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Tuesday, April 25, 2017

Construction Company Officer Sentenced to Prison for Conspiring to Defraud Government



Defendant Illegally Obtained Federal Contracts Meant for Small, Disadvantaged Businesses

Michelle Cho, an officer of Far East Construction Corporation (Far East) and other construction companies, was sentenced today to six months in prison and 24 months of supervised release on a federal charge of conspiring to commit wire fraud. Cho was also ordered to pay forfeiture in the amount of $169,166 and pay a criminal fine in the amount of $35,000.

The sentencing was announced by Acting Assistant Attorney General Andrew Finch of the Justice Department’s Antitrust Division, U.S. Attorney Channing D. Phillips of the U.S. Attorney’s Office for the District of Columbia, Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office, Acting Inspector General Hannibal “Mike” Ware for the U.S. Small Business Administration (SBA), Inspector General Carol Fortine Ochoa of the U.S. General Services Administration (GSA), Special Agent in Charge Brian J. Reihms of the Central Field Office of the Defense Criminal Investigative Service (DCIS) and Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

According to court documents, Cho was an initiator and mastermind of a scheme lasting more than five years to defraud a disadvantaged persons’ business assistance program of tens of millions of dollars. Cho utilized two straw companies, including Far East, to conspire with MCC Construction Company (MCC) and others to defraud the SBA. Cho’s two companies were eligible to receive federal government contracts that had been set asides for small, disadvantaged businesses under the SBA 8(a) program. Cho and MCC understood that MCC would illegally perform all of the work on these contracts and pay three percent of the proceeds to Cho’s companies rather than have Cho’s companies perform at least 15 percent of the work as required by the SBA 8(a) program. In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small, disadvantaged businesses.

The court documents also state that Cho and MCC violated the provisions of the SBA 8(a) program, which is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.” To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meets the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success. Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.

Cho, 45, of Downers Grove, Illinois, was charged on Oct.12, 2016, in the U.S. District Court for the District of Columbia with one count of conspiring to commit wire fraud. She pleaded guilty on Nov. 15, 2016, and was sentenced today by the Honorable Ketanji Brown Jackson.

MCC pleaded guilty on Feb. 2, 2016, to conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses and agreed to pay $1,769,924 in criminal penalties and forfeiture. Thomas Harper, another former officer and owner of MCC, pleaded guilty on June 22, 2016, to conspiring to obstruct proceedings before a department or agency. He is to be sentenced on May 15, 2017. Walter Crummy, another former officer and owner of MCC, pleaded guilty on Aug. 23, 2016, to conspiring to commit wire fraud and was sentenced earlier this month to a year of probation, two months of which were home confinement, and forfeiture in the amount of $105,618.

The investigation was conducted by the FBI’s Washington Field Office, the Inspector General for the Small Business Administration (SBA), the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS) and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

The prosecution was handled by Assistant U.S. Attorney John Marston and Trial Attorney Justin P. Murphy of the Antitrust Division.

Monday, April 24, 2017

Southern California Residents sentenced to Prison for Hiding Millions of Dollars in Secret Foreign Bank Accounts



Failed to Report Swiss and Israeli Accounts Held for Over a Decade

Three Orange County, California residents were sentenced to prison today for willfully failing to report their foreign bank accounts in Switzerland and Israel, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

Dan Farhad Kalili, 55, a resident of Irvine, California, was sentenced to serve 12 months and one day in prison; his brother, David Ramin Kalili, 52, a resident of Newport Coast, was sentenced to serve eight months in prison; and his brother-in-law, David Shahrokh Azarian, 67, also a resident of Newport Coast, was sentenced to serve eight months in prison.

According to documents and information provided to the court, Dan Kalili, David Kalili and Azarian willfully failed to file with the Department of Treasury Reports of Foreign Bank and Financial Accounts (FBARs) regarding secret bank accounts in Switzerland and Israel that each maintained and controlled, many for well over a decade. These secret accounts held assets that reached into the millions of dollars.
 
“For more than a decade, Dan Kalili, David Kalili and David Azarian hid millions in secret offshore accounts,” said Acting Deputy Assistant Attorney General Goldberg. “They moved their funds from bank to bank and country to country in an effort to escape scrutiny. Today, each was sentenced to prison. The clear message is: the days when a U.S. citizen can safely stash money in an undeclared foreign account are over.”

“Today’s sentencing should reassure every honest, hardworking American taxpayer that schemes designed to conceal income in offshore accounts will not be tolerated,” said Chief Richard Weber of Internal Revenue Service Criminal Investigation (IRS-CI). “IRS-CI will continue to devote resources to investigate individuals who engage in these types of schemes for the purpose of personal gain by defrauding the U.S. Treasury and the American taxpayer.”

From May 1996 through at least 2009, Dan Kalili opened and maintained several undeclared offshore bank accounts at Credit Suisse Group (Credit Suisse) in Switzerland. He also opened and maintained several undeclared offshore bank accounts from at least 1998 through 2008 at UBS AG (UBS) in Switzerland. In July 2006, Dan Kalili opened an undeclared account at UBS in the name of the Colsa Foundation, an entity established under the laws of Liechtenstein. At the end of May 2008, the Colsa Foundation account held approximately $4,927,500 in assets. Similarly, David Kalili opened and maintained several undeclared accounts at Credit Suisse in Switzerland, from February 1999 through at least 2009, and at UBS in Switzerland, from October 1993 through at least 2008. Dan and David Kalili also maintained joint undeclared Swiss bank accounts at both UBS and Credit Suisse beginning in 2003 and 2004. Meanwhile, Azarian opened and maintained several of his own undeclared accounts at Credit Suisse in Switzerland from May 1994 through at least 2009, and at UBS in Switzerland from April 1997 through at least 2008.

Dan Kalili, David Kalili and Azarian took affirmative steps to prevent their assets in UBS and Credit Suisse from being discovered. Dan Kalili opened an undeclared account at Swiss Bank A in the name of the Colsa Foundation and in May 2008, transferred his assets from the UBS Colsa Foundation account to Swiss Bank A. By this time, Bradley Birkenfeld, an American banker who worked for UBS, had been indicted, Martin Liechti, a UBS executive, had been detained and UBS had announced that the Justice Department and the SEC were investigating whether it helped clients avoid paying taxes between 2000 and 2007. Dan Kalili later made a partial disclosure of the Swiss Bank A Colsa account on his individual income tax returns. In 2009, he opened undeclared accounts at Israeli Bank A and at Bank Leumi, both in Israel. In June 2009, he closed the joint undeclared account at Credit Suisse he held with David Kalili, as well as his own undeclared account, and transferred the funds. Shortly before its closure, the undeclared joint account at Credit Suisse held approximately $2,561,508 in assets. As of December 2009, Dan Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,569,973, and his undeclared account at Bank Leumi held assets valued at approximately $2,497,931.

Similarly, in August 2008, David Kalili opened an undeclared account at Israeli Bank A in Israel, into which he transferred funds from his UBS accounts. He later partially declared the Israeli Bank A account on his individual income tax returns. As of August 2009, David Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,369,489.

In August 2008, Azarian, also opened an undeclared account at Israeli Bank A in Israel, and in May 2009, he closed his undeclared account held at Credit Suisse and transferred the funds to Israeli Bank A. Azarian later partially declared this Israeli Bank A account on his individual income tax returns. At the time of its closure, Azarian’s undeclared account at Credit Suisse held assets valued at approximately $1,903,214.

In addition to the term of prison imposed, Dan Kalili was ordered to serve one year of supervised release and to pay $337,443 in restitution. He also agreed to pay a civil penalty of $2,674,329. David Kalili was ordered to serve one year of supervised release and to pay $243,019 in restitution. He also agreed to pay a civil penalty of $1,325.121. Azarian was ordered to serve one year of supervised release and to pay $197,840 in restitution. He also agreed to pay a civil penalty of $951,607.

Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant Chief Jorge Almonte and Trial Attorney Jason M. Scheff of the Tax Division, who prosecuted the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Central District of California for its substantial assistance.

Haitian National Pleads Guilty to Conspiring to Launder Money Derived from Drug Trafficking



A former high-ranking Haitian National Police officer pleaded guilty today in the United States to a money laundering charge in connection with an international narcotics scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Special Agent in Charge Adolphus P. Wright of the U.S. Drug Enforcement Administration (DEA), Miami Field Division, Special Agent in Charge Matthew G. Donahue of  the DEA, Caribbean Division, and Special Agent in Charge Kelly R. Jackson Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office, made the announcement.

Guy Philippe, 49, of Haiti, appeared before U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida, where he pleaded guilty to one count of conspiracy to commit money laundering stemming from his receipt of cash payments derived from the proceeds of narcotics sales that occurred in Miami, Florida, and elsewhere in the United States in the late 1990s and early 2000s.  The defendant is scheduled to be sentenced by Judge Altonaga in Miami on July 5, 2017.

“In addition to its other pernicious effects, drug trafficking corrupts public officials and important government institutions that form the foundation of every democracy.  Philippe – a former high-ranking official in the Haitian National Police – was on the payroll of the drug traffickers for years, receiving more than $1.5 million in bribe payments for protecting drug shipments,” said Acting Assistant Attorney General Blanco.  “The department’s investigation and prosecution of this case for more than a decade demonstrates its commitment to prosecuting all of those who facilitate the international drug trade, including the corrupt officials on the take, and that there is no place to hide from the U.S. justice system.”

“After evading law enforcement for over a decade, Guy Philippe's guilty plea demonstrates the unrelenting commitment of the U.S. government and our foreign counterparts to disrupt and dismantle transnational narco-trafficking and money laundering organizations,” said Acting U.S. Attorney Greenberg.  “Philippe cast aside his duty to protect and serve the people of Haiti.  Instead, he abused his position of authority as a high-ranking Haitian National Police Officer to safeguard drug shipments and launder illicit trafficking proceeds.  The prosecution of those who abuse the public’s trust to facilitate criminal conduct remains a top priority for the U.S. and our Haitian law enforcement allies.”

“It is important that Philippe accepted responsibility for his criminal offenses against the United States and the people of Haiti for his involvement in criminal activities associated with drug trafficking,” said Special Agent in Charge Wright.  “With the increased strength of our law enforcement partners, both in the United States and abroad.  DEA will never abandon nor ever give up on seeking and bringing to justice those responsible for drug trafficking and the laundering of drug money, no matter how many years they attempt to evade capture.”    

 “This international investigation demonstrates the possibilities of success in identifying and producing significant prosecutorial evidence against members of drug trafficking organizations, money laundering organizations and corrupt public figures,” said Special Agent in Charge Donahue.  “Guy Philippe violated public trust and the confidence of the Haitian people and others throughout the Caribbean Region and the United States, by supporting and benefiting from drug trafficking organizations.   The arrest of Guy Philippe is a testament to the collective mission of our federal agencies and exceptional Foreign Police Units.  The Haitian Police, La Brigade de Lutte contre le Trafic de Stup√©fiants (BLTS), is commended for their continued hard work, dedication and assistance provided to the international law enforcement community.  This investigation sends a strong message to criminal organizations globally, that the law enforcement partners throughout the Eastern Caribbean Region will not rest until these violators are brought to justice.” 

“Today Mr. Philippe admitted to accepting bribes while employed as a high-ranking Haitian National Police Officer and to assisting a drug operation that brought cocaine into Miami,” said Special Agent in Charge Jackson.  “IRS-CI is pleased this longtime fugitive has admitted his role in the money laundering conspiracy and will now face the consequences of his actions. IRS-CI will continue to work alongside our global law enforcement partners and provide our financial investigative expertise to dismantle these international drug and money laundering organizations.”

According to admissions made in connection with the plea, beginning in the late 1990s, Philippe knowingly using his position as a high-ranking Haitian National Police Officer to provide protection for the shipments of drugs and drug proceeds arriving into Haiti in exchange for cash payments.  Philippe admitted that from approximately June 1999 to April 2003, he received between $1.5 and $3.5 million in bribes from drug traffickers, knowing that the payments he received constituted proceeds of cocaine sales that occurred in Miami, Florida, and elsewhere in the United States.  Philippe also admitted that he shared a portion of these payments with Haitian National Police officials and other security personnel to ensure their continued support for future drug shipments arriving into Haiti.  Philippe used these payments to purchase a residence in Broward County, Florida; and to support himself and to support his family in the United States.

In addition, Philippe wired proceeds derived from the sale of cocaine, in the amount of $376,000, from banks in Haiti and Ecuador to a joint bank account in Miami.  To avoid detection, Philippe used the names of others to wire the funds to his account.  Philippe further admitted that he arranged for over $70,000 in drug proceeds to be deposited into his account that were conducted in a series of deposits each less than $10,000 to avoid the U.S. federal reporting requirements. 

The DEA and IRS-CI investigated the case. The Criminal Division’s Office of International Affairs, Bureau of Diplomatic Security, DEA Port-au-Prince Country Office, Caribbean Field Division, U.S. Marshals Service Fugitive Task Force, Federal Bureau of Investigation, Immigration and Customs Enforcement Homeland Security Investigations and Enforcement and Removal Operations, and the U.S. Customs and Border Protection’s Miami Office of Field Operations provided assistance in this matter. Assistant U.S. Attorneys Lynn M. Kirkpatrick and Andy R. Camacho of the Southern District of Florida and Senior Trial Counsel Mark A. Irish of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.

The U.S. Attorney’s Office and our federal partners commend the Government of Haiti, including the Ministry of Justice, Haitian National Police, and La Brigade de Lutte contre le Trafic de Stup√©fiants (BLTS) for upholding the rule of law and assisting U.S. counterparts.

This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.