SECRETARY KERRY'S REMARKS WITH GERMAN CHANCELLOR MERKEL

FROM:  THE STATE DEPARTMENT 

Remarks With German Chancellor Angela Merkel Before Their Meeting

Remarks

John Kerry

Secretary of State

Chancellery

Berlin, Germany

October 22, 2014

CHANCELLOR MERKEL: (In German.)

Well, ladies and gentlemen, allow me to say that I am delighted to have the Secretary of State John Kerry here for the third time ever since he assumed office. And yesterday I understand the Secretary of State had the opportunity to have a lengthy discussion over dinner with the German Foreign Minister Frank-Walter Steinmeier, and today too we have our work cut out for us. There are a number of international issues that will be on the agenda of our talks today – indeed, international issues that are on the agenda for all of us in this year 2014. There are many of those tasks, many of those issues, many very demanding issues, and all of these can only be mastered by us if we act together, if we act in close partnership and coordination with our partners and friends in the United States of America.

Let me mention the issues as we see them today. First of all, we want to discuss our fight against Islamic State, countermeasures that are to be taken against this terrorist threat that IS presents to all of us. Secondly, the Iranian nuclear program will be on the agenda; and third, the catastrophe that is Ebola; and fourth, we will also discuss the future of Afghanistan. We have a very short time, that is true, available to us, and as you can see, we have more than enough on our plate to fill this very short time.

So once again, let me say that I’m delighted to have the Secretary of State here, and let me use this opportunity to thank him for the excellent cooperation that we have always enjoyed with our American partners and friends on all of these areas. And let me also mention that I forgot one very important issue, obviously – namely, Ukraine-Russia. There too there is quite a lot on our plate, and so quite a lot of things to discuss. Again, all of these crises we can only tackle, we can only master if we act in concert, if we act together. Only then will be able to bring them, hopefully, towards a solution.

SECRETARY KERRY: Well, thank you, Madam Chancellor. Thank you very, very much for making the time today to be able to meet. I know you’re very busy and I greatly appreciate the chance to sit down with you. President Obama, our administration, the American people have great respect for your leadership, and we appreciate enormously what Germany is doing on every single issue of critical importance today. I’m also mindful that I’m coming here today where I visited the old wall and met with some of your young kids who were asking questions about the future, none of whom had been born during that period of time. They were all post-Cold War.

And so even as we celebrate the fall of the wall and all that it symbolizes, it was very clear to me today, as it is to America, that the story of Germany is not the past – it’s the future, and what you are doing to define that future, leading Germany on so many issues to be a global leader. And I want to thank you, because on Ebola, you are contributing people, expertise, medivac capacity now, money, and Germany is one of the leaders in the effort to deal with this challenge.

On Ukraine, you and your foreign minister have been on the forefront of diplomacy. And your efforts with President Poroshenko, your personal interventions with President Putin, have been critical to helping to define the Minsk Agreement and to put us on a ramp to de-escalate and hopefully move away from conflict.

On ISIL, likewise, you made a very significant decision. Germany has stepped up, changed its own policy, and is helping to cooperate globally in law enforcement, as we’ve seen in the last days, but also to help to be at the forefront of fighting with the foreign fighters issue and ISIL itself.

On Iran, Germany is a critical partner in the P5+1 talks. And Foreign Minister Steinmeier and I talked at length yesterday about how we can hopefully seize this historic moment to be able to reduce that conflict and prove to the world that we can move towards a world without nuclear weapons, ultimately.

On Afghanistan, as you mentioned a few minutes ago, likewise, Germany is a key partner in the ongoing efforts to empower the people of Afghanistan to define their own future and to respect the sovereignty of the country. So all of these things, on every major challenge today, we are partnering. And we now need to obviously deal with economy, with growth. We hope that the Transatlantic Trade Investment Partnership can move forward, because all of our countries can benefit from the economic stimulation and growth that will come from that.

So we have a lot to talk about, as you said, a very little amount of time. But the time I spent last night was well spent, and I appreciate your making time today to have a personal exchange. I bring you President Obama’s great greeting, and again, our respect and gratitude for the strength of our relationship. Thank you.

READOUT: PRESIDENT'S CALL REGARDING SHOOTINGS IN CANADA

FROM:  THE WHITE HOUSE 

October 22, 2014

Readout of the President’s Call to Prime Minister Harper of Canada

President Obama spoke by phone with Prime Minister Stephen Harper to express the American people’s solidarity with Canada in the wake of attacks on Canadian Forces in Quebec on October 20 and in Ottawa on October 22.   President Obama condemned these outrageous attacks, and reaffirmed the close friendship and alliance between our people.  The President offered any assistance Canada needed in responding to these attacks.  Prime Minister Harper thanked the President and the two leaders discussed the assault and agreed to continue coordination between our governments moving forward.

SECRETARY KERRY'S STATEMENT ON DEATH OF FORMER WASHINGTON POST EDITOR BEN BRADLEE

FROM:  U.S. STATE DEPARTMENT 

On the Passing of Ben Bradlee

Press Statement

John Kerry

Secretary of State

Washington, DC

October 22, 2014

Ben Bradlee was America’s Editor-in-Chief. He was courageous and fearless, gutsy and gritty, and as much as we remember his big laugh and his love of politics and people, his legacy defines great journalism: he found the facts and he let the facts tell the story, no matter where they led.

It's hard to explain the era of the Pentagon Papers to those who didn't live it. The magnitude and consequences of the choices Ben Bradlee and Katharine Graham were making are almost impossible to convey adequately. It required bravery. It exposed the truth. It saved lives. That's a rare thing today. There aren't many journalists who can say that they decided to say no to the most powerful people in the world and do what was right, not what was easy. But that's exactly what Ben Bradlee did in publishing the Pentagon Papers and he did it again on Watergate.

Ben put his own brand on journalism and it was big, bold, and unapologetic. He invented the modern newsroom. He cared about the Post as an institution and he cared about its people. He made independence in reporting the norm, not the exception. He was a Washington institution born and bred in Boston.

Ben and Sally have been friends and neighbors to Teresa and me for many years now. We've both been in awe of the remarkable way Sally cared for Ben these last difficult years, and we send Sally all our love now that Ben's at rest.

10/21/14: White House Press Briefing

DOD REPORTS ON SITUATION IN SYRIAN CITY OF KOBANI

FROM:  U.S. DEFENSE DEPARTMENT 

Airstrikes Help Ground Forces Take Fight to ISIL, Spokesman Says

By Jim Garamone

DoD News, Defense Media Activity

FORT MEADE, Md., Oct. 21, 2014 – Kurdish forces are in control of the majority of the Syrian city of Kobani despite efforts by the Islamic State of Iraq and the Levant to take the town, Pentagon Press Secretary Navy Rear Adm. John Kirby said today.

Coalition airstrikes in and around the city on Syria’s border with Turkey have been augmented by an airdrop of arms to Kurdish forces fighting the terror group. Air Force planes dropped 27 of 28 pallets to Kurdish Peshmerga fighters in Kobani, Kirby said at a Pentagon news conference.

“ISIL forces continue to threaten [Kobani],” Kirby said. “We’re continuing to hit targets in and around there to help the Kurdish forces as they continue to fight against ISIL. So it’s still a very mixed, contested environment.”
Credit to Kurdish forces

Kirby gave credit to the Kurdish forces that have fought ISIL to a standstill.
ISIL is presenting more targets to coalition aircraft and to Iraqi forces, Kirby said. Coalition forces launched seven airstrikes yesterday, and with the weather in the region improving, Kirby said he expects more attacks on the terror group in the coming days. With better weather, “intelligence, surveillance and reconnaissance platforms are able to fly a little bit more now,” he explained.
Iraqi forces make advances

In Iraq, there have been strikes in support of forces on the ground in Fallujah, at the Mosul Dam complex and in Bayji. All three are areas ISIL wants to take and hold, and at all three locations, Iraqi security forces are contesting the group. Near Bayji – the location of a massive oil refinery -- Iraqi security forces are advancing.

“Their advances over the last few days have been slowed by the weather, which is clearing, and so they're moving again, but it also has been slowed by [improvised explosive devices] -- almost 30 IEDs that they found and cleared,” Kirby said. “They are taking the fight to the enemy, and those strikes last night are indications that we're trying to support them, too.”

DOD PARTICIPATES IN OPERATION UNITED ASSISTANCE TO HELP EBOLA STRICKEN REGIONS

FROM:  U.S. DEFENSE DEPARTMENT 

Above Photo:  A group of 30 U.S. military personnel board a U.S. Air Force C-17 Globemaster III at Leopold Sedar Senghor International Airport in Dakar, Senegal, Oct. 19, 2014. The personnel flew to Monrovia, Liberia, where U.S. troops will construct medical treatment units and train health care workers to respond the the Ebola outbreak in West Africa as part of Operation United Assistance. The personnel include Marines, airmen and soldiers assigned to the 101st Airborne Division. U.S. Air National Guard photo by Maj. Dale Greer.

Above Photo:  Aerial porters from the Kentucky Air National Guard’s 123rd Contingency Response Group load a pallet of red blood cells and frozen plasma onto a C-130 Hercules aircraft at Leopold Sedar Senghor International Airport in Dakar, Senegal, Oct. 10, 2014. U.S. Air National Guard photo by Maj. Dale Greer.

SECRETARY KERRY ANNOUNCES THAT SENATOR GARY HART TO PLAY ROLE AT STATE DEPARTMENT

FROM:  U.S. STATE DEPARTMENT 

Senator Gary Hart To Play Diplomatic Role for State Department

Press Statement

John Kerry

Secretary of State

Washington, DC

October 21, 2014

I have asked Senator Gary Hart, one of our country's most respected and accomplished senior statesmen, creative and strategic thinkers, and my longtime friend who has been working with the State Department for close to two years, to also play a direct, on-the-ground diplomatic role.

Whether it's through his 12 years in the Senate, or his work on the U.S. Commission on National Security in the 21st Century, Gary is known as a problem-solver, a brilliant analyst, and someone capable of thinking at once tactically, strategically, and practically. He's been engaged already in the intellectual side of our government's foreign policy during this Administration, whether as chairman of the State Department's International Security Advisory Board, or as chairman of the Threat Reduction Advisory Council at the Department of Defense. Now we're fortunate that he's agreed to devote some additional time to engage in the tough and patient work of diplomacy as my Personal Representative, including on issues related to Northern Ireland. He does so with my confidence and trust.

Senator Hart has spent many weeks in Ireland and Northern Ireland over the past 30 years. He has listened and spoken to the people of Northern Ireland, and he knows many of the leaders. I’ve asked Senator Hart to support the parties in Northern Ireland as they enter a new round of talks to achieve a lasting peace. We welcome these new talks, supported by the United Kingdom and Ireland. I am confident Senator Hart will help the parties strengthen the institutions and economy of Northern Ireland, as well as reinvigorate efforts to promote a shared society. Our Consul General in Belfast Greg Burton will serve as Senator Hart’s deputy for his Northern Ireland work. Senator Hart expects to visit Belfast before the end of the month.

SEC ALLEGES CFO OF CHINA-BASED CO. SIGNED OFF ON NON-EXISTENT BUSINESS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23116 / October 21, 2014

Securities and Exchange Commission v. Subaye, Inc. and James T. Crane, Civil Action No. 13 CIV 3114 (S.D.N.Y.)

Judgment Entered Against Former Chief Financial Officer of China-Based Company in Fraudulent Scheme Involving Purported Web Services Business

The Securities and Exchange Commission announced today that on October 20, 2014, a federal court in New York entered a final judgment, in an enforcement action filed by the Commission in May 2013, against James T. Crane, the former Chief Financial Officer of Subaye, Inc., a company based in China whose stock traded in the U.S. Among other things, the judgment orders Crane to pay a civil penalty of $150,000 and bars Crane from serving as an officer or director of a public company for a period of ten years.

The Commission's complaint, filed on May 8, 2013, in the U.S. District Court for the Southern District of New York, alleged that Subaye began promoting itself during 2010 as a provider of cloud computing services to Chinese businesses. According to the complaint, Subaye claimed to have over 1,400 sales and marketing employees in 2010, with reported revenues of $39 million that fiscal year and projected revenues of more than $71 million for 2011. However, by May 2011, according to the complaint, Subaye was revealed to be a company with no verifiable revenues, few, if any, real customers, and no infrastructure to support its claimed cloud computing business. The complaint alleges that the business that Subaye had presented to investors and described in filings with the Commission was imaginary and non-existent.

The complaint further alleged that Crane signed Subaye's materially misleading filings with the Commission that contained false statements about Subaye's revenues, business, number of employees, and number of paying customers. According to the complaint, Crane also falsified the books, records, and accounts of Subaye and provided false information to Subaye's outside auditors. The Commission's complaint also charged Crane with violating a bar from the Public Company Accounting Oversight Board (PCAOB). According to the complaint, in January 2011, Crane and his Cambridge, Massachusetts-based accounting firm were sanctioned by the PCAOB, which permanently revoked his firm's registration and barred him from being associated with a registered accounting firm or being associated with any public company in an accounting or financial management capacity. The complaint allege that, in violation of the January 2011 PCAOB order, Crane remained as the CFO of Subaye until March 2011, even after the PCAOB denied his request to remain as Subaye's CFO for those two months.

Crane consented to the injunction and penalty components of the final judgment. The court determined the length of the officer and director bar after considering the filings in the case. The final judgment permanently enjoins Crane from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and Section 105(c)(7)(B) of the Sarbanes-Oxley Act of 2002, and from aiding and abetting any violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules12b-20, 13a-1, 13a-11, thereunder, and orders Crane to pay a civil penalty of $150,000. The final judgment also prohibits Crane from serving as an officer or director of a public company for a period of ten years.

The Court previously entered a final judgment by consent against Subaye on May 16, 2013.

The Commission acknowledges the assistance of the Ontario Securities Commission and the Public Company Accounting Oversight Board.

ACTING ASSISTANT AG MORAN MAKES REMARKS AT U.S. ATTORNEY PARTINEZ'S INVESTITURE CEREMONY

FROM:  U.S. JUSTICE DEPARTMENT 

Remarks by Acting Assistant Attorney General Molly Moran for the Civil Rights Division at Investiture Ceremony for U.S. Attorney Damon P. Partinez for the District of New Mexico

Albuquerque, NMUnited States ~ Friday, October 17, 2014

Remarks as Prepared for Delivery

Thank you for those kind words.  It is a pleasure to be here in Albuquerque with you today as we celebrate the latest step in Damon Martinez’s remarkable career.  It is an honor to join such a distinguished group in marking his official swearing-in as United States Attorney for the District of New Mexico.  I’d like to extend a special welcome to Damon’s family and friends – including his wife Holly and his mother Carmen – along with exceptional leaders and dedicated public servants like Senator Udall, Chief Judge Armijo and other members of the federal bench here in New Mexico, Mayor Berry, former U.S. Ambassador to Spain Ed Romero, former Chief Justice Serna and Justice Chavez of the New Mexico Supreme Court, and Jim Marquez, Damon’s uncle who is a former U.S. Attorney for the District of Kansas.  Thank you all for helping to make this event so special.

Damon has devoted his career to serving the people of his home state of New Mexico.  From his earliest days in the offices of U.S. Senator Jeff Bingaman and Congressman Tom Udall, to his work as Assistant Attorney General in the New Mexico Attorney General’s Office, to his service in the New Mexico National Guard, he has always stood ready to support, protect, defend, and advance the lives and livelihoods of his fellow citizens, both in this state and throughout the country.  With his years of outstanding work as an Assistant U.S. Attorney in the Office he now leads, he expertly managed sensitive national security and anti-terrorism matters for the District of New Mexico.  And today, he builds on that rich experience and steadfast commitment by formally taking on his biggest professional responsibility yet.

As someone who has worked with U.S. Attorneys throughout the country, I can tell you that Damon has the expertise, the good judgment, and the integrity to be a U.S. Attorney of terrific distinction in New Mexico and across the nation.  As we have already seen over the last several months, he is well-prepared to serve as this state’s top federal law enforcement official.  And it doesn’t hurt that he’s one of the nicest guys working in public service today.

My colleagues at the Justice Department’s Civil Rights Division – and I personally – have had the great fortune of working with Damon and the staff at the U.S. Attorney’s Office.  For years as we have collaborated closely on critical civil rights cases and other important priorities.  Nowhere has his leadership been more important, or more necessary, than during the Justice Department’s extensive investigation of the Albuquerque Police Department’s practice of using deadly force.  Damon was instrumental in ensuring that all individuals who were impacted by our investigation will have a voice in the future of their police department.  Since we released our report, Damon’s office and mine have continued to engage with everyone affected in the community – including Mayor Berry and Chief Eden  – and we hope soon to announce a forward-looking, comprehensive agreement for reform that we can all get behind.

Damon’s leadership was also vital to advancing the cause of civil rights in the District of New Mexico beyond this very important matter.  Damon’s predecessor, Judge Ken Gonzales, began the process of developing a strong partnership between the Civil Rights Division and the U.S. Attorney’s Office, and Damon has not missed a beat in building upon that foundation.   As a result of this great partnership, together our offices have filed charges and successfully prosecuted a number of criminal civil rights cases, including cases against corrections officers, probation officers, and law enforcement officers who have abused their authority, and individuals who have committed violent racially-motivated assaults.

The partnership between our two offices has extended to civil enforcement of civil rights by enforcing federal statutes that prohibit discrimination.  Together we have successfully resolved civil cases filed under the Fair Housing Act and the Americans with Disabilities Act to the USAO.

In addition to case-related work, attorneys from the Civil Rights Division and U.S. Attorney’s Office have collaborated in community outreach activities by making presentations at civil rights and Indian Country conferences and training programs.

As a result of this good work, and due to Damon’s leadership here, there is a growing sentiment in the District of New Mexico that the community can look to the Department of Justice to seek justice when civil rights have been violated.

In the few short months since he took office, Damon has hit the ground running, stepping forward to address some of the most pressing issues this community faces.  He has quickly moved forward with forging and reinforcing the important partnerships necessary to address crime and corruption, and to fight against violence in the community.  I know that Damon will bring the same level of professionalism, dedication, and passion to the myriad of complex issues he will face in the months and years to come.

As we administer the oath of office to him, we can all recognize that Damon Martinez is superbly qualified to lead the hardworking men and women who serve this important United States Attorney’s Office; to draw upon his experience and expertise in advancing its critical work; and to extend the tradition of excellence and integrity that has always defined our very best United States Attorneys.

Damon, I’m honored to count you as a colleague and partner, and I’m delighted to share this moment with you.  On behalf of the Department of Justice, I congratulate you, once again, on this well-deserved honor.

TRACERS ID HYDRAULIC FRACTURING FLOWBACK SPILLS

FROM:  NATIONAL SCIENCE FOUNDATION 

New tracers can identify frack fluids in the environment

Scientists develop new geochemical tracers, tested at sites in West Virginia and Pennsylvania

Scientists have developed new geochemical tracers that can identify hydraulic fracturing flowback fluids that have been spilled or released into the environment.

The tracers have been field-tested at a spill site in West Virginia and downstream from an oil and gas brine wastewater treatment plant in Pennsylvania.

"By characterizing the isotopic and geochemical fingerprints of enriched boron and lithium in flowback water from hydraulic fracturing, we can now track the presence of 'frack' fluids in the environment and distinguish them from wastewater coming from other sources, including conventional oil and gas wells," said Duke University geochemist Avner Vengosh, who co-led the research.

"This gives us new forensic tools to detect if frack fluids are escaping into our water supply and what risks, if any, they might pose."

Using the tracers, scientists can determine where frack fluid contamination has--or hasn't--been released to the environment and, ultimately, help identify ways to improve how shale gas wastewater is treated and disposed of.

The researchers published their findings today in the journal Environmental Science & Technology. Their study, which was funded by the National Science Foundation (NSF), is the first to report on the development of the boron and lithium tracers.

"With increasing exploitation of unconventional oil and gas reservoirs through the use of hydraulic fracturing, it's important that we are able to assess the extent of hydraulic fracturing fluids entering the environment," said Alex Isern, section head in NSF's Division of Earth Sciences, which funded the research.

"This work is critical as it demonstrates that geochemical fingerprinting provides a powerful tool to differentiate potential sources of contamination and therefore guide efforts to mitigate environmental impacts."

Adds Nathaniel Warner of Dartmouth College, lead author of the paper, "This new technology can be combined with other methods to identify specific instances of accidental releases to surface waters in areas of unconventional drilling.

"It could benefit industry as well as federal and state agencies charged with monitoring water quality and protecting the environment."

Hydraulic fracturing fluids--or frack fluids--typically contain mixes of water, proprietary chemicals and sand. Mixtures can vary from site to site.

Drillers inject large volumes of the fluids down gas wells at high pressure to crack open shale formations deep underground and allow natural gas trapped within the shale to flow out and be extracted.

After the shale has been fractured, the frac fluids flow back up the well to the surface along with the gas and highly saline brines from the shale formation.

Some people fear that toxic frack fluid chemicals in this flowback could contaminate nearby water supplies if they're accidentally spilled or insufficiently treated before being disposed of.

"The flowback fluid that returns to the surface becomes a waste that needs to be managed," Vengosh explained.

"Deep-well injection is the preferable disposal method, but injecting large volumes of wastewater into deep wells can cause earthquakes in sensitive areas and is not geologically available in some states.

"In Pennsylvania, much of the flowback is now recycled and reused, but a significant amount of it is still discharged into local streams or rivers."

It's possible to identify the presence of frack fluid in spilled or discharged flowback by tracing synthetic organic compounds that are added to the fluid before it's injected down a well, Vengosh said, but the proprietary nature of these chemicals, combined with their instability in the environment, limits the usefulness of such tracers.

By contrast, the new boron and lithium tracers remain stable in the environment.

"The difference is that we are using tracers based on elements that occur naturally in shale formations," Vengosh said.

When drillers inject frack fluids into a shale formation, they not only release hydrocarbon, but also boron and lithium that are attached to clay minerals in the formation.

As the fluids react and mix at depth, they become enriched in boron and lithium.

As they're brought back to the surface, they have distinctive fingerprints that are different from other types of wastewater, including wastewater from a conventional gas or oil well, and from naturally occurring background water.

"This type of forensic research allows us to clearly identify possible sources of wastewater contamination," Vengosh said.

Thomas Darrah of The Ohio State University, Robert Jackson of Duke and Stanford Universities and Romain Millot and Wolfram Kloppmann of the French Geological Survey also co-authored the paper, which was partly funded by the Park Foundation.

-NSF-
Media Contacts
Cheryl Dybas, NSF

BLUE MARBLE, EASTERN HEMISPHERE

FTC SAYS CLAIMS ABOUT "OXODEGRADABLE" PLASTIC MAY BE DECEPTIVE

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Staff Warns Plastic Waste Bag Marketers That Their “Oxodegradable” Claims May Be Deceptive

Staff of the Federal Trade Commission has sent letters warning 15 marketers of “oxodegradable” plastic waste bags that their oxodegradable, oxo biodegradable, or biodegradable claims may be deceptive.

Oxodegradable plastic is made with an additive intended to cause it to degrade in the presence of oxygen. Most waste bags are intended to be deposited in landfills, however, where not enough oxygen likely exists for oxodegradable bags to completely degrade in the time consumers expect. Contrary to the marketing, therefore, these bags may be no more biodegradable than ordinary plastic waste bags when used as intended.

“If marketers don’t have reliable scientific evidence for their claims, they shouldn’t make them,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Claims that products are environmentally friendly influence buyers, so it’s important they be accurate.”

The staff notified 15 marketers that they may be deceiving consumers based on the agency's 2012 revisions to its Guides For the Use of Environmental Marketing Claims (the Green Guides). Based on studies about how consumers understand biodegradable claims, the Green Guides advise that unqualified “degradable” or “biodegradable” claims for items that are customarily disposed in landfills, incinerators, and recycling facilities are deceptive because these locations do not present conditions in which complete decomposition will occur within one year.

The FTC advised marketers that consumers understand the terms “oxodegradable” or “oxo biodegradable” claims to mean the same thing as “biodegradable.” Staff identified the 15 marketers as part of its ongoing review of green claims in the marketplace. It has given them until October 21, 2014, to respond to the warning letters and tell the staff if they will remove their oxodegradable claims from their marketing or if they have competent and reliable scientific evidence proving that their bags will biodegrade as advertised.

The staff notes that marketers who did not receive a letter should not assume that their claims are fine. Staff is not disclosing the recipients of the letters at this time.

NASA VIDEO: COMMERCIAL ROCKET TEST HELPS PREP FOR JOURNEY TO MARS

OPERATORS OF DIAGNOSTIC CENTERS TO PAY $2.6 MILLION SETTLING ALLEGATIONS OF FALSE CLAIMS ACT VIOLATIONS

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, October 17, 2014

Operators of Houston Area Diagnostic Centers Agree to Pay $2.6 Million to Settle Alleged False Claims Act Violations

Two groups of Houston-based diagnostic centers have agreed to pay the United States a total of more than $2.6 million to settle allegations that they violated the False Claims Act, announced Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.  The settlements were finalized without an admission of liability and without commencement of litigation.

One group of centers, which operates under the name One Step Diagnostic and is owned and controlled by Fuad Rehman Cochinwala, has agreed to pay $1.2 million.  The payment is being made to settle allegations that it violated the Stark Statute and the False Claims Act by entering into sham consulting and medical director agreements with physicians who referred patients to One Step Diagnostic Centers.

The other group of centers, which is owned and controlled by Rahul Dhawan, has agreed to pay $1,457,686.  This group consists of Complete Imaging Solutions LLC doing business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston MRI & Diagnostics LLC.  The United States alleged that these centers engaged in improper financial relationships with referring physicians and improperly billed Medicare using the provider number of a physician who had not authorized them to do so and had not been involved in the provision of the services being billed.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician's judgment about the patient's true health care needs and drive up health care costs for everyone,” said Acting Assistant Attorney General Branda.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“These settlements totaling more than $2.6 million represent the continuing commitment of our office in combatting health care fraud,” said U.S. Attorney Magidson.  “The U.S. takes these accusations seriously.  Working within the whistleblower laws, we will continue to bring these cases to public view where tax payer money is being used improperly.”

The settlements announced today arose from a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act.  Under that act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.

This settlement illustrates 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 $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.

The case, United States ex rel. Holderith, et al. v. One Step Diagnostic, Inc., et al., Case No. 12-CV-2988 (S.D. Tex.), was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas and Department of Health and Human Services - Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

COURT HALTS SUPPLEMENT MARKETERS FROM DECEPTIVE ADS, ILLEGAL DEBITING OF ACCOUNTS

FROM:  U.S. FEDERAL TRADE COMMISSION 

At FTC’s Request, Court Stops Supplement Marketers From Deceptive Advertising and Illegally Debiting Consumers’ Accounts

At the Federal Trade Commission’s request, a U.S. district court has temporarily stopped a group of marketers in Nevada and California from conducting business using “free” trial offers and health claims that the agency charges are deceptive and illegal to pitch green coffee bean extract and another dietary supplements. The FTC is seeking to permanently stop their allegedly deceptive conduct.

This is the first FTC action alleging violations of the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits marketers from charging consumers in an Internet transaction, unless the marketer has clearly disclosed all material terms of the transaction and obtained the consumers’ express informed consent.

“The defendants behind Simple Pure used nearly every trick in the book to deceive consumers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They not only deceived consumers about the effectiveness of their products, but also repeatedly debited consumers’ accounts without their approval.”

According to the FTC’s complaint, Health Formulas, LLC, its related entities, and principals (Simple Pure) use telemarketing, the Internet, print, radio, and television advertisements to pitch a variety of dietary supplements and other weight-loss, virility, muscle-building, or skin cream products. Examples of Simple Pure’s advertising claims include: 1) “Burn fat without diet or exercise”; 2) “Shed pounds fast!” and 3) “Extreme weight loss!”  The FTC alleges that the defendants have no basis for the weight-loss claims they make about their products.

In addition, the defendants allegedly trick consumers into disclosing their credit and debit card information, and then enroll them without authorization in a negative option program in which defendants continually charge consumers’ accounts. The charge for Simple Pure’s weight-loss supplements, with names like Pure Green Coffee Bean Plus and RKG Extreme, typically ranges from $60 to $210 per month. Some consumers were sold additional products that cost between $7.95 and $60.

The FTC charges that the defendants failed to provide the disclosures required for a negative-option program, failed to provide a way for consumers to stop the automatic charges, and also failed to disclose material facts about their refund and cancellation policy.

The complaint charges the defendants with violating the FTC Act, the ROSCA, and the Commission’s Telemarketing Sales Rule (TSR). It also charges the defendants with violating the TSR’s Do Not Call provisions by calling consumers who had asked them to stop calling. Finally, the complaint charges the defendants with violating the Electronic Funds Transfer Act by debiting consumers’ accounts on a recurring basis without their prior written authorization.

Defendants in the case include: 1) Health Formulas, LLC, also doing business as (d/b/a) Simple Pure Nutrition; 2) Pure Vitamins, LLC; 3) Longhorn Marketing, LLC also d/b/a Men’s Health Formulas, LLC, Life Vitamins, and Unleash the Thunder; 4) Method Direct, LLC, also d/b/a Extamax, LLC, Vitaman Labs, Inc., Vitafit, and Playboy Offer/DVD Entertainment; 5) Weight Loss Dojo, LLC, also d/b/a Fitness DVDs; 6) VIP Savings, LLC, also d/b/a VIP Saving Center; 7) DJD Distribution, LLC; 8) MDCC, LLC, also d/b/a Method Direct Calling Center; 9) Chapnick, Smukler & Chapnick, Inc.; and 10) Brandon Chapnick, Keith Smukler, Danelle Miller (also known as Danelle Folta and Danelle Kenealy), and Jason Miller, individually and as members of the corporate defendants.

Information for Consumers

Consumers should carefully evaluate advertising claims for weight-loss products. For more information, see the FTC’s guidance for consumers of products and services advertised for Weight Loss & Fitness. The FTC also has information about understanding free trial offers, including “Free” Trial Offers?, which includes a video on potential risks of such offers, and a short online audio tip on free trials.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada on October 7, 2014, and the court entered a temporary restraining order against the defendants on October 9, 2014.

The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.

HOUSTON HOSPITAL PRESIDENT CONVICTED FRO ROLE IN $158 MILLION MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, October 20, 2014

President of Houston Hospital and Three Others Convicted in $158 Million Medicare Fraud Scheme

A federal jury in Houston today convicted the president of Riverside General Hospital (Riverside), his son, and two others for their participation in a $158 million Medicare fraud scheme involving false claims for mental health treatment.  Ten defendants have now been convicted in connection with the Riverside fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service – Criminal Investigation’s (IRS-CI) Houston Field Office and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.  U.S. District Judge Lee H. Rosenthal of the Southern District of Texas presided over the trial.

“The former president of Riverside hospital, his son, and their co-conspirators systematically defrauded Medicare, treating mentally ill and disabled Americans like chits to be traded and cashed out to pad their own pockets,” said Assistant Attorney General Caldwell.  “For over six years, the Gibsons and their co-conspirators stuck taxpayers with millions in hospital bills, purportedly for intensive psychiatric treatment. But the ‘treatment’ was a sham – some patients just watched television all day, others had dementia and couldn’t understand the therapy they supposedly received, and other patients never even went to the hospital at all.  Today’s verdict sends another powerful message that the department will hold accountable anyone who seeks personal profits at the expense of America’s most vulnerable citizens.”

Earnest Gibson III, 70, the former president of Riverside, Earnest Gibson IV, 37, the operator of one of Riverside’s satellite locations, and Regina Askew, 49, a group home owner, were each convicted of conspiracy to commit health care fraud and conspiracy to pay kickbacks, as well as related counts of paying and receiving illegal kickbacks.  Robert Crane, 58, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks.  Gibson III and Gibson IV were also convicted of conspiracy to commit money laundering.  Gibson III was acquitted of two substantive counts of paying and receiving illegal kickbacks.

According to evidence presented at trial, Gibson III, Gibson IV, and Askew operated a scheme to defraud Medicare beginning in 2005 and continuing until June 2012.  The defendants caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital.  A PHP is a form of intensive outpatient treatment for severe mental illness.

Specifically, evidence at trial demonstrated that the Medicare beneficiaries for whom Riverside and its satellite locations billed Medicare for PHP services did not qualify for or need PHP services.  Moreover, the Medicare beneficiaries rarely saw a psychiatrist and did not receive intensive psychiatric treatment.  In fact, some of the Medicare beneficiaries were suffering from Alzheimer’s and could not actively participate in any treatment even if they actually qualified to receive PHP services.  Nevertheless, Gibson III, Gibson IV and Askew submitted claims for reimbursement to Medicare claiming that PHP services were provided to the Medicare beneficiaries.

Evidence presented at trial also showed that Earnest Gibson III paid kickbacks to patient recruiters and to owners and operators of group care homes, including Askew, in exchange for those individuals delivering ineligible Medicare beneficiaries to the hospital’s PHPs.  Gibson IV also paid patient recruiters, including Crane and others, in exchange for those individuals delivering ineligible Medicare beneficiaries to the specific PHP operated by Gibson IV.

Approximately $158 million in claims to Medicare were submitted for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.  The proceeds from the health care fraud were used to promote the fraud scheme by paying kickbacks to patient recruiters and group home owners in exchange for their sending Medicare beneficiaries to the hospital’s PHPs.

Gibson III, Gibson IV, Askew and Crane are scheduled to be sentenced on Feb. 17, 2015.

Others involved in the fraudulent scheme have already pleaded guilty and are awaiting sentencing.  Mohammad Khan, an assistant administrator at the hospital, who managed many of the hospital’s PHPs, pleaded guilty to conspiracy to commit health care fraud, conspiracy to defraud the United States and to pay illegal kickbacks, and five counts of paying illegal kickbacks.  William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie, and Sharonda Holmes, who were all involved in paying or receiving kickbacks, have also pleaded guilty to their roles in the scheme.

The case was investigated by the FBI, IRS-CI, and Texas MFCU, with assistance from the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Dallas Regional Office, the Railroad Retirement Board, Office of Inspector General’s Chicago Field Office and the Office of Personnel Management’s Office of Inspector General, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.  The case is being prosecuted by Assistant Chiefs Laura M.K. Cordova and Jennifer L. Saulino and Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

SECRETARY KERRY'S REMARKS WITH PHILIPPINE FOREIGN SECRETARY ROSARIO

FROM:  U.S. STATE DEPARTMENT 

Remarks With Philippine Foreign Secretary del Rosario Before Their Meeting

Remarks

John Kerry

Secretary of State

Shangri-La Hotel

Jakarta, Indonesia

October 20, 2014

QUESTION: Could I just ask you a very brief question about the thinking that went into the air drops of the weapons and ammunition into Kobane?

SECRETARY KERRY: Absolutely.

QUESTION: And, for both of you, I'm wondering if you could talk -- say anything about how concerned, if at all you are, about the case of this Marine, American Marine, who's been accused of murder in the Philippines.

SECRETARY KERRY: Well, let me first take the occasion to welcome my friend, Albert del Rosario, the Foreign Minister from the Philippines. And we have been meeting now in many different occasions over the course of the last year and a half. And the Philippines is a very strong, long-term ally of ours. We are very grateful for the support on major crises of the day, particularly on ISIL and on the challenge of Ebola, which we will talk about a little bit now.

With respect to the resupply of Turkey, let me just say very, very respectfully to our allies, the Turks, that we understand fully the fundamentals of their opposition and ours to any kind of terrorist group, and particularly, obviously, the challenges they face with respect to the PKK. But we have undertaken a coalition effort to degrade and destroy ISIL. And ISIL is presenting itself in major numbers in this place called Kobane, and they have chosen to make this a grounded battle, attacking a small group of people there who, while they are a offshoot group of the folks that the -- our friends, the Turks, oppose, they are valiantly fighting ISIL.

And we cannot take our eye off the prize here. It would be irresponsible of us, as well as morally very difficult, to turn your back on a community fighting ISIL, as hard as it is, at this particular moment. And we talked with Turkish authorities -- I did, the President did -- to make it very, very clear this is not a shift of policy by the United States. It is a crisis moment, an emergency where we clearly do not want to see Kobane become a horrible example of the unwillingness of people to be able to help those who are fighting ISIL.

So, there is this momentary effort. But what we did say very clearly is, "Help us to get the Peshmerga or other groups in there who will continue this, and we don't need to do that." And I think that's very much the objective, and I think that's very much the way we are going.

So, our hope is that, indeed, Kurds who have proven themselves to be very strong and valiant fighters will take this fight on, and it won't be necessary for us to have this kind of delicate reach, if you will, in terms of people's different interests.

With respect to the Marine, whatever charges there are, whatever infractions have been affected by any American anywhere, we believe in the rule of law, and we believe in our agreement. It is very important for our agreements to be upheld. It is very important for the rule of law to be upheld, for his rights to be protected, but for the process to unfold appropriately. And we will, indeed, uphold our agreements with our friends in the Philippines; they deserve nothing less. The people of the Philippines who are gracious enough to permit an arrangement whereby we meet mutual interests with this kind of a force's presence need to know that we're not seeking a special privilege, that everybody's rights will be appropriately protected. And that's exactly what we will do here. Due process will play out, and we will work with the Philippines in order to make certain that rule of law and the agreement are upheld.

FOREIGN SECRETARY DEL ROSARIO: Well, you want me to talk about --

QUESTION: Well, I wonder if you're concerned that this is causing stress in an otherwise good relationship.

FOREIGN SECRETARY DEL ROSARIO: Well, I think we are concerned, and it's unfortunate that we had this tragic event. But, as my friend John had mentioned, we do have all the mechanisms in place so that justice can properly be served.

QUESTION: Thank you.

QUESTION: Thank you all.

SECRETARY KERRY: Thank you all very much. Appreciate it, thank you.

SEC SANCTIONS HIGH FREQUENCY TRADING FIRM FOR ATTEMPTING TO MANIPULATE CLOSING NASDAQ PRICES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission sanctioned a New York City-based high frequency trading firm for placing a large number of aggressive, rapid-fire trades in the final two seconds of almost every trading day during a six-month period to manipulate the closing prices of thousands of NASDAQ-listed stocks.  This marks the first high frequency trading manipulation case.

An SEC investigation found that Athena Capital Research used an algorithm that was code-named Gravy to engage in a practice known as “marking the close” in which stocks are bought or sold near the close of trading to affect the closing price.  The massive volumes of Athena’s last-second trades allowed Athena to overwhelm the market’s available liquidity and artificially push the market price – and therefore the closing price – in Athena’s favor.  Athena was acutely aware of the price impact of its algorithmic trading, calling it “owning the game” in internal e-mails.

Athena agreed to pay a $1 million penalty to settle the SEC’s charges.

“When high frequency traders cross the line and engage in fraud we will pursue them as we do with anyone who manipulates the markets,” said SEC Chair Mary Jo White.

According to the SEC’s order instituting a settled administrative proceeding, although Athena was a relatively small firm, it dominated the market in the last few seconds of a trading day for stocks that it otherwise traded only slightly.  The manipulative trading described in the SEC’s order occurred from June to December 2009 and made up more than 70 percent of the total NASDAQ trading volume of the affected stocks in the seconds before the market close.

“Traders today can certainly use complex algorithms and take advantage of cutting-edge technology, but what happened here was fraud,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “This action should send a clear message that the Commission and its Division of Enforcement have the expertise to investigate and charge even the most sophisticated fraudulent algorithmic trading strategies.”

The SEC’s order finds that Athena’s manipulative scheme focused on trading in order imbalances in securities at the close of the trading day.  Imbalances occur when there are more orders to buy shares than to sell shares (or vice versa) at the close for any given stock.  Every day at the close of trading, NASDAQ runs a closing auction to fill all on-close orders at the best price, one that is not too distant from the price of the stock just before the close.  Athena placed orders to fill imbalances in securities at the close of trading, and then traded or “accumulated” shares on the continuous market on the opposite side of its order.

According to the SEC’s order, Athena’s algorithmic strategies became increasingly focused on ensuring that the firm was the dominant firm – and sometimes the only one – trading desirable stock imbalances at the end of each trading day.  The firm implemented additional algorithms known as “Collars” to ensure that Athena’s orders received priority over other orders when trading imbalances. These eventually resulted in Athena’s imbalance-on-close orders being at least partially filled more than 98 percent of the time.  Athena’s ability to predict that it would get filled on almost every imbalance order allowed the firm to unleash its manipulative Gravy algorithm to trade tens of thousands of stocks right before the close of trading.  As a result, these stocks traded at artificial prices that NASDAQ then used to set the closing prices for on-close orders as part of its closing auction.  Athena’s high frequency trading scheme enabled its orders to be executed at more favorable prices.

The SEC order censures Athena and finds that the firm violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Without admitting or denying the findings, Athena agreed to pay the $1 million penalty and cease and desist from committing or causing any future violations of the securities laws.

The SEC’s investigation was conducted by William Finkel, Peter Lamore, Preethi Krishnamurthy, and Alexander Vasilescu.  The case was supervised by Michael Osnato.  The Enforcement Division worked closely with the SEC’s Division of Economic Risk and Analysis and the Quantitative Analytics Unit.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

DEFENSE SECRETARY HAGEL, PEOPLE'S REPUBLIC OF CHINA STATE COUNCILOR JIECHI MEET AT PENTAGON

U.S. Defense Secretary Chuck Hagel, right, meets with Chinese State Councilor Yang Jiechi, second from left, at the Pentagon, Oct. 20, 2014, to discuss matters of mutual importance. DoD photo by U.S. Air Force Master Sgt. Adrian Cadiz.

FROM:  U.S. DEFENSE DEPARTMENT

 Hagel, Chinese Leader Discuss Strengthening Cooperation

DoD News, Defense Media Activity

WASHINGTON, Oct. 20, 2014 – Defense Secretary Chuck Hagel met in the Pentagon today with People's Republic of China State Councilor Yang Jiechi, Pentagon Press Secretary Navy Rear Adm. John Kirby reported.

In a statement summarizing the meeting, Kirby said the two leaders discussed the importance of maintaining the positive momentum that has developed in the military-to-military relationship between the United States and China.

“They also reaffirmed their shared interest in strengthening cooperation on regional and global challenges,” he added, “and noted the potential for greater cooperation in several areas, to include providing humanitarian assistance and disaster relief when crises arise, and containing the spread of Ebola in West Africa.”

Hagel and Yang both highlighted the importance of President Barack Obama's trip to Beijing in November and expressed a shared desire that the trip be a success, Kirby said.

SECRETARY KERRY'S REMARKS WITH AUSTRALIAN PRIME MINISTER ABBOT

FROM:  U.S. STATE DEPARTMENT 

Remarks With Australian Prime Minister Tony Abbott Before Their Meeting

Remarks

John Kerry

Secretary of State

Jakarta, Indonesia

October 20, 2014

PRIME MINISTER ABBOTT: Well, John, look, it's terrific to have yourself here to talk and to share (inaudible) very important issues, from the situation in the Middle East to the situation (inaudible) to all the other areas where the United States and Australia have a very, very close relationship. I appreciate the tremendous leadership the United States shows with the world. I'm grateful for (inaudible) today, because I think it's (inaudible) and that you can be here to help honor the incoming Indonesian President. Australia has had a long, strong relationship with Indonesia. Prime Minister Howard attended the inauguration of President (inaudible) back in 2004. And I hope the tradition that's now been established of Australian prime ministers attending the inaugurations of Indonesian presidents, and perhaps a similar tradition (inaudible) established (inaudible) secretaries of state.

But it's good to be with you, and I'm looking forward to (inaudible).

SECRETARY KERRY: Well, thank you, Prime Minister. It's a privilege to (inaudible), and I appreciate enormously your taking a moment to share (inaudible), and I bring you President Obama's strong greetings and great gratitude of him and all of (inaudible) Australians major stepping up with respect to the coalition. As we said when Secretary Hagel and I were in Sydney, we couldn't have a stronger partner, and we're very, very grateful for Australia's consistent willingness to step up and stand for values, as well as (inaudible) that are important to us.

We couldn't agree more about the inauguration today, the meaning of this, not just in Indonesia, but in the region. It's very, very important, obviously: you're here and, while the President couldn't come, he was very anxious to make sure we were represented at a high level here.

I do want to say that your efforts with respect to foreign fighters, which you regrettably have to experience even at a lower level, brings home to everybody how important it is for this to be a global coalition, and for all of us to understand the stakes. We were well served in the last couple of days as the Iraqis themselves chose a minister of interior and a minister of defense. That's particularly helpful for the planning and implementing of our efforts.

So, I look forward to talk with to you about that, about Iran (inaudible), Afghanistan, the DPRK, the South China Sea. There are a lot of issues for us to chat about. So again, it's good to be with you, and thank you so much for (inaudible).