West Virginia Woman Admits to Willful Retention of Top Secret National Defense Information and International Parental Kidnapping

Elizabeth Jo Shirley, of Hedgesville, West Virginia, has admitted to unlawfully retaining a document containing national defense information and committing international parental kidnapping, the Department of Justice announced.

Shirley, 47, pled guilty to one count of “Willful Retention of National Defense Information” and one count of “International Parental Kidnapping.”  Shirley admitted to unlawfully retaining a National Security Agency (NSA) document containing information classified at the TOP SECRET/SENSITIVE COMPARTMENTED INFORMATION (TS/SCI) level relating to the national defense that outlines intelligence information regarding a foreign government’s military and political issues.  Shirley also admitted to removing her child, of whom she was the non-custodial parent, to Mexico with the intent to obstruct the lawful exercise of the custodial father’s parental rights.

“When Shirley took classified information from her work with the Intelligence Community and later fled to Mexico, she violated the confidence placed in her by the American people,” said Assistant Attorney General for National Security John C. Demers. “She doubled down on this betrayal when she sought to offer classified information to the Russian government.  We are grateful for our law enforcement partners’ timely work to locate and arrest the defendant in Mexico.  Given Shirley’s troubling conduct after fleeing the United States, the damage to national security could have been far greater had law enforcement not acted swiftly.  Shirley will now be held accountable for betraying the trust of the American people.”

“High level security clearance requires a commensurate level of trust.  Shirley breached that trust and attempted to put our country at risk.  National security is one of our highest priorities and always will be.  Shirley will now face the consequences of her actions,” said U.S. Attorney William J. Powell.

“Federal government employees and contractors with high level security clearances pledge to protect classified information from foreign adversaries. It’s an essential responsibility in guarding our country’s national security,” said FBI Pittsburgh Special Agent in Charge Michael Christman. “Ms. Shirley had a duty to safeguard classified information. Instead, she chose to break the law and trust placed in her and made plans to pass national defense information to Russian officials, which could have put our citizens at risk. The FBI does not take these violations lightly and will work to hold wrongdoers accountable to keep our country safe.”

Shirley served on active duty with the United States Air Force, and in August 1994, the Air Force granted Shirley her first TS/SCI security clearance.  After leaving active duty, Shirley served in the United States Air Force Reserves and later in the United States Navy Reserves.  While serving in the Air Force, she worked on assignments with the NSA.  From May 2001 to August 2012, Shirley held various positions with the United States Navy’s Office of Naval Intelligence, the Department of Defense, the Department of Energy, the National Cyber Investigative Joint Task Force, and at least five different cleared defense contractors.  In connection with these positions, Shirley held TOP SECRET/SCI security clearances at various times.

In July 2019, Shirley took her six-year-old daughter to Mexico with the intent to make contact with representatives of the Government of Russia to request resettlement in a country that would not extradite her to the United States.  Shirley took with her to Mexico national defense information, which she had unlawfully retained.  While in Mexico, Shirley prepared a written message to Russian Government officials, referencing “an urgent need” to have “items shipped from the USA related to [her] life’s work before they are seized and destroyed.”

On Aug. 13, 2019, the United States Marshals Service and Mexican law enforcement located Shirley and her daughter at a hotel in Mexico City.  Mexican authorities arrested Shirley pursuant to an arrest warrant the West Virginia State Police (WVSP) had obtained on a charge of concealment of a minor from a custodian.

The FBI subsequently executed search warrants on numerous of Shirley’s electronic devices, including devices she took to Mexico in July 2019 and devices the FBI seized from her Martinsburg storage unit in August 2019.  Pursuant to the search of the storage unit, the FBI located the NSA document underlying the Willful Retention of National Defense Information offense.  In addition, pursuant to searches of the electronic devices, the FBI found an Office of Naval Intelligence PowerPoint presentation containing information classified at the SECRET level and messages Shirley had drafted to Russian Government officials while in Mexico, the latter of which the Central Intelligence Agency has determined to include information classified at the SECRET level.

Shirley faces up to ten years of incarceration and a fine of up to $250,000 for the national security charge and up to three years of incarceration and fine of up to $250,000 for the kidnapping charge.  Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Assistant U.S. Attorneys Jarod J. Douglas and Lara K. Omps-Botteicher and Trial Attorney Evan N. Turgeon with the Department of Justice’s Counterintelligence and Export Control Section, National Security Division, are prosecuting the case on behalf of the government.  The FBI and WVSP investigated.  The Webster County Prosecuting Attorney’s Office cooperated in the investigation and prosecution of the case.

U.S. Magistrate Judge Robert W. Trumble presided.

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Author: July 6, 2020


Two Defendants Charged for Their Role in Bribery and Money Laundering Scheme Involving Former High-Ranking Government Official in Panama

A criminal complaint was unsealed today in federal court in Brooklyn, New York, charging Luis Enrique Martinelli Linares (Luis Martinelli Linares) and Ricardo Alberto Martinelli Linares (Ricardo Martinelli Linares) for their roles in a massive bribery and money laundering scheme involving Odebrecht S.A. (Odebrecht), a Brazil-based global construction conglomerate. 

On Dec. 21, 2016, Odebrecht pleaded guilty in the Eastern District of New York to a criminal information charging it with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) for its involvement in the bribery and money laundering scheme. 

The overarching Odebrecht scheme involved the payment of more than $700 million in bribes to government officials, public servants, political parties, and others in Panama and other countries around the world to obtain and retain business for the company.  The two individual defendants are alleged to have participated in the scheme by, among other things, serving as intermediaries for approximately $28 million in bribe payments made by and at the direction of Odebrecht to a then high-ranking government official in Panama (Panama Government Official), who was a close relative of the defendants.  Luis Martinelli Linares and Ricardo Martinelli Linares were each charged with one count of conspiracy to commit money laundering.  

Luis Martinelli Linares and Ricardo Martinelli Linares were arrested at el Aeropuerto Internacional la Aurora in Guatemala on July 6 pursuant to a provisional arrest request from the United States.  

As alleged in the complaint, between approximately August 2009 and January 2014, the defendants facilitated the payment of bribes from Odebrecht to or for the benefit of the Panama Government Official by taking a number of steps that included opening and managing secret bank accounts held in the names of shell companies in foreign jurisdictions.  These secret bank accounts were used to receive, transfer, and deliver the bribe payments.  The defendants served as the signatories on certain of the shell company bank accounts, and personally sent and caused to be sent wire transfers through the structure of shell company bank accounts to conceal and spend bribery proceeds.  Many of these financial transactions were in U.S. dollars and were made through U.S. banks, some of which were located in New York.

The charges in the complaint announced today are allegations, and the defendants are presumed innocent unless and until proven guilty.

The FBI’s International Corruption squad in New York investigated this case.  Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section, Trial Attorneys Barbara Levy and Michael Redmann of the Criminal Division’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorneys Alixandra Smith and Julia Nestor of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case.

The Criminal Division’s Office of International Affairs provided substantial assistance.  The Brazilian Ministerio Publico Federal, Departamento de Polícia Federal, law enforcement authorities in Guatemala including the Public Ministry of Guatemala and Specialized Unit for International Affairs, and law enforcement authorities in El Salvador provided significant cooperation.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

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: July 6, 2020

Department of Justice Awards $2.2 Million for Innovative Community Policing Projects

The Department of Justice today announced $2.2 million in grant funding to law enforcement agencies and stakeholders through the Department’s Office of Community Oriented Policing Services (COPS Office) Community Policing Development (CPD) Microgrants Program.  COPS Office Director Phil Keith announced 29 awards with award amounts ranging from $15,090 to $100,000. 

“The CPD Microgrants Program is a critical resource to advance innovative community policing projects across the country,” said Director Keith.  “These strategic investments from the COPS Office pay huge dividends to state and local law enforcement agencies and the communities that they serve.”

CPD Microgrants Program funds are used to develop the capacity of local, state, and tribal law enforcement agencies to implement community policing strategies.  Applicants were invited to propose demonstration or pilot projects to be implemented in their agency that offer creative ideas to advance crime fighting, community engagement, problem solving, or organizational changes to support community policing in one of the following areas:

  • Human Trafficking
  • Meeting Rural Law Enforcement Challenges
  • Officer Safety and Wellness
  • Recruitment, Hiring, and Retention
  • School Safety
  • Staffing and Allocation Studies
  • Victim-Centered Approaches
  • Violent Crime
  • Youth Engagement

Funding through this program is available for the first time since 2018, following the successful removal of a nationwide injunction.  These awards are being announced at a critical time for our country, when community policing strategies are very much needed to improve police and community relations.

The complete list of awards can be found here. To learn more about CPD Microgrants, please visit https://cops.usdoj.gov/cpdmicrogrants.  For additional information about the COPS Office, please visit www.cops.usdoj.gov.

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Author: July 7, 2020

Justice Department Settles with Florida-Based Promotional Products Distributor and Retailer to Resolve Immigration-Related Discrimination Claims

The Justice Department announced today that it reached a settlement with Bel USA LLC (Bel USA), an online distributor and retailer of customized promotional products located in Miami-Dade County, Florida. The settlement resolves claims that Bel USA discriminated against work-authorized non-U.S. citizens by requiring them to provide specific and unnecessary immigration documents when verifying their work authorization, because of their citizenship or immigration status. 

“Employers must ensure that their employees are properly trained regarding the employment eligibility verification process so that they do not violate federal law by requiring additional, unnecessary work authorization documents based on a worker’s citizenship status,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “We look forward to working with Bel USA to ensure its future compliance with the Immigration and Nationality Act’s non-discrimination requirements governing hiring, firing, onboarding, and using E-Verify.”

Based on its investigation, the department concluded that Bel USA routinely requested unnecessary and specific documents — such as Permanent Resident Cards and Employment Authorization Documents — from work-authorized non-U.S. citizens with the right to work in the U.S. to establish their employment authorization. Federal law allows all work-authorized individuals, regardless of citizenship status, to choose which valid, legally acceptable documents to present to demonstrate their ability to work in the United States. The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from requesting more or different documents than necessary to prove work authorization based on employees’ citizenship, immigration status or national origin.

Under the terms of the settlement agreement, Bel USA will pay a civil penalty of $100,000, train its employees about the requirements of the INA’s anti-discrimination provision, and be subject to reporting and monitoring requirements.

The division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA. The statute prohibits, among other things, citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation.     

Learn more about IER’s work and how to get assistance through this brief video. For more information about protections against employment discrimination under immigration laws, call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar; email IER@usdoj.gov; or visit IER’s English and Spanish websites. Subscribe to GovDelivery to receive updates from IER.

The Civil Rights Division wants to hear about civil rights violations. Members of the public can report possible civil rights violations through the Civil Rights Division’s reporting portal.

Applicants or employees who believe they were subjected to discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral for a fee; or discrimination in the employment eligibility verification process (Form I-9 and E-Verify) based on their citizenship, immigration status, or national origin; or retaliation can file a charge or contact IER’s worker hotline for assistance.

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Author: July 6, 2020

Four Supervisory Correctional Officers at Angola Prison Sentenced for Beating a Handcuffed and Shackled Inmate

Four former supervisory correctional officers at Louisiana State Penitentiary in Angola, Louisiana — Daniel Davis (43), Scotty Kennedy (52), John Sanders (34), and James Savoy Jr. (42) — were sentenced on July 2, for their roles in assaulting an inmate who was handcuffed, shackled, and not resisting, and for conspiring to cover up their misconduct by devising a false cover story, submitting false reports documenting that cover story, tampering with witnesses, and lying under oath.

Kennedy, Sanders, and Savoy each pleaded guilty, and Davis was convicted in one trial of the obstruction charges and in another trial of the beating charge. At Davis’s trials, Kennedy and Sanders, among other officers, testified for the government and described the abuse and the extensive cover up.

The trial evidence established that Davis initiated the beating by yanking the inmate’s leg chains, causing the inmate to fall face-first onto the concrete breezeway. At that point, Davis and other officers punched, kicked, and stomped on the inmate, leaving the inmate with a dislocated shoulder, a hematoma, a collapsed lung, and broken ribs. Davis later ordered his subordinate officers to cover up the beating by falsifying reports, fabricating prison records, and lying to investigators.

District Judge John W. deGravelles sentenced Davis, the ringleader of the beating and cover up, to 110 months of imprisonment. Sanders and Savoy were sentenced to 18 months of imprisonment, and 24 months of imprisonment, respectively. Kennedy, the least culpable officer, was sentenced to a 14 month term of probation during which he will be required to team up with the FBI to give presentations to federal, state, and local correctional officers about the consequences of using excessive force and falsifying reports.

“The Justice Department does not tolerate assault by correctional officers of the people they are charged with protecting,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The division works tirelessly to protect the civil rights of all citizens.”

“Corrections officers are sworn to protect those within our prison systems,” said Brandon J. Fremin U.S. Attorney for the Middle District of Louisiana. “Those officers who carry out vicious attacks such as this strip citizens of their basic civil rights and dishonor the work of honest law enforcement officers. The sentences handed down today serve as an example of officials being held accountable for violations of the public trust that was placed in them.”

“Along with our partners, the FBI will aggressively investigate allegations wherein correctional officers abuse their position of power and authority over prisoners to deny them their constitutional right to be free from cruel and unusual punishment,” said Special Agent in Charge Bryan Vorndran. “The FBI is appreciative of its partnerships with the Office of the State Inspector General, the Louisiana Department of Corrections and especially the Investigative Support Unit at the Louisiana State Penitentiary, to root out correctional officers who choose to break the law and physically abuse restrained inmates,”

“The rule of law suffers the most whenever those in positions of trust abuse that trust,” said Louisiana Inspector General Stephen Street. “This is especially true of corrections officers, who are given great power over inmates. Beating a handcuffed and shackled inmate, as these defendants did, is a clear violation of the law and the U.S. Constitution, and can never be tolerated. Together with our law enforcement partners, we will continue to relentlessly pursue these cases whenever and wherever they may arise. I want to thank U.S. Attorney Brandon Fremin and his staff, as well as the FBI and Department of Corrections for their work on this case.”

The internal investigation into this incident, which resulted in the termination of all four officers, was led by Colonel Michael Vaughn and Captain Doug McDonald of Angola Prison’s Investigative Services Unit.  The federal investigation was led by the FBI’s Baton Rouge Resident Agency Office, with assistance from the Louisiana State Inspector General’s Office. The federal case was tried by Special Litigation Counsel Christopher J. Perras and Trial Attorneys Zachary Dembo and Anita Channapati of the Civil Rights Division’s Criminal Section in partnership with Assistant U.S. Attorney Frederick A. Menner Jr. of the Middle District of Louisiana.

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Author: July 2, 2020

Statement by Attorney General William P. Barr on Independence Day

Attorney General William P. Barr has issued the following statement:

“As we celebrate the 244th anniversary of our nation’s birth, we are reminded that the words of the Declaration of Independence are just as important today as they were the day they were written: ‘We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.’  The Declaration goes on to make it clear that governments exist to secure these rights and derive their power from the consent of the governed.  These words form the foundation of freedom and justice in the United States, and the framework for the rule of law. 

For much of our history, the fruits of justice and freedom were not available to all Americans, and redeeming the promise of the Founding remains a work in progress.  As our nation confronts challenges ranging from a global pandemic to serious unrest and violence, we must recommit ourselves to the timeless principles that give birth to our nation and that bind us together as a people.  At the Department of Justice, we will continue working to uphold those principles by protecting individual rights and enforcing the rule of law.  I wish all Americans a happy Fourth of July, and as the Department of Justice celebrates its 150th  anniversary, I extend particular gratitude to all of our Department employees for the work they do each day, on behalf of the nation we love.” 

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Author: July 4, 2020

Louisiana Company Charged With Conspiracy To Defraud The Government And Violate The Procurement Integrity Act

United States Attorney Peter G. Strasser and Makan Delrahim, Assistant Attorney General for the Antitrust Division of the Department of Justice, announced that CAJAN WELDING & RENTALS, LTD., a company located in Opelousas, Louisiana, was charged on July 2, 2020 in a one-count bill of information with conspiracy to defraud the United States and to violate the Procurement Integrity Act, in violation of 18 U.S.C. § 371.
According to the bill of information, CAJAN WELDING & RENTALS, LTD. conspired with unnamed co-conspirators to defraud the United States by corrupting and impairing the government procurement process, and by obtaining non-public pricing and cost information in order to obtain subcontract awards and payments from the U.S. Department of Energy in connection with its operation of the nation’s Strategic Petroleum Reserve. 

If convicted, CAJAN WELDING & RENTALS, LTD. faces a maximum fine of $500,000.00, a term of probation of up to five years, and a special assessment of $400.00.

An information is merely an accusation.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt.

The case is being investigated by the United States Attorney’s Office in the Eastern District of Louisiana, the Department of Justice Antitrust Division’s Washington Criminal II Section, and the Department of Energy’s Office of the Inspector General.

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Author: July 2, 2020

Novartis Pays Over $642 Million to Settle Allegations of Improper Payments to Patients and Physicians

Pharmaceutical company Novartis Pharmaceuticals Corporation (Novartis), based in East Hanover, New Jersey, has agreed to pay over $642 million in separate settlements resolving claims that it violated the False Claims Act (FCA).  The first settlement pertains to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients taking Novartis’s drugs Gilenya and Afinitor.  The second settlement resolves claims arising from the company’s alleged payments of kickbacks to doctors.

“Through this settlement and others, the government has demonstrated its commitment to ensuring that drug companies do not use kickbacks to influence the drugs prescribed by doctors or purchased by patients,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “We will continue to safeguard the Medicare program from kickbacks and their pernicious effects, including the undermining of important cost-control mechanisms instituted by Congress.”

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  This prohibition extends not only to improper payments to providers, but also to the improper payment of patients’ copay obligations.

In the first settlement, Novartis has agreed to pay $51.25 million to resolve allegations that it illegally paid the copay obligations for patients taking its drugs.  When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”).  Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. 

Novartis sells Gilenya, which is approved for treatment of relapsing forms of multiple sclerosis (MS).   The government alleged that, in October 2012, Novartis learned from the contractor managing Novartis’s free drug program for Gilenya that over 300 patients who were receiving free drugs would be eligible for Medicare in 2013.  Novartis and the contractor transitioned those patients to Medicare Part D so that, in the future, Novartis would obtain revenue from Medicare when those patients filled prescriptions for Gilenya.  Knowing those patients could not afford the copay for Gilenya, Novartis developed a plan with a foundation so that Novartis could cover the copays for those patients.  Specifically, at the same time Novartis made a payment to the foundation, Novartis arranged for the foundation to open its MS fund at 6:00 pm on a Friday and for the contractor to have personnel working overtime to submit applications for those patients who had been receiving free Gilenya.  Novartis knew that this coordination would result in a disproportionate share of its funding going to Gilenya patients for 2013. 

Novartis also sells Afinitor, which is a second-line treatment for advanced renal cell carcinoma (RCC) and a treatment for progressive neuroendocrine tumors of pancreatic origin (PNET).  The government alleged that Novartis learned that, for the 2010 donation year, it would be the only donor to an RCC copay assistance fund operated by a charitable foundation.  The government alleged that Novartis told the foundation that it would be willing to donate to the fund only if the eligibility definition was narrowed in a way that ensured that a greater amount of the copay assistance would support patients taking Afinitor.  The government alleged that, as a result of narrowing the fund definition, the fund disproportionately assisted patients taking Afinitor compared to its overall usage rate among RCC drugs.

The government further alleged that, in 2012, Novartis asked another foundation to open a copay assistance fund to pay copays for PNET patients, which Novartis knew would be used only to pay the copays of Afinitor patients.

“According to the allegations in today’s settlement, Novartis coordinated with three co-pay foundations to funnel money through the foundations to patients taking Novartis’ own drugs,” said U.S. Attorney Andrew E. Lelling for the District of Massachusetts.  “As a result, the Novartis’ conduct was not ‘charitable,’ but rather functioned as a kickback scheme that undermined the structure of the Medicare program and illegally subsidized the high costs of Novartis’s drugs at the expense of American taxpayers.  At the same time, we recognize that Novartis’ current management has taken constructive steps to address the government’s concerns with the company’s prior relationships with co-pay foundations.”

In the second matter, Novartis will pay $591,442,008 to resolve FCA claims that it paid kickbacks to doctors to induce them to prescribe the Novartis drugs Lotrel, Valturna, Starlix, Tekturna, Tekturna HCT, Tekamlo, Diovan, Diovan HCT, Exforge, and Exforge HCT.  In addition, Novartis will forfeit $38.4 million under the Civil Asset Forfeiture Statute.  Novartis also made extensive factual admissions in the settlement and agreed to strict limitations on any future speaker programs, including reductions to the amount it may spend on such programs.

In a case pending in the Southern District of New York, the United States alleged that Novartis hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in fact the events served as nothing more than a means to provide bribes to doctors.  Novartis paid physicians honoraria, purportedly as compensation for delivering a lecture regarding a Novartis medication, but, as Novartis knew, many of these programs were nothing more than social events held at expensive restaurants, with little or no discussion about the Novartis drugs.  Indeed, some of the so-called speaker events never even took place; the speaker was simply paid a fee in order to induce the speaker to prescribe Novartis drugs.

“For more than a decade, Novartis spent hundreds of millions of dollars on so-called speaker programs, including speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis’s drugs,” said Acting U.S. Attorney Audrey Strauss for the Southern District of New York.  “Giving these cash payments and other lavish goodies interferes with the duty of doctors to choose the best treatment for their patients and increase drug costs for everyone.  This office will continue to be vigilant in cracking down on kickbacks, however they may be dressed up, throughout the pharmaceutical industry.”

The government’s complaint further alleged that Novartis sales representatives, on the instruction of their managers, selected high-volume prescribers to serve as the paid “speakers” at these events with the intent to induce them to write more — or keep writing many — Novartis prescriptions.  The sales representatives then pressured the speakers to increase their prescriptions of Novartis drugs, and often dropped doctors from the speaker program if they failed to do so.  Further, the government alleged that this widespread kickback scheme was the result of decisions made by top management at Novartis’s North American headquarters in New Jersey.   

This settlement resolves a lawsuit captioned United States ex rel. Bilotta v. Novartis Pharmaceuticals Corp., No. 11-Civ.-0071-PGG (S.D.N.Y.) initially filed under the whistleblower provision of the FCA, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.  The FCA permits the United States to intervene in such a lawsuit, as it did in the whistleblower case filed against Novartis.  The amount to be recovered by the private whistleblower, Oswald Bilotta, has not yet been determined.  As part of the settlement, Novartis will also pay an additional $48,151,273 to resolve state Medicaid claims.

Contemporaneous with the settlement of the FCA claims in these matters, Novartis entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The five-year CIA addresses the conduct at issue in both matters.  Among other things, the CIA requires Novartis to significantly reduce the number of paid speaker programs and the amounts spent on such programs.  Under the CIA, Novartis speaker programs may only occur under limited circumstances and in a virtual format.  In addition, the CIA requires Novartis to implement measures designed to promote independence from any patient assistance programs to which it contributes.  The CIA also requires multi-faceted monitoring of Novartis’s operations and obligates company executives and Board members to certify about compliance.

“OIG will continue to work closely with the Department of Justice to investigate and pursue kickbacks regardless of the form they take,” said Gregory E. Demske, Chief Counsel to the Inspector General, HHS-OIG.  “To address Novartis’s conduct and the widely-recognized compliance risks associated with paid speaker programs, the CIA requires Novartis to make fundamental changes to its speaker program practices.  Under the CIA, Novartis must significantly reduce the number of programs and the number of paid physicians, and can no longer pay for inherently-risky in-person programs.” 

The government’s resolution of these matters illustrates the government’s emphasis on combating healthcare fraud.  One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The copay investigation was conducted by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts, in conjunction with the Department of Health and Human Services, Office of Inspector General and the Federal Bureau of Investigation.  The Bilotta matter was litigated by the Southern District of New York, with assistance from the Civil Division’s Commercial Litigation Branch, the Federal Bureau of Investigation, the Department of Health and Human Services, Office of Inspector General, and the Department of Defense, Office of Inspector General.

The claims resolved by the settlements are allegations only; there has been no determination of liability. 

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Author: July 1, 2020

Warrant and Complaint Seek Seizure of All Iranian Gasoil Aboard Four Tankers Headed to Venezuela Based on Connection to IRGC

A forfeiture complaint and warrant were filed in the U.S. District Court for the District of Columbia alleging that all petroleum-product cargo aboard the Bella with international maritime organization (IMO) number 9208124, the Bering with IMO number 9149225, the Pandi with IMO number 9105073, and the Luna with IMO number 9208100 are subject to forfeiture based on the terrorism forfeiture statute.

John C. Demers, Assistant Attorney General, National Security Division; Michael R. Sherwin, Acting U.S. Attorney for the District of Columbia; Steven W. Cagen, Special Agent in Charge, Denver, Colorado, Homeland Security Investigations (HSI); Rainer S. Drolshagen, Special Agent in Charge, Minneapolis, Minnesota, Federal Bureau of Investigation, made the announcement today.

The documents allege a scheme involving multiple parties affiliated with the IRGC to covertly ship Iranian gasoil, obtained via ship-to-ship transfers, to Venezuela.  The shipments are alleged to be a “source of influence” for the Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization.  The documents allege that profits from petroleum sales support the IRGC’s full range of nefarious activities, including the proliferation of weapons of mass destruction and their means of delivery, support for terrorism, and a variety of human rights abuses, at home and abroad.  There are approximately 302,502 barrels of Iranian gasoline currently on board the Bella, approximately 302,522 barrels of Iranian gasoline currently on board the Bering, approximately 259,700 barrels of Iranian gasoline currently on board the Luna, and approximately 298,484 barrels of Iranian gasoline currently on board the Pandi.  United States District Judge James E. Boasberg issued a warrant to seize all Iranian gasoline on these four vessels, based on a probable cause showing of forfeitability.  The warrant commands the property to be brought to the sole jurisdiction of the U.S. District Court for the District of Columbia. 

A warrant for arrest and civil forfeiture complaint are merely allegations.  The burden to prove forfeitability in a civil forfeiture proceeding is upon the government.  Funds successfully forfeited based on terrorism authorities are in part directed to the the United States Victims of State Sponsored Terrorism Fund (http://www.usvsst.com/).

In announcing the forfeiture complaint, Assistant Attorney General Demers, Acting U.S. Attorney Sherwin, Special Agent in Charge Cagen, and Special Agent in Charge Drolshagen commended the work of those who investigated the case from HSI and FBI.  Finally, they acknowledged the work of Assistant U.S. Attorneys Zia Faruqui, Brian Hudak, and Stuart Allen; National Security Division, Counterintelligence and Export Control Section, Deputy Chief Elizabeth Cannon and Trial Attorney David Lim; and U.S. Attorney’s Office for the District of Columbia Paralegal Liz Swienc and Legal Assistant Jessica McCormick.

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Author: July 1, 2020

Justice Department Settles Lending Discrimination Lawsuit with Maryland Used Car Dealership

The Justice Department today announced a settlement of its race discrimination lawsuit against Guaranteed Auto Sales, a used car dealership in Glen Burnie, Maryland.  The agreement also settles the United States’ claims against the dealership’s owner and manager, Kelly Ann West and Robert Chesgreen.

The settlement resolves claims that Guaranteed Auto Sales discriminated against African Americans in violation of the Equal Credit Opportunity Act by offering different terms of credit based on race to those seeking to purchase and finance used cars. The agreement, which is subject to court approval, was filed today in the U.S. District Court for the District of Maryland.

The settlement requires the dealership to implement a number of specific practices to ensure that loan terms are offered to customers on a nondiscriminatory basis. Specifically, defendants will develop written policies to govern financing decisions, including how down payment amounts are calculated and whether the down payments may be made in more than one installment; post and distribute nondiscrimination notices to potential purchasers; attend training on the requirements of the Equal Opportunity Act; and engage in ongoing record keeping and reporting to the United States. 

“When people borrow money to buy a car, a house, or anything else, they have a right to be treated fairly and without regard to their race,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The U.S. Department of Justice will not tolerate anyone who discriminates against people because of their race in deciding whether, and under what conditions, to lend them money. Our common humanity, our nation’s sense of decency, and federal law make this kind of race discrimination both un-American and illegal. Today’s settlement should send a clear message that car dealerships and other lenders must never make credit decisions based on a customer’s race. By entering into this agreement, the defendants have committed to take the steps necessary to ensure that they will provide equal treatment for borrowers of all races.”

This lawsuit, filed in September 2019, was based on the results of testing conducted by the department’s Fair Housing Testing Program, in which individuals pose as prospective car buyers to gather information about possible discriminatory practices. The complaint alleged that employees of Guaranteed Auto Sales told African American testers that they needed larger down payments than white testers for the same used cars, and told African American testers that they were required to fund their down payments in one lump sum, while they gave white testers an option of paying in two installments.

The federal Equal Credit Opportunity Act prohibits lending discrimination based on race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Additional information about the Section’s fair lending enforcement can be found at www.justice.gov/fairhousing.

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Author: July 2, 2020