SEC BRINGS CHARGES IN PONZI SCHEME INVOLVING FARM LOANS

 FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23246 / April 24, 2015

Securities and Exchange Commission v. Veros Partners, Inc., et al., Civil Action No. 15-cv-000659-JMS-MJD (S.D.Ind., filed April 22, 2015)

SEC Halts Fraudulent Farm Loan Scheme by Indianapolis Investment Adviser

The Securities and Exchange Commission today announced charges against an Indianapolis investment adviser, its president, two associates and several affiliated companies for engaging in two fraudulent farm loan offerings, in which they made ponzi scheme payments to investors in other offerings and paid themselves hundreds of thousands of dollars in undisclosed fees. The SEC obtained a temporary restraining order and emergency asset freeze to halt the scheme.

According to the SEC's complaint, filed in the U.S. District Court for the Southern District of Indiana, in 2013 and 2014, Veros Partners, Inc., its president, Matthew D. Haab, and two associates, attorney Jeffrey B. Risinger and Tobin J. Senefeld, fraudulently raised at least $15 million from at least 80 investors, most of whom were Veros advisory clients. The investors were informed that their funds would be used to make short-term operating loans to farmers, but instead, significant portions of the loans were to cover the farmers' unpaid debt on loans from prior offerings. According to the SEC's complaint, Haab, Risinger and Senefeld used money from the two offerings to pay millions of dollars to investors in prior farm loan offerings and to pay themselves over $800,000 in undisclosed "success" and "interest rate spread" fees.

In addition to Veros, Haab, Risinger, and Senefeld, the SEC charged Veros Farm Loan Holding LLC and FarmGrowCap LLC, the issuers of the offerings, and PinCap LLC. The SEC also charged registered broker-dealer Pin Financial LLC as a relief defendant.

The Honorable Jane Magnus-Stinson of the U.S. District Court for the Southern District of Indiana issued an asset freeze order against the defendants as well as a temporary restraining order prohibiting them from soliciting, accepting or depositing any monies from any actual or prospective investors, and in the case of Veros, any investors in private securities offerings. Judge Magnus-Stinson also ordered that a receiver be appointed. A preliminary injunction hearing has been scheduled for May 1, 2015.

The SEC's complaint charges the defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and also charges Veros and Haab with violating Sections 206(1), 206(2) of the Investment Advisers Act, and Veros with violating Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2. The SEC's complaint seeks permanent injunctions and disgorgement against all defendants and a financial penalty. The SEC's complaint names Pin Financial for the purposes of recovering proceeds it received from the fraud.

The SEC's investigation, which is continuing, has been conducted by Nicholas Eichenseer, Doressia Hutton, and Craig McShane and supervised by Kathryn Pyszka of the Chicago Regional Office. The litigation will be supervised by Robert Moye.

WHITE HOUSE VIDEO: PRESIDENT DELIVERS REMARKS ON MIDDLE-CLASS ECONOMICS AND TRADE

U.S. SAYS IT IS "DISTURBED" BY SENTENCE BY AZERBAIJANI COURT OF HUMAN RIGHTS LAWYER INTIGAM ALIYEV

FROM:  U.S. STATE DEPARTMENT
Conviction of Azerbaijani Human Rights Lawyer Intigam Aliyev
Press Statement
Marie Harf
Acting Department Spokesperson, Office of the Spokesperson
Washington, DC
April 23, 2015

We are disturbed by the April 22 decision of an Azerbaijani court to sentence human rights lawyer Intigam Aliyev to seven and a half years in prison, and a subsequent three-year ban from holding public office, on questionable charges.

One of the country’s most well-known human rights lawyers and head of the Legal Education Society, Aliyev worked extensively to promote the rule of law in Azerbaijan and defend peaceful activists. He submitted hundreds of cases to the European Court of Human Rights, winning a number of them.

We urge the Government of Azerbaijan to release Aliyev and others incarcerated in connection with exercising their fundamental freedoms. We also urge the government to afford all Azerbaijani citizens the rights guaranteed in the international agreements to which Azerbaijan has committed.

FTC, TECH COMPANY SETTLE CHARGES RELATED TO MISLEADING CONSUMERS OVER OPT "OUT CHOICES"

FROM:  U.S. FEDERAL TRADE COMMISSION
Retail Tracking Firm Settles FTC Charges it Misled Consumers About Opt Out Choices
Company Falsely Promised an In-Store Opt Out, Agency Alleges

Nomi Technologies, a company whose technology allows retailers to track consumers’ movements through their stores, has agreed to settle Federal Trade Commission charges that it misled consumers with promises that it would provide an in-store mechanism for consumers to opt out of tracking and that consumers would be informed when locations were using Nomi’s tracking services.

The FTC’s complaint against Nomi states that beginning in late 2012, the company’s privacy policy promised that Nomi would provide an opt-out mechanism at stores using its services.  This promise implied that consumers would be informed when stores were using Nomi’s tracking technology. The complaint alleges that these promises were not true because no in-store opt-out mechanism was available, and consumers were not informed when the tracking was taking place.

The complaint alleges that Nomi collected information on about nine million mobile devices within the first nine months of 2013. The complaint is the FTC’s first against a retail tracking company.

“It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If you tell a consumer that they will have choices about their privacy, you should make sure all of those choices are actually available to them.”

Nomi, according to the complaint, places sensors in its clients’ stores that collect the MAC addresses of consumers’ mobile devices as the devices search for WiFi networks.  MAC addresses are unique 12-digit identifiers that are assigned to individual mobile devices. Although Nomi “hashes” the MAC addresses prior to storing them, the hashing process still results in an identifier that is unique to a consumer’s mobile device and can be tracked over time.

The complaint alleges that Nomi tracked consumers both inside and outside their clients’ stores, tracking the MAC address, device type, date and time the device was observed, and signal strength of consumers’ devices. In reports to clients, Nomi provided aggregated information on how many consumers passed by the store instead of entering, how long consumers stayed in the store, the types of devices used by consumers, how many repeat customers enter a store in a given period and how many customers had visited another location in a particular chain of stores.

The company’s privacy policy said that it “pledged to… always allow consumers to opt out of Nomi’s service on its website, as well as at any retailer using Nomi’s technology.” While the company did provide an opt-out on its website, the complaint alleges that no such option was available at retailers using the service, and that consumers were not informed of the tracking taking place in the stores at all.

Under the terms of the settlement with the FTC, Nomi will be prohibited from misrepresenting consumers’ options for controlling whether information is collected, used, disclosed or shared about them or their computers or other devices, as well as the extent to which consumers will be notified about information practices.

U.S.-LATVIAN DEFENSE OFFICIALS MEET TO DISCUSS PRIORITIES

FROM:  U.S. DEFENSE DEPARTMENT
Deputy Secretary, Latvian Defense Minister Discuss Priorities
DoD News, Defense Media Activity

WASHINGTON, April 23, 2015 – During a 30-minute meeting at the Pentagon today, Deputy Defense Secretary Bob Work and Latvian Defense Minister Raimonds Vejonis talked about defense priorities and ongoing measures demonstrating U.S. and allied commitment to the Baltic region, Defense Department officials reported.

In a statement summarizing the meeting, officials said Work and Vejonis discussed the importance of clear NATO unity against Russian aggression, continued presence of U.S. forces in the region, and ways to work together to better support NATO deterrence measures.

“Work applauded the steps taken by Latvia to increase readiness and procure new systems that address vulnerabilities and increase capability,” the statement said. Work also lauded Vejonis's commitment to raise Latvia’s defense spending to 2 percent of the nation’s gross domestic product and to increase manning in the Latvian armed forces by 2,000 personnel by 2018, officials added.
Continued Leadership, Record of Commitment

The deputy secretary also thanked the minister for his continued leadership and Latvia's record of commitment in operations in Afghanistan, Iraq, and the Balkans, the statement said.

Work stressed that the United States will continue to work with the Baltic States to support regional cooperation, interoperability with allies, and long-term defense modernization, officials said.

In addition to meetings in Washington, Vejonis visited Fort Stewart, Georgia, to meet with leadership of the 3rd Infantry Division, which has a company of soldiers deployed to Latvia under Operation Atlantic Resolve.

This was Work's first meeting with the defense minister, officials said.

COURT BARS COMPANY FROM BULLYING ELDERLY TO PAY FOR MEDICAL ALERT DEVICES

FROM:  U.S. FEDERAL TRADE COMMISSION

Court Bars Brooklyn Company from Using Threats and Intimidation to Coerce Elderly Consumers into Paying for Unwanted Medical Alert Devices
Court Orders Defendants to Pay $3.4 Million in “Unjust Gains”

At the Federal Trade Commission’s request, a U.S. district court has prohibited Jason Abraham, a repeat offender, and his company, Brooklyn-based Instant Response Systems (IRS) from calling elderly consumers and bullying and tricking them into paying for unordered medical alert devices. The court also imposed a $3.4 million judgment against the defendants for their misconduct, which may be used to provide refunds to defrauded consumers.

“Instant Response Systems lied to older people to get them to pay for medical alert systems they didn’t order and didn’t want,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Their high-pressure, deceptive phone pitches were illegal, and they violated the do not call rules to boot.”

According to the FTC’s complaint, filed in March 2013, telemarketers for IRS called elderly consumers – many of whom are in poor health and rely on others for help with their finances – and pressured them into buying a medical alert service consisting of a pendant that supposedly would allow them to get help during emergencies. In many cases, IRS falsely claimed during sales calls that consumers had bought the service previously and owed the company hundreds of dollars.

The company shipped fake invoices and unordered medical alert pendants to consumers without their consent, repeatedly threatened them with legal action to coerce them into paying, and subjected them to repeated verbal abuse. The FTC also charged the defendants with illegally calling consumers whose phone numbers are on the National Do Not Call (DNC) Registry.

The court order issued with the summary judgment announced today imposes both conduct and monetary provisions against Abraham. First, it bars him from violating the FTC Act and the FTC’s Telemarketing Sales Rule by making any false and misleading statements to induce consumers to make payments, using threats or intimidation to coerce payment, and from calling consumers whose phone numbers are on the DNC Registry. It also bars him from violating the FTC’s Unordered Merchandise Statute. Finally, the court ordered Abraham to pay a judgment of $3,432,462, the amount of the “unjust gains” he received through the scheme.

In its ruling, the court stated, “There is no genuine dispute that [the] defendants, in letters and phone calls, made material misrepresentations that consumers ordered medical alert services and owed IRS money when, in fact, they did not.” The court also found that Abraham “knowingly made misrepresentations to hundreds of consumers over a five-year period, all while subject to a permanent injunction issued in 2003 . . . which prohibited him from such conduct.”

The summary judgment resolves the FTC’s charges against Jason Abraham. Last year, the court entered a default judgment against Abraham’s company, Instant Response Systems, LLC that resolved the FTC’s charges against the company and orders injunctive and monetary relief similar to the summary judgment order against Abraham.

The FTC appreciates the assistance of the New York State Attorney General’s Office and the U.S. Postal Inspection Service, in this case.

U.S. CONGRATULATES PEOPLE OF TANZANIA ON TANZANIA'S UNION DAY

FROM:  U.S. STATE DEPARTMENT
On the Occasion of the United Republic of Tanzania's Union Day
Press Statement
John Kerry
Secretary of State
Washington, DC
April 24, 2015

On behalf of President Obama and the people of the United States, I congratulate the people of Tanzania as you celebrate the 51st anniversary of the union between Tanganyika and Zanzibar.

Deep bonds of friendship unite the people of the United States and the people of Tanzania. The first class of Peace Corps volunteers traveled to your country to build roads connecting your cities. And soon after, President John F. Kennedy and Prime Minister Julius Nyerere shook hands in Washington, where both men reaffirmed our commitment to equality and opportunity for all our citizens.

Today, Tanzania is a model in the region of good governance, democratic ideals, and individual freedoms. We remain committed to working with you to build on your achievements in health care, access to electricity, gender equality, and in safeguarding Tanzania’s rich natural heritage for generations to come.

As Tanzanians celebrate Union Day at home and abroad, I wish you peace and prosperity in the year ahead.

WHITE HOUSE VIDEO: 4/23/15: WHITE HOUSE PRESS BRIEFING

DOD SECRETARY CARTER'S SEARCH FOR TECH PARTNERS

FROM:  U.S. DEFENSE DEPARTMENT

 Right:  Defense Secretary Ash Carter holds up a copy of his doctoral thesis as he delivers a lecture titled "Rewiring the Pentagon: Charting a New Path on Innovation and Cybersecurity," at Stanford University in Stanford, California, April 23, 2015. The lecture highlighted the Pentagon's new cyber strategy and innovation initiatives. 

Carter Seeks Tech-sector Partnerships for Innovation
By Cheryl Pellerin
DoD News, Defense Media Activity

WASHINGTON, April 23, 2015 – Defense Secretary Ash Carter announced new partnership initiatives today on the first day of a two-day visit to California’s Silicon Valley to learn from experts who run some of the highest-tech companies in one of the nation’s innovation hotspots.

At Stanford University, where he recently served as a distinguished visiting fellow at the Hoover Institution and a lecturer at the Freeman Spogli Institute for International Studies, Carter delivered the annual Drell Lecture, titled “Rewiring the Pentagon: Charting a New Path on Innovation and Cybersecurity.”

The lecture, sponsored by the Stanford Center for International Security and Cooperation, is named for Dr. Sidney Drell, a theoretical physicist and arms-control expert who cofounded the center.

When Carter became defense secretary, he told the audience, one of his top commitments was to the future -- to stay ahead of a changing world, to remain competitive, to attract new generations to the mission of serving the country, and to stay abreast of technology.

Commercially Driven Technology

To begin leveraging commercially driven technology, he said, the Defense Department wants “to partner with businesses on everything from autonomy to robotics to biomedical engineering and 3-D printing; power, energy, propulsion to distributed systems, data science [and] the Internet of things.”

Over the years, Carter said, products developed in Silicon Valley and across the tech community have enabled transformation, progress, opportunity and prosperity across all economic and social sectors, including national defense.

“It’s made many things easier, cheaper and safer,” he added.

“But in recent years it’s become clear that these same advances and technologies also present a degree of risk to the businesses, governments, militaries and individual[s] who rely on them every day … making it easier, cheaper and safer to threaten them,” the secretary said.

The same technologies DoD uses to target cruise missiles and jam enemy air defenses can be used against U.S. and allied forces, and they’re available to the highest bidders, he noted, asking, “How do we mitigate the risk that comes with technology while simultaneously unleashing its promise and potential?”

The answer, he said, is partnership.

Investments by DoD and government agencies have historically played a role in helping to spur ground-up technological innovation in Silicon Valley and on the Stanford campus, Carter said. Vint Cerf, father of the Internet, did that work and more while he was a Stanford assistant professor and a researcher at the Defense Advanced Research Projects Agency, the secretary said.

DoD-funded Innovation

The Global Positioning System began as a defense-driven project, work on Google’s search algorithm was funded by a National Science Foundation grant, and most technologies used throughout Silicon Valley can be traced back to government or DoD research and expenditures, Carter said. “Developers of multitouch [interaction] worked together through a fellowship funded by the National Science Foundation and the CIA,” he added.

“iOS’s Siri grew out of … decades of DARPA-driven research on artificial intelligence and voice recognition, [and] a specific DARPA project funded through [SRI International, formerly the Stanford Research Institute] to help develop a virtual assistant for military personnel,” the secretary said. “And Google’s self-driving cars grew out of a DARPA Grand Challenge.”

DoD, other federal agencies and tech companies helped to ignite the spark, Carter said, but Silicon Valley companies nurtured the flame and created unimaginable applications.

But the Defense Department still makes up half of federal research and development -- about $72 billion this year, he said. And $12 billion in R&D funds support breakthrough science and technology research at universities, companies and DoD labs across the tech community.

For example, he said, several Stanford scientists have worked with DARPA, and over the past three years, DARPA has partnered with nearly 50 different public- and private-sector research entities in Silicon Valley.

“These relationships are really valuable to us,” Carter added, “and I intend to continue to nurture them.”

Disaster-response Robots

In June, the results of such partnerships will come together during the DARPA Robotics Challenge Finals in Pomona, California.

At the competition, work on smaller sensors, pattern-recognition technology, big-data analysis and autonomous systems with human decision support will fuel a competition of 25 robots from around the world. Each human-robot team will try to navigate a simulated disaster area so that during future disasters such technology may be ready to help without putting people at risk.

But to stay competitive and stay ahead of threats, DoD must do even more, Carter said, “and that starts with our people, who are our most important asset both in Silicon Valley and in the military.”

Who they are and where they are affects the department’s ability to innovate, the secretary said, and that’s the rationale behind some initial steps he’s taking starting today to help the department attract new people with talent and expertise “and who want to contribute to the Force of the Future, even if only for a time or a project.”

In one such effort, the department is establishing a DoD branch of the U.S. Digital Service, an outgrowth of the tech team that helped to rescue healthcare.gov, the secretary said.

The team will help to solve some of DoD’s most intractable IT and data problems, Carter said, noting that “we have our very first team … already in the Pentagon working on transferring electronic health records from DoD to the [Department of Veterans Affairs].”

U.S. Digital Service

Another initiative Carter announced today takes advantage of the elements that make Silicon Valley “a nexus for innovation” -- an experimental Silicon Valley partnership called the Defense Innovation Unit-X, or DIUX. The unit will scout emerging and breakthrough technologies and build direct relationships to DoD.

This is “first-of-a-kind [partnership] for us, staffed by some of our best active-duty and military personnel, plus key people from the reserves who live here, who are some our best technical talent,” Carter said.

Building New Relationships

The team will strengthen existing relationships and build new ones while functioning as a local interface node for the rest of the department, the secretary said. Down the road, he added, “they can help startups find new work to do with DoD.”

Next, Carter said, the department will open a door in the other direction, from our best government technologies to industry and then back.

An existing program called Secretary of Defense Corporate Fellows sends about 15 DoD people a year out to commercial companies such as Oracle, Cisco, FedEx and others, he said.

“Right now we don’t effectively harness what they’ve learned when they come back, … so we’re going to try expanding that fellows program into a two-year gig -– one year in a company and one year in a part of DoD with comparable business practices,” the secretary said. “That way, we have a better chance to bring the private sector’s best practices back into the department.”

To invest in the most promising emerging technologies, Carter said, the department needs the creativity and innovation that comes from startups and small businesses.

“This is particularly important, because startups are the leading edge of commercial innovation,” he said, “and right now, DoD researchers don’t have enough promising ways to transition technologies that they come up with to application. I want to fix that too.”

Borrowing on the success of an intelligence community partnership with the independent nonprofit startup-backer In-Q-Tel, Carter said the department has proposed and In-Q-Tel has accepted a pilot project to provide innovative solutions to DoD’s most challenging problems.

The department will make a small investment with In-Q-Tel to leverage the nonprofit’s proven relationships and apply its approach to DoD, he added.

The Best Partners

“As secretary of defense, my mission is to make sure our military can defend our country … and we’re at our best when we have the best partners,” Carter said. “Knowing how we’ve worked together in the past and how critical your work is to our country, strengthening this partnership is very important to me.

“We have a unique opportunity to build bridges and rebuild bridges [in the commercial tech sector] and renew trust,” he continued. “That’s why I’m visiting some other companies here this afternoon and meeting with a group of tech leaders tomorrow. I want to learn how in the years to come a new level of partnership can lead to great things. That’s what’s possible through partnership.”

SPECIAL OPS WEAKENING TERRORISTS SAYS ASSISTANT SECRETARY OF DEFENCE LUMPKIN

FROM:  U.S. DEFENSE DEPARTMENT

Right:  Michael D. Lumpkin, assistant secretary of defense for special operations and low-intensity conflict, addresses the Defense Department's policy and programs to counter threats to the nation from terrorism and irregular warfare during a hearing of the Senate Armed Services Committee's subcommittee on emerging threats and capabilities, April 21, 2015. DoD screen shot.
 
Special Ops Forces Weakening Terrorist Groups, DoD Official Says
By Terri Moon Cronk
DoD News, Defense Media Activity

WASHINGTON, April 21, 2015 – U.S. special operations forces are successfully taking direct action against multiple global terrorist organizations while building U.S. partner capacity, a top Defense Department official told a Senate panel today.

Michael D. Lumpkin, assistant secretary of defense for special operations and low-intensity conflict, addressed DoD’s policy and programs to counter threats to the nation from terrorism and irregular warfare during a hearing of the Senate Armed Services Committee’s subcommittee on emerging threats and capabilities.
Special operations forces provide “a small but vital component of our comprehensive approach to counterterrorism,” Lumpkin said, taking steps to understand and address multiple global threats including terrorist networks, a flow of foreign fighters, the proliferation of weapons of mass destruction and activities undertaken or sponsored by other states.

Deployed around the world, special operations forces work closely with U.S. allies and partners to leverage the nation’s respective strengths and capabilities against common threats, he added.

AUMF Critical to Special Forces

The nation’s special operations forces are a “unique asset,” Lumpkin said, an asset that can be effective only when DoD has authority to employ them properly through Authorized Use of Military Force legislation.

“I fully support our president’s AUMF to counter the Islamic State of Iraq and the Levant,” the assistant secretary said, adding that the authorization would “provide appropriate flexibility to confront ISIL’s affiliates where conditions merit.”

The president’s proposed legislation also would signal to U.S. allies and enemies that the United States is serious about addressing future permutations of this expanding threat.

“I urge you to favorably consider it,” Lumpkin told the panel.
By making thousands of strikes against ISIL leadership and its forces, special operations forces weakened the enemy’s ability to exert external territorial control and challenged the foundation of its propaganda, he said.

Special Forces Expanding its Reach

Yet while U.S. special operations forces work to destroy ISIL in Syria and Iraq, they also are expanding their reach into Africa and Southeast Asia, Lumpkin said.

“The recent killings of civilians in Afghanistan, Libya, Yemen [and] Tunisia … highlight the expanding nature of the threat,” he pointed out. In West Africa, special operations forces are partnered with local and European allies to degrade the extremist Islamic group Boko Haram, which recently pledged allegiance to ISIL, Lumpkin said.

With what he described as a relatively modest investment of personnel and resources, he said, special operations forces and U.S. allies are exerting “significant pressure” on Boko Haram and its facilitation network.
Concern About Libya

“I’m deeply concerned that the lack of unity of government and the deteriorating situation in Libya has created a safe haven for militias and terrorist organizations,” Lumpkin said. “ISIL’s increased popularity and presence in Libya highlight the need to quickly achieve a lasting political solution.”

Across Africa, special operations forces are working with local and regional forces and European allies to degrade terrorist groups, Lumpkin noted. “These efforts have had significant disruptive effects on these organizations,” he said.
Special Ops Continue Work in Yemen

Lumpkin said he is troubled by the ongoing military aggression the Houthis are perpetuating in Yemen, and by the resulting unstable security conditions that are widespread in that country. But special operations forces will continue to contribute to the broader U.S. efforts to restore stability in Yemen, and degrade al-Qaida in the Arabian Peninsula,” he told the panel.

The U.S. special operations forces represent a relatively small slice of the U.S. government’s efforts against these threats, Lumpkin said. “However,” he added, “they are achieving meaningful and positive effects.”

CDC REPORTS ON TRAUMATIC INJURIES OF WORKERS AT HEALTH CARE FACILITIES

FROM:   CENTERS FOR DISEASE CONTROL AND PREVENTION
Occupational Traumatic Injuries Among Workers in Health Care Facilities — United States, 2012–2014

Injury prevention measures that reduce the risks associated with nurse and nurse assistant duties are urgently needed. Safety cultures that emphasize continuous improvement and support resources, such as routine use of lifting equipment and training, can protect health care personnel from disabling injuries. The Occupational Health Safety Network is a web-based portal that collects data about injuries among healthcare personnel at U.S. health care facilities to help target prevention efforts and measure their impact. This report states that between 2012 and 2014, the rates of patient handling and workplace violence injuries were highest among nurse assistants and nurses; rates of slips, trips, and falls were high for nursing jobs and for non-patient care staff. During the period, workplace violence injury rates increased for all job classifications and nearly doubled for nurse assistants and nurses

SEC ANNOUNCES WHISTLEBLOWER AWARD OF OVER ONE $ MILLION

FROM:  SECURITIES AND EXCHANGE COMMISSION
04/22/2015 11:15 AM EDT

The Securities and Exchange Commission today announced an award of more than a million dollars to a compliance professional who provided information that assisted the SEC in an enforcement action against the whistleblower’s company.

The award involves a compliance officer who had a reasonable basis to believe that disclosure to the SEC was necessary to prevent imminent misconduct from causing substantial financial harm to the company or investors.

“When investors or the market could suffer substantial financial harm, our rules permit compliance officers to receive an award for reporting misconduct to the SEC,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “This compliance officer reported misconduct after responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.”

The whistleblower in this matter will receive between $1.4 million and $1.6 million.  Whistleblower awards can range from 10 percent to 30 percent of the money collected in a successful enforcement action with sanctions exceeding $1 million.  By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose information that might directly or indirectly reveal their identities.

Since its inception in 2011, the SEC’s whistleblower program has paid more than $50 million to 16 whistleblowers who provided the SEC with unique and useful information that contributed to a successful enforcement action.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.  No money is taken or withheld from harmed investors to pay whistleblower awards.

THREE SENTENCED FOR ROLES IN $29 MILLION MEDICARE FRAUD CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, April 21, 2015
Operator of Detroit Adult Day Care Center and Two Home Health Care
Company Owners Sentenced in $29 Million Medicare Fraud Conspiracy

The former operator of a Detroit adult day care center and two former owners of Detroit-area home health care companies were sentenced to prison today for their roles in a $29 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

Felicar Williams, 51, of Dearborn, Michigan, was sentenced to five years in prison and ordered to pay $2,431,018 in restitution, representing the amount paid by Medicare for Williams’ fraudulent claims.  Abdul Malik Al-Jumail, 54, and Jamella Al-Jumail, 25, both of Brownstown, Michigan, were sentenced to 10 years in prison and four years in prison respectively.  Both were also ordered to pay $8,389,541 and $589,516 in restitution, respectively, the amounts paid by Medicare for their fraudulent claims.  The sentences were imposed by U.S. District Judge Denise Page Hood of the Eastern District of Michigan in Detroit.

All three defendants were convicted on Sept. 30, 2014, after a 12-week jury trial in the Eastern District of Michigan.  Williams was convicted of conspiracy to commit health care fraud and conspiracy to receive health care kickbacks.  Abdul Malik Al-Jumail and Jamella Al-Jumail were each found guilty of conspiracy to commit health care fraud.  Abdul Malik Al-Jumail was also found guilty of conspiracy to pay and receive health care kickbacks.  Jamella Al-Jumail was also found guilty of destroying documents in connection with a federal investigation.

According to the evidence at trial, Williams billed Medicare, through her company, Haven Adult Day Care Center LLC, for psychotherapy services that were not actually provided.  The evidence demonstrated that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased.  Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail so that he could use it to submit fraudulent claims to Medicare.  

The evidence further showed that Abdul Malik Al-Jumail obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered.  Like her father, the evidence demonstrated that Jamella Al-Jumail billed Medicare for home health services and physical therapy that were not actually provided.  The evidence at trial also showed that, the day her father was arrested, Jamella Al-Jumail told an employee to retrieve falsified patient medical records from their company, which she and others later burned.

The case was investigated by the FBI, HHS-OIG and the IRS, 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 Eastern District of Michigan.  The case was prosecuted by Trial Attorneys Christopher Cestaro, Brooke Harper and William Kanellis of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Patrick Hurford of the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 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.

FORMER EX-IM BANK LOAN OFFICER PLEADS GUILTY TO TAKING OVER $78,000 IN BRIBES

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, April 22, 2015
Former Loan Officer at Export-Import Bank Pleads Guilty to Accepting Over $78,000 in Bribes

A former loan officer at the Export-Import Bank of the United States (Ex-Im Bank) pleaded guilty in federal court today for accepting more than $78,000 in bribes in return for recommending the approval of unqualified loan applications to the bank, among other misconduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Michael T. McCarthy of the Export-Import Bank of the United States and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.      

Johnny Gutierrez, 50, of Stafford, Virginia, pleaded guilty before U.S. District Judge Gladys Kessler of the District of Columbia to one count of bribery of a public official.  A sentencing hearing is scheduled for July 20, 2015.

“Gutierrez risked both taxpayer dollars and the integrity of the Ex-Im Bank for his personal financial gain,” said Assistant Attorney General Caldwell.  “Those charged with serving the public will be held accountable when they seek personal enrichment at the public’s expense.”

“Gutierrez betrayed the trust and confidence of the hardworking Ex-Im Bank employees and the U.S. taxpayers,” said Acting Inspector General McCarthy.  “The Office of Inspector General will continue to aggressively and diligently investigate all allegations of waste, fraud, and abuse related to Ex-Im Bank programs.”

“In his role as a loan officer, Gutierrez betrayed the trust that was placed in him by fellow citizens and took bribes in exchange for providing favorable action on loan applicants,” said Assistant Director in Charge McCabe.  “The FBI, with our partners, will continue to investigate and expose fraudulent schemes that tarnish the good and ethical work of the U.S. government.”

According to his plea agreement, Gutierrez was a loan officer for the Ex-Im Bank based in Washington, D.C.  The Ex-Im Bank is the federal agency responsible for promoting the export of U.S. goods to foreign countries through the guarantee of domestic loans to foreign buyers.  As an Ex-Im Bank loan officer, Gutierrez was responsible for conducting credit underwriting reviews for companies and lenders submitting financing applications to the Ex-Im Bank.

As part of his guilty plea, Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.

Specifically, Gutierrez admitted that he intentionally ignored the fact that one company had previously defaulted in 10 previous transactions guaranteed by the bank, causing the Ex-Im Bank to lose almost $20 million.  Despite these defaults, Gutierrez accepted bribes to continue to recommend the approval of the company’s loan applications.  Additionally, Gutierrez admitted that he accepted bribes from a financing broker to expedite applications submitted by the broker, and that he privately assisted the broker to improve its applications before submission to the bank.  In exchange, Gutierrez was to receive half of the broker’s profit on the transactions financed by the bank.  Further, Gutierrez disclosed to the broker inside information about financing applications submitted to the Ex-Im Bank, so that the broker could solicit the applicants as clients.

The case was investigated by the Inspector General of the Export-Import Bank of the United States and the FBI, with significant assistance provided by the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Washington Field Office.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section.

PREDICTABILITY IN THE SPREAD OF DISESE AMONG SPECIES

FROM:  NATIONAL SCIENCE FOUNDATION
Earth Day: Disease spread among species is predictable
Study in California grassland expands understanding of biodiversity and management of emerging diseases

On Earth Day, a study of disease dynamics in a California grassland has revealed fundamental principles underlying the spread of pathogens, or disease-causing microbes, among species.

The results, announced today in the journal Nature, have implications for the maintenance of biodiversity and for addressing practical problems related to plant disease.

Researchers at the University of California, Santa Cruz, studied the phenomenon of "pathogen spillover" in grassland species on the UC Santa Cruz campus.

They found that the amount of disease present on each species could be predicted by the abundance of its close relatives in the grassland. When there were many individuals of the same or similar species living close together, pathogens spread more quickly.

Perhaps unexpectedly, that in turn promotes biodiversity by creating openings for less common species that are not attacked by these same pathogens.

Link between community structure and individual disease vulnerability

The findings reveal a tight link between the structure of a plant community and the vulnerability of individual species to disease.

"These scientists demonstrate that the relatedness of species in communities is an important predictor of disease prevalence," said Alan Tessier, acting director of the National Science Foundation's (NSF) Division of Environmental Biology, which funded the research.

The researchers were able to predict which plant species introduced into the grassland would be most strongly affected by naturally-occurring diseases.

Ingrid Parker, an ecologist and evolutionary biologist at UC Santa Cruz and first author of the paper, said the study adds an important new dimension to a longstanding concept in ecology known as the "rare species advantage."

Diseases take greater toll on common species

"The rare species advantage is thought to be a major driver of biodiversity in natural ecosystems," Parker said. "Most pathogens are not host specialists--they can easily move from one species to another. Whether pathogens 'spill over' depends on how closely related other species nearby are.

"Our study shows that it's the structure of the whole community around a species that affects its vulnerability to disease."

Large-scale experiment with 44 plant species

In a large-scale experiment, the researchers introduced 44 plant species from outside California. (The plants were removed before they reproduced.)

The biologists found that species with few close relatives in the grassland escaped disease, while those closely related to many resident species always showed high levels of disease.

The researchers were able to make surprisingly accurate predictions of disease in introduced species based on their phylogenetic, or evolutionary, distance from local species.

"It was kind of shocking how well we were able to predict disease at a local scale," Parker said.

Modeling "PhyloSusceptibility"

To incorporate the phylogenetic distance between species into their predictions of disease dynamics, the researchers used a "PhyloSusceptibility model" developed by scientist Gregory Gilbert at UC Santa Cruz and two other paper co-authors, Roger Magarey and Karl Suiter of North Carolina State University, who work with the U.S. Department of Agriculture's (USDA) Animal and Plant Health Inspection Service.

The model is based on USDA's global database of fungal pathogens and host plants, and can be used to predict the probability of two species sharing a pathogen.

"If a plant pathogen from Brazil suddenly shows up in southern California, you want to know what plants in California are most likely to be attacked," Gilbert said.

By showing that the PhyloSusceptibility model makes accurate predictions, the results suggest a range of potential applications.

The PhyloSusceptibility model could help avoid disease problems affecting proposed horticultural imports or reforestation projects.

It could also be used in agriculture to design intercropping or rotation systems to decrease crop disease.

Vulnerability of local species to "pathogen spillover"

Imported plants can bring new pathogens and pests into an area. The PhyloSusceptibility model could be used to assess the vulnerability of local species to pathogen spillover from such plant introductions, the scientists say.

While the PhyloSusceptibility model used in this study was based on data for fungal pathogens, Gilbert said the team has also created versions based on data for eight other groups of pests and pathogens, including insects, nematodes, bacteria and viruses.

In addition to Parker, Gilbert, Magarey and Suiter, the co-authors of the study include UC Santa Cruz researchers Megan Saunders, Megan Bontrager, Andrew Weitz and Rebecca Hendricks.

USDA also funded the work.
-NSF-
Media Contacts
Cheryl Dybas, NSF

FTC BARS AUTO SHIPMENT BROKER FROM TOUTING REVIEWS IT PAID CONSUMERS TO WRITE

FROM:  U.S. FEDERAL TRADE COMMISSION
FTC Approves Final Order Barring AmeriFreight from Deceptively Touting Online Consumer Reviews and Failing to Disclose Incentives It Provided to Reviewers

Following a public comment period, the Federal Trade Commission has approved a final consent order with AmeriFreight, an automobile shipment broker, which stops the company from touting its highly rated online reviews while failing to disclose that the company compensated consumers to write them.

According to the FTC’s February 2015 complaint, AmeriFreight represented that its online reviews were those of satisfied customers, but failed to disclose that AmeriFreight compensated the reviewers with discounts and incentives. AmeriFreight gave consumers $50 discounts to write favorable reviews, and offered consumers the chance to win an additional $100 if their review was selected for a monthly prize.

The final order settling the FTC’s complaint prohibits AmeriFreight from misrepresenting that their products or services are highly rated or top-ranked based on unbiased consumer reviews, or that customer reviews are unbiased. It also requires the company to clearly and prominently disclose any material connection, if one exists, between the company and its endorsers.

PRESIDENT'S STATEMENT ON CONFIRMATION OF LORETTA LYNCH AS ATTORNEY GENERAL

FROM:  U.S. DEFENSE DEPARTMENT
April 23, 2015
Statement by the President on the Confirmation of Loretta Lynch as Attorney General

Today, the Senate finally confirmed Loretta Lynch to be America’s next Attorney General – and America will be better off for it.  Loretta has spent her life fighting for the fair and equal justice that is the foundation of our democracy.  As head of the Justice Department, she will oversee a vast portfolio of cases, including counterterrorism and voting rights; public corruption and white-collar crime; judicial recommendations and policy reviews – all of which matter to the lives of every American, and shape the story of our country.  She will bring to bear her experience as a tough, independent, and well-respected prosecutor on key, bipartisan priorities like criminal justice reform.  And she will build on our progress in combatting newer threats like cybercrime.  Loretta’s confirmation ensures that we are better positioned to keep our communities safe, keep our nation secure, and ensure that every American experiences justice under the law.

ASSISTANT AG CALDWELL'S REMARKS ON DEUTSCHE BANK INTEREST RATE MANIPULATION CASE

FROM:  U.S. JUSTICE DEPARTMENT
Assistant Attorney General Leslie R. Caldwell Delivers Remarks for the Deutsche Bank Manipulation of Libor Conference Call
Washington, DCUnited States ~ Thursday, April 23, 2015

Today we announce the latest law enforcement action in our ongoing criminal investigation of the manipulation of LIBOR, the London Interbank Offered Rate, which is a critical benchmark interest rate used throughout the world.  I am pleased to be joined on this call by my colleague and friend, Assistant Attorney General Bill Baer of the Antitrust Division.

Today’s resolution of the LIBOR investigation with Deutsche Bank is in some respects the most significant one yet.  Deutsche Bank’s London subsidiary has agreed to plead guilty to wire fraud in connection with its role in manipulating LIBOR.  And the parent-level bank is entering into a deferred prosecution agreement that requires a corporate monitor.  This is the first LIBOR resolution that imposes a monitor.  Deutsche Bank is paying to DOJ the largest criminal penalty imposed yet in the LIBOR resolutions, a total of $775 million.

Today’s guilty plea, significant financial penalty, deferred prosecution agreement and corporate monitor reflect the department’s consideration of several factors, including the seriousness of Deutsche Bank’s misconduct and the level of cooperation Deutsche Bank provided in the government’s investigation.  Deutsche Bank’s cooperation at the outset of the government’s investigation was not full and complete, but it improved over time, and today’s resolution takes that fact into account.

Deutsche Bank’s manipulation of LIBOR and EURIBOR, the Euro inter-bank offered rate, was long term and pervasive.  As part of the resolution, Deutsche Bank has agreed to a detailed statement of facts that sets forth its criminal conduct.  From at least 2003 through January 2011, dozens of the bank’s traders requested that the bank’s LIBOR and EURIBOR submitters contribute rates that would benefit the traders’ trading positions.  And in brazen conflicts of interest, certain traders were also LIBOR submitters for the currency they were trading.  So the very traders who had an interest in the LIBOR fix were the ones submitting the rates on behalf of the bank.  Deutsche Bank structured its trading group in another way that benefitted the traders at the expense of submitting fair and accurate rates: certain LIBOR submitters were supervised by traders of that currency who stood to benefit from LIBOR fixes that were favorable to their trading positions.  Deutsche Bank’s manipulation involved every major benchmark currency: U.S. Dollar LIBOR, Yen LIBOR, Swiss Franc LIBOR, Sterling LIBOR and EURIBOR.

As a result, Deutsche Bank’s U.K. subsidiary, DB Group Services (U.K.) Ltd, which employed many of the individuals who engaged in the scheme, has agreed to plead guilty to wire fraud.  And Deutsche Bank AG has entered into a parent-level, three-year deferred prosecution agreement, with a corporate monitor, to resolve wire fraud and antitrust charges in connection with LIBOR manipulation.

Together with penalties that Deutsche Bank is paying to our regulatory partners at the U.K. Financial Conduct Authority, the CFTC and the New York State Department of Financial Services, Deutsche Bank is paying approximately $2.5 billion in total.

The important resolution we are announcing today is just the latest action in our ongoing and active investigation.  We have charged 12 individuals to date, and three of those have already pleaded guilty.  The other charges are pending and the defendants are presumed innocent.  We have also resolved the LIBOR investigation with five other banks – six including Deutsche Bank.  These actions reflect the department’s continued commitment to investigating and prosecuting financial fraud and protecting U.S. markets.  And our LIBOR investigation is far from over.  We have more work to do – and we’re doing it.  Today’s resolution does not provide coverage against any individuals, and Deutsche Bank has agreed to continue cooperating in our investigation.

Together with our law enforcement partners at the FBI and our regulatory partners here and abroad, we will continue to gather evidence of LIBOR manipulation and bring the accountable institutions and individuals to justice.

I would like to thank the team of prosecutors and paralegals from the Criminal Division’s Fraud Section and the Antitrust Division who have worked tirelessly on this matter, as well as the many agents, accountants and financial analysts at the FBI for their excellent work.  I am also grateful to the Criminal Division’s Office of International Affairs for their help, and I would like to thank the CFTC, the U.K. Financial Conduct Authority, the Securities and Exchange Commission and the U.K. Serious Fraud Office for their assistance as well.

U.S. EXTENDS WARMEST REGARDS TO AUSTRALIA AND NEW ZEALAND ON ANZAC DAY

FROM:  U.S. STATE DEPARTMENT
Australian and New Zealand Army Corps (ANZAC) Day
Press Statement
John Kerry
Secretary of State
Washington, DC
April 23, 2015

On behalf of President Obama and the people of the United States of America, it is my pleasure to extend our warmest regards, this April 25th, to the people of Australia and New Zealand on this very special ANZAC Day.

This year marks the 100th anniversary of Allied forces landing on the Gallipoli peninsula. The countless acts of bravery and heroism, demonstrated over ten months of battle on shores thousands of miles away, ultimately gave rise to a new national consciousness in Australia and New Zealand.

This ANZAC spirit, one defined by endurance, courage, and ‘mateship,’ still lives on in a shared commitment to individual rights and the rule of law, open and fair economic systems, and democratic freedoms. The United States is proud of our enduring cooperation with Australia and New Zealand in pursuit of these common ideals. We continue to work together on a wide range of issues, such as providing disaster relief and supporting good governance in the Pacific; promoting free trade and prosperity through the Trans-Pacific Partnership; and countering violent extremism and defending fundamental liberties at home and abroad.

As we honor all members of the Australia and New Zealand Army Corps, past and present, know that the United States stands firmly with Australia and New Zealand as a true friend and partner. We will forever remember the heroic efforts of 1915 and the brave men and women who made the ultimate sacrifice in defense of freedom.

I wish you the best on this 100th ANZAC Day. May we forever uphold the ANZAC spirit in our pursuit of peace and prosperity around the world.

Statement on the Deaths of Two Hostages in a U.S. Counterterrorism Opera...