U.S. Files New Complaint Against City Of Los Angeles and a Former Redevelopment Agency to Recover Millions of Federal Grant Dollars Allegedly Obtained by Making False Promises to Provide Housing to Persons with Disabilities

Tuesday, August 1, 2017

The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.

The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.

The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:

  • slopes and ramps that are too steep for safe passage by persons with mobility disabilities;
  • door thresholds that are too tall for wheelchairs to roll over;
  • steps that prohibit access to common areas;
  • kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;
  • sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;
  • pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and
  • insufficient numbers of accessible parking spaces in garages and lots.

“The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”

The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.

By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.

The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.

The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, five percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional two percent will be accessible to people with visual and auditory impairments.

The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.

The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in U.S. District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before U.S. District Judge Philip S. Gutierrez.

The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the HUD Office of Inspector General.

The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.

Janet Labuda on: “Reasonable Care: What the Heck Is It?”

In a case decided July 17, 2017 (Slip op 17-85), the Court of International Trade (CIT) ruled that an importer was negligent by misclassifying their imports. The importer argued that reasonable care was exercised because the company relied on the broker’s recommended classification. The broker suggested three possible classifications and the importer ultimately used the one with the lowest duty rate.

The court ordered the importer to pay $8,228.20 in unpaid duties plus prejudgment interest but said more information was needed before a penalty could be assessed.

According to the CIT’s opinion, 

“given the three conflicting classifications recommended by the broker, the Defendant had a duty to undertake some further investigation regarding the proper classification, whether it meant consulting the CROSS database of customs rulings, obtaining a second opinion, or consulting a customs attorney or other customs expert. There were also publicly-available customs rulings that, had Defendant consulted, would have alerted him to a potential problem with his classification prompting further investigation. Defendant could not reasonably have relied upon the recommendation of its customs broker under these circumstances. Without even questioning the broker’s changing advice, seeking any form of guidance from CBP, consulting publicly available rulings that may have raised questions about the classification, Defendant cannot have exercised reasonable care in classifying the entries prior to importation.”

In addition, the CIT found that the importer’s classification of all the items being entered were erroneous and that the importer thus negligently submitted materially false entry information. 

The CIT ordered the importer to pay the unpaid duties because it failed to file a timely protest, rejecting the importer’s argument that a letter from its broker sent in response to CBP’s proposed notice of action constitutes a protest. However, the court declined to issue summary judgment on the penalty amount, citing the need for more details on the importer’s history of previous violations, ability to pay, and the effect of a penalty on the importer’s ability to continue doing business.

When I worked for CBP I regularly questioned what really constituted the exercise of reasonable care as required by the U.S. Customs Modernization Act, which went into effect in 1993. CBP subsequently wrote an informed compliance publication providing guidance. 

The basic concept is simple: importers are required to inform themselves of all laws and regulations pertaining to their own Customs business activities.  According to CBP, “the importer of record is responsible for using reasonable care to enter, classify and value imported merchandise, and provide any other information necessary to enable Customs to properly assess duties, collect accurate statistics and determine whether any other applicable legal requirement is met.” 

What does the term reasonable mean? CBP will not provide you with a fail-safe definition. Nor is it a numbers game, where if I take these 10 steps, or 9 steps, or 8 steps, etc., am I exercising reasonable care? Obviously, from the opinion expressed in this most recent case, merely consulting a broker is not enough. Selecting the lowest duty rate out of a number of possibilities is not enough. 

Importers must work closely with the members of their supply chain taking a hands-on approach to ensure accuracy. As with all legislation, the courts will inevitably provide the final interpretation. Best not to be on the losing side of the opinion.

Former Government Contractor Sentenced to 60 Months for His Participation in Bribery Conspiracy

Friday, July 28, 2017

A former owner of a government contracting company that serviced the Military Sealift Command (MSC) was sentenced to 60 months in prison, and to pay a $15,000 fine, for his participation in a bribery conspiracy from approximately 1999 to 2014, in which he provided a contracting official at MSC with almost $3 million in bribes.  Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia made the announcement.

U.S. District Judge Arenda L. Wright Allen today sentenced Joseph P. Allen, 56, of Panama City, Florida, following his guilty plea on April 19, to one count of conspiracy to commit bribery.

According to the statement of facts included in Allen’s guilty plea, Allen conspired with a government contracting official, Scott B. Miserendino, Sr., 58, formerly of Stafford, Virginia, to use Miserendino’s position at MSC to enrich themselves through bribery.  Specifically, beginning in about 1999, Miserendino used his position and influence at MSC to facilitate and expand Allen’s company’s commission agreement with a third-party telecommunications company that sold maritime satellite services to MSC.  Unknown to MSC or the telecommunications company, throughout the scheme, Allen paid half of the commissions he received from that telecommunications company to Miserendino as bribes.

For his role in the scheme, Miserendino was charged in a five-count indictment on May 4, with one count of conspiracy to commit bribery and honest services mail fraud, one count of bribery, and three counts of honest services mail fraud.  His trial is currently scheduled for October 31, before U.S. District Court Judge Rebecca Beach Smith.  The charges and allegations against Miserendino contained in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Norfolk offices of the FBI, the Defense Criminal Investigative Service and the Naval Criminal Investigative Service investigated the case.  Trial Attorneys Sean F. Mulryne and Molly Gaston of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia are prosecuting the case.

Former Deputy Director of USAID Contractor Sentenced for Theft of Grant Funds

Tuesday, August 1, 2017

South African Doctor Took Over $200,000 Meant to Promote Safer Childbirth

WASHINGTON – Eugene Sickle, the former deputy executive director of a South African research institute, was sentenced today to seven months of incarceration and ordered to pay $206,250 in restitution for a scheme in which he stole grant funds originating with the U.S. Agency for International Development (USAID).

The sentencing, in the U.S. District Court for the District of Columbia, was announced by Channing D. Phillips, U.S. Attorney for the District of Columbia, and Jonathan Schofield, Special Agent in Charge for the USAID Office of Inspector General, Office of Investigations.

Sickle, 47, a chemist and a citizen of South Africa, pled guilty in May 2017 to a charge of theft concerning programs receiving federal funds. The plea, which was contingent upon the Court’s approval, called for an agreed-upon sentence of six months to 12 months and a day of incarceration. The Honorable Ketanji Brown Jackson accepted the plea today and sentenced Sickle accordingly. In addition to the restitution order, the judge issued a forfeiture money judgment of $206,250. Following his release, Sickle will be subject to deportation proceedings.

Based in Washington, D.C., USAID is a U.S. government agency that provides international development assistance and humanitarian aid worldwide. It implements and administers foreign assistance programs and funds, including those supporting global health, from dedicated offices (“missions”) around the world. USAID’s South Africa mission is one such office that works with local organizations in that country. USAID’s Office of Inspector General bases investigators in 11 countries outside the United States, including South Africa, and provides oversight of USAID programs and operations around the world.

According to a statement of offense, signed by the defendant as well as the government, Sickle was deputy executive director of the Wits Reproductive Health and HIV Institute, a South African research institute focusing on sexual and reproductive health as well as vaccine-preventable diseases. Its primary source of funding is USAID, and Sickle administered grant funds for projects. One such project involved a mobile electronic device software application, in connection with the South African National Department of Health, which would help facilitate safer childbirth deliveries in South Africa.

On Oct. 2, 2015, according to the statement of offense, Sickle and the institute’s chief executive officer signed a contract with a company called Alzar Consulting Services Ltd. to develop the childbirth app. Likewise, an individual named “Dr. Carla Das Neves” Alzar’s purported director, signed the contract. Pursuant to this contract, the institute made two payments to Alzar totaling $206,250. However, the childbirth app has never been developed.

Subsequent investigation revealed that Sickle created Alzar in the British Virgin Islands. Unbeknownst to anyone at the research institute, he was the sole owner of the company. Sickle also created e-mail accounts for Alzar and fake Alzar employees, including “Carla Das Neves.” He created a fake LinkedIn page for “Carla Das Neves,” which had a beach scene for a picture, and falsely claimed that “Carla Das Neves” was a trained expert in aid/relief work.

Sickle shepherded the research institute’s contract with Alzar through the approval and compliance process. He signed the contract both as himself and also as “Carla Das Neves.”

According to the statement of offense, Sickle did not perform any of the work required under the contract, nor did anyone else. None of the USAID money was used for its intended purpose to facilitate safer childbirth in South Africa. Instead, Sickle diverted the money to himself personally, and an associate.

Sickle resigned from his position last year. Agents with the USAID Inspector General’s Office arrested him in Washington, D.C., in February 2017. He has been in custody ever since.

This case was investigated by the U.S. Agency for International Development Office of Inspector General. It was prosecuted by Assistant U.S. Attorneys John P. Marston and Denise Simmonds and Special Assistant U.S. Attorney Vesna Harasic-Yaksic of the U.S. Attorney’s Office for the District of Columbia.

Former Home Healthcare Nurse Sentenced for Medicaid Fraud in Case that Resulted in Minor’s Death

Wednesday, July 26, 2017

DAYTON, Ohio – Mollie Parsons, 47, of Middletown, Ohio, was sentenced in U.S. District Court to 36 months in prison for healthcare fraud related to the death of a severely physically disabled minor.

She was previously sentenced by the state to serve 10 years in prison for her role in the death of her minor patient, and her federal sentence will be served consecutive to her state one. She is also banned from working for any governmental entity in the healthcare field for life.

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Lamont Pugh, Special Agent in Charge, Health and Human Services Office of Inspector General (HHS-OIG), announced the sentence handed down today by U.S. District Judge Walter H. Rice.

According to the Statement of Facts in this case, Parsons was employed as a home healthcare nurse for a minor with severe physical impairments from at least 2009 until March 2011. Parsons was paid through Medicaid to provide daily nursing services, including but not limited to, wound care, personal hygiene maintenance and feeding assistance. The child under her care was unable to communicate, completely paralyzed and dependent upon feeding tubes.

Rather than working her eight-hour shift and providing the nursing services, Parsons was frequently absent from the home for extended periods of time. To conceal her neglect, the defendant submitted false claims to Medicaid to receive fraudulent payments for private duty nurse services.

Parsons pleaded guilty in the federal case in January 2016 to two counts of healthcare fraud.

“Parsons’ actions directly undermined the purpose for which Medicaid compensated her – providing medical care to a severely disabled child – as she deprived a child with cerebral palsy of the most basic medical care and comfort,” U.S. Attorney Glassman said. “The state prosecution served as the primary mechanism to address and punish the child victim’s death, but could not address the fraud against Medicaid. This federal prosecution therefore provides accountability for her fraudulent conduct as it relates to Medicaid.”

U.S. Attorney Glassman commended the cooperative investigation by HHS-OIG, as well as Assistant United States Attorney Brent G. Tabacchi and Deputy Criminal Chief Laura I. Clemmens, who are representing the United States in this case.

SEC Announces Whistleblower Award of More Than $1.7 Million

Washington D.C., July 27, 2017

The Securities and Exchange Commission today announced a whistleblower award of more than $1.7 million to a company insider who provided the agency with critical information to help stop a fraud that would have otherwise been difficult to detect.  Millions of dollars were returned to harmed investors as a result of the SEC’s ensuing investigation and enforcement action.

”When whistleblowers tip the SEC, it not only can bring wrongdoers to justice but also relief to investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  ”This whistleblower’s valuable information enabled us to stop further investor harm and ultimately return money to victims.”

Approximately $158 million has now been awarded to 46 whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.

Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.  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 has been taken or withheld from harmed investors to pay whistleblower awards.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Hudson County, New Jersey, Man Sentenced To 63 Months In Prison For Masterminding Fake ID Website And Participating In ‘SIRF’ Scheme

Thursday, July 27, 2017

NEWARK, N.J. – A Jersey City, New Jersey, man was sentenced today to 63 months in prison for his role in two separate conspiracies: one to create and operate a website that sold high-quality, custom-made fake identification documents, some of which were later used to commit financial crimes, and a second to fraudulently obtain tax refund checks, Acting U.S. Attorney William E. Fitzpatrick announced.

Ricardo Rosario, 34, previously pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with conspiracy to commit fraud in connection with authentication features and conspiracy to submit false claims to the U.S. Government. Judge Linares imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

From October 2012 through August 2014, Rosario, with the assistance of Abraham Corcino, 34, of Jersey City, and Alexis Scott Carthens, 38, of Newark, sold fake driver’s licenses over the Internet, running a website that was available at “fakeidstore.com” and “fakedlstore.com.” A number of the fake driver’s licenses sold by Rosario and other conspirators were used in connection with “cash out” schemes, where stolen credit card information, usually obtained through hacking or ATM skimming operations, was encoded on to counterfeit credit cards and used to steal cash from victims’ accounts.

Rosario created and ran the website. Corcino and Carthens assisted him by creating and mailing the fake driver’s licenses purchased through the website. Corcino also maintained an Instagram account to promote the website. The website sold fake New Jersey, Florida, Illinois, Pennsylvania, Rhode Island, and Wisconsin driver’s licenses, and the website boasted that the licenses had “scannable barcodes” and “real” holographic overlays. The price for each fake driver’s license was approximately $150, but the website offered bulk pricing for orders of 10 or more.

The website allowed its users to pay by bitcoin, a cryptographic-based digital currency, or MoneyPak, a type of prepaid payment card that could be purchased at retail stores. The “FAQ” section of the website indicated that orders would be received approximately one to two days after payment was received and described the website’s policy with respect to returns: “No Refunds. No snitching.”

In the Stolen Identity Refund Fraud (SIRF) conspiracy, Rosario assisted Carthens, who obtained stolen personally identifiable information (PII) primarily in the form of lab testing request forms that he purchased from another individual. Rosario provided Carthens with email accounts and drop addresses used in furtherance of the scheme. The email accounts were used to register accounts for online tax filing services and prepaid card accounts used to apply for and receive the tax refunds. The drop addresses were used to physically receive the refunds in the form of prepaid debit cards.

In addition to the prison term, Judge Linares sentenced Rosario to three years of supervised release and ordered forfeiture of $232,660 and restitution of $121,922.

Corcino was sentenced on April 17, 2017, to three years of probation. Carthens pleaded guilty to his role in the scheme on April 25, 2016, and is scheduled to be sentenced Sept. 28, 2017.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Zach Intrater of the Economic Crimes Unit and Barbara Ward, Acting Chief of the U.S. Attorney’s Office Asset Forfeiture and Money Laundering Unit in Newark.

Defense counsel: Brian Neary Esq., Hackensack, New Jersey

Woman Pleads Guilty To Theft Concerning Programs Receiving Federal Funds

Thursday, July 27, 2017

SAN JUAN, P.R. – Zoraida Velázquez-Bracero plead guilty to an information charging her with theft concerning programs receiving federal funds, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. The U.S. Department of Education, Office of Inspector General was in charge of the investigation.

From June 2005 until July, 2015, Velázquez-Bracero was the Purchasing Director at Pontifical Catholic University of Puerto Rico, an entity that receives in excess of $10,000.00 in federal funding in a one year period. In this position, Defendant was issued a University corporate credit card for purchasing goods and supplies for the University as well as arranging official travel for University professors. However, in 2008 Defendant started using this corporate credit card for personal expenses not authorized by the University.

Through direct charges and cash advances, Velázquez-Bracero used this corporate credit card to pay for school tuition, household utility bills and other items, and vacations to Disney World, New York City, Atlanta, Indianapolis, Canada, and France. Defendant concealed the use of this corporate credit card by altering and/or creating fictitious credit card statements wherein she hid the charges by increasing the amounts of other legitimate charges to the card, or by deleting the charges altogether before submitting the statement to the finance department for payment.

Although the original limit on this corporate credit card was $80,000.00, Velázquez-Bracero obtained numerous credit limit increases by forging her supervisor’s signature on letters to the credit card company requesting said increases. Defendant knew that she was affecting federal grants when she illegally used this corporate credit card. The total amount of unauthorized charges by Velázquez-Bracero was $655,432.00.

“The defendant misappropriated funds intended to aid University students, for her illegal personal gain,” said US Attorney Rosa Emilia Rodríguez-Vélez. “At the U.S. Attorney’s Office we will continue to aggressively investigate and prosecute financial crimes. This arrest should discourage those who get involved in these types of schemes before it’s too late, because we will continue investigating and prosecuting these offenses.”

“Federal education funds exist to provide students with educational opportunities and help students make their dreams of higher education a reality, it’s not a personal slush fund,” said Yessyka Santana, Special Agent in Charge of the U.S. Department of Education Office of Inspector General Southeast Regional Office. “I’m proud of the work of OIG special agents, our law enforcement partners, and the PCUPR staff for holding Ms. Velázquez accountable for her alleged criminal actions.”

As a result of the guilty plea, the defendant may be sentenced to a term of eight to fourteen months in prison, a fine not to exceed two hundred fifty thousand dollars ($250,000.00), and/or a term of supervised release of not more than three (3) years. Assistant United States Attorney Scott H. Anderson is in charge of the prosecution of the case.

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Short Hills, New Jersey, Investment Manager Sentenced To 33 Months In Prison For $675,000 Ponzi Scheme

Thursday, July 27, 2017

NEWARK, N.J. – An investment manager with an office in Short Hills, New Jersey, was sentenced today to 33 months in prison for that he fraudulently inducing investments, concealing investment losses, and diverting more than $675,000 in investor money for his own use, Acting U.S. Attorney William E. Fitzpatrick announced.

Mark Moskowitz, 48, of Short Hills, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with one count of wire fraud. Judge Hayden imposed the sentence today in Newark federal court.

In a separate legal proceeding, the N.J. Bureau of Securities ordered Moskowitz and his trading company, Edge Trading LLC, to pay a $1 million civil penalty for selling unregistered fraudulent securities and misusing investors’ funds for personal expenses.

According to documents filed in this case and statements made in court:

Moskowitz controlled an investment fund under the names Edge Trading Partners L.P. and Edge Trading LLC (Edge Trading). In addition to touting his investment skill and experience, Moskowitz concealed losses from investors and falsely told them that Edge Trading was growing year after year. Based on these misrepresentations, investors continued to entrust additional funds to Moskowitz and left previous investments under his control.

Edge Trading was an investment fund that Moskowitz created and operated, starting in or around 2012. Moskowitz told investors that Edge Trading was invested in U.S. and foreign equities, futures contracts, and option contracts and that the fund’s investments continued to show positive returns. In reality, Moskowitz redirected investor money to his personal use, which he concealed from the investors.

In addition to the prison term, Judge Hayden sentenced Moskowitz to three years of supervised release and ordered restitution and forfeiture of $694,577.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to today’s sentencing. He also thanked the N.J. Bureau of Securities in the State Attorney General’s Office, under the direction of Attorney General Christopher S. Porrino and Acting Bureau Chief Amy Kopleton, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: David Holman Esq., Assistant Federal Public Defenders, Newark

District of Columbia Woman Sentenced to 63 Months in Prison For Her Role in Scheme That Used Stolen Identities To Fraudulently Seek Tax Refunds

Thursday, July 27, 2017

Wide-Ranging Operation Filed Over 12,000 Fraudulent Tax Returns Seeking More Than $42 Million

WASHINGTON – A District of Columbia woman was sentenced today to 63 months in prison for her involvement in a scheme to fraudulently obtain millions of dollars in income tax refunds, announced U.S. Attorney Channing D. Phillips; Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division; Special Agent in Charge Kimberly Lappin of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office; Inspector in Charge Robert B. Wemyss of the U.S. Postal Inspection Service, Washington Division, and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

Tarkara Cooper, 34, was convicted by a jury on Feb. 17, 2017, for conspiring to commit theft of government funds and defraud the United States and theft of public money. Two of her co-defendants, Tony Bryant, 55, and his son, Brian Bryant, 29, both of Clinton, Md., were also convicted at trial and are awaiting sentencing.

Cooper was part of a massive sophisticated stolen identity refund fraud scheme that involved a network of more than 130 people, many of whom were receiving public assistance. Conspirators fraudulently claimed refunds for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. Returns were also filed in the names of, and refunds were issued to, willing participants in the scheme. The returns filed listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia. According to court documents, the overall case involved the filing of at least 12,000 fraudulent federal income tax returns that sought at least $42 million in refunds.

Conspirators played various roles in the scheme: stealing identifying information; allowing their personal identifying information to be used; creating and mailing fraudulent federal tax returns; allowing their addresses to be used for receipt of the refund checks; cashing the refund checks; providing bank accounts into which the refund checks were deposited and forging endorsements of identity theft victims on the refund checks. The false returns typically reported inflated or fictitious income from a sole proprietorship and claimed phony dependents to generate an Earned Income Tax Credit, a refundable federal income tax credit for working families with low to moderate incomes. To date, approximately two dozen participants in this scheme have pleaded guilty.

According to the evidence presented at trial, from approximately April 2010 through June 2012, Cooper and the Bryants participated in claiming $4,959,310 in fraudulent refunds, of which the IRS paid out approximately $2,285,717. Cooper agreed to allow her residence to be used for the delivery of tax refund checks, and was paid by a co-conspirator when she provided the tax refund checks to him. The Bryants deposited refund checks fraudulently obtained by others into accounts that they controlled.

In addition to the term of prison imposed, U.S. District Judge Rosemary M. Collyer ordered Cooper to serve three years of supervised release and to pay $1,926,958 in restitution to the IRS. She also ordered a forfeiture money judgment of $16,750.

U.S. Attorney Phillips, Acting Deputy Assistant Attorney General Goldberg, Special Agent in Charge Lappin, Inspector in Charge Wemyss, and Assistant Inspector General Phillips commended the special agents who conducted the investigation and acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein; Assistant U.S. Attorney Chrisellen Kolb; Paralegal Specialists Jessica Mundi, Aisha Keys, and Donna Galindo; former Paralegal Specialist Julie Dailey; Litigation Technology Specialist Ron Royal; Investigative Analysts William Hamann and Zachary McMenamin, and Victim/Witness Advocate Tonya Jones. They also expressed appreciation for the work of Trial Attorneys Jeffrey B. Bender, Thomas F. Koelbl, and Jessica Moran of the Tax Division, who worked on the case.

Finally, they commended the work of Assistant U.S. Attorneys Ellen Chubin Epstein and Michelle Bradford of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorney Kimberly G. Ang of the Tax Division, who prosecuted the case, as well as Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

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