Birmingham CPA Sentenced to Eight Years in Prison, Must Repay $11 Million Embezzled

Friday, June 16, 2017

BIRMINGHAM – A federal judge today sentenced a Birmingham man to eight years in prison and ordered him to repay $10.9 million he embezzled from the Shelby County scrap metal brokerage where he was chief financial officer, announced Acting U.S. Attorney Robert O. Posey and FBI Special Agent in Charge Roger Stanton.

U.S. District Court Judge Abdul K. Kallon sentenced THOMAS L HINSON JR., 70, on five counts of wire fraud for depositing checks stolen from Strickland Trading Inc. into the account of Strickland Trading Company, LLC, a company Hinson formed to carry out his embezzlement. Hinson pleaded guilty to the charges in March. He must report to prison July 31.

Along with the millions in restitution that Hinson must pay, he also must forfeit his interest in properties in Huntsville, Birmingham, Virginia Beach, Va., Lutz, Fla., and Sevierville, Tenn.

Hinson “abused his position as Chief Financial Officer of Strickland Trading, Inc., and violated his long-running friendships with Strickland Trading’s principals, to perpetuate a nine years long scheme to defraud,” the government states in its sentencing memorandum.

The company’s principals and employees suffered substantial financial hardship because of Hinson’s long-term crime, the memorandum says.

The five wire fraud counts Hinson pleaded guilty to represent five of the more than 225 checks totaling more than $11.2 million that were intended for Strickland Trading Inc., but which Hinson deposited into his Strickland Trading Company, LLC, account, between April 2007 and April 2016. He used the money he embezzled over the years to pay expenses and purchase real estate, automobiles, and other assets for himself, his family, and friends.

According to the court documents, Hinson conducted his scheme as follows:

Hinson was a certified public accountant in private practice who worked for Strickland Trading Inc. from 1991 to April 2016. In 2000, he began working as Strickland Trading Inc.’s CFO. In April 2007, Hinson filed documents with the State of Alabama creating Strickland Trading Company, LLC, and provided the name and address of a friend in Madison County as its organizer so he could conceal his own association with the new company.

Using the similarity in the names of the two companies, Hinson took checks mailed to Strickland Trading Inc. by its customers and deposited the checks into his Strickland Trading Company, LLC, account for his personal use. He made false entries in the financial records of Strickland Trading Inc., prepared false financial statements and made other false representations to Strickland Trading Inc. corporate officers to conceal his embezzlement.

The FBI investigated the case, which Assistant U.S. Attorney George Martin prosecuted.

US Seeks Approximately $540 Million From Conspiracy Involving Malaysian Sovereign Wealth Fund

Thursday, June 15, 2017

LOS ANGELES – The Justice Department today filed civil forfeiture complaints seeking the forfeiture and recovery of approximately $540 million in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund.

Combined with civil forfeiture complaints filed in July 2016 that seek more than $1 billion, and civil forfeiture complaints filed last week that seek approximately $100 million in assets, this case represents the largest action brought under the Kleptocracy Asset Recovery Initiative. Assets now subject to forfeiture in this case total almost $1.7 billion.

The complaints filed today seek the forfeiture of Red Granite Pictures’ interest in the movies “Dumb and Dumber To” and “Daddy’s Home,” a condominium in New York City worth nearly $5 million, diamond jewelry, artworks by Picasso and Basquiat, and a $260 million megayacht called The Equanimity.

According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1Malaysia Development Berhad (1MDB) was allegedly misappropriated by high-level officials of 1MDB and their associates. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people.

“These cases involve billions of dollars that should have been used to help the people of Malaysia, but instead was used by a small number of individuals to fuel their astonishing greed,” said Acting United States Attorney Sandra R. Brown. “The misappropriation of 1MDB funds was accomplished with an extravagant web of lies and bogus transactions that were brought to light by the dedicated attorneys and law enforcement agents who continue to work on this matter. We simply will not allow the United States to be a place where corrupt individuals can expect to hide assets and lavishly spend money that should be used for the benefit of citizens of other nations.”

“The Criminal Division is steadfast in our efforts to protect the security, safety, and integrity of the American financial system from all manner of abuse, including by kleptocrats seeking to hide their ill-gotten or stolen wealth,” said Acting Assistant Attorney General Kenneth A. Blanco. “Today’s complaints reveal another chapter of this multi-year, multi-billion-dollar fraud scheme, bringing the total identified stolen proceeds to $4.5 billion. This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people. We are unwavering in our commitment to ensure the United States is not a safe haven for corrupt individuals and kleptocrats to hide their ill-gotten wealth or money, and that recovered assets be returned to the victims from which they were taken.”

As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds. Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the United States and abroad. These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the United States and overseas.

The complaints filed today allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of 2012 bonds. As the complaints allege, 1MDB had borrowed a total of $1.225 billion from a syndicate of banks to fund the buy-back of the options. The complaints allege that approximately $850 million was instead diverted to several offshore shell entities. From there, the complaints allege, the funds stolen in 2014, in addition to money stolen in prior years, were used, among other things, to purchase the 300-foot luxury yacht valued at over $260 million, certain movie rights, high-end properties, tens of millions of dollars of jewelry and artwork. A portion of the diverted loan proceeds were also allegedly used in an elaborate, Ponzi-like scheme to create the false appearance that an earlier 1MDB investment had been profitable.

“Today’s filing serves as a reminder of the important role that the FBI plays in rooting out international corruption. When corrupt foreign officials launder funds through the United States in furtherance of their criminal activity, the FBI works tirelessly to help hold those officials accountable, and recover the misappropriated funds,” said Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division. “I applaud all my colleagues and our international partners who have worked to help recover an immense amount of funds taken from the Malaysian people, who are the victims of this abhorrent case of kleptocracy.”

“Today’s announcement is the result of untangling a global labyrinth of multi-layered financial transactions allegedly used to divert billions of dollars from the people of Malaysia and fund the co-conspirators’ lavish lifestyles,” said Deputy Chief Don Fort of IRS Criminal Investigation. “The IRS is proud to partner with other law enforcement agencies and share its world-renowned financial investigative expertise in this complex financial investigation. It’s important for the world to see, that when people use the American financial system for corruption, the IRS will take notice.”

As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner. Instead, the funds allegedly were transferred through shell companies and were used to acquire a number of assets. The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through the bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013.

The FBI’s International Corruption Squads in New York City and Los Angeles, and IRS Criminal Investigation are investigating the case.

Assistant United States Attorneys John Kucera and Christen Sproule of the Asset Forfeiture Section, along with Deputy Chief Woo S. Lee and Trial Attorneys Kyle R. Freeny and Jonathan Baum of the Criminal Division’s Money Laundering and Asset Recovery Section, are prosecuting the case. The Criminal Division’s Office of International Affairs is providing substantial assistance.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies and U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered asset to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov(link sends e-mail) or https://tips.fbi.gov/.

A civil forfeiture complaint is merely an allegation that money or property was involved in or represents the proceeds of a crime. These allegations are not proven until a court awards judgment in favor of the United States.

Misr Sons Development S.A.E. Agrees to Pay $1.1 Million to Resolve False Claims Act Allegations

Tuesday, June 13, 2017

Misr Sons Development S.A.E. (Hassan Allam Sons, “HAS”), a construction company with its principal place of business in Cairo, Egypt, has agreed to pay $1.1 million to settle allegations that HAS submitted false claims in connection with U.S. Agency for International Development (USAID) contracts, the Justice Department announced today.

“Contractors who misrepresent their eligibility for government contracts undermine the government procurement process,” said Deputy Assistant Attorney General Joyce R. Branda of the Civil Division. “The Justice Department will take action to protect that process and to ensure that taxpayer funds are not misused.”

“USAID Office of Inspector General extensively investigated this matter and thanks the Department of Justice for its tenacity and dedication,” said Special Agent in Charge Jonathan Schofield of USAID Office of Inspector General. “Total settlements on this matter exceed $10 million and demonstrate once again that the United States expects its contractors to execute their awards in accordance with all requisite terms and conditions, whether operating domestically or overseas.”

The settlement concerns USAID-funded contracts for the construction of water and wastewater infrastructure projects in the Arab Republic of Egypt in the 1990s. The contracts were awarded to a joint venture partnership that included Washington Group International Inc. (WGI), Contrack International Inc. (Contrack) and HAS. The United States filed suit under the False Claims Act and the Foreign Assistance Act, alleging that HAS was ineligible to participate in the joint venture but that its participation was concealed from USAID. As a result, HAS and its partners allegedly received USAID-funded contracts to which they were not entitled. The settlement resolves only HAS’ liability. The United States previously settled with Contrack and WGI.

This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Idaho and the USAID Office of Inspector General.

The case is captioned United States v. Washington Group International Inc. f/k/a/ Morrison Knudsen, Corporation, Contrack International, Inc.; and Misr Sons Development S.A.E. a/k/a Hassan Allam Sons, No. 04-555 (D. Idaho). The claims resolved by this settlement are allegations only and there has been no determination of liability.

Southern CA Resident Sentenced 34 Months in Prison For Bank Fraud Conspiracy

 

Tuesday, June 13, 2017

SAN FRANCISCO – Michael Inman was sentenced to 34 months in prison for his role in a bank fraud conspiracy, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down June 7, 2017, by the Honorable Charles R. Breyer, U.S. District Judge, following a guilty plea in which Inman admitted he participated in a scheme to steal checks, open fraudulent bank accounts, write fraudulent checks, and deposit stolen and fraudulent checks as part of a bank fraud scheme.

Inman, 55, of Los Angeles, Calif., pleaded guilty on February 8, 2017, to participating in the bank fraud conspiracy. According to the plea agreement, Inman admitted that beginning in January of 2013, he agreed with at least one other person to commit bank fraud. The plea agreement describes a number of transactions in which Inman stole high value cashier’s checks from the victim and he and his co-conspirators used the stolen identity of the victim to write and deposit fraudulent checks. For example, in January of 2013, members of Inman’s conspiracy opened a bank account in the name of the victim and, in February of 2013, a co-conspirator deposited into the account a stolen $99,000 cashier’s check that had been made out to the victim. Similarly, Inman admitted that in June of 2013, co-conspirators opened another two fraudulent accounts and deposited a $99,000 check. Further, Inman admitted participating in a scheme in which people were provided checks drawn on the fraudulent bank accounts.

A grand jury indicted Inman on February 11, 2016, charging him with one count of conspiracy to commit mail fraud, wire fraud, and bank fraud, in violation of 18 U.S.C. § 1349. Pursuant to the plea agreement, Inman pleaded guilty to the conspiracy count.
In addition to the prison term, Judge Breyer sentenced Inman to pay $198,000 in restitution to the victim and to forfeit $198,000. Judge Breyer ordered the defendant to begin serving his sentence on or before August 2, 2017.

Assistant U.S. Attorneys Marc Price Wolf and Claudia A. Quiroz are prosecuting the case with assistance from Kevin Costello, Yanira Osorio, and Lance Libatique. The prosecution is the result of an investigation by the FBI.

Chicago Scrap Iron Refining Company and Its President Plead Guilty to Criminal Tax Violations for Concealing $11.6 Million from IRS

Department of Justice U.S. Attorney’s Office

Northern District of Illinois

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FOR IMMEDIATE RELEASE

Wednesday, May 10, 2017

CHICAGO — A Chicago-based scrap iron refining business and its president admitted in federal court today that they concealed from the Internal Revenue Service more than $11.6 million in cash wages paid to employees.

ACME REFINING CO., which does business as Acme Refining Scrap Iron & Metal Co., and its president, LAURENCE C. BARON, each pleaded guilty to impairing and impeding the IRS. Acme and Baron admitted in plea agreements that from 2009 to 2013 they paid cash wages of more than $11.6 million to at least 50 employees, but failed to report the payments to the IRS. Acme and Baron also acknowledged that they willfully failed to withhold for the government the required amounts for FICA taxes and Medicare.

As part of their plea agreements, Baron and Acme agreed to pay restitution of $5,878,327 to the IRS and the state of Illinois, with Acme paying $4,545,243 and Baron paying $1,333,084.

The guilty pleas were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Impairing and impeding the IRS is punishable by up to three years in prison. Baron, 70, of Burr Ridge, also pleaded guilty to a separate count of willfully filing a false individual income tax return, which carries the same maximum penalty. U.S. District Judge Harry D. Leinenweber set sentencing for Sept. 14, 2017.

The cases against Acme and Baron are part an ongoing federal investigation of cash transactions in the Chicago-area scrap metal industry that has resulted in several previous convictions.

According to the plea agreements, Baron directed Acme employees to issue multiple vouchers for cash payments due to suppliers that exceeded $10,000, using nominee or fictitious payees as the purported seller. Between 2009 and 2013 the company and Baron obtained approximately $152 million in cash from two currency exchanges, then used the money to pay 85 separate scrap metal suppliers in order to assist those suppliers in underreporting their income and taxes.

Acme – at the direction of Baron – also spent at least $1.6 million to fund construction of a personal residence in Wisconsin that had no business-related purpose, the plea agreements state. The company falsely recorded this expenditure as “cost of goods sold,” in order to reduce Acme’s tax liability and conceal the payment on behalf of its corporate officers. The bogus records included phony invoices that fraudulently identified the payments as purchases of scrap steel.

Baron also admitted filing false individual income tax returns for tax years 2011 and 2012. The fraudulent returns resulted in a total federal and state tax loss of approximately $208,875, the plea agreement states.

The government is represented by Assistant U.S. Attorney Patrick King.

Department of Justice U.S. Attorney’s Office

Southern District of New York

FOR IMMEDIATE RELEASE

Friday, April 21, 2017

Chinese National Pleads Guilty To Attempting To Illegally Export High-Grade Carbon Fiber To China
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Mary B. McCord, the Acting Assistant Attorney General for the National Security Division of the Department of Justice (“NSD”), announced that FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to violating the International Emergency Economic Powers Act (“IEEPA”) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and codewords in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection. Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”

 

NSD Acting Assistant Attorney General Mary McCord said: “Today, Fuyi Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material. The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”

 

According to the allegations contained in the Complaint and the Indictment filed against SUN and statements made in court filings and proceedings, including today’s guilty plea:

 

Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – and requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.

 

In furtherance of his attempts to illegally export M60 Carbon Fiber from the United States to China without a license, SUN contacted what he believed was a distributor of carbon fiber – but was, in fact, an undercover entity created by HSI and “staffed” by HSI undercover special agents (the “UC Company”). SUN inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years’ long communications with the undercover agents and UC Company, SUN repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.” Among other such measures, at one point, SUN instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, SUN also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

 

On April 11, 2016, SUN traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company. During meetings with the undercover agents, on or about April 11 and 12, among other things, SUN repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program. SUN further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it.

 

On April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, SUN paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. SUN was arrested the next day, April 13, 2016.

 

* * *

 

SUN, 53, pled guilty today to attempting to violate IEEPA, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. SUN is scheduled to be sentenced by Judge Hellerstein on July 26, 2017 at 11:00 a.m.

 

Mr. Kim praised the extraordinary investigative work of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations; the New York Field Office of the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service. Mr. Kim also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

 

This prosecution is being handled by the Office’s Terrorism and International Narcotics and Complex Frauds and Cybercrime Units. Assistant United States Attorneys Matthew Podolsky, Patrick Egan, and Nick Lewin are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.

Four Chinese Nationals Arrested and Charged in Connection with College Admissions Exam Scam

Department of Justice U.S. Attorney’s Office

District of Massachusetts

FOR IMMEDIATE RELEASE

Thursday, May 4, 2017
Students Arrested Today in Massachusetts, Arizona and New Jersey on Immigration-Related Charges
BOSTON – Yue Wang, 25, Shikun Zhang, 24, Leyi Huang, 21, and Xiaomeng Cheng, 21, all in the United States on F-1 non-immigrant student visas, were arrested today on charges of conspiracies to defraud the United States.

 

The conspiracies involved Wang, a current student at the Hult International Business School in Cambridge, Mass., agreeing to sit for the TOEFL exam in the place of Zhang, Huang, and Cheng. The TOEFL exam is an English language test recognized by more than 9,000 colleges, universities, and agencies in more than 130 countries. It is also used by the United States government in issuing, extending, or renewing F-1 student visas.

 

After Wang took the TOEFL exam in her co-conspirators places, her scores were allegedly used by the co-conspirators to apply for admission to various universities in the United States. Zhang used this fraudulently acquired TOEFL score to gain admission to Northeastern University in Boston, Mass.; Huang fraudulently used the TOEFL score to gain admission to Penn State University in Erie, Pa.; and Cheng used the fraudulently acquired TOEFL score to gain admission to Arizona State University. In each case, the United States Department of State issued the student an F-1 non-immigrant student visa based on their admittance to these educational institutions.

 

“Illegal schemes to circumvent the TOEFL exam jeopardize both academic integrity and our country’s student visa program,” said William B. Weinreb, Acting U.S Attorney. “The TOEFL exam ensures that international students have adequate English language skills to succeed in higher education programs in the United States. It also helps maintain the security of our borders and immigration system. By effectively purchasing passing scores, they violated the rules and regulations of the exam, taking spots at US colleges and universities that could have gone to others.”

 

“These schemes not only undermine the integrity of the academic institutions, they also undermine our nation’s immigration system,” said Matthew Etre, Special Agent in Charge of HSI in Boston. “HSI will continue to protect the nation’s immigration system by working with our federal law enforcement partners and our partners in academia to ensure that those involved in these scams are held accountable.”

 

The charge of conspiracy to defraud the United States provides for a sentence of no greater than 5 years in prison, up to three years of supervised release and a fine of $250,000. The defendants are subject to deportation after conviction and serving any sentence imposed. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Fifa Audit And Compliance Committee Member Pleads Guilty To Corruption Charges

Department of Justice U.S. Attorney’s Office

Eastern District of New York

FOR IMMEDIATE RELEASE

Thursday, April 27, 2017

Fifa Audit And Compliance Committee Member Pleads Guilty To Corruption Charges
Defendant Accepted and Facilitated Bribes Within the Asian Football Confederation
Earlier today, Richard K. Lai, a United States citizen, pleaded guilty to a criminal information charging him with two counts of wire fraud conspiracy in connection with his participation in multiple schemes to accept and pay bribes to soccer officials. Lai also pleaded guilty to one count of failing to disclose foreign bank accounts and agreed to pay more than $1.1 million in forfeiture and penalties. The plea was entered before United States District Judge Pamela K. Chen at federal courthouse in Brooklyn, New York.

 

The guilty plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Special Agent-in-Charge R. Damon Rowe, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS).

 

“Today’s plea marks another important step in our ongoing effort to root out corruption in international soccer,” stated Acting United States Attorney Rohde. “The defendant abused the trust placed in him as a soccer official in order to line his own pockets, and now he will be held to account. The defendant’s breach of trust was particularly significant given his position as a member of the FIFA Audit and Compliance committee, which must play an important and independent role if corruption within FIFA is to be eliminated.”
“Years of this systemic culture of corruption and greed have tainted one of the world’s most popular sports,” stated Assistant Director-in-Charge Sweeney. “Kickbacks and bribes became the norm for doing business with FIFA, but not anymore. The plea deal today and all the other cases tied to this investigation prove our work isn’t done, and we will continue to pursue anyone who had their hands in illegal activity.”
“Today’s guilty plea by Guam Football Association president Richard K. Lai, reaffirms the dedication of IRS Criminal Investigation to use our financial investigative expertise to uncover corrupt schemes and illicit payments involving FIFA officials,” stated Special Agent-in-Charge Rowe. “Co-conspirators may try to hide and launder the proceeds of their corrupt self-enrichment, but as mentioned in the legal documents filed today, IRS-CI Special Agents will trace and uncover those funds both through the U.S. financial system and beyond, to offshore jurisdictions in locations such as Asia, the Middle East, and around the globe.”
As alleged in the criminal information to which he pleaded guilty, Lai, a resident of the U.S. territory of Guam, has served as the president of the Guam Football Association (GFA) since 2001. In that capacity, Lai had a vote in FIFA presidential elections. Lai has also served at various times as a member and chair of the Asian Football Confederation (AFC) Finance Committee and a member of the AFC Executive Committee, and is currently a member of the AFC Marketing Committee and the FIFA Audit and Compliance Committee.

 

As also set forth in the information, Lai pleaded guilty to a scheme in which he received $100,000 in bribes in 2011 from an official of the AFC who was then running for the FIFA presidency, in exchange for Lai’s vote and support in the then-upcoming FIFA presidential election.

 

As further described in the information, Lai also pleaded guilty to a scheme in which he received over $850,000 in bribes between 2009 and 2014 from a faction of soccer officials in the AFC region. Lai received those bribes in exchange for using his influence as a soccer official to advance the interests of the faction that bribed him, including by helping officials in that faction identify other officials in the AFC to whom they should offer bribes. The goal of this scheme was for the faction to gain control of the AFC and influence FIFA.

 

The guilty plea announced today is part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS-CI Los Angeles Field Office. The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Money Laundering and Asset Recovery Section, and the Fraud Section, as well as from INTERPOL Washington.

 

Assistant U.S. Attorneys Paul Tuchmann, Nadia Shihata, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.

 

The government’s investigation is ongoing.

Philadelphia Area Restauranteur Indicted On Tax Offenses

Department of Justice U.S. Attorney’s Office

Eastern District of Pennsylvania

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FOR IMMEDIATE RELEASE

Thursday, May 11, 2017
PHILADELPHIA – Giuseppe “Pino” DiMeo, 49 years old, and a resident of Eagleville, Pennsylvania was charged today by indictment[1]
with two counts of conspiring to defraud the Internal Revenue Service (“IRS”), and twelve counts of filing false tax returns announced Acting United States Attorney Louis D. Lappen. The indictment charges that from 2008 through 2012, DiMeo conspired with his business partners at restaurants in Wilmington, Delaware and Philadelphia, Pennsylvania to defraud the IRS of income taxes and payroll taxes. DiMeo skimmed cash from four of his restaurants and failed to report the cash income to the IRS. DiMeo also paid many of his employees in cash under the table and failed to inform his accountant or the IRS about his businesses’ cash payroll. In total, DiMeo had over three million dollars in unreported gross receipts and failed to pay to the IRS approximately one million dollars in income taxes and payroll taxes.

DiMeo has owned and operated numerous restaurants in the Philadelphia area, and presently owns DiMeo’s Pizzaiuoli Napulitani in Wilmington, Delaware; Pizzeria DiMeo’s (Andorra) in Philadelphia, Pennsylvania; and Arde Osteria in Wayne, Pennsylvania.

The defendant faces a maximum possible sentence of 46 years of imprisonment, three years of supervised release, a $3.5 million fine, and a $1,400 special assessment.

The case was investigated by the Internal Revenue Service, Criminal Investigations,

and is being prosecuted by Assistant United States Attorneys Maria M. Carrillo and Tiwana L. Wright.

Defense Contractor Sentenced to 5 Years in Federal Prison for $53 Million Procurement Fraud and Illegal Gratuities Scheme

Department of Justice U.S. Attorney’s Office

District of Maryland

FOR IMMEDIATE RELEASE

2015-05-29 11.34.57

Friday, April 28, 2017

Defense Contractor Sentenced to 5 Years in Federal Prison for $53 Million Procurement Fraud and Illegal Gratuities Scheme

Baltimore, Maryland – On April 27, 2017, U.S. District Judge Marvin J. Garbis sentenced John Wilkerson, age 51, of Moultrie, Georgia to five years in prison, followed by three years of supervised release, for a wire fraud conspiracy and for paying illegal gratuities to a government official, in connection with the award of more than $53 million in federal government contracts. Judge Garbis also ordered Wilkerson to pay forfeiture and restitution in the amount of $9,441,340.11.

 

The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Commander of the Air Force Office of Special Investigations (OSI); Special Agent in Charge Robert Craig, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office; and U.S. Small Business Administration Acting Inspector General Mike Ware.

 

According to his plea agreement, Wilkerson was a Department of Defense Account Manager for Iron Bow Technologies, LLC (Iron Bow), which provided IT consulting and other services to government and industry customers. Wilkerson was also part owner and operated an information technology company, Superior Communications Solutions, Inc. (SCSI).

 

Andrew Bennett, who was separately charged and has pled guilty, was a program manager for an information technology company, Advanced C4 Solutions, or AC4S, from 2005 until 2011. In 2011, Bennett left AC4S and went to work for Wilkerson at SCSI.

 

James T. Shank, who was separately charged and has pled guilty, was a Program Manager at the United States Navy’s Space and Naval Warfare (SPAWAR) Systems Center

 

From September 2009 through August 2012 Wilkerson, Bennett and Shank conspired to steer government contracts at Joint Base Andrews to companies affiliated with Wilkerson and Bennett. After the award of the contracts, Wilkerson offered, and Shank accepted, employment with SCSI while Shank was still a government employee and while he was taking official actions that benefited Wilkerson. In addition, Wilkerson paid Shank $86,000 in the year after Shank retired from government service, funneling the payment through two other companies in order to conceal the source of the funds. Wilkerson also hired Bennett and paid him a $500,000 bonus using proceeds from the fraud scheme.

 

For example, Shank, Wilkerson, and Bennett developed a request for proposal (RFP) for DO27, a contract to supply labor services for an Air Force technology project, including for overall project management services, so that AC4S would win the contract. On June 10, 2010, DO27 was awarded to AC4S in the amount of $18,332,738.10. Wilkerson provided Bennett with a quote for labor on behalf of SCSI that was less than the quote he had previously submitted on behalf of Iron Bow as their sales representative. After SCSI was selected as a subcontractor on DO27, it subcontracted with Iron Bow to provide most of the labor SCSI was supposed to provide under DO27. Wilkerson was able to earn income from the work Iron Bow employees were doing by having SCSI act as a middleman and charging a mark-up on Iron Bow’s work. Wilkerson and Bennett also directed an SCSI employee to create false invoices supposedly documenting the hours SCSI employees spent working on DO27, which were submitted to AC4S and paid by the United States government. SCSI received $6,794,432.98 on DO27 out of the $18 million AC4S received for providing labor for the project.

 

Shank also initiated the procurement process on more than 11 delivery orders that purchased telecommunications equipment and furniture as part of the Air Force project. Those delivery orders were issued to Iron Bow in 2010 and 2011. Wilkerson took multiple items of commercially available furniture, bundled them together and assigned them an SCSI specific number and a price that included a significant mark up over what SCSI paid the furniture manufacturer for the items. Shank then submitted to SPAWAR contracting officers a purchase order asking for authority to buy the bundle of furniture that bore the SCSI specific part number. SCSI received approximately $33 million of the $35 million paid to Iron Bow under the various furniture and equipment delivery orders. Wilkerson charged the United States a 25 percent markup on furniture purchased under these two purchase orders, resulting in a profit to him of more than $6 million.

 

In addition, from 2010 until his retirement in June 2011, Shank falsely certified that the United States government received more than $1 million worth of goods under the W91QUZ-07-D-0010 contract that the government did not in fact receive.

 

In late 2010 or early 2011, Wilkerson offered Shank employment. Shank did not disclose that fact to anyone at SPAWAR and did not recuse himself from any of the contracts that benefited Wilkerson. In February 2011, Bennett left AC4S and went to work for Wilkerson at SCSI. Bennett received a $500,000 bonus when he joined SCSI, which was paid for by profit Wilkerson had earned on the furniture contracts.

 

Shank accepted employment with SCSI in May 2011, but was still working for SPAWAR when he approved more than $1.1 million worth of invoices that benefitted SCSI and Wilkerson.

 

Between July 2011 until August 2012, Wilkerson paid Shank approximately $86,000. The funds that Wilkerson paid Shank were funneled through T&M Communications, LLC, a company owned by T.R., a senior executive at SCSI, who ultimately paid out the funds to Shank. Further, in some instances funds paid to Shank were also funneled through Decision Point Technologies, LLC, another company owned by Wilkerson. Shank did no work for Decision Point Technologies or T&M Communications in that time period.

 

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

 

Acting United States Attorney Stephen M. Schenning thanked Air Force OSI, DCIS, and the U.S. Small Business Administration Office of Inspector General for their work in the investigation. Mr. Schenning commended Assistant U.S. Attorneys Leo J. Wise and Philip A. Selden, who are prosecuting the case.