William P. Barr Confirmed As 85th Attorney General of the United States

Today, William P. Barr was confirmed by the U.S. Senate to be the 85th Attorney General of the United States. Following the vote, President Donald J. Trump participated in the swearing-in of Mr. Barr during a ceremony in the Oval Office of the White House, where U.S. Supreme Court Chief Justice John Roberts administered the oath of office. Mr. Barr’s wife, his three daughters and their spouses, and his grandchildren attended the ceremony. Mr. Barr joins John Crittenden (1841 and 1850-1853) as one of only two people in U.S. history to serve twice as Attorney General.

Mr. Barr is rejoining the Department of Justice where he previously served as the 77th Attorney General of the United States from 1991 to 1993 under President George H.W. Bush. Mr. Barr also served as the Deputy Attorney General from 1990 to 1991 and as the Assistant Attorney General of the Office of Legal Counsel from 1989 to 1990. While serving at the Department, Mr. Barr helped create programs and strategies to reduce violent crime and was responsible for establishing new enforcement policies in a number of areas including financial institutions, civil rights, and antitrust merger guidelines. Mr. Barr also led the Department’s response to the Savings & Loan crisis; oversaw the investigation of the Pan Am 103 bombing; directed the successful response to the Talladega prison uprising and hostage taking; and coordinated counter-terrorism activities during the First Gulf War.

Most recently, Mr. Barr served as Of Counsel at Kirkland & Ellis. Before his work at Kirkland & Ellis, he served as Executive Vice President and General Counsel for GTE Corporation from 1994 until 2000 and as Executive Vice President and General Counsel of Verizon from 2000 to 2008.

Mr. Barr served as a law clerk under Judge Malcolm Wilkey of the U.S. Court of Appeals for the District of Columbia Circuit, and from 1982 to 1983, served on the White House Domestic Policy Staff under President Ronald Reagan. He received his A.B. in government in 1971 and his M.A. in government and Chinese studies in 1973, both from Columbia University. From 1973 to 1977, Mr. Barr served in the Central Intelligence Agency before receiving his J.D. with highest honors from George Washington University Law School in 1977.

The Department of Justice welcomes back Attorney General Barr and looks forward to his leadership in upholding the rule of law and protecting the rights of all Americans.

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Author: February 14, 2019

United States Files False Claims Act Lawsuit in Connection With MOX Fuel Fabrication Facility Contract

The Department of Justice announced today that the United States has filed suit against CB&I AREVA MOX Services LLC (MOX Services) and Wise Services Inc. under the False Claims Act and the Anti-Kickback Act in connection with a contract between MOX Services and the National Nuclear Security Administration relating to the design and operation of the MOX Fuel Fabrication Facility (MFFF) at the NNSA Savannah River Site in Aiken, South Carolina.  MOX Services is a South Carolina Limited Liability Corporation with headquarters in Aiken, South Carolina.  Wise Services, which subcontracted with MOX Services, is an Ohio corporation with headquarters in Dayton, Ohio.  

Under the MOX Contract, MOX Services agreed to design, build, operate (and ultimately decommission) the MFFF. The MFFF is designed to transform weapons-grade plutonium into mixed oxide fuel rods that may be irradiated in commercial nuclear power plants.  In performing the MOX Contract, MOX Services entered into a series of subcontracts with Wise Services between 2008 and 2016. Each of these subcontracts provided for Wise Services to supply labor, materials, equipment, and supervision for unplanned construction activities (e.g. general labor, plumbing, electrical, carpentry) deemed necessary to support MOX Services’ efforts at the MFFF.   

The government’s complaint alleges that Wise Services falsely claimed reimbursement under its subcontracts with MOX Services for construction materials that did not exist, and that in turn MOX Services knowingly submitted $6.4 million in claims to NNSA for the fraudulent charges submitted by Wise Services.  The complaint further alleges that Wise Services’ Senior Site Representative Phillip Thompson paid kickbacks to MOX Services officials with responsibility for the subcontracts to improperly obtain favorable treatment from MOX Services.  On Feb. 27, 2017, Mr. Thompson entered a guilty plea on charges of conspiring to commit theft of government funds. 

“Government contractors who line their bank accounts by receiving kickbacks or submitting fraudulent claims undermine the public’s trust in government programs and operations,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “We will continue to vigorously pursue those who misuse taxpayer funds.” 

“Through rigorous enforcement of the False Claims Act, the Department of Justice protects taxpayer dollars from waste, fraud, and abuse,” said U.S. Attorney Sherri A. Lydon.  “The U.S. Attorney’s Office for the District of South Carolina will continue to hold accountable government contractors who seek to fraudulently achieve profits at the expense of the American taxpayer.”

“The Department of Energy Office of Inspector General remains committed to ensuring the integrity of the Department’s contractors and subcontractors,” said Teri L. Donaldson, Department of Energy Inspector General. “We take allegations of false claims, overbilling, and kickbacks very seriously and will aggressively investigate these matters to protect the Department and the American taxpayers. We appreciate the efforts of the DOJ in pursuing these allegations and will continue our collaboration with the DOJ to investigate those who seek to defraud Department programs.”

This matter was investigated by the Commercial Litigation Branch of the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of South Carolina, and the Department of Energy’s Office of Inspector General. The claims asserted in this action are allegations only, and there has been no determination of liability.

The lawsuit is captioned United States v. CB&I AREVA MOX Services, LLC, et al.(D.S.C).

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Author: February 14, 2019

New Orleans Man Sentenced for Hate Crime in Shooting of Three African-American Men Attempting to Evacuate After Hurricane Katrina

Roland J. Bourgeois Jr., 55, of New Orleans, Louisiana, was sentenced to 10 years imprisonment, followed by five years of supervised release on charges that, in the wake of Hurricane Katrina, he shot at three young African-American men because of their race as the men attempted to evacuate New Orleans, announced Assistant Attorney General for the Civil Rights Division Eric Dreiband; U.S. Attorney for the Eastern District of Louisiana Peter G. Strasser; and FBI New Orleans Division Special Agent in Charge Eric J. Rommal.

“Today’s sentencing brings closure to this race-motivated shooting that occurred over 13 years ago, in the wake of Hurricane Katrina,” said Assistant Attorney General Eric Dreiband.  “This sentence sends a clear message to those who attempt to divide our community with violence and fear that the Department of Justice will work tirelessly to prosecute perpetrators of hate-motivated violence.” 

“Upholding the civil rights of our citizens is one of the most important duties of the Department of Justice.  This sentencing clearly demonstrates the tenacity of law enforcement to hold individuals responsible for their actions, despite the passage of time,” said U.S. Attorney Strasser. “Hurricane Katrina was a tragic chapter in the history of our city.  Hopefully this plea brings some measure of finality to those directly affected by this crime and to this great city that endured so much in the days following this calamity.”

Eric Rommal, FBI New Orleans Special Agent in Charge stated: “Justice is blind, but she is also patient.  Mr. Bourgeois’ cowardly, unprovoked, and racially based violent acts were unjustly carried out upon his victims over a decade ago, leaving the victims, their families, and our community torn by hate.  We hope his sentencing will help the healing process and serve notice that violence especially borne from hate, will never be tolerated and the FBI remains committed to upholding the Constitution and protecting civil rights.”

According to documents filed in connection with the plea, shortly after Hurricane Katrina struck New Orleans, Bourgeois and other white male residents of the Algiers Point neighborhood agreed that they would use force to keep out African Americans from their neighborhood. They moved fallen trees to barricade the streets near their homes and started armed patrols of the neighborhood.

On Sept. 1, 2005, three young African-American men – D.H., M.A., and C.C. – walked to Algiers Point in an effort to reach the ferry landing, a site that state and federal agencies were using as an evacuation point. When the three men crossed a barricade constructed by Bourgeois and others, Bourgeois opened fire with a shotgun, wounding all three men. After the men fled, Bourgeois boasted that he had “got one” and pledged to “kill that [racial slur]” if the man had survived.  Bourgeois warned one of his neighbors: “Anything coming up this street darker than a brown paper bag is getting shot.”

The prosecution of this matter was delayed because the defendant was repeatedly found incompetent to stand trial after being charged in July 2010. The defendant’s competency was evaluated six different times between 2010 and 2018. After he was declared competent in 2018, Bourgeois pleaded guilty in October 2018.

The FBI conducted the investigation.  The case was prosecuted by Special Litigation Counsel Jared Fishman and Trial Attorney Mary J. Hahn of the Civil Rights Division, and Assistant United States Attorney David Howard Sinkman of the Eastern District of Louisiana.

For more information about Department of Justice’s work to combat and prevent hate crimes, visit www.justice.gov/hatecrimes: a one-stop portal with links to Department of Justice hate crimes resources for law enforcement, media, researchers, victims, advocacy groups, and other organizations and individuals.

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Author: February 14, 2019

One American and One Chinese National Indicted in Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud

A grand jury sitting in Greeneville, Tennessee has returned an indictment against Xiaorong You, a/k/a Shannon You, 56, of Lansing, Michigan, and Liu Xiangchen, 61, of Shandong Province, China for conspiracy to steal trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings.  You was also indicted on seven counts of theft of trade secrets and one count of wire fraud.

Assistant Attorney General National Security John C. Demers, U.S. Attorney J. Douglas Overbey of the Eastern District of Tennessee, FBI Executive Assistant Director for the National Security Branch Jay Tabb, and Special Agent in Charge Troy Sowers of the FBI’s Knoxville Field Office made the announcement.

“The conduct alleged in today’s indictment exemplifies the rob, replicate and replace approach to technological development,” said Assistant Attorney General Demers.  “Xiaorong You is accused of an egregious, premediated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen.  Unfortunately, China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property, but the Justice Department will continue to prioritize investigations like these, to ensure that China understands that this criminal conduct is not an acceptable business or economic development practice.” 

“Our office is committed to working closely with our federal, state and local partners to identify and prosecute those who engage in illegal and deceptive practices to steal trade secret and protected information from companies who spend millions of dollars to develop it,” said U.S. Attorney Overbey.  “Not only can theft of this information be potentially devastating to our American companies, it could also pose a threat to our overall national and economic security.”

“The facts laid out in this indictment show the conspirators engaged in blatant criminal activity,” said Executive Assistant Director Tabb.  “They didn’t stop at going after technical secrets belonging to just one company.  They allegedly targeted multiple companies and made off with trade secrets at an estimated value of almost 120 million dollars.  As this case demonstrates, the FBI is determined to do everything possible to bring to justice those who try to steal secrets belonging to American companies.”

“As this indictment highlights, theft of trade secrets from American companies is an emerging economic threat, even here in East Tennessee,” said Special Agent in Charge Sowers.  “The tireless work of our agents and prosecutors in this case underscores the FBI’s commitment to protecting American ingenuity.”

The BPA-free trade secrets allegedly stolen by these individuals belonged to multiple owners and cost an estimated total of at least $119,600,000 to develop.  Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss, and prevent the container from corroding or reacting with the food or beverage contained therein.  However, due to the discovered potential harmful effects of BPA, companies began searching for BPA-free alternatives. These alternatives are difficult and expensive to develop.

From December 2012 through Aug. 31, 2017, You was employed as Principal Engineer for Global Research by a company in Atlanta, which had agreements with numerous companies to conduct research and development, testing, analysis and review of various BPA-free technologies.  Due to her extensive education and experience with BPA and BPA-free coating technologies, she was one of a limited number of employees with access to trade secrets belonging to the various owners.  From approximately September 2017 through June 2018, You was employed as a packaging application development manager for a company in Kingsport, Tennessee, where she was one of a limited number of employees with access to trade secrets belonging to that company.

Details of the conspiracy are included in the indictment on file with the U.S. District Court.  The indictment alleges that You, Liu, and a third co-conspirator formulated a plan in which You would exploit her employment with the two American employers to steal trade secrets and provide the information for the economic benefit of trade secrets the Chinese company that Liu managed, which would manufacture and profit from products developed using the stolen trade secrets.  In exchange, Liu would cause the Chinese company to reward You for her theft, by helping her receive the Thousand Talent and another financial award, based on the trade secrets she stole, and by giving You an ownership share of a new company that would “own” the stolen trade secrets in China.  The conspirators also agreed to compete with U.S. and foreign companies, including some of the owners of the stolen stolen trade secrets, in China and elsewhere, by selling products designed, developed and manufactured using the stolen trade secrets.

The charges contained in this indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

The case is being investigated by the FBI’s Knoxville Field Office.

The government’s case is being prosecuted by the Eastern District of Tennessee and the National Security Division’s Counterintelligence and Export Control Section.

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Author: February 14, 2019

Dark Web Trafficker Convicted of Drug Importation Conspiracy

Christopher Bantli pleaded guilty today in U.S. District Court for the District of Columbia to a conspiracy to import fentanyl into the United States, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Adolphus P. Wright of the U.S. Drug Enforcement Administration’s (DEA) Miami Field Division.

Bantli, 39, pleaded guilty before U.S. District Judge Amy Berman Jackson for the District of Columbia.  Bantli had been extradited to the United States from Canada following his indictment in the District of Columbia.  According to court records, beginning in or around Nov. 2015 and continuing through Sept. 8, 2016, Bantli advertised, distributed, and imported controlled substances, including powerful fentanyl analogues and synthetic opiates, through the encrypted website AlphaBay.  Bantli accepted virtual currency such as Bitcoin as payment for the illegal substances, and used Canadian and U.S. mail to distribute the illicit substances to consumers.  To assist with his distribution enterprise, Bantli used his apartment in Calgary, Canada, as a drug laboratory and de facto fulfillment center for the orders placed on his AlphaBay profile.  Bantli’s apartment contained a pill press, packaging, cutting agents, as well as the controlled substances themselves.

Bantli will be sentenced on May 29 before Judge Berman Jackson.

The case was investigated by the DEA, in cooperation with Canadian law enforcement authorities.  The U.S. Marshals Service provided critical assistance in Bantli’s extradition.  The U.S. Department of Justice thanks the Government of Canada for its assistance in this case, in particular the Calgary Police Service Cybercrime Support Team.  This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Forces (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state, and local enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt, dismantle, and prosecute high-level members of drug trafficking, weapons trafficking, and money laundering organizations and enterprises.

Trial Attorneys Anthony Aminoff and Kaitlin Sahni of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) are prosecuting the case. Trial Attorney Brian Nicholson of the Department of Justice’s Office of International Affairs provided significant assistance in bringing Bantli to the United States and procuring foreign evidence during the investigation. 

 

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Author: February 13, 2019

Former U.S. Counterintelligence Agent Charged With Espionage on Behalf of Iran; Four Iranians Charged With a Cyber Campaign Targeting Her Former Colleagues

Monica Elfriede Witt, 39, a former U.S. service member and counterintelligence agent, has been indicted by a federal grand jury in the District of Columbia for conspiracy to deliver and delivering national defense information to representatives of the Iranian government.  Witt, who defected to Iran in 2013, is alleged to have assisted Iranian intelligence services in targeting her former fellow agents in the U.S. Intelligence Community (USIC).  Witt is also alleged to have disclosed the code name and classified mission of a U.S. Department of Defense Special Access Program. An arrest warrant has been issued for Witt, who remains at large.

The same indictment charges four Iranian nationals, Mojtaba Masoumpour, Behzad Mesri, Hossein Parvar and Mohamad Paryar (the “Cyber Conspirators”), with conspiracy, attempts to commit computer intrusion and aggravated identity theft, for conduct in 2014 and 2015 targeting former co-workers and colleagues of Witt in the U.S. Intelligence Community.  The Cyber Conspirators, using fictional and imposter social media accounts and working on behalf of the Iranian Revolutionary Guard Corps (IRGC), sought to deploy malware that would provide them covert access to the targets’ computers and networks.  Arrest warrants have been issued for the Cyber Conspirators, who also remain at large.

The announcement was made by Assistant Attorney General for National Security John Demers, U.S. Attorney Jessie K. Liu for the District of Columbia, Executive Assistant Director for National Security Jay Tabb of the FBI, U.S. Treasury Secretary Steven Mnuchin, Special Agent Terry Phillips of the Air Force Office of Special Investigations, and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office.

“Monica Witt is charged with revealing to the Iranian regime a highly classified intelligence program and the identity of a U.S. Intelligence Officer, all in violation of the law, her solemn oath to protect and defend our country, and the bounds of human decency,” said Assistant Attorney General Demers.  “Four Iranian cyber hackers are also charged with various computer crimes targeting members of the U.S. intelligence community who were Ms. Witt’s former colleagues. This case underscores the dangers to our intelligence professionals and the lengths our adversaries will go to identify them, expose them, target them, and, in a few rare cases, ultimately turn them against the nation they swore to protect.  When our intelligence professionals are targeted or betrayed, the National Security Division will relentlessly pursue justice against the wrong-doers.” 

“This case reflects our firm resolve to hold accountable any individual who betrays the public trust by compromising our national security,” said U.S. Attorney Liu.  “Today’s announcement also highlights our commitment to vigorously pursue those who threaten U.S. security through state-sponsored hacking campaigns.”

“The charges unsealed today are the result of years of investigative work by the FBI to uncover Monica Witt’s betrayal of the oath she swore to safeguard America’s intelligence and defense secrets” said Executive Assistant Director for National Security Tabb.  “This case also highlights the FBI’s commitment to disrupting those who engage in malicious cyber activity to undermine our country’s national security. The FBI is grateful to the Department of Treasury and the United States Air Force for their continued partnership and assistance in this case.”

Treasury is taking action against malicious Iranian cyber actors and covert operations that have targeted Americans at home and overseas as part of our ongoing efforts to counter the Iranian regime’s cyber-attacks,” said Treasury Secretary Steven Mnuchin.  “Treasury is sanctioning New Horizon Organization for its support to the IRGC-QF.  New Horizon hosts international conferences that have provided Iranian intelligence officers a platform to recruit and collect damaging information from attendees, while propagating anti-Semitism and Holocaust denial.  We are also sanctioning an Iran-based company that has attempted to install malware to compromise the computers of U.S. personnel.”

“The alleged actions of Monica Witt in assisting a hostile nation are a betrayal of our nation’s security, our military, and the American people,” said Special Agent Phillips. “While violations like this are extremely rare, her actions as alleged are an affront to all who have served our great nation.”  

“This investigation exemplifies the tireless work the agents and analysts of the FBI do each and every day to bring a complex case like this to fruition,’ said Assistant Director in Charge McNamara.  “Witt’s betrayal of her country and the actions of the cyber criminals – at the behest of the IRGC – could have brought serious damage to the United States, and we will not stand by and allow that to happen.  The efforts by the Iranian government to target and harm the U.S. will not be taken lightly, and the FBI will continue our work to hold those individuals or groups accountable for their actions.”

According to the allegations contained in the indictment unsealed today:

Monica Witt’s Espionage

Monica Witt, a U.S. citizen, was an active duty U.S. Air Force Intelligence Specialist and Special Agent of the Air Force Office of Special Investigations, who entered on duty in 1997 and left the U.S. government in 2008.  Monica Witt separated from the Air Force in 2008 and ended work with DOD as a contractor in 2010.  During her tenure with the U.S. government, Witt was granted high-level security clearances and was deployed overseas to conduct classified counterintelligence missions.

In Feb. 2012, Witt traveled to Iran to attend the Iranian New Horizon Organization’s “Hollywoodism” conference, an IRGC-sponsored event aimed at, among other things, condemning American moral standards and promoting anti-U.S. propaganda.  Through subsequent interactions and communications with a dual United States-Iranian citizen referred to in the indictment as Individual A, Witt successfully arranged to re-enter Iran in Aug. 2013.  Thereafter, Iranian government officials provided Witt with a housing and computer equipment.  She went on to disclose U.S. classified information to the Iranian government official.  As part of her work on behalf of the Iranian government, she conducted research about USIC personnel that she had known and worked with, and used that information to draft “target packages” against these U.S. agents.   

Iranian Hacking Efforts Targeting Witt’s Former Colleagues

Beginning in late 2014, the Cyber Conspirators began a malicious campaign targeting Witt’s former co-workers and colleagues.  Specifically, Mesri registered and helped manage an Iranian company, the identity of which is known to the United States, which conducted computer intrusions against targets inside and outside the United States on behalf of the IRGC.  Using computer and online infrastructure, in some cases procured by Mesri, the conspiracy tested its malware and gathered information from target computers or networks, and sent spearphishing messages to its targets.  Specifically, between Jan. and May 2015, the Cyber Conspirators, using fictitious and imposter accounts, attempted to trick their targets into clicking links or opening files that would allow the conspirators to deploy malware on the target’s computer.  In one such instance, the Cyber Conspirators created a Facebook account that purported to belong to a USIC employee and former colleague of Witt, and which utilized legitimate information and photos from the USIC employee’s actual Facebook account. This particular fake account caused several of Witt’s former colleagues to accept “friend” requests.

*          *          *

The case is being investigated by the FBI’s Washington Field Office with assistance from the Air Force Office of Special Investigations.  The prosecution is being handled by Assistant U.S. Attorneys Deborah Curtis, Jocelyn Ballantine and Luke Jones of the U.S. Attorney’s Office for the District of Columbia with assistance from Trial Attorney Evan N. Turgeon of the National Security Division’s Counterintelligence and Export Control Section.

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Author: February 13, 2019

Six Convicted for Roles in Multi-Million Dollar Black Market Peso Exchange Money-Laundering Scheme

A federal jury in Laredo, Texas found four men and two women guilty for their roles in a two-year multi-million dollar black market peso exchange money-laundering scheme, the Justice Department announced.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan Patrick of the Southern District of Texas, Special Agent in Charge Will R. Glaspy of the U.S. Drug Enforcement Administration (DEA) and Special Agent in Charge D. Richard Goss of the IRS Criminal Investigation (IRS-CI) made the announcement.

Adrian Arciniega-Hernandez, 36, of Nuevo Laredo, Mexico; Adriana Alejandra Galvan-Constantini, 36, and Luis Montes-Patino, 57, both of Irving, Texas, and Ravinder Reddy Gudipati, 61; Harsh Jaggi, 54; and Neeru Jaggi, 51, all of Laredo, Texas, were each convicted of a money laundering conspiracy following a five-week jury trial.  In addition, Harsh Jaggi and Adrian Arcinieg-Hernandez were each convicted of two counts of money laundering and Neeru Jaggi was convicted of one count of money laundering.  Gudipati was convicted of two counts of money laundering, two counts of causing a trade or business to fail to file a Form 8300, and one count of causing a trade or business to file a Form 8300 containing a material omission and misstatement of facts. Arciniega-Hernandez was found not guilty of a third count of money laundering.  Sentencing before U.S. District Judge Marina Garcia Marmalejo of the Southern District of Texas, Laredo Division, who presided over the trial, has not yet been scheduled.

Arciniega-Hernandez, Galvan-Constantini, Montes-Patino, Gudipati, Harsh Jaggi, and Neeru Jaggi were part of a complex money laundering scheme whereby money derived from the sale of drugs in the United States were laundered through businesses in Laredo, in order to return these proceeds to Mexican drug dealers. 

According to the evidence presented at trial, from 2011 through 2013, Galvan-Constantini, Montes-Patino and other co-conspirators helped to move millions of dollars derived from the sale of drugs throughout the United States, including New York, Kentucky, North Carolina, Illinois, Mississippi, and multiple cities in Texas to Laredo, Texas.  The U.S. currency was moved by couriers, including Galvan-Constantini and Montes-Patino, via cars, commercial buses, commercial planes, and a private plane in bulk cash amounts of up to hundreds of thousands of dollars at a time.  The money, in heat sealed packs, uneven rubber-banded money stacks, or loose U.S. currency, arrived in plastic bags, cloth bags, suitcases, backpacks, and even cereal boxes.  The money was then distributed among downtown Laredo, Texas perfume stores, including El Reino International Inc., and NYSA Impex LLC.  The owner of NYSA Impex LLC, Gudipati, and the owners of El Reino International Inc., Harsh Jaggi, and Neeru Jaggi, accepted loose bulk-cash, even after being told it was “narco dinero.”  The store owners also failed to file Form 8300s which are required when more than $10,000 in cash is received by a business, or filed Form 8300s which omitted pertinent information such as the name of the courier who brought the bulk cash.    

Co-defendant Carlos Velasaquez, 55, of Laredo, pleaded guilty to conspiracy to launder money on Nov. 7, 2018, and is pending sentencing. 

This case was investigated by the DEA and IRS-CI.  Trial Attorneys Keith Liddle and Stephanie Williamson of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorney José Angel Moreno of the Southern District of Texas are prosecuting the case, with the support and assistance of MLARS Trial Attorney Kerry Blackburn.

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Author: February 12, 2019

South Carolina University to Pay $2.5 Million to Settle False Claims Act Allegations Arising From Violation of Ban on Incentive Compensation

North Greenville University (NGU), based in Greenville, South Carolina, will pay $2.5 million to resolve allegations under the False Claims Act of submitting false claims to the U.S. Department of Education in violation of the federal ban on incentive-based compensation, the Justice Department announced today.   

Title IV of the Higher Education Act (HEA) prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based on the recruiters’ success in securing student enrollment.  The incentive compensation ban protects students against aggressive admissions and recruitment practices that serve the financial interests of the recruiter, rather than the educational needs of the student.

“Offering unlawful financial incentives for recruiting undermines the integrity of our higher education system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “Prospective students are entitled to make enrollment decisions without the improper influence of recruiting companies who pursue their own financial gain at the expense of the students’ best interests.”

“This settlement will help ensure that schools and recruitment services put the educational interests of students and potential enrollees first,” said U.S. Attorney Sherri A. Lydon for the District of South Carolina.  “It should serve as a warning to institutions that would attempt to maximize enrollments to line their own pockets, disregarding the best interests of students in the process.  Through False Claims Act cases like this one, the U.S. Attorney’s Office will continue to help protect federal taxpayer dollars from waste, fraud, and abuse.”

The settlement resolves allegations that between 2014 and 2016, NGU hired Joined Inc., a company partially owned by NGU, to recruit students to NGU and compensated Joined based on the number of students who enrolled in NGU’s programs, in violation of the prohibition on incentive compensation. 

“The Office of Inspector General has a unique and special law enforcement mission – to protect public education funds for eligible students.  Today’s settlement is an example of our commitment to this mission,” said Neil Sanchez, Special Agent in Charge of the U S. Department of Education Office of Inspector General’s Southern Regional Office.  “The OIG will continue to work with our law enforcement colleagues and pursue allegations of violations of the False Claims Act in carrying out our important public service.” 

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblowerprovisions of the False Claims Act by Maurice Shoe, the co-owner of Joined.  The Act permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  As part of today’s resolution, the whistleblower will receive $375,000.

This matter was investigated by the U.S. Attorney’s Office for the District of South Carolina and the Civil Division’s Commercial Litigation Branch.  Investigative assistance was provided by the Office of Inspector General of the Department of Education.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.  The case is captioned United States ex rel. Shoe v. North Greenville University, No. 6:16-cv-01570 (D.S.C.).

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Author: February 11, 2019

Associate of Former Border Patrol Agent Pleads Guilty to Conspiracy to Commit Bribery

An associate of a former U.S. Border Patrol Agent (BPA) pleaded guilty to conspiring to accept money in return for helping to smuggle marijuana and other illegal drugs into the United States.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney for the Southern District of Texas Ryan K. Patrick, Special Agent in Charge Perrye Turner of the FBI’s Houston Field Office and Special Agent in Charge Juan Benavidez of the Department of Homeland Security Customs and Border Protection Office of Professional Responsibility (CBP OPR)’s Houston Field Office made the announcement.

Daniel Hernandez, 46, of Roseville, California, pleaded guilty on Feb. 5 to one count of conspiracy to bribe a public official before U.S. Magistrate Judge Nancy K. Johnson in the Southern District of Texas.  Sentencing has been scheduled for May 9, before U.S. District Judge Gray H. Miller, who accepted the plea on Feb. 8.

According to the plea documents, between 2013 and May 2014, Hernandez and the BPA agreed, and took overt acts, to facilitate the trafficking of illegal drugs, including marijuana, into the United States from Mexico on behalf of a drug trafficking organization (DTO).  In exchange for cash payments, they provided an individual they believed to be a member of the DTO with CBP sensor locations, the locations of unpatrolled roads at or near the U.S.-Mexico border, the number of BPAs working in a certain area, keys to unlock CBP locks located on gates to ranch fences along the border, and CBP radios.  In total, Hernandez accepted approximately $5,000 in cash in return for facilitating shipments of illegal narcotics into Texas without law enforcement detection.

The FBI with the assistance of CBP OPR, investigated the case.  Trial Attorneys Rebecca Moses and Peter M. Nothstein of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorneys John Pearson and Arthur R. Jones of the Southern District of Texas are prosecuting the case.

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Author: February 11, 2019

U. S. and West Virginia Reach Settlement With Antero Resources Corporation for Clean Water Act Violations at 32 West Virginia Sites

The Department of Justice, the United States Environmental Protection Agency (EPA), and the West Virginia Department of Environmental Protection (WVDEP) announced that they have reached a settlement with Antero Resources Corporation resolving alleged violations of Section 404 of the Clean Water Act (CWA) at 32 sites in Harrison, Doddridge, and Tyler Counties in West Virginia.

The settlement filed in U.S. District Court for the Northern District of West Virginia requires Antero to pay a civil penalty of $3.15 million and to conduct restoration, stabilization, and mitigation work at impacted sites. Antero will also provide mitigation for aquatic resource impacts.

“The Department of Justice is pleased to join with the EPA and the West Virginia Department of Environmental Protection in reaching this settlement and will continue to work with its law enforcement partners to hold corporations accountable for violating the nation’s environmental laws,” said Assistant Attorney General Jeffrey Bossert Clark of the Environment and Natural Resources Division.

“This settlement seeks to rectify harm done to U.S. waters from unauthorized activities undertaken by Antero, and demonstrates that federal and state regulators are committed to pursuing violations that threaten human health and the environment,” said EPA Regional Administrator Cosmo Servidio.

Impacts to aquatic resources will be partially offset at a 51.5-acre permittee-responsible mitigation site that will restore, enhance, create, and preserve over 11,500 linear feet of streams and more than 3 acres of wetlands. The EPA-estimated value of the proposed mitigation and restoration is $8 million.

The violations involved the unauthorized disposal of dredged and fill materials into waters of the United States at or near sites where Antero had constructed well pads, compressor stations, impoundments, pipeline crossings, access roads, and other structures associated with Marcellus Shale natural gas extraction by means of hydraulic fracturing, also known as fracking.

While each of the 32 sites varied regarding the extent of the impact to wetlands and streams, the unauthorized activities impacted more than 19,000 linear feet of streams and over four acres of wetlands and included:

  • Stream impoundments;
  • Filling wetlands and streams for compressor station pads;
  • Realigning and culverting stream segments; and
  • Failing to fully restore “temporary” impacts.

Approximately half of the sites were identified by Antero through a self-audit. Several of the sites were associated with construction failures or “slips” from access roads and pads.

The proposed settlement which is subject to a 30-day public comment period is available at: https://www.justice.gov/enrd/consent-decrees.

For more information about Clean Water Act Section 404 protection of wetlands and waterways, visit https://www.epa.gov/cwa-404.

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Author: February 11, 2019