Monthly Archives: December 2014

New Grant Fraud Case Filed (Americorps)

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Maricopa County Community College District Agrees to Pay $4 Million for Alleged False Claims Related to Award of AmeriCorps Education Awards

Maricopa County Community College District (MCCCD) has agreed to pay $4.08 million to resolve allegations under the False Claims Act that it submitted false claims to the Corporation for National and Community Service (CNCS) concerning AmeriCorps state and national grants, the Justice Department announced today.  MCCCD is the entity responsible for operating community colleges in Maricopa County, Arizona, and is based in Phoenix.

“Those who receive federal funds must deal with the government openly and honestly,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The Department of Justice will ensure that financial assistance provided by the Corporation for National and Community Service is received only by eligible individuals who satisfy CNCS’s mission of promoting service and education.”

CNCS is an independent federal agency that administers AmeriCorps, among other national service programs.  MCCCD obtained AmeriCorps funding for Project Ayuda, a program that proposed to engage students in national service.  In order to receive an AmeriCorps education award, a student had to meet certain service-hour requirements.  MCCCD allegedly improperly certified that students had completed the required number of service hours so that they would earn an education award.  This resulted in CNCS providing education awards to these students.  MCCCD also allegedly improperly received grant funds from CNCS to administer the project.

“Our internal process uncovered MCCCD’s mismanagement, and we worked with the Justice Department to ensure that taxpayer dollars were recovered,” said CNCS’s General Counsel Valerie Green.  “This is an example of how interagency collaboration works.”

“Taxpayers are justifiably outraged when a community fails to receive promised services because national service funds were misused,” said CNCS’s Inspector General Deborah J. Jeffrey.  “We hope that this settlement will deter other grantees from similar misconduct.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by Christine Hunt, an MCCCD employee.  Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery.  Hunt’s share of the settlement is $775,827.

This case was handled by the Commercial Litigation Branch of the Civil Division and CNCS’s Office of Inspector General and Office of General Counsel.

The lawsuit is captioned United States ex rel. Hunt v. Maricopa County Community College District; Paula and Richard Vaughn, No. 11-cv-2241 (D. Ariz.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

T.RAD Executive Agrees to Plead Guilty to Bid Rigging and Price Fixing on Automobile Parts Installed in U.S. Cars

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An executive of Japan-based T.RAD Co. Ltd. has agreed to plead guilty and to serve one year and one day in a U.S. prison for participating in a conspiracy to fix prices of radiators installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

A one-count felony charge was filed today in the U.S. District Court for the Eastern District of Michigan in Detroit against Kosei Tamura, a general manager for T.RAD.  According to the charge, Tamura, a Japanese national, conspired from as early as November 2002 until at least February 2010, by agreeing to allocate bids for, and prices of, radiators sold to Honda Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere.  In addition to the prison sentence, Tamura has agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“Companies and their executives should do their part to ensure American consumers are guaranteed a fair marketplace within the automotive industry,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The Antitrust Division will continue to hold accountable the companies and executives who ignore these laws in order to make this a reality.”

T.RAD is a manufacturer of radiators and was engaged in the sale of radiators in the United States and elsewhere.  Radiators are devices located in the engine compartment of a vehicle that cool the engine.

In November 2013, T.RAD pleaded guilty and was sentenced to pay a $13.75 million criminal fine for its role in a conspiracy to fix the prices of radiators and automatic transmission fluid warmers.

Including today’s charges, 48 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.

Tamura is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal sections and the FBI.  This case was brought by the Washington Criminal I Section of the Antitrust Division with the assistance of the Detroit Field Office of the FBI.  Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the Detroit Field Office of the FBI at 313-965-2323.

Former Mitsuba Executive Agrees to Plead Guilty to Bid Rigging and Price Fixing on Automobile Parts Installed in U.S. Cars

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A former executive of Japan-based Mitsuba Corporation has agreed to plead guilty and serve 13 months in a U.S. prison for conspiring to fix the prices of products installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

A one-count felony charge was filed today in the U.S. District Court for the Eastern District of Michigan in Detroit against Kazumi Umahashi, a Japanese national and former General Manager of Mitsuba.  Umahashi conspired from in or about June 2005 to in or about December 2009 by agreeing upon bids and prices for, and allocating the supply of, windshield wiper systems and starter motors sold to Honda Motor Co. Ltd. and its subsidiaries and affiliates in the United States and elsewhere, according to the charge.  Umahashi also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“The Antitrust Division has uncovered dozens of conspiracies to fix prices in the automotive industry,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The impact of these schemes has affected nearly every American.  We will continue our efforts to hold culpable companies and individuals accountable for their illegal actions.”

Mitsuba manufactures and sells a variety of automotive parts, including starter motors, which are small electric motors used in internal combustion engines, and windshield wiper systems.  On Nov. 6, 2013, Mitsuba pleaded guilty for its involvement in the conspiracy and agreed to pay $135 million in criminal fines.

Umahashi is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum sentence for individuals of 10 years and a fine of $1 million.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Including today’s charges, 48 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.

This prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section with the assistance of the FBI’s Detroit Field Office and the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

CCC: Seventh Circuit Rules (Again) in Motorola Mobility

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December 1, 2014 by Leave a Comment

The Seventh Circuit issued its opinion in Motorola Mobility on November 26.   Motorola Mobility LLC v. AU Optronics Corp., 14-8003. In the opinion, written by Judge Posner, the Seventh Circuit panel ruled that the Foreign Trade Antitrust Improvements Act, (FTAIA) barred Motorola’s lawsuit because the harm was incurred by its foreign subsidiaries and not the parent company itself. The most critical fact in the case was this: “Motorola says that it “purchased over $5 billion worth of LCD panels from cartel members [i.e., the defendants] for use in its mobile devices.” That’s a critical misstatement. All but 1 percent of the purchases were made by Motorola’s foreign subsidiaries.” This key fact led to Motorola’s downfall:

What trips up Motorola’s suit is the statutory requirement that the effect of anticompetitive conduct on domestic U.S. commerce give rise to an antitrust cause of action. 15 U.S.C. § 6a(2). The conduct increased the cost to Motorola of the cellphones that it bought from its foreign subsidiaries, but the cartel-engendered price increase in the components and in the price of cellphones that incorporated them occurred entirely in foreign commerce.

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CCC: “Congratulations to Nezida Davis on Her Retirement”

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Congratulations to Nezida S. Davis who retired from the Antitrust Division last week. Nezida was the former Chief of the Atlanta office until it got whacked in early 2013 (along with Cleveland, Dallas and Philadelphia). Nezida had a long and distinguished career in public service with the Division. She joined the Division in 1984 as a trial attorney after serving a clerkship with U.S. District Court Judge Horace T. Ward. Nezida, a graduate of Columbia Law School, was named Assistant Chief of the Atlanta office in 1995 and Chief in 2002.

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