Category Archives: Uncategorized

Former Packaged Seafood Executive Pleads Guilty to Price Fixing

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Wednesday, June 28, 2017

A former senior vice president of sales for a packaged seafood company pleaded guilty for his role in a conspiracy to fix the price of packaged seafood, such as canned tuna, sold in the United States, the Department of Justice announced today.

According to documents filed in this case, Stephen Hodge and his co-conspirators agreed to fix the prices of packaged seafood from as early as 2011 through 2013. He pleaded guilty to a one-count criminal information filed on May 30, 2017, in U.S. District Court for the Northern District of California in San Francisco. Hodge has agreed to pay a criminal fine and cooperate with the Antitrust Division’s ongoing investigation. He will be sentenced by the court at a later date.

“With today’s plea, the Antitrust Division continues to send a strong signal that senior executives will be held accountable for their actions,” said Acting Assistant Attorney General Andrew Finch of the Justice Department’s Antitrust Division. “The division, along with our law enforcement colleagues, will continue to investigate price fixing among packaged seafood companies and the executives who worked at those companies.”

“The FBI will not tolerate the reprehensible behavior of company executives who abuse the trust of the American public for personal gain,” said FBI San Francisco Division Special Agent in Charge John F. Bennett. “We, along with our Justice Department partners, are dedicated to our ongoing investigations into price fixing and will bring these companies to justice.”

According to court documents, Hodge and his co-conspirators discussed the prices of packaged seafood sold in the United States and agreed to fix the prices of those products. Hodge and his co-conspirators negotiated prices and issued price announcements for packaged seafood in accordance with the agreements they reached. Including Hodge, three executives have pleaded guilty for their participation in this conspiracy. Bumble Bee Foods LLC has also been charged for its role in the price-fixing conspiracy. Bumble Bee Foods has a court appearance scheduled for August 2, 2017.

Today’s plea is the result of an ongoing federal antitrust investigation into the packaged seafood industry, which is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office.

Federal Grand Jury in Chicago Indicts Two Former Tech Executives For Allegedly Conspiring to Obstruct SEC Probe into Sale of Company

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Department of Justice
U.S. Attorney’s Office
Northern District of Illinois
FOR IMMEDIATE RELEASE
Friday, June 30, 2017

CHICAGO — A federal grand jury in Chicago has indicted two former executives of a Florida technology company for allegedly conspiring to obstruct an investigation by the U.S. Securities and Exchange Commission.

CHRISTOPHER YOUNG, the former President of Tampa-based M2 Interactive Group Inc., and JOSHUA CARLUCCI, M2 Interactive’s former Chief Executive Officer, are charged with conspiracy to obstruct, influence, and impede an official proceeding. The pair allegedly conspired with executives from Schaumburg-based Quadrant 4 System Corp. to obstruct an SEC investigation into Quadrant 4’s 2013 purchase of M2 Interactive.

The indictment was returned Thursday in federal court in Chicago. In addition to the conspiracy count, Young, 35, of Norwich, N.Y., and Carlucci, 39, of Tampa, Fla., are also charged with attempting to obstruct, influence, and impede an official proceeding. Carlucci also faces a charge of making false statements to the Federal Bureau of Investigation. The Court will schedule arraignments for Young and Carlucci at a later date.

New and expanded criminal charges were also filed Thursday against the two Quadrant 4 executives, NANDU THONDAVADI and DHRU DESAI. A criminal information filed in federal court in Chicago charged them with wire fraud. Arraignments for Thondavadi, 63, of North Barrington, and Desai, 55, of Barrington, have been scheduled for July 6, 2017, at 10:00 a.m., before U.S. District Judge Charles Norgle.

The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago office of the FBI. The Chicago office of the SEC provided valuable assistance.

M2 Interactive was a technology company that developed applications for mobile devices and conducted business under the name Momentum Mobile. Quadrant 4 provides software products, platforms and consulting services to customers in the healthcare and education sectors. As a public company, Quadrant 4 is required to provide to the SEC a detailed report of its financial condition.

In 2015 the SEC launched an investigation of Quadrant 4 based on indications that the firm may have violated federal securities laws. The FBI initiated an investigation of Quadrant 4 in 2016. As set forth in the information against Thondavadi and Desai, the investigation revealed that Thondavadi and Desai engaged in a wide-ranging scheme to defraud Quadrant 4’s shareholders by misappropriating more than $3 million from the company, fraudulently inflating Quadrant 4’s revenue, and regularly concealing Quadrant 4’s liabilities. The information charges that Thondavadi and Desai certified false SEC reports, including Quadrant 4’s 2014 Form 10-K, in which the defendants fraudulently inflated Quadrant 4’s revenue by more than $4.2 million – nearly 10% of Quadrant 4’s reported income that year.

The fraud scheme also involved numerous misrepresentations related to Quadrant 4’s acquisitions, including misrepresentations about the terms of Quadrant 4’s purchase of Momentum Mobile in 2013. Quadrant 4 purchased Momentum Mobile for $100,000 in cash and 250,000 shares of Quadrant 4 stock, plus assumption of approximately $165,000 in Momentum Mobile liabilities, according to the indictment against Young and Carlucci. Federal authorities discovered that Thondavadi and Desai later concealed the true terms of the deal from Quadrant 4’s auditor and its shareholders, according to the charges. The pair furnished the auditor with a fictitious agreement that Thondavadi created, the charges state. The bogus document inflated the purchase price and failed to mention the liabilities Quadrant 4 assumed, according to the charges.

As set forth in the charges, the investigation further revealed that Thondavadi and Desai attempted to obstruct the SEC’s investigation of Quadrant 4 as it related to the Momentum Mobile acquisition. In July 2016 SEC attorneys sought to question Young and Carlucci, who were unaware of the fictitious acquisition agreement that Thondavadi created. Carlucci notified Thondavadi and Desai of the SEC’s inquiry, and the Quadrant 4 executives responded by striking a deal with Young and Carlucci to pay them cash in exchange for their agreement to send Thondavadi an e-mail falsely stating that Momentum Mobile had previously authorized the terms of the fictitious agreement, according to the charges. The defendants attempted to disguise the payments – $102,900 to Young and $60,000 to Carlucci – as “consulting” fees, the charges state.

The public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The conspiracy, obstruction and wire fraud charges are each punishable by up to 20 years in prison, while making false statements to the FBI is punishable by up to five years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

Defense Contractor Sentenced To 30 Months In Federal Prison For $53 Million Procurement Fraud And Illegal Gratuities Scheme

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Department of Justice
U.S. Attorney’s Office
District of Maryland
FOR IMMEDIATE RELEASE
Tuesday, June 27, 2017

JUNE 27, 2017

FOR IMMEDIATE RELEASE                                               Contact ELIZABETH MORSE

www.justice.gov/usao/md                                                                          at (410) 209-4885

Baltimore, Maryland – On June 27, 2017, U.S. District Judge Marvin J. Garbis sentenced Andrew Bennett, age 37, of Tampa, Florida to 30 months in prison, followed by 36 months 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 Bennett to pay forfeiture and restitution in the amount of $500,000.00

 

Co-conspirator John Wilkerson, age 51, of Moultrie, Georgia was previously sentenced to five years in prison, followed by three years of supervised release. 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.

 

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, Special Agent in Charge, Robert E. Craig Jr, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office; and U.S. Small Business Administration Acting Inspector General Mike Ware.

 

According to Bennett’s plea agreement, he was a program manager for Advanced C4 Solutions, or AC4S, from 2005 until 2011. AC4S was an information technology company headquartered in Tampa, Florida. In 2011, Bennett left AC4S and went to work for Co-conspirator Wilkerson at Superior Communications Solutions, Inc. (SCSI). According to co-conspirator Shank’s indictment, from August 28, 2006 until he retired on June 30, 2011, Shank was employed as a Program Manager at the United States Navy’s Space and Naval Warfare (SPAWAR) Systems Center. Shank worked with agencies within the Department of Defense to procure telecommunications equipment, software, and related services. 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 Superior Communications Solutions, Inc. (SCSI).

 

From September 2009 through August 2012 Bennett conspired with Wilkerson, to give them and the companies they worked for and/or owned an unfair competitive advantage in obtaining government contracts. Court documents state that 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.

 

According to Bennett’s plea agreement, Shank improperly shared information with Bennett and Wilkerson, and worked with them to structure the government contracts so as to give their companies an unfair advantage over other potential bidders.

 

For example, according to Bennett’s indictment, Bennett and Wilkerson 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 for the installation of specific technology 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 for the installation of the technology. 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. Bennett and Wilkerson then 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.

 

In February 2011, Bennett left AC4S and went to work for Wilkerson at SCSI. According to the plea agreement, Bennett received a $500,000 bonus when he joined SCSI, which was paid for by profit Wilkerson had earned on the Air Force contracts.

 

By March 2011, the Air Force project was incomplete and there were numerous contract disputes related to the project. Shank was directed not to take any other action related to the project without the approval of a senior manager. Nevertheless, in April 2011, Shank accepted more than $3.7 million worth of invoices that benefited SCSI without informing the senior manager. In May, 2011, after Shank accepted employment with SCSI, but was still working for SPAWAR, he allegedly approved more than $1.1 million worth of invoices that benefitted SCSI and Wilkerson.

 

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, Defense Criminal Investigative Service, and the U.S. Small Business Administration Office of the 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.

Duke admits faked data “potentially affected” grant applications

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From Retraction Watch (which makes my list of “must read” blogs):

“A former researcher at Duke University has admitted to faking data that allegedly were used to secure hundreds of millions of dollars in federal grants.

Duke has also admitted that it knew Erin Potts-Kant, a pulmonary scientist, faked data, but it’s unclear whether that was discovered prior to using those data to apply for grants, as a lawsuit alleges.

The admissions come from court documents submitted by Potts-Kant, her supervisor — former Duke researcher William Michael Foster — and Duke itself, responding to allegations in a whistleblower suit that says they defrauded the government.

Regular readers may recall that Joseph Thomas, a former colleague of Potts-Kant and Foster, has filed a False Claims Act suit against the three defendants on behalf of the U.S. government. The responses, submitted separately by the three defendants, are the latest development in what could be a landmark case for research misconduct. The lawsuit has survived motions to dismiss and is moving through the discovery process, which is likely to reveal more than the defendants have already said.

The suit claims that Potts-Kant “knew that the reported research results in question were false and/or fabricated, having generated the results herself.” To which she responded (in writing):

“Defendant admits that she has generated experiment data that was altered.”

Later on, she responded:

“to the extent she altered experiment data, she knew the altered experiment data was false.” 

In addition, Duke has admitted that it found out about the fraud when Potts-Kant told an investigative committee about it. The pulmonary division launched an investigation in 2013 after discovering the embezzlement and Duke launched a formal scientific misconduct investigation in June 2013.

*  *  *

An admission that there’s falsity of data in the context of research misconduct doesn’t in and of itself create False Claims Act liability.

*   *   *   *

Click Here for the Rest of the Retraction Watch Story

Owner of Afghanistan Marble Mining Company Indicted for Defrauding U.S. Agency and Defaulting on a $15.8 M Loan

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Friday, June 16, 2017

The former owner of a now-defunct marble mining company in Afghanistan was charged in an indictment unsealed today with allegedly defrauding the Overseas Private Investment Corporation (OPIC), a U.S. government agency, and defaulting on a $15.8 million loan.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Special Inspector General for Afghanistan Reconstruction (SIGAR) John F. Sopko and Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office made the announcement.

Azam Doost, aka Adam Doost, Mohammad Azam Doost and Mohammad Azim (Doost), 39, most recently of Union City, California, was charged in an indictment filed in U.S. District Court for the District of Columbia with three counts of major fraud against the United States, eight counts of wire fraud, four counts of false statements on loan applications or extensions and eight counts of money laundering. The indictment also has a forfeiture notice.

The indictment alleges that in February 2010, while working at his company, Equity Capital Mining LLC, Doost, along with his brother, obtained a $15.8 million loan from OPIC for the development, maintenance and operation of a marble mine in western Afghanistan. The loan proceeds were paid directly from OPIC to the alleged vendors who provided equipment for the mine, as reported to OPIC by Doost or his consultant. Doost was required to deal with these companies in arms-length transactions or, to the extent any transactions were other than at arms-length, he was required to report any affiliation he had with a vendor. Doost informed OPIC that he had no affiliation with any of the alleged vendors with whom he dealt, when in fact he allegedly had financial relationships with several of them. The indictment alleges that Doost’s business partner was listed with the bank for a number of these alleged vendors and, upon receipt of money from OPIC into the respective accounts, significant amounts of this money were then transferred from that respective account to companies and individuals with whom Doost was associated, or to pay debts Doost owed. Doost’s consultant allegedly received a commission of $444,000 for his alleged consulting services with the first of three disbursements from OPIC, and shortly after $40,000 was transferred from his account to a Doost company in California

The indictment further alleges that when the time came for Equity Capital Mining LLC to repay the loan to OPIC, Doost provided purported reasons to OPIC why it was not able to make those repayments at a time when Doost had control of sufficient funds to make those repayments. Doost and his brother failed to repay any of the principal on the OPIC loan, and only a limited amount of interest, and ultimately defaulted on the loan, the indictment alleges.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

SIGAR, with assistance from the FBI, investigated the case. Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section is prosecuting the case.

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

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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

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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 [email protected](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

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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

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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

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Department of Justice U.S. Attorney’s Office

Northern District of Illinois

shutterstock_73722895

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.