Twenty-Five Individuals Indicted for Wire Fraud

Posted on October 26, 2015 by Brad Geyer

Defendants Defrauded the U.S. Army National Guard Recruiting Assistance Program

Twenty-five individuals have been charged in 14 separate indictments for their alleged participation in a conspiracy to defraud the United States and the National Guard Bureau of money and property, wire fraud and aggravated identity theft, announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico. The U.S. Secret Service is in charge of the investigation, with the collaboration of the U.S. Army Criminal Investigation Command, the U.S. Postal Service Office of Inspector General, the Department of Defense-Defense Criminal Investigative Service and the Puerto Rico Police Department. The indictments were unsealed today upon the arrest of the defendants.

A federal grand jury in the District of Puerto Rico returned the indictments yesterday, Oct. 21, 2015, which include the following individuals: recruiters Cristobal Colón-Colón, Ángel D. Rivera-Rodríguez, Enrique Costas-Torres, Gregorio Quiñones-Pacheco, Guillermo Cruz-García, Edwin Izquierdo-Montañez, Luis De Jesús-Negrón, Gabriel González-Franco, Gilberto Rivera-Quiñones, Juan Rivera-Rivera and Héctor Rodríguez-Colón; and recruiter assistants Axel Aponte-García, Gilberto Gierbolini-Emanuelli, Freddie García-Ruiz, Félix González-Rodríguez, Radamés Robles-Meléndez, Emilio Rivera-Maldonado, Carlos Meléndez-González, Natalio Soto-Rivera, José Rivera-Pereles, Félix Lasen-Nieves, Ángel Perales-Muñoz, Alexis Betancourt-Jiménez, José Velázquez-Lugo and Garby Ruiz-Rosado.

These charges stem from a scheme utilized by the defendants from 2007 through 2011. In or about September 2005, the National Guard Bureau, located in Arlington, Virginia, entered into a contract with Document and Packaging Broker Inc. (Docupak), located in Pelham, Alabama, to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program designed to offer referral bonus payments to Army National Guard soldiers to recruit civilians to serve in the Army National Guard. As part of the G-RAP, the National Guard Bureau reimbursed Docupak for the recruiting referral bonus payments that Docupak paid to participating soldiers. The National Guard Bureau also paid Docupak an administrative fee for disbursing each of the referral bonus payments.

The program had two primary participants: recruiters, whose job it was to assist the Docupak subcontractors in enlisting new members into the Army National Guard; and recruiter assistants, who were Docupak subcontractors, whose job it was to identify and assist recruit new potential members into the Army National Guard and assist recruiters with other related duties. Under the contract specifications of the program, only recruiter assistants were eligible for recruiting referral bonuses.

The program required recruiter assistants to establish an online account in their name to record their referral and recruitment efforts. The recruiter assistant would input the personal identifying information of each recruit into the account. A recruiter assistant could receive a bonus between $500 and $1,000 for every referred soldier that enlisted in the Army National Guard, and an additional bonus between $500 and $1,000 once the referred soldier was sent to basic training. If the referred soldier had previously served in a different military branch, did not need to attend basic training or joined the Army National Guard as an officer, the recruiter assistant could receive a bonus between $2,000 and $8,500. The recruiter assistant could receive the referral bonus payments either through direct deposit in a bank account or a VISA account.

It was the goal of the conspiracy for the recruiters to unlawfully enrich themselves by defrauding the United States and performing acts in violation of their official duties, in exchange for things of value. The recruiter assistants provided things of value to the recruiters in exchange for their assistance in defrauding the U.S. National Guard.

The defendants’ scheme knowingly caused the transfer, possession and use without lawful authority of a means of identification of another person, which contained the name, date of birth and social security number of potential soldiers; and by submitting the personal identifying information (PII) for unauthorized purposes, they generated a fraudulent referral bonus of the G-RAP program that would then create an interstate wire transfer to the co-conspirator’s different bank accounts.

An example of the scheme, as alleged in one of the indictments, is as follows: the defendants allegedly cheated the program, known as G-RAP, by having the recruiter assistants create a G-RAP account and or allow the recruiters to use the recruiter assistants’ G-RAP account to enter all information necessary to claim recruiting bonuses that the recruiter assistants had not earned. The defendants applied for the G-RAP bonuses using PII given to the recruiters by enlistees who would go to the recruitment office seeking orientation to enlist in the Puerto Rico Army National Guard (PRANG). The recruiters would obtain the PII in their official capacity as a recruiter and would use the recruiter assistants’ G-RAP accounts to apply for fraudulent recruiting bonuses. The recruiter assistants were paid bonuses that would be deposited by Docupak in their personal bank accounts or a VISA Card that was given to them by Docupak, based on the misrepresentations made by the defendants of the recruitment process. Some recruiter assistants withdrew a cash amount from each bonus and paid a kickback of approximately half of the bonus to the recruiters, and in some cases the recruiters kept the bonuses for themselves.

“These charges clearly demonstrate that we will take firm action against those who choose to exploit our military system for personal and criminal gain,” said U.S. Attorney Rodríguez-Vélez. “We remain committed to investigating and apprehending those who cheat the system for personal gain, and will continue to work towards the eradication of this type of fraud in Puerto Rico.”

“The U.S. Secret Service will continue to aggressively pursue those that commit fraud and identity theft for their own enrichment,” said Resident Agent in Charge Carlos Colón of the U.S. Secret Service Office in Puerto Rico. “These crimes remain a top investigative priority for our agency.”

“We should expect honesty and integrity from our military personnel,” said Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service. “This case demonstrates the commitment of DCIS, along with our investigative partners, to relentlessly pursue and bring to justice those who commit fraud and violate positions of trust for personal enrichment.”

“The conduct alleged in the criminal Indictments is beyond disgraceful,” said Special Agent in Charge Eileen Neff of the USPS Office of Inspector General (OIG). “The USPS-OIG, along with our law enforcement partners, will continue to aggressively investigate those who seek to defraud our government programs.”

If found guilty, the defendants face a maximum penalty of 10 years in prison for the conspiracy, 20 years in prison for wire fraud and a mandatory two-year consecutive term in prison for aggravated identity theft.

The case is being investigated by the U.S. Secret Service. The case is being prosecuted by Assistant U.S. Attorney Olga B. Castellón-Miranda and Special Assistant U.S. Attorney Amanda C. Soto-Ortega of the District of Puerto Rico.

Indictments contain only charges and are not evidence of guilt. The defendants are presumed to be innocent unless and until proven guilty. The investigation is ongoing.

Three People Arrested in Puerto Rico in a Contractor Major Scheme to Defraud the U.S. Department Of Veterans Affairs

Posted on June 18, 2015 by Brad Geyer

On June 3, 2015, a federal grand jury in the District of Puerto Rico returned a five count indictment charging Jose A. Rosa-Colon, his brother and business partner, Ivan Rosa-Colon and Louis Enrique Torres with a multi-million dollar Service-Disabled Veteran-Owned Small Business (SDVOSB) scheme to defraud the U.S. Department of Veteran Affairs. The charges include major fraud against the United States and wire fraud. This investigation was conducted by Special Agents from the U.S. Department of Veteran Affairs, Office of Inspector General, Criminal Investigations Division.

The indictment unsealed in federal court today alleges that from on or about 2007 to 2014, Ivan Rosa-Colon, Jose Rosa-Colon and Torres conspired to use Jose Rosa-Colon’s service-disabled veteran status to create BELKRO General Contractors, which was a pass- through or front company for Ivan Rosa-Colon’s other business, IRC Air Contractors.

The indictment alleges that Ivan Rosa-Colon and Louis Torres used Jose Rosa-Colon’s service-disabled veteran status to certify and register BELKRO General Contractors in various government databases as a SDVOSB after Ivan Rosa- Colon learned that President George W. Bush would be signing a government stimulus package encouraging the use of SDVOSB. The stimulus package would allow for government agencies to award non-competitive, set-aside or sole-source government contracts to SDVOSB like BELKRO General Contractors.

The indictment further alleges that Jose Rosa-Colon, owner of BELKRO General Contractors, was employed as a full-time U.S. Postal Service Carrier; he was not in charge of the day to day operations of BELKRO General Contractors. Jose Rosa-Colon was simply a figurehead or “rent-a-vet”, who was being used for his service-disabled veteran status to obtain contracts for his brother Ivan Rosa-Colon’s company. As a result of the scheme, BELKRO General Contractors unlawfully received set-aside and/or sole-source SDVOSB contracts from the U.S. Department of Veterans Affairs, including contracts involving American Recovery and Reinvestment Act (ARRA) funds.

If convicted, they face a term of 20 years in prison as to each wire fraud charge and up to ten years in prison for the charges of major fraud against the United States. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count.

This indictment was announced today by U.S. Attorney Rosa Emilia Rodríguez-Vélez for the District of Puerto Rico, Special Agent in Charge Monty Stokes for the Southeast Field Office, Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division and Acting Special Agent in Charge Sharon Johnson for the Eastern Regional Office, Small Business Administration, Office of Inspector General. The government is represented by Assistant U.S. Attorney Julia Diaz-Rex.

Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.

Las Vegas Attorney Pleads Guilty for Role in Multimillion-Dollar Fraud

Posted on February 3, 2014 by Brad Geyer

A Las Vegas attorney pleaded guilty today for his role in multiple schemes to defraud his clients, to defraud the IRS and to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to ensure that the HOAs would steer business to a certain law firm and a certain construction company.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Laura Bucheit of the FBI’s Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Acting Special Agent in Charge Shea Jones of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
Barry Levinson, 47, pleaded guilty before U.S. District Judge James C. Mahan in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Levinson is the 30th person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area. Levinson simultaneously pleaded guilty to one count of tax evasion and one count of wire fraud, with the latter charge relating to his embezzlement of his legal clients’ funds.
Levinson admitted that from approximately August 2003 through February 2009, he participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to his law firm and construction company designated by Levinson’s co-conspirators. This scheme was carried out in part by straw buyers who purchased properties in their names that were in reality paid for and controlled by other co-conspirators. According to plea documents, Levinson’s co-conspirators managed and operated the payments associated with maintaining straw properties by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
Levinson admitted that he was hired to represent the Park Avenue condominium complex, but he treated a co-conspirator as his client rather than the HOA itself. Levinson also admitted that several of his co-conspirators rigged an HOA board election at Park Avenue. Levinson admitted that, after a lawsuit was filed by the homeowners and a special election master was designated for the make-up election, he attempted to bribe the special election master.
Similarly, Levinson admitted that after a rigged election at the Pebble Creek HOA, the homeowners filed a recall petition. Levinson was hired as the HOA general counsel at the direction of a co-conspirator and took several steps to deter the recall election, including firing the property management company and filing a lawsuit to stop the recall election.
Related to the tax evasion charge, Levinson admitted that he failed to file taxes for the 2005 to 2010 tax years and filed a false 2011 tax return. Levinson also admitted that he took affirmative steps to evade taxes for the tax years 2009, 2010 and 2011, including concealing cash earnings from the IRS and telling the IRS that his business was no longer operating.
Finally, related to the wire fraud charge, Levinson admitted that between March 2010 and September 2011, he embezzled nearly $180,000 from at least nine different minor personal injury clients. Levinson also admitted that he stole another $65,000 from an individual for whom he was serving as an escrow agent.
As part of the plea agreement, Levinson has agreed to be disbarred by the State Bar of Nevada.
Levinson’s sentencing is scheduled for May 5, 2014. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison. The maximum sentence for attempting to evade or defeat federal taxes is five years in prison. The maximum penalty for wire fraud is 20 years in prison.
The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
The case is being prosecuted by Deputy Chief Charles La Bella, Senior Deputy Chief for Litigation Kathleen McGovern and Trial Attorneys Thomas B.W. Hall and Alison Anderson of the Criminal Division’s Fraud Section. The Department also thanks former Trial Attorneys Mary Ann McCarthy and Nicole Sprinzen for their efforts in prosecuting the case.

Maurice E. Stucke Curriculum Vitae

Posted on June 25, 2013 by Brad Geyer

Maurice E. Stucke Curriculum Vitae (pdf)

Leading Antitrust Lawyers and DOJ Alumni Allen P. Grunes and Maurice E. Stucke Join GeyerGorey LLP

Posted on June 24, 2013 by Brad Geyer

GeyerGorey LLP is pleased to announce that two veteran Department of Justice prosecutors, Allen P. Grunes and Maurice E. Stucke, have joined the firm. Grunes, recently named as a “Washington D.C. Super Lawyer for 2013” in antitrust litigation, government relations, and mergers & acquisitions, joins as a partner. Stucke, a widely-published professor with numerous honors including a Fulbright fellowship, joins as of counsel. Stucke will continue to teach at the University of Tennessee College of Law.

“We are delighted that Allen and Maurice have decided to join us,” said Brad Geyer. “They add considerable fire power to our already impressive antitrust, compliance and white collar roster and give us more capabilities and capacity, particularly on the civil side.”

Robert Zastrow, who was Verizon’s Assistant General Counsel for 15 years before co-founding the firm in October 2012, added, “Allen’s and Maurice’s extensive background and expertise nicely complement our firm’s unique philosophy and enrich our competition and merger practices. We are thrilled they are joining our innovative effort in delivering legal services.”

GeyerGorey LLP presents a new way to practice law. It may be the only law firm in the country where prior federal prosecutorial experience is a prerequisite for partnership. Given its lawyers’ extensive legal expertise, GeyerGorey can handle trials involving the most complex legal and factual issues, and, when advantageous, work with other law firms, economists and specialists, particularly former federal prosecutors and agents, who bolster existing resources, expertise and constantly freshen perspective. As founding partner Hays Gorey added, “We seek to avoid the traditional hierarchal partner-associate pyramid, hourly billing fee structure, and practice fiefdoms. We want to attract entrepreneurial lawyers, like Allen and Maurice, who love competition policy and practicing law. Having worked with them at DOJ, I am excited about the expertise and enthusiasm they bring to our clients.”

Consistent with GeyerGorey’s philosophy, both Grunes and Stucke are alumni of the U.S. Department of Justice, Antitrust Division, in Washington, D.C. At DOJ, they led numerous civil investigations, worked on high-profile trials, and negotiated consent decrees involving significant divestitures across many different industries. In their last case together at the Division, In re Visa Check/MasterMoney Antitrust Litigation, they successfully sought, as a matter of equity and the first time in the Division’s history, for the government’s share of damages in a private class action settlement.

Grunes and Stucke are regarded as leading authorities on competition policy in the media. Their scholarship on media and telecommunications policy has been published in the Antitrust Law Journal, the Northwestern University Law Review, the Connecticut Law Review, the Journal of European Competition Law & Practice, and the Federal Communications Law Journal. They have spoken at numerous conferences on competition policy and the media, including the U.S. Federal Trade Commission’s workshop, How Will Journalism Survive the Internet Age? Both are frequently quoted in the press on mergers and anticompetitive conduct. In addition, both serve on the advisory boards of the American Antitrust Institute and the Loyola Institute for Consumer Antitrust Studies in Chicago.

Allen Grunes joins GeyerGorey from another Washington, D.C. firm, where he was a shareholder. His recent matters include acting as class counsel in litigation against several hospitals and an association in Arizona that allegedly artificially depressed the rates paid to temporary nurses, opposing the merger of AT&T and T-Mobile for a coalition of companies including DISH Network, and representing Warner Music Group in connection with the merger of Universal and EMI. He has counseled dozens of companies and associations on antitrust issues and corporate mergers. He also serves as chair of the antitrust committee of the Bar Association of the District of Columbia.

Maurice Stucke is a tenured professor at the University of Tennessee and a leading competition law scholar. With over 30 articles and book chapters, Stucke has been invited by competition authorities from around the world and the OECD to speak about behavioral economics and competition policy. He currently is one of the United States’ non-governmental advisors to the International Competition Network, the only international body devoted exclusively to competition law enforcement. His scholarship has been cited by the U.S. federal courts, the OECD, competition agencies and policymakers.

Headquartered in Washington, D.C., GeyerGorey specializes in white collar criminal defense, particularly investigations and cases involving allegations of economic crimes, such as violations of the federal antitrust laws (price fixing, bid rigging, territorial and customer allocation agreements), procurement fraud, securities fraud, foreign bribery (Foreign Corrupt Practices Act) and qui tam (False Claims Act) and whistleblower actions. The firm also conducts internal investigations of possible criminal conduct and provides advice regarding compliance with U.S. antitrust and other laws.

Former U.S. Army Staff Sergeant Pleads Guilty in Tennessee to Bribery Scheme

Posted on February 20, 2013 by Brad Geyer

A former U.S. Army staff sergeant pleaded guilty today to accepting thousands of dollars in bribes from contractors while he was deployed to Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Tennessee William C. Killian.

Richard A. Gilliland, 44, of Fayetteville, Tenn., pleaded guilty before U.S. Magistrate Judge Susan K. Lee in the Eastern District of Tennessee to a criminal information charging him with one count of conspiracy to accept illegal bribes.

According to court documents, from October 2007 until November 2008, Gilliland was a U.S. Army staff sergeant who worked with the Civil Affairs Unit at Camp Victory in Iraq and also was assigned as a pay agent responsible for U.S. government funds. As a pay agent, Gilliland was responsible for paying contractors to perform work in accordance with civil development objectives set forth by U.S. Army commanders in furtherance of the strategic mission of Coalition Forces in Iraq.

While deployed to Iraq in October 2007, Gilliland worked closely with two Iraqi contracting companies and their American representatives. Gilliland admitted to receiving approximately $27,200 and a laptop in bribes from American representatives of the contracting companies in return for his attempt to influence contracts for the Iraqi-based contractors and his assistance in acquiring used and non-working generators from the Defense Reutilization and Marketing Office. After receiving the bribes, Gilliland wired the cash payments he received back to the United States.

The case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and Assistant U.S. Attorney John MacCoon of the Eastern District of Tennessee. The case was investigated by SIGIR.

GeyerGorey LLP Opens New York Office

Posted on February 18, 2013 by Brad Geyer

FOR IMMEDIATE RELEASE

PRLog (Press Release) – Feb. 18, 2013 – WASHINGTON — GeyerGorey LLP today announced the opening of a new office in New York. This is the firm’s fourth office. The New York office now joins with the firm’s Washington, D.C., Philadelphia and Boston offices in providing international and inside-the-beltway experience to individuals and companies that have become — or wish to avoid becoming — the subject of federal criminal law enforcement agency interest. Partner Robert J. Zastrow, resident in the Boston office, will oversee client matters in New York.

GeyerGorey LLP aims to meet the needs of companies for advice and training in compliance with federal criminal laws and in the detection of wrongdoing by corporate employees. The firm also specializes in the defense of white-collar criminal cases. The firm’s Web site may be found at www.GeyerGorey.com.

The New York office is located at 112 W. 34th Street, 17th Floor, New York, NY 10120. The office telephone number is (212) 920-0676. For further information, please call Robert Zastrow at (212) 920-0676 or send an email to [email protected].

Florida-Based Lender Processing Services Inc. to Pay $35 Million in Agreement to Resolve Criminal Fraud Violations Following Guilty Plea from Subsidiary CEO Agreement Also Follows Closure of Subsidiary DocX Operations

Posted on February 15, 2013 by Brad Geyer

Lender Processing Services Inc. (LPS), a publicly traded mortgage servicing company based in Jacksonville, Fla., has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States. The settlement, which follows a felony guilty plea from the chief executive officer of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Florida Robert E. O’Neill.

The non-prosecution agreement, which LPS entered into today with the U.S. Department of Justice and the U.S. Attorney’s Office for the Middle District of Florida, requires the company to make the payment and meet a series of other conditions.

Lorraine Brown, the former CEO of DocX LLC, pleaded guilty on Nov. 20, 2012, in federal court in Jacksonville to conspiracy to commit mail and wire fraud. During her guilty plea, Brown admitted to her leadership role in the scheme.

LPS has taken a number of remedial actions to address the misconduct at DocX. Among other things, LPS has wound down all of DocX’s operations, re-executed and re-filed mortgage assignments as appropriate and terminated Brown and others. LPS has also demonstrated changes in its compliance, training and overall approach to ensuring its adherence to the law, and has retained an independent consultant to review and report on LPS’s document execution practices; assess related operational, compliance, legal and reputational risks; and establish a plan for reimbursing any financial injuries to mortgage servicers or borrowers.

According to the statement of facts accompanying the agreement, before its wind-down, DocX was in the business of assisting residential mortgage servicers with creating and executing mortgage-related documents to be filed with property recorders’ offices throughout the United States. Employees of DocX, at the direction of Brown and others, falsified signatures on the documents. Through this scheme and unbeknownst to the clients, Brown and subordinates at DocX directed authorized signers to allow other, unauthorized personnel to sign and to have documents notarized as if they were executed by authorized signers. These signing practices were used at DocX from at least March 2003 until late 2009, and were implemented to increase profits.

Also to increase profits, Brown hired temporary workers to sign as authorized signers. These temporary employees would sign mortgage-related documents at a much lower cost and without the quality controls represented to clients. These documents were then falsely notarized by employees at DocX, allowing the fraud scheme to remain undetected.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country. Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.

In entering into the non-prosecution agreement with LPS, the Justice Department took several factors into consideration. Soon after discovering the misconduct at DocX, LPS conducted a thorough internal investigation, reported all of its findings to the government, cooperated with the government’s investigation and effectively remediated any problems it discovered. The government’s investigation also revealed that Brown and others at DocX took various steps to actively conceal the misconduct from detection, including from LPS senior management and auditors.

Brown, 51, of Alpharetta, Ga., faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. She is scheduled to be sentenced on April 23, 2013, before U.S. District Judge Henry Lee Adams Jr. in Jacksonville.

This case is being handled by Trial Attorney Ryan Rohlfsen and Assistant Chief Glenn S. Leon of the Justice Department’s Criminal Division Fraud Section and Assistant U.S. Attorney Mark B. Devereaux of the U.S. Attorney’s Office for the Middle District of Florida. The case is being investigated by the FBI, with assistance from the state of Florida’s Department of Financial Services.

Today’s disposition is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

British Contractor Agrees to Plead Guilty to Wire Fraud Conspiracy Related to Iraq Reconstruction Efforts

Posted on December 10, 2012 by Brad Geyer

FOR IMMEDIATE RELEASE

Monday, December 10, 2012

British Contractor Agrees to Plead Guilty to Wire Fraud Conspiracy Related to Iraq Reconstruction Efforts

WASHINGTON – British contractor APTx Vehicle Systems Limited agreed today to plead guilty to conspiracy to defraud the United States, the Coalition Provisional Authority that governed Iraq from April 2003 to June 2004, the government of Iraq and JP Morgan Chase Bank. A civil settlement agreement resolving a related action filed under the False Claims Act was also announced today.

APTx was charged with one count of wire fraud conspiracy in a criminal information filed today in U.S. District Court in Massachusetts. As part of the plea agreement filed with the information, APTx agreed to pay a criminal fine of $1 million.

The charges and resolutions were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Principal Deputy Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division and U.S. Attorney for the District of Massachusetts Carmen M. Ortiz.

According to the criminal information, APTx engaged in a fraudulent scheme involving an August 2004 contract valued at over $8.4 million for the procurement of 51 vehicles for the Iraqi Police Authority. The contract was initially awarded to a different, “prime” contractor, which in turn subcontracted the procurement to APTx for over $5.7 million. Payment under the contract was by letters of credit issued by JP Morgan Bank.

The criminal information further charges that in May and June 2005, APTx submitted shipping documents to JP Morgan to draw down on the letters of credit, which falsely and fraudulently asserted that all 51 vehicles were produced and ready to ship to Iraq. In fact, as APTx knew, none of the vehicles had been built, none of the vehicles were legally owned or held by APTx and none of the vehicles were in the process of transport to Iraq. The fraudulent shipping documents also listed a company as the freight carrier that APTx knew was not a shipping company and named a fictitious company as the freight forwarder.

In a related civil settlement agreement, APTx, along with Alchemie Grp Ltd., a United Kingdom corporation, and Haslen Back, the director and shareholder of Alchemie, agreed to pay $2 million to the United States to resolve claims originated by Ian Rycroft, an individual retained by the prime contractor to oversee transportation of the vehicles, under the qui tam, or whistleblower, provisions of the False Claims Act in the District of Massachusetts. The False Claims Act authorizes private whistleblowers to bring suit for false claims submitted to the United States and to share in any recovery. Rycroft’s estate will receive $540,000 as its share of the settlement amount.

Benjamin Kafka, a representative for APTx in the United States, was charged on April 13, 2009, with one count of misprision of a felony in connection with his role in the wire fraud conspiracy. According to court documents, Kafka allegedly allowed APTx to use his corporate name and identity as the freight carrier and freight forwarder on the fraudulent shipping documents presented to JP Morgan.

The criminal case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Trial Attorney William H. Bowne III of the Criminal Division’s Fraud Section, and by Assistant U.S. Attorneys Eugenia M. Carris and Jeffrey Cohen of the District of Massachusetts. The civil case is being handled by Trial Attorney Diana Younts of the Civil Division, and by Assistant U.S. Attorney Christine Wichers of the District of Massachusetts. The investigation was conducted by the Special Inspector General for Iraq Reconstruction, the Defense Criminal Investigative Service Boston Resident Agency and U.S. Immigration and Customs Enforcement Homeland Security Investigations in Washington, D.C.