble,” Kendall said. “A company called Digital Equipment Corp. had introduced something called the VAX. They were cutting-edge in their day, and Data General had to respond to this threat, so they launched a crash program to develop a new design."
Telling the story, Kendall explained the point in the book he considers relevant today.

"The program manager, the chief designer for Data General, realized the computer he was building was too complex to be understood by a single individual," the undersecretary said. But the designer realized that no single person could possibly grasp all the complexity involved in the design they were creating, he added, and the designer had to trust many others to design their parts successfully and bring the machine together.

"It's that complexity that led to a very successful product, and they were successful at the time," Kendall said. "It's that complexity that characterizes the product behind me," referring to a gleaming new F-35.

During one of Kendall's first office calls several years ago with then-Defense Secretary Leon E. Panetta, the undersecretary recalled, "[Panetta] said, 'Frank, why can't we make more things like the [mine resistant, ambush-protected vehicle]? Why is the F-35 taking so long and costing so much?'

"My answer was one word," Kendall said. "Complexity."

The undersecretary listed several of the factors that make the F-35 so complex: "Millions of lines of code, an incredibly integrated design that brings together stealth, a number of characteristics, very advanced sensors, advanced radars, advanced [infrared] sensors, incredibly capable electronic warfare capability, integration of weapons and integration across the force of multiple aircraft and multiple sensors to work together as a team."

All of that integrated technology is unprecedented, he said. "You're talking about something that no one has ever done before, which will put us all a decade or more ahead of anybody else out there. And [it will] keep us ahead for some time to come as we continue to upgrade the F-35," he added.

Such complexity has led to the cost and the time it has taken to design and build the F-35, Kendall said, but also to the capability it represents. “That's why we're all still together,” he added. “That's why all the communities I talked about have stayed with this aircraft."

As he ended his remarks, Kendall asked for a round of applause for the engineers and production workers who made the F-35 possible.

REMARKS BY SECRETARY, TURKISH FOREIGN MINISTER DAVUTOGLU AND QATARI FOREIGN MINISTER AL-ATTIYAH

FROM:  THE STATE DEPARTMENT 

Remarks With Turkish Foreign Minister Ahmet Davutoglu and Qatari Foreign Minister Khalid al-Attiyah After Their Meeting

Remarks

John Kerry

Secretary of State

U.S. Ambassador's Residence

Paris, France

July 26, 2014

---

SECRETARY KERRY: I’m delighted to have a chance to be able to welcome my colleagues, the Foreign Minister of Turkey Ahmet Davutoglu and Foreign Minister of Qatar Khalid Attiyah, here to the American Embassy in Paris. And I’m going to say a couple of words about what we’ve been working on with respect to the situation in Gaza in a moment.

But first, I want to try to clarify something and announce, to some degree, for people who haven’t heard, news regarding our situation in Libya. The United States, together with other countries – one of them Turkey – have decided that because of the free-wheeling militia violence that is taking place in Tripoli, and particularly in our case around – a lot of the violence is around our embassy but not on the embassy. But nevertheless is presents a very real risk to our personnel. So we are suspending our current diplomatic activities at the embassy – not closing the embassy, but suspending the activities. And we have moved people on ground to Tunisia where they will then disperse to other places where we will continue our diplomatic activities in Libya.

We are deeply committed and remain committed to the diplomatic process in Libya. Our envoy will continue to be engaged with the British envoy and other envoys. And we will continue to try to build out of the election the legitimacy of the government formation and the efforts to end the violence. We call on all Libyans to engage in the political process and to come together in order to avoid the violence.

So many people died and gave so much effort to the birth of the new Libya, and we’re very, very hopeful that together all those people will recognize that the current course of violence will only bring chaos and possibly longer term difficulties. We will return the moment the security situation permits us to do so, but given the situation, as with Turkey – I think they moved some 700 people or so out – we want to take every precaution to protect our folks.

Now I want to express my appreciation for the enormous amount of work that both Foreign Minister Attiyah, Foreign Minister Davutolgu engaged in the last days to help bring about the short-term cease-fire that we all hope is going to be extended into a longer term cease-fire where people can get together and work on the way forward for a sustainable cease-fire, a longer-term effort to work out the difficult issues between the state of Israel and the Palestinian factions.

We’re very hopeful that that can happen, but I will tell you the progress that we’ve made was significantly contributed to by many people, and we’re grateful obviously for the Egyptian initiative, for the Israeli efforts initially, but also this particular effort now has been significantly assisted by the input of Qatar, the input of Turkey, and the willingness of these foreign ministers to work hard even though they were at a distance, and to engage directly with some of the Palestinian factions in order to try to help get us where we are today. They’re both committed to trying to work to continue further, and we very much appreciate that.

If you want to say something, Ahmet.

FOREIGN MINISTER DAVUTOGLU: Thank you, John. It’s a great pleasure to meet again, but this time we are meeting for a very tragic development in Gaza. The humanitarian situation in Gaza is terrible. I want to extend condolences to all those who lost their lives in this crisis and especially in these holidays approaching – Ramadan, Eid. We intensified our efforts to agree on a cease-fire; in less than 10 days all of our teams have working last two – three days. We worked in close contact with the – with Secretary Kerry and my dear colleague, Minister Attiyah. As a team, we worked together. Yesterday we had several telephone conversations, consultations, and today we are continuing here.

We wish to have a sustainable cease-fire, which we approached very closely until last month. Unfortunately, it was rejected by Israeli side – but still we are working very hard to reach the (inaudible), hopefully with the great effort – we all appreciate Secretary Kerry’s effort.
Now we have a short-term cease-fire, which is really a success of his effort, and supported by all of us. And I want to assure all the parties and, of course, both of our colleagues, allies, that Turkey will be working very hard to stop this bloodshed on the ground, to reach a sustainable cease-fire, and at the end of these efforts, to have two-state solution, which is the real solution for all these disasters and bloodshed.

Again, I want to express my thanks to my dear colleagues, Secretary Kerry and Minister Attiyah, for this joint cooperation and all those who contributed to this process, to this short-term cease-fire. And as a team, we will continue to work – Egyptian – Egypt, Turkey, Qatar, United States, and Israel and Palestinian groups – (inaudible) and Hamas, all of us split – Palestinian Administration – at the end of the day, our goal is to achieve sustainable cease-fire as early as possible.

Thank you. Thank you.

SECRETARY KERRY: Thank you. You have any --

FOREIGN MINISTER AL-ATTIYAH: Yes.

SECRETARY KERRY: Okay.

FOREIGN MINISTER AL-ATTIYAH: And I’d like again also to thank John and Dr. Ahmet for the effort of the past days to come to such agreement on humanitarian cease-fire. As from now, I won’t add more of what John and Dr. Ahmet says. For now, we will be working hardly to come to a point where we have cease-fire and the lift of blockade. The tragic situation of – was I think deserve now to have a free movement of goods, a free movement of trade, that they deserve now to have their own port – their sea port, so they can trade in and out, even though if it’s under the international supervision. But I think the time now comes that we have to have long-term solution for the people of Gaza. They’ve been suffering for a long time, and with the help of Secretary Kerry and Brother Ahmet and all the other international player who their input will be positive on this. I’m sure you will come to a stage where we can get a cease-fire and a lift of blockade in Gaza. Thank you.

SECRETARY KERRY: So before we end, I want to just pick up on a couple of themes expressed by both the foreign ministers and on what I said last night. And I want anybody who cares about the Palestinian side of these issues to listen, and I want everybody in Israel to understand: we clearly understand – I understand that Palestinians need to live with dignity, with some – freedom, with goods that can come in and out, and they need a life that is free from the current restraints that they feel on a daily basis, and obviously free from violence. But at the same time, Israelis need to live free from rockets and from tunnels that threaten them, and every conversation we’ve had embraces a discussion about these competing interests that are real for both. And so we need to have a solution that works at this.

I understand that Israel can’t have a cease-fire in which they are not able to – that somehow the tunnels are never going to be dealt with. The tunnels have to be dealt with. We understand that; we’re working at that. By the same token, the Palestinians can’t have a cease-fire in which they think the status quo is going to stay and they’re not going to have the ability to be able to begin to live and breathe more freely and move within the crossings and begin to have goods and services that come in from outside. These are important considerations. Each side has powerful feelings about the history and why they are where they are. And what we’re going to work at is how do we break through that so that the needs are met and we have an ability to provide security for Israel and a future – economic and social and otherwise development for the Palestinians. That’s what this is about.

Thank you all very much.

QUESTION: (Inaudible.) Secretary Kerry, are you going back to (inaudible)?

SECRETARY KERRY: No.

WHITE HOUSE VIDEO: 7/25/14: WHITE HOUSE PRESS BRIEFING

SEC WARNS INVESTORS ABOUT FRAUDSTERS USING SOCIAL MEDIA TO MANIPULATE STOCK PRICES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy (“OIEA”) is issuing this Investor Alert to warn investors about fraudsters who may attempt to manipulate share prices by using social media to spread false or misleading information about stocks.

Social media and the Internet in general have become important tools for investors. Investors may use social media to research particular stocks, look up background information on a broker-dealer or investment adviser, find guidance on investing strategies, receive up-to-date news, and discuss the markets with others.

While social media can provide many benefits for investors, it also presents opportunities for fraudsters. Through social media, fraudsters can spread false or misleading information about a stock to large numbers of people with minimum effort and at a relatively low cost. They can also conceal their true identities by acting anonymously or even impersonating credible sources of market information.

One way fraudsters may exploit social media is to engage in a market manipulation, such as spreading false and misleading information about a company to affect the stock’s share price. Wrongdoers may perpetuate stock rumors on social media, as well as on online bulletin boards and in Internet chat rooms.

The false or misleading rumors may be positive or negative. For example, in a “pump-and-dump” scheme, promoters “pump” up the stock price by spreading positive rumors that incite a buying frenzy and they quickly “dump” their own shares before the hype ends. Typically, after the promoters profit from their sales, the stock price drops and the remaining investors lose money. In other instances, fraudsters start negative rumors urging investors to sell their shares so that the stock price plummets and the fraudsters take advantage of buying shares at the artificially low price.

BEETLE INSPIRES NEW MATERIALS DEVELOPED TO TRAP AND CHANNEL SMALL AMOUNTS OF FLUIDS

FROM:  NATIONAL SCIENCE FOUNDATION 

Quenching the world's water and energy crises, one tiny droplet at a time

In pursuit of beetle biomimicry, NSF-funded engineers develop new, textured materials to trap and channel small amounts of liquid

In the Namib Desert of Africa, the fog-filled morning wind carries the drinking water for a beetle called the Stenocara.

Tiny droplets collect on the beetle's bumpy back. The areas between the bumps are covered in a waxy substance that makes them water-repellant, or hydrophobic (water-fearing). Water accumulates on the water-loving, or hydrophilic, bumps, forming droplets that eventually grow too big to stay put, then roll down the waxy surface.

The beetle slakes its thirst by tilting its back end up and sipping from the accumulated droplets that fall into its mouth. Incredibly, the beetle gathers enough water through this method to drink 12 percent of its body weight each day.

More than a decade ago, news of this creature's efficient water collection system inspired engineers to try and reproduce these surfaces in the lab.

Small-scale advances in fluid physics, materials engineering and nanoscience since that time have brought them close to succeeding.

These tiny developments, however, have the prospect to lead to macro-scale changes. Understanding how liquids interact with different materials can lead to more efficient, inexpensive processes and products, and might even lead to airplane wings impervious to ice and self-cleaning windows.

Beetle bumps in the lab

Using various methods to create intricately patterned surfaces, engineers can make materials that closely mimic the beetle's back.

"Ten years ago no one had the ability to pattern surfaces like this at the nanoscale," says Sumanta Acharya, a National Science Foundation (NSF) program director. "We observed naturally hydrophobic surfaces like the lotus leaf for decades. But even if we understood it, what could we do about it?"

What researchers have done is create surfaces that so excel at repelling or attracting water they've added a "super" at the front of their description: superhydrophobic or superhydrophilic.

Many superhydrophobic surfaces created by chemical coatings are already in the marketplace (water-repellant shoes! shirts! iPhones!).

However, many researchers focus on materials with physical elements that make them superhydrophobic.

These materials have micro or nano-sized pillars, poles or other structures that alter the angles at which water droplets contact their surface. These contact angles determine whether a water droplet beads up like a teeny crystal ball or relaxes a bit and rests on the surface like a spilled milkshake.

By varying the layout of these surfaces, researchers can now trap, direct and repulse small amounts of water for a variety of new purposes.

"We can now do things with fluids we only imagined before," says mechanical engineer Constantine Megaridis at the University of Illinois at Chicago. Megaridis and his team have two NSF grants from the Engineering Directorate's Division of Chemical, Bioengineering, Environmental and Transport Systems.

"The developments have enabled us to create devices -- devices with the potential to help humanity -- that do things much better than have ever been done before," he says.

Megaridis has used his beetle-inspired designs to put precise, textured patterns on inexpensive materials, making microfluidic circuits.

Plastic strips with superhydrophilic centers and superhydrophobic surroundings that combine or separate fluids have the potential to serve as platforms for diagnostic tests (watch "The ride of the water droplets").

"Imagine you want to bring drops of blood or water or any liquid to a certain location," Megaridis explains. "Just like a highway, the road is the strip for the liquid to travel down, and it ends up collecting in a fluid storage tank on the surface." The storage tank could hold a reactive agent. Medical personnel could use the disposable strips to field-test water samples for E. coli, for example.

Devices such as these -- created in engineering labs -- are now working their way to the marketplace.

Water, water in the air

NBD Nanotechnologies, a Boston-based company funded by NSF's Small Business Technology Transfer program, aims to scale up the durability and functionality of surface coatings for industrial use.

One of the most impactful applications for superhydrophobic or hydrophobic research is improved condensation efficiency. When water vapor condenses to a liquid, it typically forms a film. That film is a barrier between the vapor and the surface, making it more difficult for other droplets to form. If that film can be prevented by whisking away droplets immediately after they condense--say, with a superhydrophobic surface--the rate of condensation increases.

Condensers are everywhere. They're in your refrigerator, car and air conditioner. More efficient condensation would let all this equipment function with less energy. Better efficiency is especially important in places where large-scale cooling is paramount, such as power plants.

"NBD makes more durable coatings that span large surface areas," says NBD Nanotechnologies senior scientist Sara Beaini. "Durability is an important factor, because when you're working on the micro level you depend on having a pristine surface structure. Any mechanical or chemical abrasion that distorts the surface structures can significantly reduce or eliminate the advantageous surface properties quickly."

NBD, which you might have guessed stands for Namib Beetle Design, has partnered with Megaridis and others to improve durability, the main challenge in commercializing superhydrophobic research. Power plant condensers with durable hydrophobic or superhydrophobic coatings could be more efficient. And with water and energy shortages looming, partnerships such as theirs that help to transfer this breakthrough from the lab to the outside world are increasingly valuable.

Other groups have applied hydrophobic patterning methods in clever ways.

Kripa Varanasi, mechanical engineer at MIT and NSF CAREER awardee, has applied superhydrophobic coatings to metal, ceramics and glass, including the insides of ketchup bottles. Julie Crockett and Daniel Maynes at Brigham Young University developed extreme waterproofing by etching microscopic ridges or posts onto CD-sized wafers.

With all these cross-country efforts, many are optimistic for a future where people in dry areas can harvest fresh water from a morning wind, and lower their energy needs dramatically.

"If someone comes up with a really cheap solution, then applications are waiting," said Rajesh Mehta, NSF Small Business Innovation Research/Small Business Technology Transfer program director.
-- Sarah Bates
Investigators
Constantine Megaridis
Sara Beaini
Julie Crockett
Kripa Varanasi
Brent Webb
R Daniel Maynes
Related Institutions/Organizations
University of Illinois at Chicago
Iowa State University
Brigham Young University
NBD Nanotechnologies, Inc.
Massachusetts Institute of Technology

Closing Corporate Tax Loopholes

NASA VIDEO: SPACE TO GROUND: COMING AND GOING 7/25/14

SEC CHARGES CITIGROUP BUSINESS UNIT WITH FAILING TO PROTECT CONFIDENTIAL TRADING DATA

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission charged a Citigroup business unit operating an alternative trading system (ATS) with failing to protect the confidential trading data of its subscribers.

New York-based LavaFlow Inc. has agreed to pay $5 million to settle the SEC’s charges, including a $2.85 million penalty that is the agency’s largest to date against an ATS.

An ATS is a venue that executes stock trades on behalf of broker-dealers and other traders.  LavaFlow operates a type of ATS known as an electronic communications network (ECN), which unlike a dark pool displays some information about pending orders in its system, such as best bid or best offer.  Under federal rules, an ATS must have safeguards to protect the confidential trading information of its subscribers.

According to the SEC’s order instituting a settled administrative proceeding, LavaFlow allowed an affiliate operating a technology application known as a smart order router to access and use confidential information related to the non-displayed orders of LavaFlow’s ECN’s subscribers.  The order router was located outside of the ECN’s operations and LavaFlow did not have adequate safeguards and procedures to protect the confidential information that the order router accessed.  While LavaFlow only allowed the affiliate to use the confidential trading data for order router customers who also were ECN subscribers, the firm did not obtain consent from its subscribers to use their confidential information in this way, nor did LavaFlow disclose the use in its regulatory filings with the SEC.

According to the SEC’s order, LavaFlow eventually discontinued this practice, but not before the smart order router executed more than 400 million shares in a three-year period based in part on the subscriber information contained in the ECN’s unexecuted hidden orders.

“Operators of alternative trading systems must protect confidential subscriber data and take steps to ensure that affiliates do not improperly use order information,” said Andrew J. Ceresney, director of the SEC’s Enforcement Division. “We will continue to hold accountable firms that fail to follow the rules applicable to off-exchange venues.”

Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit, added, “LavaFlow’s subscribers trusted and expected that knowledge of their hidden orders would not escape the ATS.  Because much of today’s equity trading is automated, firms must protect sensitive information within computer networks just as aggressively as they police against the misuse of information by people.”

Alternative trading systems currently execute approximately 12 percent of the U.S. equity trading volume.  According to Financial Industry Regulatory Authority data, LavaFlow is estimated to be a top 10 ATS when measured by share or trade volume.  LavaFlow is owned by Citigroup Financial Products.

In addition to the Regulation ATS violations, the SEC’s order finds that LavaFlow aided and abetted a violation by the same affiliate that operated the smart order router, Lava Trading Inc., which continued to provide broker-dealer services for several months after it deregistered in August 2008.  Lava Trading, which also was owned by Citigroup Financial Products, earned approximately $1.8 million in broker-dealer business during this time period, and LavaFlow provided operational and administrative support while also responsible for a website that claimed Lava Trading was a registered broker-dealer.

The SEC’s order finds that LavaFlow violated Rule 301(b)(10) of Regulation ATS, which requires an ATS to establish safeguards and procedures for protecting confidential trading information of its subscribers.  LavaFlow also violated Rule 301(b)(2) of Regulation ATS, which requires that an ATS file certain amendments on Form ATS with the SEC.  LavaFlow aided and abetted and caused Lava Trading’s violation of Section 15(a) of the Securities Exchange Act of 1934, which requires broker-dealer registration.  The SEC’s order, to which LavaFlow consented without admitting or denying the findings, requires the firm to pay $1.8 million in disgorgement of money earned by Lava Trading while unregistered plus $350,000 in prejudgment interest and a $2.85 million penalty.  The order also censures LavaFlow and requires the firm to cease and desist from committing or causing these violations.

The SEC’s investigation was conducted by Market Abuse Unit staff including Jason Breeding and Mandy Sturmfelz.  The investigation was supervised by Mr. Hawke, Robert Cohen, and Diana Tani.  The SEC’s National Exam Program and Division of Trading and Markets provided substantial assistance with the case.

NAVY SECRETARY ANNOUNCES RENEWABLE ENERGY CONTRACT AWARDED

FROM:  U.S. NAVY 

SECNAV Announces Contract for Navy Photovoltaic Array Project

Story Number: NNS140725-01Release Date: 7/25/2014 8:05:00 AM 

By the Navy Chief of Information Office

WASHINGTON (NNS) -- Secretary of the Navy Ray Mabus announced today that Naval Facilities Engineering Command (NAVFAC) Pacific awarded a contract to Pacific Energy Solutions LLC, for the procurement of electricity produced from renewable energy generation systems.

Pacific Energy Solutions, based out of Boca Raton, Florida, will design, construct, own, operate and maintain various solar photovoltaic (PV) power generation systems that will provide renewable electricity to Navy and Marine Corps bases on Oahu, Hawaii. The total amount of power generated is anticipated to be about 17 megawatts of alternating current that will be shared between the Navy and Marine Corps.

"This is a large project with 10 roof top photovoltaic systems and four ground-based or elevated systems, built on three different bases," said Secretary of the Navy Ray Mabus. "In the first year alone we expect that these systems will save the taxpayers $1.6 million. That's the equivalent of the electricity that can be generated from 54,000 barrels of oil here in Hawaii. It's the amount of electricity needed to power more than 5,000 average homes here. And that's just in the first year. This program will be generating those savings for decades. The work we are doing here will serve as a model for other projects around the world."

The sites under this task order include: three roof tops and one ground mount location on Waipio Peninsula at Joint Base Pearl Harbor Hickam (JBPHH); six roof tops and two elevated PV structures at Marine Corps Base Hawaii; and one roof top and one elevated PV structure at Camp Smith, Aiea.

"This project signals the Navy's largest photovoltaic array in the Pacific, and a significant step toward achieving our renewable energy goals," said NAVFAC Pacific Commander Rear Adm. Bret Muilenburg. "Renewable energy initiatives are paramount to enabling the Navy and Marine Corps to improve energy security and efficiency ashore, and operational reach afloat. In addition, we are very proud to be partnering with Pacific Energy Solutions as we work to execute this substantial investment."

Once constructed, the PV systems will deliver renewable energy for a term of 25 years. The construction of the PV systems is expected to take 12 months.

DOJ ANNOUNCES PROPOSAL TO EXPAND MOVIE THEATER ACCESS FOR HEARING, VISUALLY DISABLED

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, July 25, 2014

Justice Department Announces Proposed Amendment to Americans with Disabilities Act Regulations to Expand Access to Movie Theaters for Individuals with Hearing and Vision Disabilities

The Justice Department announced today that Attorney General Eric Holder has signed a Notice of Proposed Rulemaking (NPRM) to amend the Title III regulation for the Americans with Disabilities Act (ADA) to require movie theaters to provide closed movie captioning and audio description in order to give persons with hearing and vision disabilities access to movies.

"This proposed rule will allow all Americans, including those with disabilities, to fully participate in the moviegoing experience.  With this proposal, the Justice Department is taking an important step to ensure consistent access for people with vision and hearing disabilities," said Attorney General Eric Holder.  "Twenty-four years after its passage, the Americans with Disabilities Act remains a critical tool for extending the promise of opportunity and inclusion for everyone in this country."

Closed movie captioning refers to captions that are delivered to the patron’s seat and are visible only to that patron.  Audio description enables individuals who are blind or have low vision to enjoy movies by providing a spoken narration of key visual elements of a movie, such as actions, settings, facial expressions, costumes and scene changes.  Audio description is transmitted to a user’s wireless headset.  The department is proposing to provide a consistent nationwide standard for movie theaters to exhibit movies that are available with closed movie captioning and audio description for all showings.  The department is also proposing to require theaters to provide a specific number of closed captioning and audio description devices.  Theaters need not comply with the proposed rule if doing so would cause an undue burden or fundamental alteration.  The department is not proposing to require movie theaters to add captions or audio description to movies that are not already produced and distributed with these features.

The department is proposing a six-month compliance date for movie theaters’ digital movie screens and is seeking public comment on whether it should adopt a four-year compliance date for movie theaters’ analog movie screens or should defer rulemaking on analog screens until a later date.

“As we celebrate the 24th anniversary of the Americans with Disabilities Act on Saturday, we are reminded that people with disabilities still do not have full access to all aspects of American cultural life,” said Jocelyn Samuels, Acting Assistant Attorney General for Civil Rights.  “Although some movie theaters are making strides towards meeting their ADA obligations, there is a good deal of inconsistency among theaters across the United States.  This proposed rule is intended to ensure that, regardless of where a person with a hearing or vision disability lives, that person will be able to attend movies with their friends and family and fully enjoy this important social and cultural activity.”

On July 26, 2010, the department published an Advance Notice of Proposed Rulemaking (ANPRM) asking how requirements for movie captions and audio description should be implemented.  The ANPRM sought public comment regarding the type of accessibility requirements for captioning and video [audio] description the department should consider, particularly in light of the industry’s conversion to digital cinema technology.  The department received more than a thousand comments in response to the ANPRM and these comments were taken into consideration when developing the proposed rule.

The department intends to publish the proposed rule in the Federal Register in the near future, and public comments on the NPRM will be due 60 days from the date the rule is published.

COURT ORDER BANS DEFENDANTS FROM TIMESHARE RESALE SERVICES

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Obtains Court Orders Banning Defendants From Selling Timeshare Resale Services

The defendants behind three deceptive timeshare resale operations are banned from selling timeshare property resale services under settlements resolving charges that they lured consumers into paying hefty up-front fees, falsely claiming they had prospective buyers for properties they wanted to sell.

The settlements stem from a crackdown on travel and timeshare resale fraud last year involving 28 states and law enforcement agencies in 10 other countries.

“Timeshare owners should avoid anyone who wants money up front and claims they have a buyer ready and waiting,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “If you’re thinking of selling a timeshare unit through a reseller, check them out first. Deal only with licensed real estate brokers and agents, ask for references from satisfied clients, and get everything in writing.”

Avoid scams that promise to recover money you’ve lost in a timeshare resell scam. To learn more, read Callers target timeshare owners for a second scam.

Universal Timeshare

According to the complaint filed by the FTC and Florida’s Attorney General in the Universal Timeshare case, the defendants claimed they had buyers who would pay a specified price for consumers’ timeshare properties, or that the defendants would quickly sell those timeshares, and charged consumers up to $2,200 in connection with the promised sale.  In fact, the defendants did not have buyers lined up to pay any price for consumers’ timeshares. Sheldon Lee Cohen, who resides and operates a telemarketing business in the Dominican Republic, was the mastermind and main perpetrator behind this scam.

The complaint charged the defendants with violating the FTC Act and the Telemarketing Sales Rule (TSR), including calling consumers with numbers listed on the National Do Not Call Registry, as well as the Florida Deceptive and Unfair Trade Practices Act and the Florida Timeshare Resale Accountability Act. The court subsequently halted the defendants’ deceptive practices, froze their U.S. assets, and appointed a receiver over the two companies, and over Cohen, when doing business as Universal Timeshare Sales Associates and M.G.M. Universal Timeshares, pending litigation.

Under the court order, all of the defendants are banned from selling timeshare resale services. They also are prohibited from violating the TSR and two Florida laws, and from misrepresenting material facts about any product or service, including the total cost, any restrictions, the nature or terms of a refund or cancellation policy, and the income likely to be realized. The defaulting defendants (Cohen and his company, Vacation Communications Group LLC) are also banned from telemarketing.

The order imposes a judgment of more than $1.2 million against the settling defendants (Tammie Lynn Cline, Mark Russell Gardner, and their former telemarketing company, Gardner Cline LLC), which will be suspended based on their inability to pay. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. The judgment for $10.2 million against the defaulting defendants is immediately due and payable upon entry of the court order.

The Commission vote approving the proposed stipulated final order was 5-0. The judgment was entered by the U.S. District Court for the Middle District of Florida, Orlando Division, on June 16, 2014.

Resort Property Depot and Resort Solution Trust

In May 2013, the FTC alleged that Resort Property Depot Inc. and Narendra “Nick” Patel made unsolicited telemarketing calls to timeshare owners and tricked them into paying fees ranging from $300 to $3,000, and that Resort Solution Trust Inc., Lincoln Renwick II, and Anthony Talavera deceived thousands of consumers into paying advance fees ranging between $800 and $3,400. Consumers did not receive what they were promised, and they were denied refunds. The court subsequently halted the defendants’ allegedly deceptive practices, froze their assets, and put the companies into receivership pending litigation.

Under both settlement orders, in addition to the ban on selling timeshare resale services, the defendants are permanently prohibited from telemarketing, misrepresenting material facts about any product or service, collecting money from customers, selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.

The settlement order against Resort Property Depot and Patel imposes a judgment of more than $2.6 million, which will be suspended  when the defendants have paid $175,000 to the Commission and Patel has surrendered his car and certain bank and investment accounts. A default judgment was entered against Resort Solution Trust in December 2013. The settlement order announced today against Renwick and Talavera imposes a judgment of more than $6.4 million, which will be suspended when Renwick has transferred to the FTC possession of bank accounts and a car. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote approving the proposed stipulated final orders was 5-0. The orders against Resort Property Depot, and against Renwick and Talavera, were entered by the U.S. District Court for the Middle District of Florida, Tampa Division, on July 1, 2014, and June 25, 2014, respectively.

To learn more about timeshare resale fraud, read Timeshares and Vacation Plans.  To learn about scams that promise to recover money you’ve lost in a scam, read Refund and Recovery Scams.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

FORMER LUFTHANSA SUBSIDIARY CEO PLEADS GUILTY TO FOREIGN BRIBERY CHARGES

FROM:  U.S. DEPARTMENT OF JUSTICE 

Thursday, July 24, 2014

Former Chief Executive Officer of Lufthansa Subsidiary BizJet Pleads Guilty to Foreign Bribery Charges

The former president and chief executive officer of BizJet International Sales and Support Inc., a U.S.-based subsidiary of Lufthansa Technik AG with headquarters in Tulsa, Oklahoma, that provides aircraft maintenance, repair and overhaul services, pleaded guilty today for his participation in a scheme to pay bribes to foreign government officials.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Danny C. Williams Sr., of the Northern District of Oklahoma and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“The former CEO of BizJet, Bernd Kowalewski, has become the third and most senior Bizjet executive to plead guilty to bribing officials in Mexico and Panama to get contracts for aircraft services,” said Assistant Attorney General Caldwell.  “While Kowalewski and his fellow executives referred to the corrupt payments as ‘commissions’ and ‘incentives,’ they were bribes, plain and simple.  Though he was living abroad when the charges were unsealed, the reach of the law extends beyond U.S. borders, resulting in Kowalewski’s arrest in Amsterdam and his appearance in court today in the United States.  Today’s guilty plea is an example of our continued determination to hold corporate executives responsible for criminal wrongdoing whenever the evidence allows.”

“I commend the investigators and prosecutors who worked together across borders and jurisdictions to vigorously enforce the Foreign Corrupt Practices Act,” said U.S. Attorney Williams.  “Partnership is a necessity in all investigations. By forging and strengthening international partnerships to combat bribery, the Department of Justice is advancing its efforts to prevent crime and to protect citizens.”

Bernd Kowalewski, 57, the former President and CEO of BizJet, pleaded guilty today in federal court in Tulsa, Oklahoma, to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and a substantive violation of the FCPA in connection with a scheme to pay bribes to officials in Mexico and Panama in exchange for those officials’ assistance in securing contracts for BizJet to perform aircraft maintenance, repair and overhaul services.

Kowalewski was arrested on a provisional arrest warrant by authorities in Amsterdam on March 13, 2014, and waived extradition on June 20, 2014.   Kowalewski is the third BizJet executive to plead guilty in this case.   Peter DuBois, the former Vice President of Sales and Marketing, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA and a substantive violation of the FCPA and Neal Uhl, the former Vice President of Finance, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA.   Jald Jensen, the former sales manager at BizJet, has been indicted for conspiracy as well as substantive FCPA violations and money laundering and is believed to be living abroad.   Charges were unsealed against the four defendants on April 5, 2013.

According to court filings, Kowalewski and his co-conspirators paid bribes directly to foreign officials to secure aircraft maintenance repair and overhaul contracts, and in some instances, the defendants funneled bribes to foreign officials through a shell company owned and operated by Jensen.   The shell company, Avionica International & Associates Inc., operated under the pretense of providing aircraft maintenance brokerage services but in reality laundered money related to BizJet’s bribery scheme.   Bribes were paid to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil.

Further according to court filings, the co-conspirators discussed in e-mail correspondence and at corporate meetings the need to pay bribes, which they referred to internally as “commissions” or “incentives,” to officials employed by the foreign government agencies in order to secure the contracts.   At one meeting, for example, in response to a question about who the decision-maker was at a particular customer organization, DuBois stated that a director of maintenance or chief pilot was normally responsible for decisions on where an aircraft went for maintenance work.   Kowalewski then responded by explaining that the directors of maintenance and chief pilots in the past received “commissions” of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in “commissions.”   Similarly, in e-mail correspondence between Uhl, DuBois, Kowalewski, and several others, Uhl responded to a question about BizJet’s financial outlook if “incentives” paid to brokers, directors of maintenance, or chief pilots continued to increase industry wide, stating that they would “work to build these fees into the revenue as much as possible.   We must remain competitive in this respect to maintain and gain market share.”

On March 14, 2012, the department announced that it had entered into a deferred prosecution agreement with BizJet, requiring that BizJet pay an $11.8 million monetary penalty to resolve charges related to the corrupt conduct.   That agreement acknowledged BizJet’s voluntary disclosure, extraordinary cooperation, and extensive remediation in this case.   In addition, the department announced on March 14, 2012, that BizJet’s indirect parent company, Lufthansa Technik AG, entered into an agreement with the department in which the department agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years.

This case is being investigated by the FBI’s Washington Field Office with substantial assistance form the Oklahoma Field Office.   The department has worked closely with its law enforcement counterparts in Amsterdam, Mexico and Panama, and has received significant assistance from Germany and Uruguay.   The Criminal Division’s Office of International Affairs has also provided assistance.   This case is being prosecuted by Assistant Chief Daniel S. Kahn and Trial Attorney David Fuhr of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kevin Leitch of the Northern District of Oklahoma.