Former State Department Employee Pleads Guilty to Conspiring with Foreign Agents

Candace Marie Claiborne, a former employee of the U.S. Department of State, pleaded guilty today to a charge of conspiracy to defraud the United States, by lying to law enforcement and background investigators, and hiding her extensive contacts with, and gifts from, agents of the People’s Republic of China (PRC), in exchange for providing them with internal documents from the U.S. State Department. 

The announcement was made by Assistant Attorney General for National Security John C. Demers, U.S. Attorney Jessie K. Liu of the District of Columbia, Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office and Deputy Assistant Secretary Ricardo Colón, Domestic Operations, U.S. Department of State’s Diplomatic Security Service.

The plea took place before the Honorable Randolph D. Moss of the U.S. District Court for the District of Columbia. 

“Candace Marie Claiborne traded her integrity and non-public information of the United States government in exchange for cash and other gifts from foreign agents she knew worked for the Chinese intelligence service,” said Assistant Attorney General Demers.  “She withheld information and lied repeatedly about these contacts.  Violations of the public’s trust are an affront to our citizens and to all those who honor their oaths.  With this guilty plea we are one step closer to imposing justice for these dishonorable criminal acts.” 

“Candace Claiborne broke the public trust when she accepted gifts and money from foreign officials, and then lied about it to State Department background investigators,” said U.S. Attorney Liu. “The United States will continue to seek to hold accountable those who abuse their positions of trust.” 

“Candace Claiborne was entrusted with Top Secret information when she purposefully misled federal investigators about her repeated interactions with foreign contacts which violated her oath of office as a State Department employee,” said Assistant Director McNamara.  “The FBI will continue to investigate individuals who fail to report foreign contacts, which is a key indicator of potential insider threats posed by those in positions of public trust.”

“Our close working relationship with the FBI and the Department of Justice resulted in the conviction of Candace Claiborne who violated the public trust and damaged our national security,” said Deputy Assistant Secretary Colón.  “Diplomatic Security will continue working with our law enforcement partners to vigorously defend the interests and security of the United States of America.”

According to the plea documents, Claiborne, 63, began working as an Office Management Specialist for the Department of State in 1999.  She served overseas at a number of posts, including embassies and consulates in Baghdad, Iraq, Khartoum, Sudan, and Beijing and Shanghai, China.  As a condition of her employment, Claiborne maintained a TOP SECRET security clearance.  Claiborne also was required to report any contacts with persons suspected of affiliation with a foreign intelligence agency as well as any gifts she received from foreign sources over a certain amount.

Despite such a requirement, Claiborne failed to report repeated contacts with two agents of the People’s Republic of China Intelligence Service, even though these agents provided tens of thousands of dollars in gifts and benefits to Claiborne and her family over five years.  The gifts and benefits included cash wired to Claiborne’s USAA account, Chinese New Year’s gifts, international travel and vacations, tuition at a Chinese fashion school, a fully furnished apartment, a monthly stipend and numerous cash payments.  Some of these gifts and benefits were provided directly to Claiborne, while others were provided to a close family member of Claiborne’s.

In exchange for these gifts and benefits, as stated in the plea documents, Claiborne provided copies of internal documents from the State Department on topics ranging from U.S. economic strategies to visits by dignitaries between the two countries. 

Claiborne noted in her journal that she could “Generate 20k in 1 year” working with one of the PRC agents.  That same agent at one point tasked her with providing internal U.S. Government analyses on a U.S.-Sino Strategic Economic Dialogue that had just concluded.

Claiborne, who confided to a co-conspirator that the PRC agents were “spies,” willfully misled State Department background investigators and FBI investigators about her contacts with those agents, the plea documents state.  After the State Department and FBI investigators contacted her, Claiborne also instructed her co-conspirators to delete evidence connecting her to the PRC agents.  She was arrested on March 28, 2017, following a law enforcement investigation.

Judge Moss scheduled sentencing for July 9, 2019.  Claiborne, of Washington, D.C., was ordered detained pending sentencing, but will self-surrender for said detention on June 5, 2019.  The statutory maximum penalty for a person convicted of conspiracy to defraud the United States is five years in prison.  The maximum statutory sentences are prescribed by Congress and are provided here for informational purposes.  The sentencing of the defendant will be determined by the court after considering the advisory Sentencing Guidelines and other statutory factors.

The FBI’s Washington Field Office is leading the investigation into this matter.  The case was prosecuted by Thomas A. Gillice and investigated by John L. Hill, both Assistant U.S. Attorneys in the U.S. Attorney’s Office for the District of Columbia, and Deputy Chief Julie A. Edelstein and Trial Attorney Evan N. Turgeon of the National Security Division’s Counterintelligence and Export Control Section.

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Author: April 24, 2019

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Greek Ship Management Company, Corporate Vessel Owner, and Chief Engineer Indicted for Falsification of Pollution Records, Obstruction of Justice, and Witness Tampering

A federal grand jury in Wilmington, Delaware, returned a six-count indictment today charging Chartworld Shipping Corporation, Nederland Shipping Corporation, and Chief Engineer Vasileios Mazarakis with failing to keep accurate pollution control records, falsifying records, obstruction of justice, and witness tampering, the Justice Department announced.

The charges stem from the falsification of records and other acts designed to cover up from the Coast Guard the overboard discharges of oily mixtures and machinery space bilge water from the Bahamian-flagged cargo vessel, M/V Nederland Reefer. 

According to the indictment, on Feb. 21, 2019, the M/V Nederland Reefer entered the Port of Delaware Bay with a false and misleading Oil Record Book available for inspection by the U.S. Coast Guard. The Oil Record Book failed to accurately record transfers and discharges of oily wastewater on the vessel.

The vessel’s management company, Chartworld Shipping Corporation, the vessel’s owner, Nederland Shipping Corporation, and the Chief Engineer of the vessel, Greek national Vasileios Mazarakis, are all charged with failing to maintain an accurate oil record book as required by the Act to Prevent Pollution from Ships, a U.S. law which implements the International Convention for the Prevention of Pollution from Ships, commonly known as MARPOL.  The defendants were also charged with falsification of records, obstruction of justice, and witness tampering for destroying evidence of the illegal discharges and directing lower level crew members to withhold evidence from the Coast Guard. 

Finally, the corporate defendants are charged with the failure to report a hazardous condition to the Coast Guard, namely a breach in the hull of the vessel and resulting incursion of seawater into tanks on board the vessel that occurred before the vessel came to port in Delaware.

An indictment is merely an accusation and defendants are presumed innocent unless and until proven guilty in a court of law.

The case was investigated by the Coast Guard Investigative Service.  The case is being prosecuted by Senior Trial Attorney David P. Kehoe of the Justice Department’s Environmental Crimes Section and Assistant United States Attorney Edmund Falgowski of the United States Attorney’s Office for the District of Delaware.

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Author: April 23, 2019

New Hampshire Man Pleads Guilty To Trafficking in CITES-Protected Water Monitor Lizards

Derrick Semedo, a resident of Nashua, New Hampshire, pleaded guilty today to illegally trafficking live water monitor lizards from the Philippines.

The guilty plea was announced by Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Environment and Natural Resources Division and Andrew Lelling, United States Attorney for District of Massachusetts.  

Semedo, 26, pleaded guilty in Boston before U.S. District Judge Douglas P. Woodlock to one count of wildlife trafficking in violation of the Lacey Act.   

According to plea documents, Semedo admitted to illegally importing more than 20 live water monitor lizards from the Philippines between March and December 2016, in violation of United States law and the Convention on International Trade in Endangered Species (CITES) Treaty. To avoid detection by United States customs authorities, the lizards were placed in socks, which were sealed closed with tape, and then concealed in the back panels of audio speakers or other electronic equipment. The equipment was then shipped via commercial carriers to Semedo in Massachusetts. The customs declarations accompanying the shipments identified the content as audio speakers or similar electronics.

As part of his plea, Semedo admitted that he knew the monitor lizards he received had been taken in violation of Philippine law, and that the import violated United States law. Semedo also admitted that upon receiving the monitor lizards, he sold some of them to customers, including customers in Colorado, Connecticut, and New Hampshire.  

“To remove members of endangered species from their natural habitat and illegally sell them in the United States is harmful to the animals, their native habitats, and the new ecosystems they have unwittingly invaded,” said Assistant Attorney General Clark. “The Department of Justice remains determined to work with our law enforcement partners to ensure that these endangered animals are protected.”

“Endangered species are called that for a reason,” said U.S. Attorney Andrew E. Lelling. “Illegally trafficking a protected species in violation of United States and international law is callous and short-sighted. This office will continue to target those who exploit protected animals and ecosystems for personal gain.”

“Wildlife trafficking is a transnational crime that impacts imperiled species at home and abroad,” said Edward Grace, Assistant Director of the U.S. Fish and Wildlife Service, Office of Law Enforcement. “Monitor lizards, and other reptiles, are especially vulnerable to the illegal wildlife trade and are the silent victims of those who choose to inhumanely decimate these animals for financial gain. We would like to thank our partners at the U.S. Attorney’s Office and the U.S. Department of Justice for their assistance with this case. Together, we can continue to protect imperiled species for future generations.”

Monitor lizard is the common name for lizards comprising the genus Varanus.  Monitor lizard species (there are approximately 70) are characterized by elongated necks, heavy bodies, long-forked tongues, strong claws, and long tails. Monitor lizards have a vast geographical range and are native to Africa, Asia, and Oceania. Water monitor lizards are semi-aquatic monitor lizards endemic to South and Southeastern Asia. Water monitor lizards, as their name suggests, are water dependent and easily swim long distances. This ability has allowed them to inhabit many remote islands. Some species of water monitor lizard are common and abundant in the pet trade, while others are extremely rare and are found only on specific islands. In addition to suffering increasing habitat loss due to rainforest destruction, water monitor lizards are often illegally collected from the wild and killed for bush meat, traditional medicine, or for their skins. Water monitor lizards are also targeted due to their popularity in the international exotic pet trade. Exotic pet traders seek these water monitor lizards due to their attractive patterns, unique colors, intelligence, and rarity. The yellow-headed water monitor (Varanus cumingi), the white-headed water monitor (Varanus nuchalis), and the marbled water monitor (Varanus marmoratus), are species of large monitor lizards endemic to the Philippines.

This case is part of Operation Sounds of Silence, an ongoing effort by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice, to prosecute those involved in the illegal taking of and trafficking in protected species, including water monitor lizards.

The investigation was handled by the U.S. Fish and Wildlife Service’s Office of Law Enforcement, the United States Attorney’s Office for the District of Massachusetts, and the Justice Department’s Environmental Crimes Section. The government is represented by Assistant U.S. Attorney Seth Kosto and Environmental Crimes Section Trial Attorneys Gary N. Donner and Erica H. Pencak.

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Author: April 23, 2019

Aluminum Extrusion Manufacturer Agrees to Pay Over $46 Million for Defrauding Customers, Including the United States, in Connection with Test Result Falsification Scheme

An Oregon aluminum extrusion manufacturer has agreed to pay $46 million to NASA, the Department of Defense, and others to resolve criminal charges and civil claims relating to a 19-year fraud scheme that included falsifying thousands of certifications for aluminum extrusions provided to hundreds of customers.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Assistant Attorney General Jody Hunt of the Justice Department’s Civil Division, U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, Inspector General Paul K. Martin of the NASA Office of Inspector General, Special Agent in Charge Loren ‘Renn’ Cannon of the FBI’s Portland Field Office and Special Agent in Charge Bryan Denny of the Defense Criminal Investigative Service’s (DCIS) Western Field Office made the announcement.

According to court documents, Hydro Extrusion Portland, Inc., formerly known as Sapa Profiles Inc. (SPI), and its corporate parent, Hydro Extrusion USA, LLC, formerly known as Sapa Extrusions Inc. (SEI), admitted to providing customers, including U.S. government contractors, with falsified certifications after altering the results of tensile tests designed to ensure the consistency and reliability of aluminum extruded at the companies’ Oregon-based facilities. Tensile testing involves slowly stretching and then ripping apart a sample of the metal using a machine, which then measures the force applied to the sample at each stage of the test.

“For nearly 20 years, Sapa Profiles and Sapa Extrusions falsified critical tests on the aluminum they sold — tests that their customers, including the U.S. government, depended on to ensure the reliability of the aluminum they purchased,” said Assistant Attorney General Benczkowski of the Department of Justice’s Criminal Division.  “Corporate and personal greed perpetuated this fraud against the government and other private customers, and this resolution holds these companies accountable for the harm caused by their scheme.”

“Today’s settlement reflects the Civil Division’s commitment to pursue fraudulent conduct,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The Department will vigorously pursue those who seek to take advantage of American taxpayers and undermine the safety and integrity of critical government programs.” 

“For nearly two decades, SPI and its employees covered up substandard manufacturing processes by brazenly falsifying test results,” said U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia.  “They then provided the false test results to hundreds of customers across the country, all to increase corporate profits and obtain production-based bonuses.  This proposed resolution ensures that the victims of this conduct, including the U.S. military, can replace faulty product put into the supply chain and help recover the costs foisted on taxpayers to investigate this scheme.  I want to thank our partners at NASA-OIG, DCIS, and the FBI for their efforts in helping bring much-needed oversight and reform to these companies.”

“The results of this investigation are indicative of the law enforcement community’s unwavering commitment to protecting the aerospace supply chain,” said NASA Inspector General Paul K. Martin.  “I am very proud of the central role the NASA OIG played in unraveling the test falsification scheme.”

“Our partners at NASA and in the military – as well as hundreds of private businesses – put their faith in the integrity of this supplier and the structural integrity of its products,” said Special Agent in Charge Loren ‘Renn’ Cannon of the FBI’s Portland Field Office.  “For almost two decades, this company’s greed violated that trust.  Today’s proposed resolution is an important step to repairing the harm done.”

“Today’s proposed resolution with SPI exhibits the unending commitment of DCIS and its investigative partners to bring to justice those who seek to defraud the Department of Defense,” said Special Agent in Charge Bryan Denny of the DCIS Western Field Office.  “Those who purposely disregard requirements imposed to assure the quality of materials provided to our military will be investigated and prosecuted to the fullest extent of the law.”

According to court documents, SPI has agreed to plead guilty to one count of mail fraud, and SEI has entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today charging the company with mail fraud.  As part of the plea agreement, SPI has agreed to pay $34.1 million in combined restitution to NASA, the Department of Defense’s Missile Defense Agency (MDA), and commercial customers.  SPI has also agreed to forfeit $1.8 million in ill-gotten gains.  The plea agreement remains subject to acceptance by the court at a plea hearing currently scheduled for May 13, 2019, before U.S. District Judge Liam O’Grady.  The DPA with SEI is conditioned on the court’s acceptance and SPI’s satisfaction of the plea agreement’s terms.

SPI also agreed to pay $34.6 million as part of a related civil settlement to resolve its liability under the False Claims Act for causing a government contractor to invoice MDA and NASA for aluminum extrusions that did not comply with contract specifications.  Government contractors purchased aluminum extrusions for use on rockets for NASA and missiles provided to the MDA.  Under the terms of the civil settlement agreement, SPI will satisfy the $34.6 million settlement through credits totaling $23.6 million for its restitution payments as part of the criminal plea agreement, plus additional payments of $6 million to NASA and $5 million to the MDA.

According to the companies’ admissions, employees at SPI facilities in the Portland area generally altered the tests in one of two ways.  First, from in or about 1996 through in or about 2006, an SPI plant manager led a scheme to make thousands of handwritten alterations to failing test results by changing failing numbers that fell below the minimum required test results to appear to be passing.  Those numbers were then typed onto a certification and provided to customers.  Second, from in or about 2002 through September 2015, Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications.  Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution.

According to court documents, the SPI employees generally engaged in these practices to conceal the inconsistent quality of aluminum extrusions produced by SPI, avoid the costly scrapping of metal and accompanying production delays, improve SPI’s and SEI’s profits, and receive bonuses that were calculated in part based on a production metric. 

In addition, the companies admitted that SPI’s customers included U.S. government contractors who in turn provided aluminum extrusions produced by SPI to NASA and the MDA for use in “frangible joints” in rockets provided to NASA and missiles provided to the MDA, respectively.  According to court documents, the replacement cost of frangible joints provided to the MDA that included SPI extrusions is approximately $15.3 million, and NASA incurred approximately $9 million in investigative and other costs to determine the impact of SPI extrusions on NASA operations.

As described in the civil settlement agreement, NASA maintains that SPI’s manufacturing processes lacked sufficient controls and produced extrusions unable to pass mechanical properties testing.  NASA further maintains that it identified SPI’s out-of-specification extrusions as the cause of two failed rocket launches, which resulted in the loss of important scientific missions.  SPI disputes NASA’s positions, and except for those facts admitted to in the DPA and the plea agreement, the claims resolved by the civil settlement are allegations only. There has been no determination of liability.  To protect the government supply chain, NASA both suspended SPI from government contracting and proposed SPI for debarment government-wide.  The exclusion from government contracting has been effective since Sept. 30, 2015. 

A number of significant factors contributed to the Department’s criminal resolution with the companies.  Among these, the companies received significant credit for their cooperation with the Department’s investigation and their engagement in extensive remedial measures to address the misconduct, including the termination and severance of employees who were involved, the implementation of state-of-the-art equipment to automate the tensile testing process, company-wide audits at all U.S. tensile labs, increased resources devoted to compliance and revamping internal quality controls and quality audit processes.  However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because the companies did not voluntarily self-disclose the full extent of their misconduct to the Department.

This case was investigated by NASA Office of Inspector General, FBI’s Portland Field Office, and DCIS.  The NASA Launch Services Program and Office of the General Counsel Acquisition Integrity Program provided extensive cooperation and assistance throughout the investigation.

Trial Attorneys Emily Scruggs and Laura Connelly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ryan S. Faulconer are prosecuting the criminal case, with previous assistance from former Trial Attorneys Thomas Hall and Jennifer Ballantyne. Trial Attorneys Allison Cendali and Greg Pearson of the Civil Division’s Fraud Section handled the civil case.

If you believe you are a victim of this offense, please visit https://www.justice.gov/criminal-vns/case/SAPA or call (888) 549-3945.

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Author: April 23, 2019

Jury Finds Pennsylvania Biofuel Company Owners Guilty of Tax and False Statements Conspiracy

Following a 14-day jury trial in Harrisburg, Pennsylvania, Ben T. Wootton, of Enola, Pennsylvania, and Race A. Miner, of Buena Vista, Colorado, were found guilty of one count of conspiracy to make false statements to the Environmental Protection Agency (EPA), six counts of making false statements to the EPA, one count of conspiracy to defraud the Internal Revenue Service (IRS), and one count of aiding and assisting in the filing of a false claim with the IRS, announced Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environmental and Natural Resources Division (ENRD), Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney David J. Freed for the Middle District of Pennsylvania, EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine, and IRS-CI Special Agent in Charge Kelly Jackson. The jury also found the corporation, Keystone Biofuels Inc. (Keystone), guilty of conspiring to make false statements to the EPA and six counts of making false statements to the EPA. 

According to the evidence presented at trial, Wootton and Miner co-owned and operated Keystone, originally in Shiremanstown, Pennsylvania, and later in Camp Hill, Pennsylvania. Keystone purported to be a producer and seller of biodiesel, a type of renewable fuel. From August 2009 through September 2013, Wootton and Miner participated in a conspiracy to fraudulently generate renewable fuel credits, identified by renewable identification numbers (RINs) on Keystone fuel and, through January 2012, to fraudulently claim tax refunds based on the Biodiesel Mixture Tax Credit, a federal excise tax credit for persons or businesses who mix biodiesel with petroleum and use or sell the mixture as a fuel.

“These defendants are guilty of premeditated fraud, pure and simple,” said Assistant Attorney General Clark.  “They directly stole money from the federal fisc and they masqueraded as benefactors of the environment.  We are grateful for the cooperation of our partners in the Tax Division and U.S. Attorney’s Office in putting an end to this scheme.”

 “Abuse of biodiesel fuel credits harms law abiding renewable fuel producers and the United States government,” said Principal Deputy Assistant Attorney General Zuckerman. “The Tax Division along with its partners at United States Attorney’s Offices, ENRD, IRS-CI, and EPA will vigorously prosecute those who fraudulently claim biodiesel fuel credits and violate the criminal law.”

“The defendants in this case participated in a criminal scheme that struck directly at the heart of a government program that was created to benefit both honest business owners and the community at large by encouraging the development and use of clean bio-diesel fuel,” said U.S. Attorney David J. Freed.  “Instead, the defendants defrauded their fellow citizens to the tune of more than 4 million dollars. Working with our partners, we will not rest in pursuing cases that target our shared financial resources.”

“Today’s guilty verdict is a victory for the American taxpayer,” said IRS-CI Special Agent in Charge Kelly Jackson.  “IRS Criminal Investigation will pursue anyone who burns the biodiesel industry by enriching themselves through tax credits they are not entitled to.”

“Today’s guilty verdict demonstrates the severe consequences for anyone who tries to make a profit by defrauding the RINS market,” said EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine. “EPA and its federal partners worked together to protect the integrity of the Renewable Fuels Standard program by uncovering and prosecuting the defendants’ criminal activities.”

According to evidence presented at trial, as part of the conspiracy, Wootton and Miner caused inflated fuel amounts to be reported to the IRS. The inflated fuel numbers supported their fraudulent claims for tax refunds on fuel Keystone was not producing. To account for the inflated fuel amounts, Wootton and Miner created false books and records and engaged in a series of sham financial transactions intended to mirror the false books and records. In addition, Miner doctored fuel samples and test results to fraudulently claim tax refunds and RINs on fuel that did not meet the requisite quality standards to qualify for the tax refunds and RINs. It is estimated that over $10 million was generated from the fraudulent RIN sales, and the total tax loss to the government resulting from the defendants’ conduct is approximately $4,149,983.41.

Wootton and Miner face a statutory maximum sentence of five years in prison on each conspiracy count, each false statement to the EPA count, and three years in prison on the count of filing a false tax claim with the IRS, as well as periods of supervised release, restitution, and monetary penalties.

Assistant Attorney General Clark, Principal Deputy Assistant Attorney General Zuckerman, and U.S. Attorney Freed thanked agents of IRS-Criminal Investigation and EPA Criminal Investigation Division, who conducted the investigation, and Senior Litigation Counsel Howard P. Stewart of the Justice Department’s Environmental and Natural Resources Division, Trial Attorneys Mark Kotila, Kimberly Ang, and Michael Vasiliadis of the Justice Department’s Tax Division, Assistant U.S. Attorney Geoffrey MacArthur, and Special Assistant U.S. Attorney David Lastra, who prosecuted the case.

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Author: April 23, 2019

Former Alabama Police Investigator Pleads Guilty to Assaulting Handcuffed Arrestee

The Department of Justice announced today that a former Tallassee Police investigator, Brandon Smirnoff, 27, pleaded guilty to assaulting a handcuffed, 24-year-old man. 

According to the guilty plea, Smirnoff, who was on duty as an investigator with the Tallassee Police Department, used his patrol car to pursue the victim, J.M., who was on a four-wheeler. After the pursuit, J.M. stepped off his four-wheeler, laid face down on the ground, and allowed several Tallassee police officers to handcuff him. While J.M. was handcuffed and compliant, Smirnoff lifted him into the air and then slammed him to the ground. Smirnoff then repeated the assault. Moments later, before Smirnoff placed the victim into his patrol car, Smirnoff slammed the victim’s head into the side of the vehicle. For each assault, the victim was handcuffed, compliant, and did not pose a threat.    

“Police officers who willfully use excessive force not only violate the Constitution, they erode public trust in law enforcement,” said Assistant Attorney General Eric Dreiband of the Department of Justice’s Civil Rights Division. “The Civil Rights Division is committed to protecting victims of these abuses and upholding the Constitution and laws that protect us all.”

“It is especially important in a climate of distrust between law enforcement and the public, that officers act ethically and within the bounds of the law,” said U.S. Attorney Louis V. Franklin for the Middle District of Alabama. “This police officer’s brutal behavior was unacceptable and criminal. He violated this young man’s constitutional rights and the trust placed in law enforcement officers to faithfully, ethically, and morally enforce the law. You can be sure that anytime an officer steps over the line and into criminal behavior, as this one did, my office will hold that individual accountable.”

FBI Special Agent in Charge James E. Jewell stated, “the FBI supports our state and local law enforcement partners but will not tolerate the intentional abuse of a citizen. The position of police officer should convey compassion as well as trust and we intend to hold that line.”

Smirnoff faces a statutory maximum sentence of 10 years in prison and a $250,000 fine.

This case is being investigated by the FBI’s Montgomery Division. It is being prosecuted by Assistant U.S. Attorney Denise Simpson of the Middle District of Alabama and Trial Attorney Michael J. Songer of the Civil Rights Division.

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Author: April 19, 2019

The Justice Department, Environmental Protection Agency, and State of Colorado Reach Agreement with Highpoint Operating Corporation to Resolve Alleged Clean Air Act Violations and Reduce Air Pollution in Colorado

WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA), and the state of Colorado today announced a settlement with Denver-based HighPoint Operating Corporation resolving alleged Clean Air Act violations.

The settlement resolves alleged claims that HighPoint violated requirements to reduce volatile organic compounds (VOCs) emissions from its oil and natural gas production operations in the Denver-Julesburg Basin. VOCs are a key component in the formation of ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis.

“As part of the Department’s continued effort to safeguard and improve air quality, we remain committed to reducing the emissions of volatile organic compounds that contribute to high levels of ground-level ozone and so endanger the public health,” said Assistant Attorney General Jeffrey Bossert Clark. “This settlement reflects the progress that can be made when the federal government engages in cooperative endeavors with its state partners.”

“This settlement reflects EPA’s continued efforts with the Department of Justice, the State of Colorado and oil and gas producers to secure Clean Air Act compliance and reduce emissions that are contributing to high levels of ground-level ozone in communities across Colorado’s Front Range,” said EPA Acting Regional Administrator Deb Thomas.  

“This represents another step in Colorado’s ongoing efforts to protect public health and the environment by minimizing harmful emissions from the oil and gas industry,” said Jill Hunsaker Ryan, Executive Director of the Colorado Department of Public Health and Environment.       

As part of the settlement, HighPoint will spend an estimated $3 million to implement measures that will ensure the vapor control systems on its condensate storage tanks are adequately designed and sized and will improve its operation and maintenance practices, monitoring, and inspections. These improvements, including monthly inspections using infrared cameras to better detect and respond in real time to emissions, will significantly reduce VOC emissions. EPA and the state of Colorado estimate that HighPoint’s modifications of vapor control system design, improvements to operations and maintenance practices, and increased monitoring will reduce VOC emissions from HighPoint’s operations by approximately 350 tons per year.

HighPoint will also implement an environmental mitigation project to reduce VOC emissions in the Denver area. HighPoint will install and operate vapor balancing controls to minimize emissions associated with loading of condensate into tank trucks at ten HighPoint well pads. This project will reduce HighPoint’s VOC emissions from tank truck load-out by an estimated 50 tons per year.

HighPoint will pay the United States a $275,000 civil penalty, and will pay a civil penalty to Colorado and perform a State supplemental environmental project, with a combined value of $275,000. HighPoint will apply $220,000 of the State’s portion of the penalty to a supplemental environmental project.

This action arose when inspections of HighPoint operations conducted from 2014 to 2017 by EPA and Colorado found VOC emissions from HighPoint’s condensate storage tanks. Through these inspections and information requests, EPA and the State of Colorado identified alleged violations of the Colorado State Implementation Plan, Regulation Number 7, due to undersized vapor control systems and inadequate operations and maintenance practices.

This settlement covers 50 HighPoint tank systems in Colorado’s Denver-Julesburg Basin. The tank systems covered by the settlement are located in an ozone nonattainment area, which means the area does not meet the National Ambient Air Quality Standard set for ozone. By reducing the emissions of VOCs that lead to the formation of ground-level ozone, this settlement will contribute to the improvement of air quality in the Front Range.

The consent decree, lodged in the District Court of Colorado, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing at https://www.justice.gov/enrd/consent-decrees.

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Author: April 19, 2019

Fifth Defendant Pleads Guilty to Laundering Millions of Dollars of Hard Narcotics Proceeds for Sinaloa Cartel

A Culiacan, Mexico man pleaded guilty to international money laundering in connection with his operation of a currency exchange house that received the proceeds of multi-kilogram quantities of cocaine, methamphetamine and heroin smuggled into the United States by the Sinaloa Cartel, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Robert S. Brewer Jr. of the Southern District of California. 

Gibran Rodriguez-Mejia, 31, was extradited from Mexico to San Diego in September 2018, and is the fifth Mexican-based defendant in this case to enter a guilty plea, doing so before U.S. Magistrate Judge Mitchell D. Dembin.  Rodriguez-Mejia will be sentenced on July 8, 2019 before U.S. District Judge Roger T. Benitez. 

Through his plea agreement, Rodriguez-Mejia admitted to laundering $3.5 million in drug proceeds.  He coordinated with couriers, primarily located in Southern California, who smuggled the bulk of U.S. currency from the United States to Mexico.  Rodriguez-Mejia also admitted that he arranged for currency to be smuggled to an exchange house in Tijuana, Mexico owned and operated by co-defendant Cesar Hernandez-Martinez, who pleaded guilty on April 4, 2019 and will be sentenced on July 8, 2019.  After the money was converted to Mexican pesos, Rodriguez-Mejia provided financial accounts in Mexico into which the money was deposited for the benefit of the Mexican-based cartel drug traffickers.

In addition to the five defendants in this case, approximately 20 other individuals have entered guilty pleas and have been previously sentenced in related cases.  Those cases have involved individuals based in the United States or individuals who have frequently crossed into the United States and served as money couriers, drug couriers and drug stash-house operators and who were part of, or related to, the same money laundering and drug trafficking organization.

Omar Ayon-Diaz, Osvaldo Contreras-Arriaga and Joel Acedo-Ojeda have also pleaded guilty in this case and have been sentenced to 120 months, 132 months and 135 months in prison, respectively.

U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) San Diego Field Office conducted the investigation.  Senior Trial Counsel Mark A. Irish of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Lawrence A. Casper of the Southern District of California prosecuted the case.  The Justice Department’s Office of International Affairs provided significant support with the defendant’s extradition.  The U.S. Attorney’s Office is working together in this matter with the Criminal Division’s Money Laundering and Asset Recovery Section.

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Author: April 19, 2019

Indian National Extradited to United States to Face Charges for Leadership Role in Multimillion Dollar India-Based Call Center Scam Targeting U.S. Victims

An Indian national has been extradited to the United States from Singapore to face charges related to his role as an operator of a call center network that targeted U.S victims.  The massive India-based telephone impersonation fraud and money laundering conspiracy defrauded thousands of U.S. residents out of hundreds of millions of dollars.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Executive Associate Director Derek N. Benner of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) and Acting Inspector General John Kelly of the U.S. Department of Homeland Security (DHS) Office of Inspector General (OIG) made the announcement today.

Hitesh Madhubhai Patel, 42, of Ahmedabad, India, arrived in the United States and is scheduled to be arraigned today before a U.S. magistrate judge in federal court in Houston, Texas.  The indictment, which was unsealed in October 2016, charged Patel and 60 other individuals and entities with general conspiracy, wire fraud conspiracy and money laundering conspiracy.  The case is assigned to the Honorable David Hittner of the Southern District of Texas.

“Hitesh Patel operated a call center that allegedly preyed upon vulnerable U.S. citizens as part of a massive fraud scheme,” said Assistant Attorney General Benczkowski.  “This extradition once again demonstrates the Department’s unwavering commitment to disrupt and dismantle the India-based call center scam industry and to work with our foreign partners to hold accountable those who perpetrate schemes that defraud our citizens.  I especially would like to thank our Singaporean colleagues for their excellent cooperation with this extradition and their commitment to combatting transnational organized crime.”

“I cannot compliment enough the hard work and effort put into this case by the agents, analysts and attorneys of the many agencies involved,” said U.S. Attorney Patrick.  “Large complex international cases like these often take years to bring in foreign-based defendants.  I applaud our global partners in helping bring this case closer to a conclusion.”

“Today’s extradition should serve as a strong deterrent to anyone considering taking part in similar scams, and I hope it provides a sense of justice for the victims as well,” said HSI Executive Associate Director Benner.  “HSI will continue to utilize its unique investigative mandate, in conjunction with our local, state and federal partners, to attack and dismantle the criminal enterprises who would seek to manipulate U.S. institutions and taxpayers.”

“Since 2013, the IRS impersonation scam has been on a relentless path, claiming more than 15,000 victims who have collectively suffered over $75 million in losses,” said Treasury Inspector General for Tax Administration J. Russell George.  “TIGTA’s investigations, often conducted with other Federal agencies, have identified 140 scammers, including Patel, who have preyed upon taxpayers.  Today’s extradition and arraignment are proof that TIGTA and its law enforcement partners will be equally relentless in rooting out individuals who fraudulently identify themselves as IRS employees in order to extort money from taxpayers.  We especially appreciate the cooperation of the Government of Singapore for its role in the extradition.”

“This historic extradition should serve as notice to transnational criminal organizations of the lengths DHS is willing to go to arrest those who would enrich themselves by extorting the most vulnerable in our society,” said Special Agent in Charge David Green of DHS-OIG Houston, Texas Field Office.  “The owners, managers and employees of overseas call centers who target U.S. residents should know that our pursuit of justice for victims of their scams does not stop at the water’s edge.  We will continue to work with our international partners to identify these fraudsters, track them down and hold them accountable for their crimes.”

Singapore authorities apprehended Patel at the request of the United States pursuant to a provisional arrest warrant on Sept. 21, 2018, after flying from India to Singapore.  The Singaporean Minister for Law issued a warrant on March 25, 2019 for Patel to be delivered into custody of the United States.

The indictment alleges that Patel operated the HGlobal call center conglomerate and participated in a complex fraudulent scheme involving a network of call centers based in Ahmedabad, India.  Using information obtained from data brokers and other sources, India-based conspirators allegedly called potential victims while impersonating officials from the IRS or U.S. Citizenship and Immigration Services.  According to the indictment, the call center conspirators then threatened victims with arrest, imprisonment, fines or deportation if they did not pay taxes or penalties to the government.  When victims agreed to pay, the call centers used a network of U.S.-based conspirators to quickly liquidate and launder the extorted funds through the use of stored value cards or via wire transfers.  As alleged in the indictment, the stored value cards were often registered by the scammers using misappropriated personal identifying information of thousands of identity theft victims, and conspirators collected the wire transfers by using fake names and fraudulent identifications.

According to the indictment, the call center conspirators also defrauded victims through other schemes, including via offering fake short-term loans or grants.  The indictment alleges that the conspirators would then request a good-faith deposit to show the victims’ ability to pay back the loan or a fee to process the grant.  The victims of the alleged scam never received any money after making the requested payment.

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

A total of 24 domestic defendants associated with this transnational criminal scheme have previously been convicted and sentenced to terms of imprisonment of up to 20 years in the Southern District of Texas, District of Arizona and Northern District of Georgia.  The defendants were also ordered to pay millions of dollars in victim restitution and money judgments and to forfeit seized assets.  Some defendants were ordered to be deported based on their illegal immigration status, with another defendant having his U.S. citizenship revoked due to a separate conviction for immigration fraud.  The remaining India-based defendants have yet to be arraigned in this case.

HSI, DHS-OIG and TIGTA conducted the investigation.  The Department of Justice’s Office of International Affairs and HSI Singapore provided significant support in securing and coordinating Patel’s arrest and extradition, working in concert with their counterparts at the Singapore Attorney General’s-Chambers and the Singapore Police Force. 

Trial Attorneys Michael Sheckels and Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section, Amanda Wick of the Criminal Division’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorneys Mark McIntyre and Craig Feazel of the Southern District of Texas are prosecuting the case.

A Department of Justice website has been established to provide information about the case to victims and the public.  Anyone who believes they may be a victim of fraud or identity theft in relation to this investigation or other telefraud scam phone calls may contact the FTC via this website.

Anyone seeking additional information about telefraud scams generally, or preventing identity theft or fraudulent use of their identity information, may find helpful information on the IRS tax scams website, the FTC phone scam website, and the FTC identity theft website.

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Author: April 19, 2019

Former Captain of Arkansas Juvenile Detention Center Sentenced to Prison for Conspiracy to Assault Juvenile Detainees

Former Captain of the White River Regional Juvenile Detention Center, Peggy Kendrick, 45, was sentenced yesterday to prison for her role in conspiring to assault juvenile inmates, assaulting a 16-year-old juvenile, and obstructing justice by falsifying incident reports about that assault. Kendrick, who served as captain and administrator of the detention center, and was in charge of its daily operations, was sentenced to 84 months in prison and three years of supervised release, announced Assistant Attorney General Eric Dreiband of the Department of Justice’s Civil Rights Division, U.S. Attorney Cody Hiland of the Eastern District of Arkansas, and Special Agent in charge Diane Upchurch of the FBI Little Rock Field Office.

“This defendant abused her power as Captain and attempted to cover up the assault of young inmates under her care and custody,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Department of Justice will continue to aggressively enforce our nation’s laws and hold officers who break the law and mistreat inmates accountable.”

“As former Captain of the facility, this defendant was in a position of trust. Her behavior towards these children violated that trust, and the sentence shows these actions will not go unpunished,” said U.S. Attorney for the Eastern District of Arkansas Cody Hiland.

“We are morally, constitutionally, and legally obligated to treat juvenile inmates humanely.  The sentencing reflects our commitment to investigate the mistreatment of inmates by the people in charge of them,” stated Special Agent in Charge Diane Upchurch with the Little Rock FBI Field Office. “We appreciate the efforts of our partners at the Justice Department’s Civil Rights Division and the United States Attorney’s Office for the Eastern District of Arkansas and the FBI.”

On April 26, 2017, Kendrick pleaded guilty in federal court to conspiring to assault juvenile inmates at the White River facility. According to the plea documents, Kendrick assaulted and physically punished juvenile detainees who posed no threat, including by spraying them in the face with pepper spray. In some instances, she then shut the compliant juveniles in their cells after pepper spraying them to “let them cook,” or continue suffering the effects of the pepper spray, rather than immediately decontaminating them. Kendrick also encouraged other juvenile detention officers to unjustifiably assault juveniles and to falsify their incident reports to cover up the assaults.

Kendrick also pleaded guilty to assaulting a 16-year-old girl by pepper spraying her in the face for failing to follow directions. At the time, the girl, who was in the detention center as part of the “Families in Need of Service” program and had not been charged with any crime, was standing in the back corner of her cell with her arms folded, and not posing a physical threat to anyone or physically resisting in any way. Kendrick covered up the assault by writing an incident report falsely claiming that the girl had clenched her fist and stepped toward Kendrick in an aggressive manner.

Kendrick was sentenced yesterday by United States District Court Judge James M. Moody Jr. On March 14, Judge Moody sentenced Dennis Fuller, 41, who served as Kendrick’s lieutenant, to 36 months in prison for his role in the conspiracy. 

This case was investigated by the FBI’s Little Rock Division. Trial Attorneys Samantha Trepel and Michael J. Songer of the Justice Department’s Civil Rights Division, and Assistant United States Attorneys Julie Peters and Pat Harris of the U.S. Attorney’s Office for the Eastern District of Arkansas prosecuted the case.

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Author: April 19, 2019