Assistant Attorney General Lanny A. Breuer Delivers Keynote Address at Money Laundering Enforcement Conference

Washington, D.C. ~ Tuesday, October 19, 2010

Thank you for that kind introduction, Rob.   It’s a pleasure for me to be here today.   I want to thank the American Bankers’ Association and the American Bar Association for this opportunity to speak with you.

Over the last quarter century, asset forfeiture and money laundering prosecutions have become integral to our country’s law enforcement strategy.   Whether it takes the form of drug trafficking, fraud, or corruption, crime is – very bluntly – a business.   And like any business, it requires capital.   When we forfeit the proceeds of crime and vigorously prosecute violations of our money laundering laws, we take the profit out of crime and deny criminal organizations the resources they need to survive.

But because crime is a business – and because criminals must constantly hide, move, and access their money – they will always look for, and seek to exploit, vulnerabilities in our financial system or weaknesses in a bank’s compliance structure.   Thankfully, most bankers are committed to keeping dirty money out of their institutions.   They know it is bad for business; bad for their reputations; and bad for the integrity of our banking system.   Frankly, they know it is just plain wrong.   That commitment to protecting our banks is the very reason that so many of you are gathered here for this important conference and I applaud you.   Yet, this view is not shared by all.   Indeed, the Justice Department has recently prosecuted several cases where compliance was simply ignored and short-term profits were put ahead of doing what was right.

We have learned much from these prosecutions.   When compliance officers don’t do their jobs effectively, our first line of defense is breached.   When financial institutions are ambivalent about fostering a culture of compliance – or when they fail to devote the necessary resources to their Bank Secrecy Act and anti-money laundering programs – criminals are able to inject dirty money into our banks and, worse, use that money to advance their illegal activity.  

For these reasons, all of you play a critical role in our efforts.  Money laundering schemes succeed, and criminal enterprises thrive, only when law enforcement is not in a position to detect the dirty money moving surreptitiously through our banks.   But you can be our eyes and ears.  

Today, I would like to speak with you about how the Justice Department is aggressively deploying its resources to prosecute those who threaten the integrity of our financial system.   And, I want to describe how you can be our partner in that fight.

Reinvigorated Criminal Enforcement

Ten years ago, there were no criminal enforcement actions, or even serious regulatory penalties, for the failure of banks to file Suspicious Activity Reports or comply with the Bank Secrecy Act.   Indeed, the first civil penalty against a bank for failing to file SARs was imposed only in September of 2002.

Happily, things have changed.   Since that first civil penalty in 2002, the Justice Department has undertaken a series of investigations of financial institutions, resulting either in the criminal conviction or deferred prosecution of at least 15 different banks – among them Lloyds, Credit Suisse, Wachovia, and Barclays.   Moreover, in the last three years alone, our prosecutions of banks have resulted in forfeitures of nearly $1.5 billion dollars.  

In bringing these enforcement actions, we have not just focused on large banks.   Indeed, the banks have run the full gamut – from Pamrapo Savings Bank, a small community bank in New Jersey that pleaded guilty earlier this year to conspiring to violate the Bank Secrecy Act, to banking giant Wachovia, which admitted in March in a deferred prosecution agreement to failing to establish an anti-money laundering program.

In both of these cases – to put it very plainly – the institutions abdicated their roles as responsible gatekeepers to the American banking system.   Pamrapo, for example, admitted to failing to file CTRs and SARs related to approximately $35 million in illegal and suspicious transactions, including more than $5 million in structured currency transactions.  Wachovia admitted to allowing at least $110 million of drug proceeds to flow unimpeded through its accounts.   As seen in just these two cases, the amount of dirty money that can move through a single bank can be staggering.  

It is not surprising, then, that the use by criminals of our banking system to launder money poses a significant criminal threat.   All you have to do is look at the cartel-driven bloodshed in Mexico, the damage that organized crime syndicates can inflict on our communities, and the millions of dollars that Americans lose each year to fraud, to see why the Justice Department is so committed to prosecuting and punishing money launderers.

Money laundering, moreover, is not the only concern we as law enforcement have when we talk about protecting the integrity of our banks.   Indeed, we have been equally vigilant about going after those banks that have, for their own profit, purposefully violated U.S. sanctions against certain countries – sanctions that are meant not only to protect our banks, but also to affirmatively block specific countries from using our financial institutions.   Last year, for example, Credit Suisse admitted to systematically evading – over the course of a decade – U.S. sanctions against Iran, Sudan, Burma, Libya, and Cuba.   Credit Suisse set up a system – some might even call it a business plan – to deceive the United States by disguising its U.S. dollar clearing on behalf of countries that the United States had banned from our financial system.  The bank’s actions ranged from stripping out the word “Iran” from payment messages, to substituting code words for Iranian customer names, to hand-checking payment messages from Iran to ensure that they had been formatted to avoid U.S. sanctions filters.   Credit Suisse even advised and trained the sanctioned entities on how to avoid automated filters at U.S. banks.   In essence, evading our banking regulations was a service offered by Credit Suisse to sanctioned countries.   As a result, Credit Suisse illegally moved hundreds of millions of dollars through the American financial system.   As part of a deferred prosecution agreement with the Justice Department relating to this conduct, Credit Suisse forfeited $536 million dollars to the government.   

In each of the cases I just described, the bank’s compliance processes fell far short.   Now, I am very aware that at many banks, Bank Secrecy Act and anti-money laundering responsibilities are considered a cost-center.   Setting up an effective compliance program to detect and report suspicious activity means accruing significant expenses for technology, personnel, and training – all without the promise of any short-term profits.   But if there is one message I want to leave you with today, it is that financial institutions simply cannot cut corners on compliance:   having a compliance program that works is worth it.   Indeed, as our recent prosecutions show, failing to adopt and maintain a real compliance structure will have serious consequences.   Frankly, not having a robust compliance program makes absolutely no business sense.

Our New Initiatives

Now, more than ever, the American public wants, and deserves, trust and transparency from the financial industry.   The public wants to see profits, of course, but not at the expense of the security of our banks.   To that end, I want to talk with you today about two new initiatives that I believe will significantly enhance the Justice Department’s enforcement efforts.   Two initiatives that I am proud of.

First is the creation of the Money Laundering and Bank Integrity Unit within the Criminal Division’s Asset Forfeiture and Money Laundering Section.   The creation of this Unit is a testament to, and builds upon, our recent enforcement successes.   The new Unit will be devoted to investigating complex, national and international criminal cases, and will focus on three specific types of violators:   first, financial institutions, including their officers, managers, and employees, when their actions violate the law; second, professional money launderers who sell their services to criminal organizations; and third, those engaged in using the latest and most sophisticated money laundering techniques, such as virtual currency and mobile payment systems.   By standing up this new Unit, we are committing significant resources, and expertise, to prosecuting those who funnel crime proceeds through our banks.   Moreover, we are seeking to staff the Unit with sophisticated, talented and aggressive lawyers – prosecutors and lawyers from the banking industry – those who know the complicated mechanisms by which money moves through the global financial system, and those who understand how organized criminal networks work.  

Our second new initiative is the Kleptocracy Asset Recovery Initiative, which will target and recover the proceeds of foreign official corruption that have been laundered into or through the United States.   In November of last year, at the Global Forum on Fighting Corruption and Safeguarding Integrity, in Qatar, Attorney General Holder pledged to redouble the U.S. commitment to recovering foreign corruption proceeds.   This Initiative represents a concrete step toward fulfilling that commitment.  The Kleptocracy Initiative will involve three key sections in the Criminal Division:   the Asset Forfeiture and Money Laundering Section, which will lead it, and the Office of International Affairs and the Fraud Section, which will provide critical support.   Once fully implemented, this Initiative will allow the Department to recover assets on behalf of countries victimized by high-level corruption, building on the Justice Department’s already robust enforcement of the Foreign Corrupt Practices Act.   Through the Kleptocracy Initiative, the Department will ensure that corrupt leaders cannot seek safe haven in the United States for their stolen wealth.   And, if we uncover such wealth, the Justice Department will forfeit and return this stolen money to its rightful owners – the people and governments from whom it was taken.

Enhanced Enforcement Against Individuals

In addition to these new initiatives, and in conjunction with our already vigorous enforcement efforts against financial institutions themselves, individual wrongdoers must be prosecuted and sent to jail when they play a role in the illegal conduct of the banks for which they work.   Naturally, no company can act criminally without some action by individuals.   And we are acutely aware that we cannot allow companies to be seen as “taking the fall” for executives who may have violated the law.   Yet, we are also cognizant of the challenges in proving the criminal liability of any single person where the real problem in a particular financial institution may be a systemic failure to build a true compliance program.   It is not surprising, then, that the decision whether to prosecute an individual, an entity, or both, is one we have to make very carefully.

As our recent record shows, we are not reluctant to bring criminal charges against executives when they put at risk the stability of their financial institutions.   This past June, for example, the Justice Department obtained an indictment against Lee Bentley Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corporation.   TBW, as it is called, was once one of the largest private mortgage companies in the United States.   Mr. Farkas was charged with perpetrating a massive fraud scheme that resulted in losses exceeding $1.9 billion and that contributed to the failure not just of TBW, but also of Colonial Bank, one of the 50 largest banks in the United States before its collapse in 2009.  

Similarly, this past July, in a prosecution brought by the U.S. Attorney’s Office in Atlanta, two vice presidents of Integrity Bank, a $1 billion financial institution, pleaded guilty to various crimes.   The bank’s former vice president in charge of risk management, Joseph Foster, pleaded guilty to insider trading of Integrity stock.   He admitted to knowing that the bank faced a growing risk that a debtor would default on $80 million in outstanding loans, and sold his stock anyway.   In the same case, Integrity’s former executive vice president in charge of lending, Douglas Ballard, admitted to conspiring with a major bank customer to provide bogus loans in exchange for cash bribes.     

The Integrity and Colonial Bank investigations are just a couple of examples of the Department’s commitment to prosecuting individuals who cheat, deceive, and defraud.   Although not every investigation of a financial institution will result in the indictment of individual executives, we will not let individuals escape from punishment when they intentionally violate the laws that are meant to protect our financial system.  

The Benefits of Cooperation

Before I end, let me discuss with you one additional, and important, issue:   the critical decision that all of you face about how and whether to cooperate with the government when the institutions for which you work are faced with evidence of illegal conduct.  

I have said many times before, and I say to you again now, we want companies that uncover illegal conduct to come forward voluntarily.   Put very simply, if you come forward and fully cooperate with our investigation, you will receive meaningful credit.   “Meaningful credit” does not mean a free pass for doing the right thing.   But, self-reporting and cooperation do carry significant incentives.   Indeed, many options are available to the Justice Department short of prosecution when a banking entity has been truly cooperative:   no charges may be brought at all, or we may agree to a deferred prosecution agreement or non-prosecution agreement, sentencing credit, or a below-Guidelines fine.   Ultimately, every case requires an assessment of the particular facts, as well as the severity and pervasiveness of the conduct and the quality of the bank’s compliance program.   But, in every case of self-disclosure, full cooperation, and remediation, the Department is committed to giving credit where it’s deserved.

The recent resolution of the Barclays Bank matter is a concrete example of what I mean by “meaningful credit.”   In May 2006, Barclays voluntarily disclosed to the Office of Foreign Assets Control four transactions that violated U.S. sanctions.   At that time, Barclays commenced a limited internal investigation into the operation and limitations of its automated filtering system and, in November 2006, the bank exited all relevant relationships with banks subject to U.S. economic sanctions, banks headquartered in sanctioned countries, and the subsidiaries of such banks.   In 2007, after being contacted by federal and state prosecutors, Barclays agreed to cooperate fully and broadened its review to include a comprehensive internal investigation covering the preceding seven years.

Barclays promptly shared the results of its internal investigation with the Department and the Manhattan District Attorney’s Office, as well as with OFAC, and Barclays’ U.S. banking regulators – the Federal Reserve and the New York State Banking Department.   And, most important, from the beginning of the investigation, Barclays took full responsibility for its conduct.   The case was resolved through a deferred prosecution agreement with a term of two years, a forfeiture of $298 million, and compliance by the bank for a period of two years overseen by the Justice Department, OFAC, and the Federal Reserve in coordination with the UK’s Financial Services Authority.

As seen by our prosecution of Barclays, real cooperation has real benefits.   At the same time, cooperation didn’t result in amnesty, nor should it have.   Indeed, while a deferred prosecution is a second chance of sorts for an institution, any bank that is subject to deferred prosecution must understand that it must live up to the terms of its agreement.   If a bank subject to a DPA fails to implement a state-of the-art compliance program, does not live up to its promise of full cooperation, or commits any other crime during the term of the agreement, it will be prosecuted for all of its conduct.  

Conclusion

The Department of Justice is committed to punishing and deterring illegal conduct in our financial system.   But the Department cannot – and does not – do this work alone.   Indeed, nowhere is cooperation among our public and private sector partners more vital than in fighting the increasingly interconnected groups that traffic in drugs, run organized crime syndicates, and commit fraud – and then try to use our banks to hide and move their crime proceeds.   Of course, nothing we do will make us invulnerable, but we can become less vulnerable if we work together.

I want to thank you for all the work you do.   You are the gatekeepers of our financial system, and you have a daunting task.   But the challenges you face cannot be an excuse.   You must institute robust anti-money laundering and compliance programs in order to prevent dirty money from entering our banking system.   And, if you uncover evidence of illegal conduct in your institutions, we need you to come forward.  

The Justice Department continues to work hard to zero in on the profits of crime, and the new Bank Integrity Unit and Kleptocracy Initiative I’ve described today are significant additional steps in that direction.   We hope, and expect, that you will do your best to partner with us on this essential mission.

Thank you so much for having me here today.

North Carolina Doctor Sentenced to Three Years in Prison for Tax Crimes

WASHINGTON – Rodney K. Justin, a medical doctor from Woodleaf, N.C., was sentenced to three years in prison and ordered to pay over $600,000 in restitution to the Internal Revenue Service (IRS) for obstructing the internal revenue laws and for failing to file tax returns for several years, the Justice Department and IRS announced today. The sentence was imposed by Chief Judge James A. Beaty Jr. in Winston-Salem, N.C.

In 2009, a federal jury convicted Justin of four felony counts of corruptly obstructing the administration of the internal revenue laws by sending fake financial instruments called "Bills of Exchange" to the Secretary of the Treasury in Washington, D.C., in purported payment of over $350,000 in taxes. The jury also convicted Justin of willful failure to file tax returns for the tax years 2001 through 2004.

According to the indictment and evidence presented at trial, Justin had not filed a valid tax return since 1997. However, Justin earned in excess of $200,000 each year from 2001 through 2004. Justin sent letters and bogus returns to the IRS advancing false and frivolous tax defier claims purporting to set forth reasons why he was not required to pay taxes. The IRS repeatedly warned Justin that his positions were frivolous and advised him of his legal duty to file returns and pay taxes.

According to the indictment and evidence presented at trial, from 1998 through early 2004, Justin was a client at Guiding Light of God Ministries, also known as American Rights Litigators (ARL), formerly of Mount Dora, Fla. The evidence showed that Justin purchased the four fictitious "Bills of Exchange" he submitted in purported payment of income taxes from ARL.

Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS special agents who investigated the case, as well as Assistant U.S.

Attorney Frank Chut of the U.S. Attorney’s Office for the Middle District of North Carolina and Tax Division Trial Attorney Jeffrey McLellan, who prosecuted the case.

In August 2004, a federal district judge permanently enjoined ARL and two of its promoters from the sale of a nationwide tax scam. In April 2008, a federal court in Florida sentenced two promoters of ARL, as well as ARL client Wesley Snipes, to prison for tax offenses. In August of 2010, three promoters of ARL were sentenced in the District of Columbia to ten years’ imprisonment each along with ARL founder Eddie Ray Kahn, who received a twenty-year sentence.

More information about the Justice Department's Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.

Leader of Property-Flipping Scheme and Husband Sentenced in Family Scheme to Conceal Millions in Profits From the Purchase and Sale of Foreclosed Properties

Concealed from IRS Millions of Dollars of Profits Made from “Flipping” Hundreds of Properties Bought at Foreclosure Auctions

GREENBELT, MD—Chief U.S. District Judge Deborah K. Chasanow sentenced Minh-Vu Hoang, age 58, of Bethesda, Maryland, today to five years in prison followed by three years of supervised release for conspiracy to defraud the Internal Revenue Service and the U.S. Bankruptcy Trustee in connection with a scheme to conceal millions in profits earned from the purchase and sale of hundreds of foreclosure properties. Judge Chasanow also sentenced her husband Thanh Hoang, age 65, also of Bethesda, to a year and a day in prison followed by two years of supervised release for conspiracy to impede the IRS in connection with his role in the scheme.

The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation; Montgomery County State’s Attorney John McCarthy; and Special Agent in Charge Richard McFeely of the Federal Bureau of Investigation.

“This was a transparent scheme to defraud the United States,” stated Rebecca Sparkman, Internal Revenue Service-Criminal Investigation Special Agent in Charge, Washington, D.C. Field Office. “The IRS-Criminal Investigation is proud to be part of the law enforcement team that is having an impact on this criminal activity.”

According to their plea agreements, the Hoangs and other family members purchased property at foreclosure auctions beginning in 1999, and resold some of the properties at a profit. The Hoangs and others deposited and withdrew money from an escrow account for the purchase and sale of properties, and transferred money from the escrow account to business entities they controlled in order to conceal their financial interests in the properties. From 2000 to 2005, the Hoangs and others purchased and sold hundreds of foreclosure properties using the names of their agents or business entities to conceal their involvement in the purchase and sale of the properties, and thereby avoid taxes.

On May 10, 2005, Minh-Vu Hoang filed for bankruptcy in Maryland. She filed several false schedules and a false statement of financial affairs with the bankruptcy court in support of her bankruptcy petition in which she: reported a financial interest in only six properties, knowing that she had an interest in other properties; substantially under-reported the income she earned in 2003 and 2004; and failed to report her interest in various bank accounts.

The court determined today that the tax loss from the fraud was between $2.5 and $7 million. Because the bankruptcy proceedings are ongoing, the court made no separate determination of the bankruptcy loss.

United States Attorney Rod J. Rosenstein thanked the IRS - Criminal Investigation; Special Investigator Daniel N. Wortman of the Montgomery County State’s Attorney’s Office; the Federal Bureau of Investigation and the Greenbelt Office of the United States Trustee Program, the Department of Justice agency that supervises bankruptcy cases and trustees, for their work in this investigation and prosecution. Mr. Rosenstein commended Assistant United States Attorneys David I. Salem and Emily N. Glatfelter, who prosecuted the case.

Former Prince George’s County Police Officer Sentenced to 30 Months in Prison in Bank Break-In

GREENBELT, MD—U.S. District Judge Peter J. Messitte sentenced former Prince George’s County Police officer Eddie Lee Smith, Jr., age 42, of Fort Washington, Maryland, today to 30 months in prison, followed by three years of supervised release, for a scheme to break into a bank to steal money from the ATM. Judge Messitte also entered an order that Smith pay restitution of $10,170.94, for the damage caused to the ATM.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation, Chief Roberto L. Hylton of the Prince George’s County Police Department; Chief Eugene A. Jones of the Prince George’s County Fire/EMS Department; and Prince George’s County State’s Attorney Glenn F. Ivey.

Chief Hylton stated, “We are thankful to the FBI and the U.S. Attorney for their work in investigating this case. We want the community to understand that the lack of integrity of one officer does not reflect the character of the rest of the officers of the Prince George’s County Police Department.”

According to Smith’s plea agreement, on June 9, 2009, Smith, a uniformed Prince George’s County Police Officer met with Earl Blake in Prince George’s County and told Blake that he had a job for him. Smith drove Blake in his marked police cruiser to the SunTrust Bank located at

4625 Old Branch Avenue

in Temple Hills, Maryland. Smith provided Blake with a black bag containing an electric grinder/saw and other materials and instructed Blake on how to cut open the ATM safe. Blake entered the SunTrust Bank through the front door which was unlocked. Although not on duty, Smith stayed in the area of the bank. At approximately 3:30 a.m., the bank alarm company received a fire alarm notification. Members of the Prince George’s County Fire Department responded and saw a Prince George’s County police cruiser sitting on the side of

Beach Road

, adjacent to the bank. The police cruiser followed the fire engine into the bank parking lot and Smith advised the firemen that he had checked the building and it was secured. Firemen smelled the odor of burning metal and moments later one of the firemen saw Earl Blake inside the bank. Blake fled through the rear bank door. Smith ran around the rear of the bank as if to pursue Blake, but he returned moments later and left the scene without speaking to the firemen or contacting his dispatcher. Blake was subsequently arrested by other Prince George’s County Police Department officers who also entered the bank and recovered an electric grinder/saw and observed damage to the ATM located in the rear of the bank. The ATM contained approximately $40,540 which Smith and Blake intended to steal.

Co-defendant Earl Blake, age 54, of Capitol Heights, Maryland, pled guilty to the same charge and was sentenced to five months in prison, followed by four months of home detention with electronic monitoring as part of his three years of supervised release.

United States Attorney Rod J. Rosenstein commended Assistant United States Attorneys

Justice Department Files Brief in Support of Continued Construction of Murfreesboro, Tenn., Mosque

WASHINGTON – The Justice Department’s Civil Rights Division today filed an amicus brief in support of a mosque in Murfreesboro, Tenn., that has met with community opposition and a lawsuit.  

The brief was filed in a state court action in which a group of Murfreesboro landowners are attempting to stop construction of the mosque. Rutherford County, Tenn., is the defendant in the civil case, and had granted permission for the construction of the mosque.   The county is opposing the landowners’ attempt to stop construction.  

The department’s brief argues that Islam is a religion entitled to protection under the First Amendment to the U.S. Constitution, and points out that, “consistent among all three branches of government, the United States has recognized Islam as a major world religion.”   It also argues that mosques are places of religious worship, and that Rutherford County properly determined that it must treat the mosque project as it would other proposals for construction of places of worship.  

“A mosque is quite plainly a place of worship, and the county rightly recognized that it had an obligation to treat mosques the same as churches, synagogue, or any other religious assemblies.  This is not only common sense; it is required by federal law.  The Justice Department is committed to protecting rights of Americans of all faiths to build places of worship and to worship in peace,” said Thomas E. Perez, Assistant Attorney General for Civil Rights.   

“Although this is presently a local matter, the U. S. Department of Justice and the U.S. Attorney’s Office for the Middle District of Tennessee vigorously support the decision of the Rutherford County Regional Planning Commission and the Board of Commissioners in approving the site plans and authorizing construction of a mosque and Islamic center,” said U.S. Attorney Jerry E. Martin. “To suggest that Islam is not a religion is quite simply ridiculous.  Each branch of the federal government has independently recognized Islam as one of the major religions of the world.  As pointed out in our brief filed with the court, had the Rutherford County Government adopted the position the plaintiffs set forth, it would likely be in violation of the Religious Land Use and Institutionalized Persons Act, enacted by the U.S. Congress in 2000.”

The department’s brief comes shortly after the celebration of the 10th anniversary of the Religious Land Use or Institutionalized Persons act (RLUIPA) on Sept. 22, 2010.   RLUIPA protects the rights of religious assemblies and institutions to be free from discrimination in the application of zoning and land-use laws.   In the 10 years since its passage, RLUIPA has helped secure the ability of thousands of individuals and institutions to practice their faiths freely and without discrimination.

In the past 10 years, the department has opened 51 RLUIPA investigations, filed seven lawsuits under RLUIPA’s land-use provisions and participated in 40 privately filed lawsuits.   More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt.   Individuals who believe that they have been victims of discrimination can call the Discrimination Tip Line at 1-800-896-7743, or e-mail the Justice Department at fairhousing@usdoj.gov.

The Civil Rights Division and LGBT rights

By Tracy Russo

Under the leadership of Assistant Attorney General Tom Perez, and with the strong support of Attorney General Eric Holder, the Civil Rights Division of the Department of Justice has worked to reinvigorate its more traditional enforcement responsibilities and transform itself to meet the civil rights challenges of the 21st century.

 Among these challenges is the struggle to achieve equal rights for lesbian, gay, bisexual and transgender (LGBT) individuals.

 This week, Assistant Attorney General Perez joined the Mayor of Cleveland, Frank Jackson, and U.S. Attorney Steve Dettelbach, to celebrate LGBT Heritage in Cleveland. During remarks delivered at the celebration and awards ceremony held in the City Hall Rotunda, Assistant Attorney General Perez said:

 “From our nation’s founding, individuals have fought for their rights, facing dozens of defeats for each victory.  Progress has so often been painfully incremental. But each victory, however small, was motivation enough to keep moving.  And so it has gone with the fight for LGBT equal rights.  For decades now you have stood up to challenge discrimination, misconception and sometimes hatred. And hard-fought victories have been won.  But the people in this room know that we have not yet reached our goal.”

 The Civil Rights Division is committed to advancing the rights of LGBT individuals, and to using its existing authorities in support of LGBT rights.

 Nearly a year ago, the Division received significant new authority to protect LGBT civil rights with the passage of the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, which provides nationwide protection to LGBT individuals from physical attacks based on the victim’s actual or perceived sexual orientation or gender identity.  Significantly, the long overdue law was the first time the words “sexual orientation” and “gender identity” appeared in federal law to protect civil rights of LGBT individuals.    The Department of Justice is committed to vigorously enforcing the Shepard-Byrd law, along with our already existing authorities to forcefully respond to hate-motivated violence, and already has a number of open investigations under the new law.

 Unfortunately, hate crimes are  a symptom of the climate of intolerance towards LGBT individuals that has had a particularly devastating impact on the lives of LGBT youth, as evidenced by the six recent suicides by LGBT teens.  Each of these teens was a victim of bullying, underscoring the challenge we face in ensuring that our schools provide a safe and tolerant environment for all students.

 The Civil Rights Division has used its existing legal authority to hold a school district accountable for the ongoing harassment of a gay teen who failed to conform to gender stereotypes, and the Justice Department is working with the Department of Education and other agencies on the development of a national anti-bullying strategy.

For more information, read Assistant  Attorney General  Perez’s full remarks from the Cleveland LGBT Heritage Celebration.

In the Line of Duty

48 Officers Made Ultimate Sacrifice

An assistant police chief with 27 years of law enforcement experience was shot and killed on an Arkansas highway after stopping a suspected stolen vehicle.

A 30-year-old U.S. Border Patrol agent was shot multiple times while on patrol near San Diego.

A patrol officer in Pennsylvania awaiting backup was ambushed in his police cruiser after responding to a 9-1-1 call.

These three officers, who paid the ultimate price for their desire to serve and protect the public, are just three of the 48 law enforcement officers from around the nation who lost their lives in the line of duty during 2009.

You can read more about the sacrifices made by these brave men and women in the just-released report: Law Enforcement Officers Killed and Assaulted, 2009, an annual reminder of the dangers of policing.

Of the 48 officers killed in the line of duty last year:

… Fifteen were ambushed;

… Eight were involved in arrest situations;

… Eight were performing traffic pursuits or stops;

… Six were answering disturbance calls;

… Five were involved in tactical situations (like high-risk entries);

… Four were investigating suspicious persons or activities; and

… Two were handling, transporting, or maintaining custody of prisoners.

Here’s at look at some of the other data collected on officers killed in the line of duty:

More officers (eight) died from assaults occurring in April.

More officers (13) died from assaults occurring on a Saturday.

More officers (13) died between 8:01 p.m. and midnight than in any other time period.

The average age of victim officers was 38.

The average number of years of law enforcement experience was 12.

Forty-five of the victims were killed with firearms, and three were killed by vehicles used as weapons.

Of the 41 alleged assailants identified in connection with the 48 deaths, 33 had prior criminal arrests.

The report also provides information regarding accidental line-of-duty deaths:

During 2009, the nation lost 47 additional officers to accidents while they were performing their duties.

Thirty-four of these officers died as a result of automobile accidents.

Other officers were killed by vehicles while executing traffic stops or roadblocks, directing traffic, or assisting motorists; in motorcycle accidents; or by crossfire or other firearm mishaps.

Also contained in the report are statistics on assaults on officers:

A total of 57,268 officers were assaulted during 2009.

Of the officers assaulted, the largest percentage (32.6) was responding to disturbance calls (such as family quarrels or bar fights).

The largest percentage of assaults (16.0) took place from 12:01 to 2 a.m., while the lowest percentage of assaults (2.4) took place from 6:01 to 8 a.m.

A total of 61.9 percent of officers assaulted were patrol personnel working alone, while 18.9 percent of the officers assaulted were working in pairs.

Why do we collect and publish this information yearly? In addition to calling attention to these heroic individuals, we hope that the details in this report will be used by law enforcement managers and civic leaders to improve safety strategies and training for those officers who put their lives on the line for us all each and every day.

JUSTICE DEPARTMENT FILES ANTITRUST LAWSUIT AGAINST BLUE CROSS BLUE SHIELD OF MICHIGAN

Department Alleges Agreements with Hospitals Stifle Competition, Resulting in Higher Health Insurance Prices for Michigan Consumers

WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today against Blue Cross Blue Shield of Michigan (BCBSM) alleging that provisions of its agreements with hospitals raise hospital prices, prevent other insurers from entering the marketplace and discourage discounts. The department said that these agreements likely resulted in Michigan consumers paying higher prices for their healthcare services and health insurance.

The state of Michigan joined the department in its lawsuit, which was filed in U.S. District Court in the Eastern District of Michigan.

The challenged provisions are known as most favored nation (MFN) clauses. In the healthcare context, MFN provisions generally refer to contractual clauses between health insurance plans (buyers) and healthcare providers (sellers) that essentially guarantee that no other plan can obtain a better rate than the plan wielding the MFN. Some of the MFNs in this case guarantee the plan an even better rate than given to any other plan or purchaser.

The department alleges in its complaint that BCBSM's MFN clauses in its contracts with hospitals have caused hospitals to increase their prices to BCBSM's competitors and insulated BCBSM from competition. According to the complaint, BCBSM has used MFNs or similar clauses in its contracts with at least 70 of Michigan's 131 general acute care hospitals, including many major hospitals in the state.

"The department's lawsuit alleges that the intent and effect of Blue Cross Blue Shield of Michigan's MFNs is to raise hospital costs for competing health plans and reduce competition for the sale of health insurance. As a result, consumers in Michigan are paying more for their healthcare services and health insurance,"said Christine Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "American consumers deserve affordable healthcare at competitive prices, and the Antitrust Division will vigorously pursue anticompetitive actions that stand in the way of achieving that goal."

The department said that the MFNs require a hospital either to charge BCBSM no more than it charges BCBSM's competitors, or to charge the competitors a specified percentage more than it charges BCBSM, in some cases between 30 and 40 percent. The complaint alleges that BCBSM's use of MFN provisions has reduced competition in the sale of health insurance in Michigan by raising hospital costs to BCBSM's competitors, which discourages other health insurers from entering into or expanding within markets throughout Michigan. The complaint further alleges that BCBSM agreed to raise the prices that it pays certain hospitals to obtain the MFNs, thus buying protection from competition by increasing its own costs.

BCBSM is a Michigan nonprofit healthcare corporation headquartered in Southfield, Mich. It is the largest provider of commercial health insurance in Michigan, with revenues of more than $10 billion in 2009. BCBSM insures more than nine times as many Michigan residents as its next largest commercial health insurance competitor, covering more than 60 percent of Michigan's three million commercially insured residents.

The court will determine a pretrial schedule for the case once BCBSM files its response to the government's lawsuit.

Mission Man Sentenced for Hostage-Taking of Local Businessman

MCALLEN, TX—Domingo Lara III, 26, of Mission, Texas, has been sentenced to 235 months in federal prison for taking a McAllen businessman hostage, United States Attorney José Angel Moreno announced today. Once he is released from prison, he will also serve a five-year term of supervised release, and he was ordered to pay restitution to the victim in the amount of $101,000.

After hearing the arguments from both the government and defense counsel in federal court today, U.S. District Judge Randy Crane handed down the 235-month prison term for seizing, detaining and threatening to kill, injure, and continuing to detain a McAllen businessman in order to compel his family to pay a sum of money as an explicit condition for his release. The court took into account the extent of Lara’s involvement in the hostage taking, noting that Lara had been responsible for collecting the ransom. Lara pled guilty on Jan. 5, 2010.

On Jan. 28, 2008, a McAllen businessman was abducted, detained at gunpoint, and subsequently taken to a trailer home in Mission. Shortly thereafter, co-defendant Gilberto Ivan Gonzalez-Pena, 26, called the victim’s wife and demanded $125,000 in exchange for the release of the victim or else they were going to kill him. The victim’s family paid the ransom on Jan. 30, 2008. Once the ransom was paid, the businessman was released with minor injuries.

Gonzalez-Pena along with two others have also pleaded guilty and have already been sentenced for their roles in the kidnapping. Gonzalez-Pena received 13 years, while Jose Alfredo Gonzalez, 37, and Uvaldo Quintero, 27, were sentenced to 14 years and six years, respectively. Gonzalez-Pena had been one of the individuals who actually abducted the victim at gunpoint and Gonzalez was the one making the phone calls demanding the ransom. Quintero was responsible for releasing the victim once the ransom was paid.

This investigation leading to the charges against Lara and others was conducted by the FBI with the assistance of the McAllen Police Department and was prosecuted by Assistant United States Attorneys Leo J. Leo III and Casey MacDonald.

Couple Had Premature Infant in Back Seat of Their Getaway Car

DALLAS—Waylon McDonald, 32, of Dallas, who pleaded guilty in May 2010, to an indictment charging conspiracy to commit bank robbery and bank robbery, was sentenced late yesterday by U.S. District Judge Jane J. Boyle to 262 months in federal prison, announced U.S. Attorney James T. Jacks of the Northern District of Texas. McDonald must serve the nearly 22-year sentence without parole. His extensive criminal record played a large role in the sentence that he received. Co-defendant Inequa Rushing, 24, also of Dallas, pleaded guilty in April 2010, to the same offenses and was sentenced in August 2010 to 46 months in prison.

According to documents filed, on January 19, 2010, McDonald and Rushing conspired to rob the Comerica Bank, located at 5201 East R.L. Thornton Freeway in Dallas, and robbed the bank that day. Specifically, at approximately 1:50 p.m., Rushing, donning a wig and sunglasses as a disguise, entered the bank and placed her purse and a handwritten note on the counter. Just a few minutes prior to Rushing entering the bank and robbing it, McDonald had walked to the bank’s entrance to “case” it. Rushing’s note stated, “I HAVE A GUN GIVE ME THE MONEY - NO ONE WILL GET HURT.. ‘HURRY’ Bitch!!” The bank teller realized she was being robbed, feared for her life and gave Rushing currency containing a dye pack. Rushing put the money in her purse, exited the bank, and got into the front passenger’s seat of a getaway car that was parked in the bank parking lot. Rushing’s infant son were in the backseat of the getaway car.

As McDonald attempted to drive away from the bank, the dye pack exploded inside Rushing’s purse, spewing red dye and smoke. McDonald grabbed the purse and threw it out of the car window. Police responding to the robbery quickly discovered Rushing’s brown purse and could see the red dye-stained money and assorted identification and personal papers for Inequa Rushing. The police then went to Rushing’s home in Dallas, where they found her and McDonald. Rushing told officers that she had robbed the bank and that McDonald had driven her to and from the bank. A search of the residence revealed the wig, clothing and red dye-stained shoes that Rushing had worn during the robbery. According to the evidence presented in court, the red dye-pack exploded in the getaway car, spraying noxious fumes and dye. Rushing’s four-month-old baby, who was on oxygen because of premature birth, was in the back seat of the getaway car at the time.

The case was investigated by the FBI and the Dallas Police Department. Assistant U.S. Attorney Gary Tromblay was in charge of the prosecution.

Derby Man Who Made Bomb Threats at New Haven Office Building is Sentenced

David B. Fein, United States Attorney for the District of Connecticut, announced that JUAN RIVERA, JR., 43, of Derby, was sentenced today by Senior United States District Judge Ellen Bree Burns in New Haven to two years of probation for making hoax bomb threats at the New Haven office building where he worked. Judge Burns also ordered RIVERA to perform 100 hours of community service.

According to court documents and statements made in court, from March 2001 to June 2009, RIVERA was employed as a maintenance mechanic at the Connecticut Financial Center, a 26-floor office building located at

157 Church Street

in New Haven. During the course of RIVERA’s employment, he became familiar with tenants that maintained offices in the building, including the U.S. Attorney’s Office, the U.S. Probation Office, a U.S. Bankruptcy Court, and the chambers for a Judge of the United States Court of Appeals for the Second Circuit.

In pleading guilty, RIVERA admitted that, on May 22, 2009, he wrote two notes claiming that a bomb would go off that day. The first note, which stated that, “a bomb will go off at noon today,” was placed on a vending machine located on the fourth floor. The second note, which stated that, “a bomb will go off at 1:00 p.m. today,” was placed near a sink in a kitchenette area on the fifth floor. Both notes were placed in areas open and accessible to employees and authorized guests of the tenant that leased the space in the building where the notes were found.

RIVERA has stated that he intended the notes as a joke on one of his co-workers.

When the first note was found at approximately 11:23 a.m., the building was evacuated and authorities were called to search the building. During the course of the search of the building, the second note was found. RIVERA was not in the building when the two notes were discovered.

On May 18, 2010, RIVERA pleaded guilty to one count of conveying false information or perpetrating a hoax.

This case was investigated by agents of the Federal Bureau of Investigation’s Joint Terrorism Task Force and the New Haven Police Department. The case was prosecuted by Assistant United States Attorneys Paul McConnell and Brian Leaming.

U.S. Embassy Employee in Iraq Charged with Theft of Public Funds and Conflict of Interest

WASHINGTON—A foreign national employed at the U.S. Embassy in Baghdad, Iraq, was charged today with theft of public money and acts affecting a personal financial interest in connection with $237,236 in U.S. government funds, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia, and Acting Assistant Director in Charge John G. Perren of the FBI Washington Field Office.

An indictment returned today by a federal grand jury in the Eastern District of Virginia charges Osama Esam Saleem Ayesh, 36, with two counts of theft of public money and one count of acts affecting a personal financial interest, commonly known as a conflict of interest charge. Ayesh was arrested on Aug. 16, 2010, based on a criminal complaint charging him with one count of conflict of interest.

According to the indictment, Ayesh held the position of shipping and customs supervisor at the U.S. Embassy in Baghdad. Ayesh was responsible for preparing the necessary documents and logistical support for customs clearance and delivery of shipments coming into Iraq for the embassy and embassy officials and personnel. While Ayesh worked at the U.S. Embassy in Baghdad, his primary residence was in Amman, Jordan.

The indictment alleges that, between November 2008 and June 2010, Ayesh fraudulently caused $237,236 in U.S. government funds, intended for the payment of services provided to the U.S. Embassy pursuant to two Blanket Purchase Agreements (BPAs), to be sent to a bank account in Jordan that he controlled. The indictment further alleges that, between September 2008 and June 2010, Ayesh participated in the creation and operation of BPAs executed by the U.S. Embassy in Baghdad, in which Ayesh knew that he and his wife had a financial interest. The indictment alleges that Ayesh also knew that he and his wife had a financial interest in the instigation of U.S. electronic funds transfers to pay for services rendered under those BPAs.

The theft of public funds counts each carry a maximum of 10 years in prison and a $250,000 fine. The conflict of interest charge carries a maximum of five years in prison and a $250,000 fine.

The charges contained in the indictment are merely accusations and the defendant is presumed innocent.

The case is being prosecuted by Trial Attorney David H. Laufman of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction, and by Assistant U.S. Attorney Thomas H. McQuillan for the Eastern District of Virginia. Trial Attorney Dan Stigall of the Criminal Division’s Office of International Affairs provided assistance. The case is being investigated by the Office of Inspector General of the U.S. Department of State and the FBI - Washington Field Office as part of the International Contract Corruption Task Force. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate, and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan, and Iraq.

FBI Announces New Website to Assist in Capturing Wanted Bank Robbers

PHOENIX, AZ—Phoenix FBI Special Agent in Charge Nathan Gray announced a new website that will assist the FBI‘s Bank Robbery Task Force and our law enforcement partners in tracking, identifying, and capturing wanted bank robbers throughout Arizona. 

The new website is a joint effort between the FBI Phoenix Division and Electronic Tracking Systems (ETS), a Carrollton, Texas based leader in asset tracking systems. The first of the BanditTracker® sites was designed in 2007 by the FBI and ETS. ETS specializes in tracking and location. In addition, ETS works closely with law enforcement, financial institutions, and businesses to capture bank robbers. The website, www.BanditTrackerArizona.com, features color photos and descriptions of bank robbers. This site will provide 24-hour access for the public, bank employees, and the news media. The public will be able to provide confidential information to law enforcement.

SAC Nathan Gray said, “The system being provided by ETS will greatly enhance the FBI and our law enforcement partners’ capabilities to identify and capture bank robbers. It will also provide an avenue for the public to assist law enforcement in identifying wanted bank robbers which is critical to these types of investigations.”

Joe Ares, Regional Managing Director of ETS said, “We are very pleased that the ETS-facilitated Community Coalition, consisting of financial institutions, law enforcement agencies and our company can provide the unique support offered by the BanditTracker® site to aid our law enforcement partners in Arizona.”

The FBI Bank Robbery Task Force is comprised of the Maricopa County Sheriff’s Office, Mesa Police Department, Phoenix Police Department, and the FBI.

Porterville Man Pleads Guilty to Sexual Exploitation of Minors

Plea Agreement Calls for 120-Year Prison Sentence

FRESNO, CA—United States Attorney Benjamin B. Wagner announced that Steven Patrick Arthur, 33, of Porterville, pled guilty today before Senior United States District Judge Oliver W. Wanger to four counts of sexual exploitation of a minor.

This case is the result of an investigation by the Porterville Police Department with assistance from the Fresno office of the Federal Bureau of Investigation. Assistant United States Attorney David Gappa is prosecuting the case.

According to court documents, between September 2007 and January 2008, Arthur and his co-defendant Jennifer Thurman had at least temporary custody, care, or supervisory control over four minors at their residence in Tulare County. The defendants administered the tranquilizer Ativan to the four minors by placing it in Oreo cookies or drinks that were then given to the minors. Once the minors were unconscious, the defendants produced still and video images of each other engaged in sexually explicit conduct with the victims. At least one image depicted violence and several others depicted sexual acts. Some of the images were then transferred to a computer or to compact digital video discs.

Each count carries a possible sentence of 15 to 30 years in prison, a $250,000 fine, and a lifetime term of supervised release. The plea agreement requests that the court impose a federal prison sentence of 120 years for Arthur. If the court accepts the agreement, this sentencing recommendation will be binding upon the court. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Arthur and Thurman still each face multiple felony charges resulting from an indictment in the California Superior Court, Tulare County. Those cases will be resolved at the conclusion of the federal cases against Arthur and Thurman. Sentencing for Thurman is on December 17, 2010, at 1:30 p.m. Sentencing for Arthur is scheduled for December 13, 2010 at 1:30 p.m.

U.S. Files PCB Cleanup Lawsuit Against 12 Polluters of Wisconsin’s Fox River

WASHINGTON – The Department of Justice’s Environment and Natural Resources Division announced the filing of a major lawsuit today against 10 companies and two municipalities to require continued environmental cleanup work at Wisconsin’s Lower Fox River and Green Bay Site.  The lawsuit also seeks payment of associated government costs and natural resource damages.  The total cleanup costs and damages for the Green Bay Site are expected to exceed $1 billion.  The Superfund lawsuit, brought jointly by the United States and the State of Wisconsin, targets risks to humans and wildlife posed by polychlorinated biphenyls (PCBs) in bottom sediment, banks, and shoreline areas of the Fox River and Green Bay.

In addition to the complaint, the United States and the state of Wisconsin filed a proposed settlement with one of the newly-named defendants, Georgia-Pacific Consumer Products LP.  In the proposed settlement, Georgia-Pacific would agree that it is liable, along with other defendants, for performance of all required cleanup work downstream from a line across the Fox River slightly upstream of its paper mill in the city of Green Bay.  The company also would pay $7 million to reimburse a portion of the government’s unpaid past and future costs.  The proposed settlement is subject to a 30-day public comment period.

The lawsuit will proceed against 11 other non-settling defendants, including: NCR Corporation; Appleton Papers Inc.; CBC Coating Inc. (formerly known as Riverside Paper Corp.); City of Appleton; Kimberly-Clark Corp.; Menasha Corp.; Neenah-Menasha Sewerage Commission; NewPage Wisconsin Systems Inc.; P.H. Glatfelter Co.; U.S. Paper Mills Corp.; and WTM I Co. (formerly known as Wisconsin Tissue Mills Inc.).  

A large amount of cleanup and natural resource restoration work has already been done in the area under a set of partial settlements and an Environmental Protection Agency (EPA) administrative order.  The parties performing the ongoing cleanup work under that order have protested, and they have not agreed to take full responsibility for completing the cleanup or paying all damages for injuries to natural resources, according to the Justice Department.

The complaint by the United States seeks a court order requiring the responsible parties to continue funding and performing the PCB cleanup without delay.  It also seeks monetary damages for decades of PCB-related injuries to fish and birds and for lost recreational opportunities.  By law, any damages recovery will be used to restore or replace the injured natural resources or acquire equivalent resources.

The defendants in the government’s lawsuit include paper companies that contaminated sediment in the Fox River and Green Bay when they made and recycled a particular type of PCB-containing “carbonless” copy paper.  NCR Corporation and its affiliates produced that paper with PCBs from the mid-1950s until 1971.  The suit also names two municipal sewer system operators that discharged relatively large amounts of PCBs to the Fox River.  In 2009, the United States and Wisconsin reached pre-litigation settlements with several other local sewer system operators and a number of companies that made relatively minor contributions to the PCB contamination at the site.

The cleanup remedy at the site was jointly-selected by the EPA and the Wisconsin Department of Natural Resources.  The remedy will remove much of the PCB-containing sediment from the Fox River by dredging.  In other portions of the river, contaminated sediment will be contained in place with specially-engineered caps.  The dredging and capping will reduce PCB exposure and greatly diminish downstream migration of PCBs to Green Bay.  More than $300 million in cleanup work has already been done at the site.  The remaining dredging and capping work could cost an estimated $550 million more.

The U.S. Fish and Wildlife Service and the state and tribal trustees for natural resources in the area also have prepared a related natural resource damage assessment under the Superfund law.  According to that assessment, the additional cost of required natural resource restoration work may approach another $400 million.

Copies of the complaint and the consent decree with Georgia-Pacific are available on the Department of Justice’s website at www.justice.gov/enrd/Consent_Decrees.html.

CVS to Pay Largest Ever Civil Penalty Under Controlled Substances Act

$77.6 million to be paid after retail pharmacy admits to unlawfully selling pseudoephedrine to criminals

( LOS ANGELES) - In an agreement finalized late yesterday, CVS Pharmacy, Inc., the biggest operator of retail pharmacies in the United States, has admitted that it unlawfully sold pseudoephedrine to criminals who made methamphetamine. As part of the agreement with federal prosecutors, CVS has agreed to pay $75 million in civil penalties and to forfeit the $2.6 million in profits the company earned as a result of the illegal conduct.

CVS Pharmacy, a subsidiary of CVS Caremark Corporation, failed to ensure compliance with laws limiting sales of pseudoephedrine, which allowed criminals to obtain a key ingredient used in the manufacture of methamphetamine from CVS stores located primarily in Los Angeles County; Orange County, California; and Clark County, Nevada. Between September 2007 and November 2008, CVS supplied large amounts of pseudoephedrine to methamphetamine traffickers in Southern California, and the company’s illegal sales led directly to an increase in methamphetamine production in California. CVS eventually changed its sales practices to prevent these illegal sales, but it did so only after it became aware of the government’s investigation.

The $75 million portion of the settlement represents the largest civil penalty ever paid under the Controlled Substances Act.

“This historic settlement underscores DEA’s commitment to protect the public’s health and safety against the scourge of methamphetamine,” said Michele M. Leonhart, the Acting Administrator of the Drug Enforcement Administration. “CVS’s flagrant violation of the law resulted in the company becoming a direct link in the methamphetamine supply chain. DEA will continue to work with its state and local counterparts to disrupt the supply of methamphetamine, including inhibiting access to chemicals, such as pseudoephedrine, used to produce methamphetamine.”

ConocoPhillips Company and Sasol North America Agree to Reimburse Costs for Calcasieu Estuary, Bayou Verdine Cleanup

Agreement will reimburse EPA Superfund more than $4.5 million, resolve nearly$1.2 million in natural resource damages assessment costs, and perform removal action and restoration project

WASHINGTON – The Department of Justice, the Environmental Protection Agency and the United States Attorney’s Office announced today, the settlement of claims against ConocoPhillips Company and Sasol North America Inc. to resolve their liability to EPA under CERCLA for contamination in the Calcasieu Estuary of Louisiana.   The Justice Department also announced a settlement of claims for natural resource damages against ConocoPhillips Company and Sasol North America Inc. related to contamination in the Estuary.

Under the terms of a consent decree lodged in the federal district court for the Western District of Louisiana together with a filed complaint, ConocoPhillips and Sasol North America will reimburse the EPA Superfund more than $4.5 million and will complete a removal action valued at about $10 million to clean up Bayou Verdine within the Calcasieu Estuary.   The Louisiana Department of Environmental Quality (LDEQ) is also a plaintiff in the case and party to the settlement.

 “These settlements demonstrate the United States’ and Louisiana’s successful and continuing efforts to hold polluters accountable for contamination in the Estuary,” said Ignacia S. Moreno, Department of Justice Assistant Attorney General for the Environment and Natural Resources Division.  “The responsible parties will fund the cleanup and restore the damaged Estuary.  This will provide substantial benefits to the health and environment of the citizens of Louisiana.”

“The United States Attorney’s Office remains committed to addressing environmental concerns in Calcasieu Parish and throughout our entire district.   Today’s filing is an example of the coordination of federal and state efforts to protect the environment and the health of all area residents,” said United States Attorney Stephanie A. Finley.

“It is important that polluters help pay for cleanup,” said EPA Regional Administrator Al Armendariz.   “Recovering more than $4.5 million is another milestone in our ongoing work to address historical pollution problems in this area of Louisiana.”

Bayou Verdine is a waterway within the Calcasieu Estuary that flows into the Calcasieu River and is located southwest of the City of Westlake and south of the City of Mossville, in Calcasieu Parish, La.   Heavy industry dominates the southern reaches of Bayou Verdine which is the recipient of industrial discharges.

ConocoPhillips and Sasol North America previously entered into an agreement with EPA to perform an Engineering Evaluation and Cost Analysis of Bayou Verdine.   The project documented the presence of hazardous substances in the sediments and water of Bayou Verdine and nearby Coon Island Loop.   ConocoPhillips and Sasol North America also performed a cleanup in the West Ditch area of Bayou Verdine to address high concentrations of contaminants.   The parties entered into negotiations with the Justice Department, EPA and LDEQ to perform a cleanup of Bayou Verdine and resolve their liability for past and future response costs for the entire Calcasieu Estuary.  

Over the past 10 years, EPA has performed numerous investigations at abandoned hazardous waste sites, made decisions on cleanup actions, addressed industrial non-compliance and monitored ozone and other air toxics associated with the Mossville area.   EPA will continue to work with Calcasieu Parish and Mossville to address environmental concerns.  

As part of a comprehensive settlement, the Department of Justice also announced the lodging of a second consent decree to resolve the liability of ConocoPhillips and Sasol North America for natural resource damages in the Estuary resulting from discharges of hazardous substances.   Over the past several years, federal and state trustees worked cooperatively with ConocoPhillips and Sasol North America to assess injuries and to develop a restoration plan.   Under the terms of settlement with state and federal natural resource trustees (the National Oceanic and Atmospheric Administration (NOAA), the Department of the Interior (DOI), the Louisiana Department of Environmental Quality (LDEQ), and the Louisiana Department of Wildlife and Fisheries (LDWF), ConocoPhillips and Sasol North America will reimburse the federal and state trustees a total of nearly $1.2 million for a share of past natural resource damages assessment costs, perform construction of a restoration project selected by the trustees in the Sabine Wildlife Refuge in accordance with the Final Restoration Plan and Environmental Assessment for the Bayou Verdine Site, and pay an additional $750,000 for future monitoring of the restoration project.  

Copies of the consent decrees are available on the DOJ website at: www.justice.gov/enrd/Consent_Decrees.html.

Northern Virginia Couple Indicted for Conspiracy, Bank Fraud and Tax Evasion

WASHINGTON – A federal grand jury in Alexandria, Va., returned an indictment against a married couple from Fairfax Station, Va., for conspiracy, bank fraud and tax evasion, the Justice Department today announced.  

According to the indictment, Kevin and LuAnn Shaffer were co-owners of a Manassas, Va.,-based consulting business named Matrix-DSS.   From 2003 to 2006, the indictment alleges that the couple conspired to defraud four separate banks, including attempting to secure approximately $5.6 million from one bank for a home loan.   The Shaffers are accused of submitting false information to their lenders that overstated their assets and made other material misrepresentations, including inflated 401(k) account balances, false W-2 forms, false pay stubs and false wage information.

In addition, the couple are charged with four counts of tax evasion for allegedly failing to make an income tax return for the calendar years 2005 to 2007 and for understating their taxable income in 2004 by more than $380,000.

Finally, Kevin Shaffer is also accused of failing to account for and pay over to the IRS more than $200,000 in federal taxes that he withheld from the paychecks of Matrix DSS employees from July 1, 2006, to Jan. 31, 2008.

The 12-count indictment, which was unsealed today, was announced by John A. DiCicco, Acting Assistant Attorney General for the Department of Justice, Tax Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; and Rebecca A. Sparkman, Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation’s Washington, D.C., Field Office.

The case is being investigated by the IRS Criminal Investigation Office and U.S. Secret Service. Trial Attorney Tracy L. Gostyla from the department’s Tax Division and Assistant U.S. Attorney Charles F. Connolly from the Eastern District of Virginia are prosecuting the case on behalf of the United States.

Justice Department Concludes no Federal Criminal Violation in the Death of Imam Abdullah in Dearborn

WASHINGTON—The Justice Department announced today that the evidence does not reveal a violation of the applicable federal criminal civil rights statute or warrant further federal criminal investigation in the death of Imam Luqman Ameen Abdullah, a Detroit Muslim cleric, who was shot during an Oct. 28, 2009, arrest by FBI agents in Dearborn, Mich.

The department conducted a complete, thorough, and independent review of this matter. The review included examining all documents witness accounts, forensic evidence and reports, and operational plans and procedures that were generated by an FBI Inspection Division inquiry, a Dearborn Police Department investigation, and the Wayne County Medical Examiner’s office. Additionally, a senior Civil Rights Division prosecutor consulted with Dearborn detectives and forensic experts and interviewed critical witnesses, including the FBI agents who shot Imam Abdullah and who voluntarily agreed to be interviewed.

To establish a violation of 18 U.S.C., Section 242, the applicable federal statute, the government must prove, beyond a reasonable doubt, that an official, acting under color of law, willfully deprived a person of a right protected by the Constitution or laws of the United States. In prosecuting a Section 242 case, the government must show that the official used unnecessary and unreasonable force that was not warranted to achieve a legitimate law enforcement purpose. The government must also prove, beyond a reasonable doubt, that the official acted willfully, that is, with the specific intent to do something the law forbids.

Assistant Attorney General for Civil Rights Thomas E. Perez met in Detroit today with members of Imam Abdullah’s family and later with representatives of interested local groups. Assistant Attorney General Perez explained based on a thorough review of the evidence, federal prosecutors have determined that the evidence does not reveal a violation of Section 242.

The summary of the findings regarding the shooting incident provides detailed information and legal analysis to support the department’s conclusion. This matter is being returned to the FBI to complete its administrative inquiry of the incident.