District Court Orders Injunctions against Two Telecom Carriers Who Facilitated Hundreds of Millions of Fraudulent Robocalls to Consumers in the United States

The U.S. District Court for the Eastern District of New York entered orders in two separate civil actions, barring eight individuals and entities from continuing to facilitate the transmission of massive volumes of fraudulent robocalls to consumers in the United States, the Department of Justice announced today. 

In one of the matters, United States v. Nicholas Palumbo, et al., the District Court entered a preliminary injunction that bars two individuals and two entities from operating as intermediate voice-over-internet-protocol (VoIP) carriers during the pendency of the civil action.  In the other matter, United States v. John Kahen, et al., the District Court entered consent decrees that permanently bar an individual and three entities from operating as intermediate VoIP carriers conveying any telephone calls into the U.S. telephone system.

“These massive robocall fraud schemes target telephones of residents across our country, many of whom are elderly or are otherwise potentially vulnerable to such schemes,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The department is committed to stopping this unlawful conduct and pursuing those who knowingly facilitate these schemes for their own financial gain.”

“This office will take all appropriate measures to stop fraudulent robocalling schemes responsible for causing catastrophic losses to victims, including seeking to permanently shut down the U.S.-based enablers of such schemes,” said United States Attorney Richad P. Donoghue for the Eastern District of New York.  “Protecting elderly and vulnerable individuals from being conned by foreign call center scammers remains a priority of this office and the Department of Justice.”

As alleged in the complaints, the defendants in both cases operated as VoIP carriers, receiving internet-based calls from other entities, often located abroad, and transmitting those calls first to other carriers within the United States and, ultimately, to the phones of individuals.  Numerous foreign-based call centers are alleged to have used the defendants’ VoIP carrier services to pass fraudulent government- and business-imposter robocalls to victims in the United States.  The defendants also sold U.S. phone numbers to foreign entities, which were used as victim call-back numbers as part of massive robocalling fraud schemes.

As also alleged, the defendants were warned numerous times that they were carrying fraudulent robocalls — including calls impersonating government agencies, such as the Social Security Administration, the IRS, and legitimate businesses, such as Microsoft — and yet continued to carry those calls and facilitate fraud schemes targeting individuals in the United States.  Many of the robocalls were made by foreign fraudsters impersonating government investigators and conveying alarming messages, such as: the recipient’s social security number or other personal information has been compromised or otherwise connected to criminal activity; the recipient faces imminent arrest; the recipient’s assets are being frozen; the recipient’s bank and credit accounts have suspect activity; the recipient’s benefits are being stopped; the recipient faces imminent deportation; or combinations of these threats.  Each of these claims was a lie, designed to scare the call recipient into paying large sums of money.  These calls led to massive financial losses to elderly and other vulnerable victims throughout the United States.

“The court’s decision sends a clear message to gateway carriers who knowingly do business with scammers targeting Americans from overseas,” said Gail S. Ennis, Inspector General for the Social Security Administration.  “We will continue to pursue those who facilitate these scam calls by allowing them into the U.S. telephone network.  I want to thank the Department of Justice for its support throughout this investigation and its commitment to protecting Americans from this insidious form of fraud and theft.”

United States v. Nicholas Palumbo, et al.

In the first case, the District Court issued a preliminary injunction against spouses Nicholas and Natasha Palumbo of Scottsdale, Arizona, and the Arizona companies they own and operate, Ecommerce National LLC d/b/a TollFreeDeals.com and SIP Retail d/b/a sipretail.com.  The District Court held, in a written opinion, that the evidence presented by the United States demonstrated probable cause to conclude that the defendants were engaged in “widespread patterns of telecommunications fraud, intended to deprive call recipients in the Eastern District of New York and elsewhere of money and property.”

The preliminary injunction issued by the court bars those defendants from carrying any VoIP calls destined for phones in the United States and providing any U.S. telephone numbers (often used as call-back numbers in the fraudulent robocalling schemes) to any individuals or entities during the pendency of this litigation.  The court noted that though defendants had been warned more than 100 times of specific instances of fraudulent calls being transmitted through their network, they never severed their business relationship with any entity they learned was associated with fraudulent call traffic, prior to the United States’ filing of its lawsuit.  The court further noted that “the telecommunications ‘intermediary’ industry is set up perfectly to allow fraudulent operators to rotate telephone numbers endlessly and blame other parties for the fraudulent call traffic they carry,” that the United States “demonstrat[ed] probable cause to conclude that defendants’ business is permeated with fraud,” that “multiple individual victims in the United States suffered significant fraud losses,” and that “[e]very day that the defendants’ actions in this vein continue, the public is at risk of harm in the form of additional high-dollar fraud losses.”

The claims in the United States v. Nicholas Palumboet al. matter are allegations only, and there has not been any final determination of liability or wrongdoing.

United States v. John Kahen, et al.

In the second case, the District Court entered consent decrees permanently resolving the matter against five individuals and entities who were also operating intermediary VoIP carriers.  The court entered a consent decree on March 2, 2020 against Jon Kahen, a/k/a Jon Kaen of New York, and New York corporations Global Voicecom Inc. and Global Telecommunication Services Inc., permanently barring those defendants from, among other things, using the U.S. telephone system to: deliver prerecorded messages through automatic means, carry calls to the United States from foreign locations, and provide calling and toll-free services for calls originating in the United States.  In addition, the defendants are permanently barred from serving as employees, agents, or consultants to any person or entity engaged in these activities.  In a second consent decree, entered on March 24, 2020, the District Court barred KAT Telecom Inc., a New York corporation, from conveying or causing any other person or entity from conveying fraudulent telephone calls, fraudulent recordings, and unauthorized “spoofed” telephone calls.  In the event that KAT Telecom, Inc. resumes operations, it must also implement strong anti-fraud measures, including anti-fraud monitoring, mitigation, and know-your-customer measures.

The claims resolved by the settlement in the United States v. Jon Kahenet al. matter are allegations only, and there has not been any final determination of liability or wrongdoing. 

These cases are being handled by Trial Attorneys Ann F. Entwistle and Charles B. Dunn of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorneys Bonni Perlin, Dara Olds, and Evan Lestelle of the U.S. Attorney’s Office for the Eastern District of New York, in coordination with the Social Security Administration Office of the Inspector General and the U.S. Postal Inspection Service.  Investigative support was also provided by the U.S. Treasury Inspector General for Tax Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigation’s El Dorado Task Force and U.S. Secret Service.  The Federal Trade Commission and the Federal Communications Commission also provided pertinent data.  

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.   

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: March 27, 2020

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Readout of the President’s Commission on Law Enforcement and the Administration of Justice Teleconferences Related to Social Problems Impacting Public Safety

This week, the President’s Commission on Law Enforcement and the Administration of Justice held hearings on social problems impacting public safety, specifically mental illness.  The hearings were held over three days via teleconference.  Each teleconference featured a panel of expert witnesses who provided testimony and, subsequently, answered questions from the Commissioners.  Next week, the Commission will continue its analysis of social problems impacting public safety, hearing testimony from experts on homelessness and substance abuse. 

On Tuesday, March 24, the Commission received testimony from San Bernardino (Calif.) Sheriff John McMahon; John Snook, CEO of the Treatment Advocacy Center, and; Sergeant Sarah Shimko from the City of Madison (Wisc.) Police Department Mental Health Unit.

Testimony and discussions focused on the current interactions that arise between individuals suffering from untreated mental illnesses and law enforcement.  Sheriff McMahon and Sergeant Shimko spoke of the importance of mandatory mental illness course training for all law enforcement officers, not just because of the scope of the mental health crisis across the country, but also because law enforcement will always play a role in responding to people with mental health issues, and, therefore, adequate training is essential.  Speaking about the connections between mental health and law enforcement, CEO John Snook recommended, “This Commission must resist the urge to force greater responsibilities on law enforcement.”

On Wednesday, March 25, the Commission heard testimony from Orange County (Calif.) Sheriff Donald Barnes; Dr. Shannon Robinson, Principal, Health Management Associates (formerly the Chief Psychiatrist for the California Department of Corrections and Rehabilitation), and; Maricopa County (Ariz.) Sheriff Paul Penzone.

Testimony and discussions focused on the intersection of mental health and substance abuse disorders and law enforcement.  Sheriff Barnes called for a national naloxone program in jails to keep victims of opioid overdoses alive.  He also called attention to the ever-growing quantities of pure fentanyl being seized in his county and the impact that pure fentanyl has on the general public.  Dr. Robinson’s testimony shed light on the multi-generational effects, as well as the resource requirement, that mental health and substance abuse issues have on society at large.  And Sheriff Penzone called attention to the public’s instinct to call 911 based on the expectation that law enforcement officers will handle any problem, regardless of whether or not it is within the scope of law enforcement’s traditional role.

On Thursday, March 25, Dr. Keith Humphreys, Professor and Section Director for Mental Health Policy in the Department of Psychiatry and Behavioral Sciences at Stanford University, addressed the Commission.

Dr. Humphrey’s testimony focused on the intersection of alcohol and law enforcement, calling attention to the number of calls law enforcement receive daily that are linked to an incident involving alcohol abuse.  He pointed to statistics that show that those who receive treatment for alcoholism are less likely to re-offend, and called for treatment to be part of probation or parole options.

For more information on the Commission, please visit: https://www.justice.gov/ag/presidential-commission-law-enforcement-and-administration-justice

Audio recordings and transcripts of the hearings will be posted online once available.

Please note, these hearings were originally to take place in person in Orange County, Calif., but were changed to teleconference format in response to CDC recommendations regarding COVID-19.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: March 27, 2020

Assistant Attorney General Brian A. Benczkowski Delivers Remarks at Press Conference Announcing Criminal Charges Against Venezuelan Officials

Good morning.  Today, we also are announcing charges against General Vladimir Padrino Lopez, the Venezuelan Minister of Defense for the Maduro regime.  Padrino Lopez, who has been indicted here in the District of Columbia, is accused of conspiring to traffic large amounts of cocaine on board aircraft registered in, and destined for, the United States.

The charges we are announcing today are merely allegations, and the defendant is presumed innocent until proven guilty.

As the Attorney General and my colleagues from the Southern District of New York and Southern District of Florida have explained, the Maduro regime is propped up by a sham judiciary and a corrupt military. 

That military—led by Padrino Lopez—was responsible for interdicting suspected drug traffickers flying through Venezuelan air space.  But as Minister of Defense, Padrino Lopez instead wielded his power to allow drug traffickers to use Venezuela as a transshipment route for narcotics destined for the United States.

Padrino Lopez allegedly accepted bribes from drug trafficking organizations to allow them free passage to fly through Venezuelan air space.  So long as he was paid off, cocaine-filled aircraft could get by and avoid interdiction.  Far from stopping drug traffickers, the military – for the right price – gave safe passage to drug traffickers, terrorists, and other criminals.

This was a brazen pay-to-play scheme and abuse of power.  And it facilitated the rampant trafficking of drugs through Venezuela to Central America and eventually the United States.

On other occasions, when drug traffickers failed to pay the requisite bribes, Padrino Lopez allegedly ordered or authorized interdiction—either forcing the pilots to land or shooting the planes down.  

Today’s announcement should make clear that the Department of Justice is committed to holding current and former officials of the Maduro regime to account.  Those like Padrino Lopez who used their positions of power to promulgate state-sponsored drug trafficking and narco-terrorism will be prosecuted for their crimes. 

I thank the prosecutors from the Criminal Division’s Narcotic and Dangerous Drug Section and the dedicated agents from the DEA who investigated—and will continue to investigate—this case.

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Author: March 26, 2020

Justice Department Requires Divestitures in Merger Between UTC and Raytheon to Address Vertical and Horizontal Antitrust Concerns

The Department of Justice announced today that it is requiring United Technologies Corporation (UTC) and Raytheon Company (Raytheon) to divest Raytheon’s military airborne radios business and UTC’s military global positioning systems (“GPS”) and large space-based optical systems businesses in order to proceed with their proposed merger.  Without these divestitures, the merger would eliminate competition between two of the primary suppliers of military airborne radios and military GPS systems to the Department of Defense (DoD), and enable the merged firm to lessen competition for multiple components used in reconnaissance satellites sold to DoD and the wider U.S. intelligence community.  

The department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed merger.  At the same time, the Antitrust Division filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit.

“Today’s settlement protects the American taxpayer by preserving competition that leads to lower costs and higher innovation in critical military and defense products,” said Assistant Attorney General Makan Delrahim of the Antitrust Division.  “The merger, as originally proposed, would have eliminated competition in the supply of military airborne radios and military GPS systems, and would have positioned the merged firm to harm rivals capable of making key components for reconnaissance satellites.  These horizontal and vertical concerns are resolved by the Division’s structural remedy, which includes the divestiture of three separate business units.”

According to the department’s complaint, UTC and Raytheon are the only firms that develop, manufacture, and sell military airborne radios, which allow for secure voice, data, and video communications to and from aircraft, and are installed on every airplane and helicopter currently used by DoD.  The department’s complaint also alleges that UTC and Raytheon are the only competitors for military GPS systems for aviation and maritime applications, and are two of the three competitors for military GPS systems for ground applications.  Military GPS systems receive and process satellite signals, providing information regarding position, navigation, and timing.  The complaint alleges that the merger would eliminate competition between UTC and Raytheon for all of these products, likely leading to higher prices, diminished innovation, lower quality, and less favorable contract terms.  

The department’s complaint further alleges that UTC and Raytheon are among the few firms capable of producing several components for space-based electro-optical/infrared (EO/IR) reconnaissance satellites, which provide DoD and U.S. intelligence community customers with essential information, including early warning of missile launches.  Specifically, UTC is one of only two companies able to build large space-based optical systems, and Raytheon is a leading supplier of detectors called focal plane arrays (FPAs).  Raytheon is the only firm that produces FPAs that detect visible light, and one of two firms that produces FPAs that detect infrared light.  Large space-based optical systems and FPAs are components of EO/IR reconnaissance satellite payloads – the system that carries out the mission of the satellite – which Raytheon also produces.  According to the department’s complaint, the merged firm would have the ability and incentive to require EO/IR payload builders seeking to purchase Raytheon’s industry-leading FPAs to also purchase UTC’s large space-based optical systems, and could deny Raytheon’s EO/IR payload competitors access to UTC’s large space-based optical systems.  As a result, the complaint alleges that the transaction likely would result in higher prices, less favorable contract terms, and diminished innovation for large space-based optical systems and EO/IR reconnaissance satellite payloads.   

Under the terms of the proposed settlement, the parties must divest Raytheon’s military airborne radios business, including facilities in Fort Wayne, Indiana and Largo, Florida, and UTC’s military GPS business to BAE Systems, Inc. (BAE), or an alternate acquirer approved by the United States.  BAE is the U.S. subsidiary of BAE Systems plc, an international defense, aerospace, and security company that provides a wide range of products and services for air, land, and naval forces.  The proposed settlement further requires the parties to divest UTC’s optical systems business, including a facility in Danbury, Connecticut, to an acquirer to be approved by the United States.

The Antitrust Division and DoD worked closely throughout the course of the investigation.  In addition, the Antitrust Division, the European Commission, and the Canadian Competition Bureau cooperated closely throughout the course of their respective investigations.

UTC, a Delaware corporation headquartered in Farmington, Connecticut, produces a wide range of products for the aerospace and defense industries.  UTC had sales of approximately $77 billion in 2019.

Raytheon, a Delaware corporation headquartered in Waltham, Massachusetts, is one of the world’s largest defense manufacturers, with significant capabilities in radars and missiles.  Raytheon had sales of approximately $29 billion in 2019. 

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Katrina Rouse, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon finding it is in the public interest.

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Author: March 26, 2020

Attorney General William P. Barr Delivers Remarks at Press Conference Announcing Criminal Charges against Venezuelan Officials

Remarks as Prepared for Delivery

Good morning.  Today, I am here to talk about the former Maduro regime and its direct participation in narco-terrorism, corruption, money laundering, and drug trafficking.  Joining me today is the U.S. Attorney for the Southern District of New York, Geoff Berman; the U.S. Attorney for the Southern District of Florida, Ariana Fajardo; the Assistant Attorney General for the Criminal Division, Brian Benczkowski, and; DEA Acting Administrator Uttam Dhillon.

As you will hear, the Department of Justice is announcing the unsealing of a superseding indictment filed in the Southern District of New York against four defendants, including Nicolás Maduro, as well as the current head of Venezuela’s Constituent Assembly, the former Director of Military Intelligence, and a former high-ranking general for their involvement in narco-terrorism.

In addition, a recent superseding indictment charges two high-ranking regime leaders with corruption.  Further, the Southern District of Florida unsealed charges this morning against the Chief Justice of the Venezuelan Supreme Court, involving money laundering.  Additionally, the Criminal Division unsealed an indictment charging the Minister of Defense for his involvement in drug trafficking.  These charges are in addition to charges the department has previously filed in the Eastern District of New York, the Southern District of Texas, and the District of Arizona against former members of the Maduro regime, totaling 15 defendants.  Of these cases, 12 are DEA-led investigations; three are HSI-led investigations.

The indictment of Nicolás Maduro and his co-defendants alleges a conspiracy involving an extremely violent terrorist organization known as the Revolutionary Armed Forces of Colombia – or FARC – in an effort to flood the United States with cocaine.  Now, FARC has been operating in Colombia.  In 2017, the Colombians entered into a peace agreement with FARC, under which the overwhelming majority of FARC members laid down their arms and have been living within the political structure of Columbia.  However, there is a dissident group of about 2,500 FARC members, and they have taken up on the border between Venezuela and Colombia.  These FARC dissidents continue to be involved in drug trafficking and armed insurgency.  They have obtained the support of the Maduro regime, which is allowing them to use Venezuela as a safe haven from which they can continue to conduct their cocaine trafficking and their armed insurgency.

There is an area right on the border in Colombia, Norte de Santander, which is one of the primary cocaine producing areas remaining in Colombia.  FARC gets this cocaine over into Venezuela and then is given safe haven by the regime to fly this cocaine from an area called Zulia, near Lake Maracaibo, up into Central America.  Since 2016, this air bridge has been established and has grown fivefold in just those four years.  In addition, the regime is allowing these drug traffickers to take drugs by a maritime route into the Caribbean.  We estimate that somewhere between 200 and 250 metric tons of cocaine are shipped out of Venezuela by these routes per year.  Those 250 tons equate to 30 million lethal doses.

The U.S. Attorneys from the Southern District of New York and the Southern District of Florida, as well as the Assistant Attorney General for the department’s Criminal Division, will now describe some of the indictments in more detail, but I wanted to give you a sense of just how deeply the institutions of the former Venezuelan government are infected by criminality and corruption.  You will hear that the people profiting from this corruption are high-ranking members of this former regime, and you will see how this involves all branches of government: executive, judicial, and military.  With that, I will turn it over to the U.S. Attorney for the Southern District of New York, Geoff Berman.

***

Remarks at the end of the press conference

Again, I want to thank all of the agents and all of the prosecutors who have worked on these cases over the years.  As U.S. Attorney Berman mentioned, this work goes back in the Southern District of New York for over a decade, so it is greatly appreciated.  To all the work at the DEA, HSI, and our sister agency, the Department of Homeland Security, thank you.  

As alleged, the Maduro regime is awash in corruption and criminality.  Maduro and the other defendants have betrayed the Venezuelan people and corrupted Venezuela’s institutions.  While the Venezuelan people suffer, this cabal lines their pockets with drug money and the proceeds of their corruption.  This has to come to an end. 

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Author: March 26, 2020

Nicolás Maduro Moros and 14 Current and Former Venezuelan Officials Charged with Narco-Terrorism, Corruption, Drug Trafficking and Other Criminal Charges


For additional information and documents please visit: Documents Related to the March 26, 2020 Press Conference


Former President of Venezuela Nicolás Maduro Moros, Venezuela’s vice president for the economy, Venezuela’s Minister of Defense, and Venezuela’s Chief Supreme Court Justice are among those charged in New York City; Washington, DC; and Miami, along with current and former Venezuelan government officials as well as two Fuerzas Armadas Revolucionarias de Colombia (FARC) leaders, announced U.S. Attorney General William P. Barr, U.S. Attorney Geoffrey S. Berman of the Southern District of New York, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Acting Administrator Uttam Dhillon of the U.S. Drug Enforcement Administration (DEA) and Acting Executive Associate Director Alysa D. Erichs of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

“The Venezuelan regime, once led by Nicolás Maduro Moros, remains plagued by criminality and corruption,” said Attorney General Barr.  “For more than 20 years, Maduro and a number of high-ranking colleagues allegedly conspired with the FARC, causing tons of cocaine to enter and devastate American communities.  Today’s announcement is focused on rooting out the extensive corruption within the Venezuelan government – a system constructed and controlled to enrich those at the highest levels of the government.  The United States will not allow these corrupt Venezuelan officials to use the U.S. banking system to move their illicit proceeds from South America nor further their criminal schemes.” 

“Today we announce criminal charges against Nicolás Maduro Moros for running, together with his top lieutenants, a narco-terrorism partnership with the FARC for the past 20 years,” said U.S. Attorney Geoffrey S. Berman.  “The scope and magnitude of the drug trafficking alleged was made possible only because Maduro and others corrupted the institutions of Venezuela and provided political and military protection for the rampant narco-terrorism crimes described in our charges.  As alleged, Maduro and the other defendants expressly intended to flood the United States with cocaine in order to undermine the health and wellbeing of our nation.  Maduro very deliberately deployed cocaine as a weapon.  While Maduro and other cartel members held lofty titles in Venezuela’s political and military leadership, the conduct described in the Indictment wasn’t statecraft or service to the Venezuelan people.  As alleged, the defendants betrayed the Venezuelan people and corrupted Venezuelan institutions to line their pockets with drug money.”

“Over the last decade, corrupt Venezuelan government officials have systematically looted Venezuela of billions of dollars,” said U.S. Attorney Ariana Fajardo Orshan.  “Far too often, these corrupt officials and their co-conspirators have used South Florida banks and real estate to conceal and perpetuate their illegal activity.  As the recent charges show, Venezuelan corruption and money laundering in South Florida extends to even the highest levels of Venezuela’s judicial system.  In the last couple of years, the US Attorney’s Office in South Florida and its federal law enforcement partners have united to bring dozens of criminal charges against high-level regime officials and co-conspirators resulting in seizures of approximately $450 million dollars.”  

“These indictments expose the devastating systemic corruption at the highest levels of Nicolas Maduro’s regime,” said DEA Acting Administrator Uttam Dhillon.  “These officials repeatedly and knowingly betrayed the people of Venezuela, conspiring, for personal gain, with drug traffickers and designated foreign terrorist organizations like the FARC.  Today’s actions send a clear message to corrupt officials everywhere that no one is above the law or beyond the reach of U.S. law enforcement.  The Department of Justice and the Drug Enforcement Administration will continue to protect the American people from ruthless drug traffickers – no matter who they are or where they live.”

“The collaborative nature of this investigation is representative of the ongoing work HSI and international law enforcement agencies perform each day, often behind the scenes and unknown to the public, to make our communities safer and free from corruption,” said HSI’s Acting Executive Associate Director Alysa D. Erichs.  “Today’s announcement highlights HSI’s global reach and commitment to aggressively identify, target and investigate individuals who violate U.S. laws, exploit financial systems, and hide behind cryptocurrency to further their illicit criminal activity.  Let this indictment be a reminder that no one is above the law – not even powerful political officials.”

A four-count superseding indictment unsealed today in the Southern District of New York (SDNY) charges Nicolás Maduro Moros, 57; Diosdado Cabello Rondón, 56, head of Venezuela’s National Constituent Assembly; Hugo Armando Carvajal Barrios aka “El Pollo,” 59, former director of military intelligence; Clíver Antonio Alcalá Cordones, 58, former General in the Venezuelan armed forces; Luciano Marín Arango aka “Ivan Marquez,” 64, a member of the FARC’s Secretariat, which is the FARC’s highest leadership body; and Seuxis Paucis Hernández Solarte aka “Jesús Santrich,” 53, a member of the FARC’s Central High Command, which is the FARC’s second-highest leadership body.  The case is pending before U.S. District Judge Alvin K. Hellerstein.

The U.S. Department of State, through its Narcotics Rewards Program, is offering rewards of up to $15 million for information leading to the arrest and/or conviction of Maduro Moros, up to $10 million for information leading to the arrest and/or conviction of Cabello Rondón, Carvajal Barrios, and Alcalá Cordones, and up to $5 million for information leading to the arrest and/or conviction of Marín Arango.

Maduro Moros, Cabello Rondón, Carvajal Barrios, Alcalá Cordones, Marín Arango, and Hernández Solarte have each been charged with: (1) participating in a narco-terrorism conspiracy, which carries a 20-year mandatory minimum sentence and a maximum of life in prison; (2) conspiring to import cocaine into the United States, which carries a 10-year mandatory minimum sentence and a maximum of life in prison; (3) using and carrying machine guns and destructive devices during and in relation to, and possessing machine guns and destructive devices in furtherance of, the narco-terrorism and cocaine-importation conspiracies, which carries a 30-year mandatory minimum sentence and a maximum of life in prison; and (4) conspiring to use and carry machine guns and destructive devices during and in relation to, and to possess machine guns and destructive devices in furtherance of, the narco-terrorism and cocaine-importation conspiracies, which carries a maximum sentence of life in prison.  The potential mandatory minimum and maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

According to the allegations contained in the superseding indictment, other court filings, and statements made during court proceedings:

Since at least 1999, Maduro Moros, Cabello Rondón, Carvajal Barrios and Alcalá Cordones, acted as leaders and managers of the Cártel de Los Soles, or “Cartel of the Suns.”  The Cartel’s name refers to the sun insignias affixed to the uniforms of high-ranking Venezuelan military officials.  Maduro Moros and the other charged Cartel members abused the Venezuelan people and corrupted the legitimate institutions of Venezuela—including parts of the military, intelligence apparatus, legislature, and the judiciary—to facilitate the importation of tons of cocaine into the United States.  The Cártel de Los Soles sought to not only enrich its members and enhance their power, but also to “flood” the United States with cocaine and inflict the drug’s harmful and addictive effects on users in the United States.

Marín Arango and Hernández Solarte are leaders of the FARC.  Beginning in approximately 1999, while the FARC was purporting to negotiate toward peace with the Colombian government, FARC leaders agreed with leaders of the Cártel de Los Soles to relocate some of the FARC’s operations to Venezuela under the protection of the Cartel.  Thereafter, the FARC and the Cártel de Los Soles dispatched processed cocaine from Venezuela to the United States via transshipment points in the Caribbean and Central America, such as Honduras.  By approximately 2004, the U.S. Department of State estimated that 250 or more tons of cocaine were transiting Venezuela per year.  The maritime shipments were shipped north from Venezuela’s coastline using go-fast vessels, fishing boats, and container ships.  Air shipments were often dispatched from clandestine airstrips, typically made of dirt or grass, concentrated in the Apure State. According to the U.S. Department of State, approximately 75 unauthorized flights suspected of drug-trafficking activities entered Honduran airspace in 2010 alone, using what is known as the “air bridge” cocaine route between Venezuela and Honduras.

In his role as a leader of the Cártel de Los Soles, Maduro Moros negotiated multi-ton shipments of FARC-produced cocaine; directed that the Cártel de Los Soles provide military-grade weapons to the FARC; coordinated foreign affairs with Honduras and other countries to facilitate large-scale drug trafficking; and solicited assistance from FARC leadership in training an unsanctioned militia group that functioned, in essence, as an armed forces unit for the Cártel de Los Soles.

DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Miami Field Division conducted the investigation.  This case is being handled by the U.S. Attorney’s Office for the Southern District of New York’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Amanda L. Houle, Matthew J. Laroche, Jason A. Richman, and Kyle A. Wirshba are in charge of the prosecution.

*                *                *

An indictment unsealed today in the District of Columbia charges Vladimir Padrino Lopez, 56, Minister of Defense of Venezuela. The indictment alleges that from March 2014 until May 2019, Padrino Lopez conspired with others to distribute cocaine on board an aircraft registered in the United States. 

Padrino Lopez, who holds the rank of General in the Venezuelan armed forces, held the authority for interdicting aircraft, many of which are registered in the United States, suspected of being used to traffic drugs from Venezuela to countries in Central America.  On numerous occasions, Padrino Lopez ordered or authorized the Venezuelan military to force suspected trafficking aircraft to land or to shoot down the aircraft.  However, Padrino Lopez allowed for other aircraft whose drug trafficking coordinators paid bribes to him to safely transit Venezuelan airspace. 

On Sept. 25, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) included Padrino Lopez on its Specially Designated Nationals List.  Pursuant to the Foreign Narcotics Kingpin Designation Act, this means that his assets are blocked and U.S. persons are generally prohibited from having financial transactions with him. 

The DEA Orlando District Office led the investigation, which was supported by the Organized Crime Drug Enforcement Task Force program and the Criminal Division’s Office of Enforcement Operations. Acting Deputy Chief Charles Miracle and Trial Attorneys Michael Christin and Kirt Marsh of the Criminal Division’s Narcotic and Dangerous Drug Section are prosecuting the case.

*                *                *

Maikel Jose Moreno Perez, 54, current Chief Justice of the Venezuelan Supreme Court, was charged via a criminal complaint in the Southern District of Florida with conspiracy to commit money laundering and money laundering in connection with the alleged corrupt receipt or intended receipt of tens of millions of dollars and bribes to illegally fix dozens of civil and criminal cases in Venezuela.  

The complaint alleges, for example, that the defendant authorized a seizure and sale of a General Motors auto plant with an estimated value of $100 million in exchange for a personal percentage of the proceeds.  Similarly, the complaint alleges that the defendant received bribes to authorize the dismissal of charges or release against Venezuelans, including one charged in a multibillion-dollar fraud scheme against the Venezuelan state-owned oil company.

According to the criminal complaint, in or around October 2014, Moreno Perez told U.S. authorities in a visa application that he earned the equivalent of about $12,000 per year from his work in Venezuela. From 2012 to 2016, the defendant’s U.S. bank records show approximately $3 million in inflows to the defendant’s accounts, primarily from large round-dollar transfers from shell corporations with foreign bank accounts linked to Co-Conspirator 1, who is a former criminal defense attorney in Venezuela that currently controls a media company in Venezuela.

As set out in the criminal complaint, the defendant’s bank records allegedly show that from 2012 to 2016, the defendant spent approximately $3 million, primarily in the geographical area of South Florida. For example, bank records allegedly show that Moreno Perez spent about $1 million for a private aircraft and private pilot, more than $600,000 in credit or debit card purchases at stores primarily in South Florida (including tens of thousands of dollars at luxury stores in Bal Harbor, such as Prada and Salvatore Ferragamo), about $50,000 in payments to a luxury watch repair store in Aventura, and approximately $40,000 in payments to a Venezuelan beauty pageant director.

HSI’s Miami Field Office conducted the investigation.  Assistant U.S. Attorney Michael N. Berger of the Southern District of Florida is in charge of the prosecution.

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A separate superseding indictment unsealed today in the Southern District of New York charges Tareck Zaidan El Aissami Maddah, 45, Venezuela’s vice president for the economy, Joselit Ramirez Camacho, 33, Venezuela’s superintendent of cryptocurrency (Sunacrip), and Samark Lopez Bello, 45, a Venezuelan businessman, with a series of crimes relating to efforts to evade sanctions imposed by OFAC against Maduro Moros, El Aissami Maddah, and Lopez Bello.  

The indictment alleges that from February 2017 until March 2019, El Aissami Maddah and Ramirez Camacho worked with U.S. persons and U.S.-based entities to provide private flight services for the benefit of Maduro’s 2018 presidential campaign, in violation of OFAC’s sanctions targeting Maduro after he organized elections for the illegitimate National Constituent Assembly that Cabello Rondon now leads.  

The U.S. Department of State, through its Narcotics Rewards Program, is offering a reward of up to $10 million for information leading to the arrest and/or conviction of El Aissami Maddah.

HSI’s New York Field Office conducted the investigation.  This case is being handled by the U.S. Attorney’s Office for the Southern District of New York’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Sam Adelsberg and Amanda L. Houle are in charge of the prosecution.

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Other individuals charged in separate indictments include:

  • Luis Motta Dominguez, 67, Former Minister of Energy, was charged in the Southern District of Florida for his alleged role in laundering the proceeds of violations of the Foreign Corrupt Practices Act (FCPA) in connection with his alleged receipt of bribes to award Corpoelec business to U.S.-based companies;
  • Nestor Reverol Torres, 55, former General Director of Venezuela’s La Oficina Nacional Antidrogas (ONA) and former commander of Venezuela’s National Guard and Edylberto Jose Molina Molina, 57, former Sub-Director of Venezuela’s ONA and currently Venezuela’s military attaché to Germany, were charged in the Eastern District of New York with participating in an international cocaine distribution conspiracy where they allegedly assisted narcotics traffickers in importing cocaine into the United States;
  • Vassyly Kotosky Villarroel Ramirez aka “Mauro” and “Angel,” 47, a former captain in the Venezuelan Guardia Nacional, was charged in a third superseding indictment in the Eastern District of New York with participating in an international cocaine distribution conspiracy between Jan. 1, 2004, and Dec. 1, 2009;
  • Rafael Antonio Villasana Fernandez, 48, a former officer in the Venezuelan Guardia Nacional, was charged in the Eastern District of New York with participating in an international cocaine distribution conspiracy between Jan. 1, 2004, and Dec. 1, 2009. According to court documents, Kotosky and Villasana allegedly used official government vehicles to transport more than seven metric tons of cocaine from the Colombian border to various airports and seaports in Venezuela for ultimate importation into the United States;
  • Nervis Gerardo Villalobos Cardenas, 52, former Vice Minister of Energy of Venezuela, was charged in a 20-count indictment in the Southern District of Texas with conspiracy to commit money laundering, money laundering and conspiracy to violate the Foreign Corrupt Practices Act (FCPA) for his alleged role in an international money laundering scheme involving bribes paid by the owners of U.S.-based companies to Venezuelan government officials to corruptly secure energy contracts and payment priority on outstanding invoices; and
  • Oscar Rafael Colmenarez Villalobos, 51, former Venezuelan Air Force Officer, charged in the District of Arizona with violations of the Arms Export Control Act. He allegedly conspired with others, including individuals associated with an aviation company in Arizona, to smuggle from the United States to Venezuela T-76 military aircraft engines used on OV-10 Bronco aircraft to individuals in Venezuela and allegedly made false and misleading statements on shipping and export control documents to conceal the prohibited activities and transactions from detection of the U.S. government.
     

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

The Criminal Division’s Office of International Affairs and Office of Enforcement Operations provided valuable assistance.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: March 26, 2020

Pennsylvania Attorney Indicted for Role in $2.7 Million Ponzi Scheme

An Allentown, Pennsylvania, attorney has been charged for his role in a $2.7 million investment fraud scheme that victimized his law clients, according to a superseding indictment that was unsealed Monday.  

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania and Special Agent in Charge Michael J. Driscoll of the FBI’s Philadelphia Field Office made the announcement.

Todd H. Lahr, 59, of Nazareth, Pennsylvania, was indicted by a federal grand jury in the Eastern District of Pennsylvania on one count of conspiracy to commit securities fraud and wire fraud, two counts of securities fraud, and four counts of wire fraud.   

According to the superseding indictment, from 2012 through 2019, Lahr conspired with others to perpetrate a securities fraud scheme targeting his own law clients, which involved the fraudulent sale of the securities of two entities, THL Holdings LLC and Ferran Global Holdings Inc.  Lahr used investor funds to finance his own lifestyle, paying his home mortgage, his child’s school tuition, utility bills and other personal debts.  He allegedly perpetuated the scheme by using money that he received from new investors to pay money owed to other investors in the scheme. 

Total investor losses are estimated to be over $2.7 million, according to the indictment. 

An indictment is not a finding of guilt. It merely alleges that crimes have been committed. A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

The FBI investigated this case.  Trial Attorney Philip Trout of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael J. Rinaldi of the Eastern District of Pennsylvania are prosecuting the case. 

The department appreciates the substantial assistance provided by the U.S. Securities and Exchange Commission. 

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.   

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Author: March 24, 2020

The Justice Department and the Federal Trade Commission Announce Expedited Antitrust Procedure and Guidance for Coronavirus Public Health Efforts

The U.S. Department of Justice Antitrust Division and the Federal Trade Commission (FTC) today issued a joint statement detailing an expedited antitrust procedure and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic.

The expedited procedure notes, for example, that health care facilities may need to work together in providing resources and services to assist patients, consumers, and communities affected by the pandemic and its aftermath. Other businesses may need to temporarily combine production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies.

Under the expedited procedure for COVID-19 public health projects, the agencies will respond to all COVID-19-related requests, and resolve those addressing public health and safety, within seven calendar days of receiving all information necessary to vet these proposals. The statement sets out the instructions for businesses wishing to take advantage of this procedure.

The expedited COVID-19 procedure offers quicker review than existing FTC and Justice Department programs that are designed to provide guidance to businesses concerned about the legality of proposed conduct under the antitrust laws. The FTC’s “Staff Advisory Opinion” procedure and DOJ’s “Business Review Letter” procedure allow any firm, individual, or group of firms or individuals to submit a proposal to the agencies and to receive a statement advising whether the agencies would challenge the proposed activity under the antitrust laws.

“The Antitrust Division recognizes the importance of providing expeditious clarity on any antitrust obligations in this challenging time,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Our expedited Business Review Letter procedure will help facilitate businesses that want to work quickly to address the urgent public health and economic needs associated with COVID 19.”  

“Under these extraordinary circumstances, we understand that businesses collaborating on public health initiatives may need an expedited response from U.S. antitrust authorities,” said FTC Chairman Joe Simons. “We are committed to doing everything we can to help with these efforts, while continuing to aggressively enforce the antitrust laws.”

The antitrust laws accommodate procompetitive collaborations among competitors. In their joint statement, the FTC and the Department of Justice listed several types of collaborative activities designed to improve the health and safety response to the pandemic that would likely be consistent with the antitrust laws.

At the same time, the agencies also stressed that they will not hesitate to hold accountable those who try to use the pandemic to engage in antitrust violations. In addition, the Department of Justice will criminally prosecute conduct such as price-fixing, bid-rigging, or market allocation.

The expedited procedure requires that an applicant provide the FTC or Justice Department a written description of the proposal, including the parties that would be involved in the effort or activity, and the name and contact information of a person from whom the agencies could obtain additional information. This expedited procedure is for use solely for coronavirus-related public health efforts and may be invoked at the option of the requestor, in lieu of the agencies’ standard procedures for handling requests for advice.

The agencies also committed to expedite requests under the National Cooperative Research and Production Act for flexible treatment of certain standard development organizations and joint ventures. 

The statement also notes that the FTC and the Justice Department are addressing actions by individuals and businesses to take advantage of COVID-19 through other fraudulent and illegal schemes. Anyone with information or concerns about this sort of conduct, or other COVID-19-related complaints, should contact the FTC’s Consumer Response Center at 1-877-382-4357 or the National Center for Disaster Fraud Hotline (1-866-720-5721) or e-mail (disaster@leo.gov). More information on the FTC’s guidance on potential fraud, deceptive practices, and scams is available here, and to report a complaint go to www.ftc.gov/complaint.

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Author: March 24, 2020

Federal Court Permanently Shuts Down Texas Tax Return Preparers

A federal court permanently enjoined Smart Ajayi, d/b/a Harplett Marketing LLC., Topps Tax Services and Smart Tax Services, and JoAnn Villarreal, both of Grand Prairie, Texas, from owning or operating a tax return preparation business and preparing tax returns for others, the Justice Department announced today. Ajayi and Villarreal consented to the relief.

The complaint against Ajayi and Villarreal, which was filed in the U.S. District Court for the Northern District of Texas, alleges that Ajayi and Villarreal repeatedly understated their customers’ tax liabilities by fabricating noncash charitable deductions and creating false Schedules C with inflated or fraudulent business losses, to generate tax refunds. For example, the government alleges that Ajayi prepared a return on which he falsely reported that a customer with adjusted gross income of $34,027 made $19,759 in noncash charitable contributions. The complaint alleges that, over the course of years 2016 through 2018, Ajayi and Villarreal each filed hundreds of returns, and that by repeatedly understating their customers’ tax liabilities, Ajayi and Villarreal have caused the United States to lose substantial tax revenue.

“Particularly during this time of year, when honest taxpayers are filing their returns, we want the public to know that the Justice Department will pursue those who would abuse our nation’s tax laws,” said Principal Deputy Assistant Attorney General for the Tax Division Richard Zuckerman. 

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. The IRS has information on its website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

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Author: March 23, 2020

Justice Department Reaches Settlement with Richmond County Sheriff’s Office Resolving the Military Employment Discrimination Claim of an Active Duty Servicemember and Requiring Development of a USERRA Policy

The Justice Department announced today that it has reached a settlement with the Richmond County (GA) Sheriff’s Office (RCSO) that resolves allegations that the RCSO violated the employment rights of Private First Class (PFC) Auben Kendall under the Uniformed Services Employment and Reemployment Rights Act (USERRA).

“This country has long depended on the sacrifices made by its all-volunteer armed forces, and the Department of Justice is committed to ensuring that servicemembers who make the tremendous sacrifice to leave their civilian careers to serve this country can do so without suffering discrimination,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “Placing military servicemembers in a leave status when they are away from their jobs because of their military service and providing them with the same benefits accorded to other employees on similar leaves is not just a good business practice, it is required by law.”

PFC Kendall began working for the RCSO as a jailer in 2016, and was promoted to a deputy sheriff position in 2017 after attending state mandated training. In approximately May 2018, PFC Kendall informed the RCSO that he had enlisted in the Army and would be departing in several months to perform military service. He expressed his desire to return to work at the RCSO after his service. After notifying the RCSO of his enlistment, the employer demanded reimbursement of the costs of Kendall’s salary that he earned while attending mandatory training. The RCSO later filed suit against Kendall in a Georgia State Court for breach of contract, seeking reimbursement for the $7,437.56 in salary that it claimed Kendall owed. Prior to settling Kendall’s USERRA claims, the RCSO dismissed its state court lawsuit.

Under the terms of the agreement, the RCSO has agreed to place PFC Kendall in military leave status retroactive to the date of his entry on active duty, to process any future request for reemployment from PFC Kendall consistent with USERRA’s requirements, and to not seek to recover any training-related funds from PFC Kendall. The RCSO also agreed that it will not seek reimbursement for any training-related expenditures from any servicemember who leaves employment with the RCSO for military service. As part of the settlement agreement, the RCSO will devise and implement a USERRA policy, distribute its USERRA policy to all of its employees, and train its supervisory and human resources staff members on its USERRA policy. 

USERRA safeguards the rights of uniformed servicemembers, including those who enlisted in uniformed service after beginning their employment, to be free from discrimination based on their service obligation. USERRA also requires that employers treat employees who are absent from their employment by reason of military service as though they are on leave and provide them with the same rights and benefits as employees who are on comparable leaves. 

The Justice Department gives high priority to the enforcement of servicemembers rights under USERRA. Attorneys assigned to the Employment Litigation Section of the Civil Rights Division represented the United States in this matter. Additional information about USERRA can be found at the Justice Department’s websites at https://www.justice.gov/crt/employment-litigation-section and https://www.justice.gov/servicemembers, as well as on the Department of Labor’s website at https://www.dol.gov/agencies/vets/programs/userra.

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Author: March 23, 2020