Author Archives: Brad Geyer

Founder of Non-Profit Charged with Bribing Former Prince George’s County Official in Exchange for Grant Funds

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A Maryland man has been charged with bribery and making false statements as part of an alleged scheme to obtain government grants for a charitable organization of which he was the founder. The  case was brought via a criminal complaint filed by the United States Attorney for the District of Maryland. It alleges that the defendant made three annual payments of $5000 each to a member of the Prince George’s County Council to secure annual grants of $25,000 for the Salvadoran Business Caucus, which claimed to award scholarships to high school and college students.
The agent affidavit accompanying the criminal complaint describes conversations  that allegedly occurred between the council member and  the defendant in sufficient detail as to indicate that tape recordings of the conversations exist.
Department of Justice
U.S. Attorney’s Office
District of Maryland
FOR IMMEDIATE RELEASE
Wednesday, February 1, 2017

Greenbelt, Maryland – A criminal complaint has been filed charging

, of Rockville, Maryland, late yesterday with bribery and making false statements in connection with a scheme to engage in bribery in order to influence a public official in the performance of his official duties in Prince George’s County. Ayala’s initial appearance is scheduled today at 1:45 p.m. before U.S. Magistrate Judge Timothy J. Sullivan in U.S. District Court in Greenbelt, Maryland.

The criminal complaint was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Acting Special Agent in Charge Thomas J. Holloman of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; and Chief Hank Stawinski of the Prince George’s County Police Department.

According to affidavit filed in support of the criminal complaint, Ayala was an accountant and founder of Ayala and Associates Public Accountants in Washington, D.C. Ayala was also the founder of the Salvadoran Business Caucus, a non-profit organization also known as the Caucus Salvadoreno Empresarial, Inc. (CSE). CSE’s website stated that CSE awarded scholarships to high school and college students.

The affidavit alleges that Ayala paid bribes to former Prince George’s County Council Member Will Campos in exchange for grant funding. Specifically, the affidavit alleges that Ayala paid Campos $5,000 for each of County fiscal years 2012 through 2015, in exchange for $25,000 in grants to CSE in each of those years. For example, on August 13, 2014, Campos met with Ayala for lunch in Washington, D.C. During the meeting, Ayala asked Campos what would happen after Campos left his position on the County Council and assumed his position within the Maryland General Assembly. According to the affidavit, Ayala advised, “The arrangement is still on,” and Campos asked if Ayala had anything for Campos. Ayala asked Campos to give him two weeks, and “I [Ayala] call you and I’ll say let’s, let’s have a drink and you know what it’s for.” Campos asked for $5,000, “like last time,” and Ayala agreed.

According to the affidavit, on September 23, 2014, Ayala had dinner with Campos at a restaurant in Silver Spring, Maryland, and discussed the grant money. Specifically, Campos advised that he would push for Ayala to still receive grant money after Campos left office. At the conclusion of the meal, Ayala walked Campos out of the restaurant and allegedly handed Campos an envelope bearing a label for CSE and containing a cashier’s check for half the agreed upon amount. The affidavit alleges that Ayala explained, “I was unable to obtain cash. It’s better like this. This comes from – from a third party who knows me, so it’s better.” Campos joked that Ayala was paying “half now, half later,” and Ayala responded, “I would say that.”

According to the affidavit, on January 8, 2015, Ayala met with Campos at Ayala’s office in Washington, D.C. Ayala reached into his desk and retrieved an envelope. Ayala handed the envelope to Campos, who asked if it was “the rest that we talked about? 2,500?” and Ayala responded, “Yeah.” The affidavit alleges that inside the envelope, Ayala had placed $2,500 in cash.

On January 5, 2017, Ayala was interviewed by federal law enforcement agents. The affidavit alleges that Ayala denied providing anything of value to Campos in exchange for receiving Prince George’s County grant money for CSE. Thereafter, agents showed Ayala still photographs from videos taken while Ayala was making bribe payments to Campos on September 23, 2014 and January 8, 2015.

If convicted, Ayala faces a maximum sentence of ten years in prison for bribery, and a maximum of five years in prison for false statements. An individual charged by criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings.

United States Attorney Rod J. Rosenstein commended the FBI, IRS-CI, and Prince Georges County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Thomas P. Windom, Mara Zusman Greenberg, and James A. Crowell IV, who are prosecuting the case.

Man Ordered To Pay More than $2.9 Million in Disgorgement and a Civil Monetary Penalty for Engaging in Precious Metals Transactions

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Court Earlier Entered a Default Judgment Order against His Company, Oakmont Financial, Inc.

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge William P. Dimitrouleas of the U.S. District Court for the Southern District of Florida entered an Order of Final Judgment by Default (Order) against Defendant Joseph Charles DiCrisci of Henderson, Nevada, an owner and principal of Oakmont Financial Inc. (Oakmont), for engaging in in illegal, off-exchange precious metals transactions (see CFTC Complaint and Press Release 7317-16, February 3, 2016). The Court previously, on November 8, 2016, entered a Default Judgment Order against Oakmont (Oakmont Order).

The Court’s Order requires DiCrisci to pay $735,329 in disgorgement and a $2,205,987 civil monetary penalty. The Order also imposes permanent trading and registration bans against DiCrisci and prohibits him from engaging in illegal, off-exchange precious metals transactions, as charged. Similar prohibitions were entered against Oakmont in the Oakmont Order.

The Court’s Order stems from a CFTC Complaint filed on January 12, 2016 that charged DiCrisci and Oakmont with engaging in illegal, off-exchange precious metals transactions on a leveraged, margined or financed basis. The Complaint also charged Oakmont with acting as a Futures Commission Merchant (FCM), without being registered as such. The Complaint charged, and the Order finds, that DiCrisci was Oakmont’s controlling person who knowingly induced the underlying violation of the Commodity Exchange Act, or failed to act in good faith, and therefore was liable for Oakmont’s violations of the Act.

In the Order, the Court further finds that, from at least July 16, 2011 and continuing through at least July 27, 2012, Oakmont, by and through its employees, solicited retail customers by telephone to engage in financed precious metals transactions, which constitute illegal off-exchange retail commodity transactions and acted as an FCM without being so registered.

The Order also finds that precious metals were never delivered to any customers with respect to the leveraged metals transactions made on behalf of Oakmont’s customers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined or financed transactions, such as those conducted by Oakmont, are illegal off-exchange transactions unless they result in actual delivery within 28 days.

The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.  The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

CFTC Division of Enforcement staff members responsible for this action are Kara Mucha, Erica Bodin, Kassra Goudarzi, James A. Garcia, Michael Solinsky, Charles Marvine, and Rick Glaser.

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Trade compliance–why bother?

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by Janet Labuda

I worked in Customs for over thirty years and met regularly with importers to discuss trade risk, compliance, and enforcement. Often, companies would express their concerns about the cost of compliance–the proverbial cost benefit analysis. If money is spent to create a compliance department, what will the benefits be? Do the risks of possibly getting caught by Customs outweigh the investment in corporate trade compliance? How can there be an effective response to risk without the associated high costs?

Just as with most things, there are rules that govern our behavior. When we drive to work there are lane markings on major thoroughfares, and traffic light systems, and posted speed limits to guide us in an orderly fashion. The same can be said for international trade rules. They are meant to make order out of potential chaos. No person or company can operate successfully in an atmosphere of chaos. Business seeks out predictability, and stability. The rules and regulations governing trade provide a needed stable structure that can help companies weather shifts in the global economy or changes to the legal or regulatory framework.

More importantly, the rules help to level the playing field, and enhance and improve the competitive business dynamic. When companies fail to operate using these rules the underpinnings of trade policy collapse. Trade preference program become endangered, national economies become threatened, sourcing models get upended, business relationships are uprooted.

In addition, companies can get swept up in enforcement actions. Customs assesses risk using somewhat broad parameters. It could be driven by product, country of origin, manufacturer, preferential trade program usage, or combinations of these elements. There are also those instances when very specific information reaches the agency.

The better question to ask is what price is paid if my company does not invest in a culture of compliance? Getting enmeshed in Customs or other regulatory enforcement actions can tarnish your brand, lead to expensive law suits and penalty actions, and divert your resources away from your corporate mission and goals.

Ensuring a strong compliance structure in your organization ensures greater facilitation of product entering the commerce which supports just in time inventory practices. Costs are reduced for both government and business by focusing limited resources to enhancing productivity. A compliance driven operation is a win-win.

Latest GrantFraud.Com post involves a $200 million credit card fraud scheme

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Bradford L. Geyer is reading enforcement agency tea leaves and he is seeing signs of enhanced enforcement involving grant fraud and procurement fraud at grantfraud.com.  His latest note regarding an extensive credit card fraud scheme can be found here.

Who’s driving your trade compliance bus?

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We are including a column by Janet Labuda of the FormerFedsGroup which has supported GeyerGorey LLP with investigative and compliance resources and helps FormerFedsGroup clients on compliance issues involving international trade and Customs matters. I will oversee FormerFedsGroup trade compliance training programs and set the protocols of the PerfectShield (TM) certification process.

By Janet Labuda

The short answer to the question who’s driving the compliance bus is your corporate compliance department. The driver’s seat, should not be filled with personnel from your transportation and logistics operation, the sourcing, or import management groups. All parts of your organization need to be involved in your culture of compliance, but the compliance department is where the rubber meets the road, so it should be staffed with highly focused compliance experts. Companies also should ensure that Customs is not in your driver’s seat.

In 1993, the U.S. Congress amended the Tariff Act of 1930 by enacting, as part of the North American Free Trade Agreement, the Customs Modernization Act (Mod Act). Inherent in the legislation was a shift of responsibility, to the importer, to ensure that imports are compliant. In addition, a series of recordkeeping requirements with tough penalty provisions were established. The Mod Act also introduced the two concepts of informed compliance and reasonable care into the legal and trade lexicon. Customs must explain the rules, and importers, and others in the trade community, must take care to understand and follow the rules.

The legislation gave the bus key to the importers. But, an important thing to remember is that although, the importers are driving the compliance bus, the route is dictated by Customs. Most times importers find that they do not travel on the most direct route. Often, there are bumps in the road and unexpected detours. You must be prepared for these inevitabilities.

Over the last few weeks, it has become obvious that international trade will be a priority for U.S. policy makers. The trade community can expect a greater emphasis on the enforcement of laws and regulations, and possible changes to current trade legislation, especially as it relates to preferential access to U.S. markets. Our traditional trade relationships will be tried and tested, and may see unexpected changes to the current norm.

From past experience, the federal government pendulum tends to swing in wide and sweeping arcs. Establishing a predictable balance can be difficult to achieve as guidance and focus shift. Often, the importing community gets caught in the middle.

The time for doing some critical introspection is now. Do not allow your company to be caught off guard. The following recommendations are ways your company can engage in upgrading your bus’s safety and navigation systems:

  1. Put yourself in Customs shoes and do a complete review of your operations and document how you believe your company is meeting a reasonable care standard.
  1. Enhance your corporate internal controls, as needed.
  1. Ensure a transparent and understandable supply chain for all phases of your overseas production.
  1. Don’t fly under the radar screen. Develop a regular outreach to Customs and other federal regulatory agencies.
  1. Review your business relationships to guarantee that there is an understanding that compliance is key to working with your company.
  1. Become a CTPAT tier three partner or an Authorized Economic Operator, and keep abreast of Customs Trusted Trader programs.
  1. Work closely with a professional broker to navigate complex trade issues. A broker dedicated to compliance is a force multiplier for your company.
  1. Understand the nature of any perceived risk, e.g., forced labor, anti-dumping circumvention, trade preference non-compliance, and how your products and partners might be affected by such risk.
  1. Review your sourcing strategies in light of the potential risk you identify.
  1. If you uncover a problem seek legal advice on the best way to move forward to mitigate any potential downstream penalties.
  1. Ensure that all corporate departments are pulling in the compliance direction.
  1. Provide regular compliance training throughout the company.
  1. Work through industry associations to have your voice heard when changes in government policies and procedures affect your business model.

Start your engines, buckle up, and try to enjoy the ride.

GrantFraud.Com: Former DOD Employee Sentenced for GSA Advantage thefts

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As part of our effort to track white collar enforcement trends with the new Administration we will be tracking developments in grant fraud enforcement and procurement fraud enforcement over at GrantFraud.Com that is under construction and open.  You may click the title below to see a new grant fraud case filing involving GSA Advantage theft.  As is often the case between election and inauguration, career employees under “acting” top managers start to react to perceptions about what the new Administration’s enforcemenet priorities will be.  For a variety of reasons that Brad Geyer will be blogging about, we are projecting emboldened grant fraud and procurement fraud enforcement moving forward

Former DOD Employee Sentenced for GSA Advantage thefts

GrantFraud.Com: Bid-Rigging Involving State of California Contracts

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As part of our effort to track white collar enforcement trends with the new Administration we will be tracking developments in grant fraud enforcement and procurement fraud enforcement over at GrantFraud.Com that is under construction and open.  You may click the title below to see a new grant fraud case filing where the State of California was the victim.  For a variety of reasons that Brad Geyer will be blogging about, we are projecting emboldened grant fraud and procurement fraud enforcement moving forward.

San Francisco, New York, and Granite Bay Residents Charged in Bid-Rigging Conspiracy Involving Government Contracts

FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones

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Company’s sales and licensing practices hamper Qualcomm’s competitors and threaten innovation in mobile communications, according to FTC

The Federal Trade Commission filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products.

Qualcomm is the world’s dominant supplier of baseband processors – devices that manage cellular communications in mobile products. The FTC alleges that Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.

Qualcomm also holds patents that it has declared essential to industry standards that enable cellular connectivity. These standards were adopted by standard-setting organizations for the telecommunications industry, which include Qualcomm and many of its competitors. In exchange for having their patented technologies included in the standards, participants typically commit to license their patents on what are known as fair, reasonable, and non-discriminatory, or “FRAND,” terms.

When a patent holder that has made a FRAND commitment negotiates a license, ordinarily it is constrained by the fact that if the parties are unable to reach agreement, the patent holder may have to establish reasonable royalties in court.

According to the complaint, by threatening to disrupt cell phone manufacturers’ supply of baseband processors, Qualcomm obtains elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject. These royalties amount to a tax on the manufacturers’ use of baseband processors manufactured by Qualcomm’s competitors, a tax that excludes these competitors and harms competition. Increased costs imposed by this tax are passed on to consumers, the complaint alleges.

By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the Internet of Things.

The FTC has charged Qualcomm with violating the FTC Act. The complaint alleges that Qualcomm:

  • Maintains a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms. The FTC alleges that this tactic forces cell phone manufacturers to pay elevated royalties to Qualcomm on products that use a competitor’s baseband processors. According to the Commission’s complaint, this is an anticompetitive tax on the use of rivals’ processors. “No license, no chips” is a condition that other suppliers of semiconductor devices do not impose. The risk of losing access to Qualcomm baseband processors is too great for a cell phone manufacturer to bear because it would preclude the manufacturer from selling phones for use on important cellular networks.
  • Refuses to license standard-essential patents to competitors. Despite its commitment to license standard-essential patents on FRAND terms, Qualcomm has consistently refused to license those patents to competing suppliers of baseband processors.
  • Extracted exclusivity from Apple in exchange for reduced patent royalties. Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.

The FTC is seeking a court order to undo and prevent Qualcomm’s unfair methods of competition in violation of the FTC Act. The FTC has asked the court to order Qualcomm to cease its anticompetitive conduct and take actions to restore competitive conditions.

The Commission vote to file the complaint was 2-1. Commissioner Maureen K. Ohlhausen dissented and issued a statement. Both a public and sealed version of the complaint were filed in the U.S. District Court for the Northern District of California on January 17, 2017.

 

GrantFraud.Com: Former DHS Employee Inprisoned for Stealing USDA Funds

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As part of our effort to track white collar enforcement trends with the new Administration we will be tracking developments in grant fraud enforcement and procurement fraud enforcement over at GrantFraud.Com that is under construction and open.  You may click the title below to see a new USDA grant fraud case filing.  For a variety of reasons that Brad Geyer will be blogging about, we are projecting emboldened grant fraud and procurement fraud enforcement moving forward

Former DHS Employee Sentenced to Prison in Scheme to Steal USDA Funds Intended to Feed Hungry Children & Little Rock Man Pleads Guilty in Same Scheme

 

 

 

Labuda on The Role of Customs in National Economic Growth

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The Role of Customs in National Economic Growth

By Janet Labuda**

Traditionally, Customs Services have  been tasked with the collection and protection of revenues generated from the importation of goods into their respective countries. Declared valuation of the imported goods is the basis for the collection of duties and value added tax for the national budgets. However, as the global economy is gravitating toward various free trade and duty-free preference partnerships and regional economic integration the traditional role of Customs is evolving.

Most Customs Services will readily admit that the growth of import trade and resulting complexities are often overwhelming for current personnel numbers, training, and abilities. The World Customs Organization has advocated the use of various risk management programs to identify the highest risk transactions, and therefore direct limited resources to addressing only these risks, while absorbing lower risk situations. Various countries have also established trusted partnerships with members of the supply chain using the business community as a force multiplier for compliance. Modern Customs Services must be on the leading edge of building a culture of compliance within the global trade community.

The international trade community has embraced the concept of just in time inventory procedures and Customs must embrace a just in time response to the needs of business. The lack of timeliness in regulatory decisions, and addressing legal issues, e.g., protests, the inability to create clear and concise regulations to elucidate new legal requirements, and failure to understand the business of business has a detrimental effect on corporate prosperity and subsequently a nation’s economic growth. Customs must see itself as an economic growth engine and compliance partnerships need to be expanded to include economic growth partnerships.

Generally, companies that reach out to Customs are seeking to enhance their compliance footprint, not to engage in questionable trade practices. There is no doubt that there are those in the trade community who engage in undervaluation, circumvention of anti-dumping duties, the introduction of goods that violate intellectual property rights, and in introducing products that adversely affect the health and safety of consumers. In these situations, Customs should take swift and effective enforcement action. Violations such as these also have a dampening effect on economic growth. However, for those companies seeking to be compliant players in the global economy, Customs Services need to step up and engage in collaborative solutions and ways forward.

Customs has a duty to remove unnecessary roadblocks affecting international trade transactions. Creating policies that are the antithesis of global economic partnerships is unacceptable. Customs Services should recognize their role in national economic growth by taking steps to ensure that Customs officials are trained in the complexities of international trade and the legal requirements necessary for a seamless facilitation of legitimate trade. Customs needs to develop programs that enable the highest level of integrity among Customs human resources and to develop strong risk management programs that address serious violations, rather than just seeking to pluck low hanging fruit which have little risk to compliance or which impede the flow of compliant trade. Of course, it is critical to ensure that adequate resources are in place to quickly address requests from the trade community regarding legal advice and rulings. Mutually developed compliance programs must take into account business needs, and provide quick and effective communication with the trade community. Customs must guarantee consistent and uniform treatment of issues across various ports and government agency offices to ensure predictability.

For import/expert issues, Janet can be contacted at Vandegrift Inc.  Janet can also be contacted at FormerFedsGroup.