Accomplishments under the Leadership of Attorney General Eric Holder

On his first day as Attorney General, Eric Holder promised the Department's top priority — and its chief responsibility — would be protecting the security, rights and interests of the American people. Five years later, together with the extraordinary men and women who serve at the Department of Justice, that promise has been fulfilled and under Attorney General Holder the Department will continue its important work on behalf of all Americans.

Here you will find some of the Justice Department’s top accomplishments under the leadership of Attorney General Holder.

Terrorism and National Security | Violent Crime | Financial Fraud
Protecting Vulnerable Populations | Transparency | Protecting the Environment

The Department of Justice has thwarted multiple terrorist plots against the United States.  Since the beginning of 2009, the Justice Department has thwarted multiple terrorist plots against the United States; convicted and incarcerated scores of individuals on terrorism-related charges; and gleaned critical intelligence from and about terrorists through the criminal justice system.

Significant accomplishments include:

• In March 2015, Abid Naseer, 28, a Pakistani national who joined al-Qaeda and plotted to commit a terrorist attack in the United Kingdom, was convicted by a jury for providing material support to al-Qaeda, conspiring to provide material support to al-Qaeda, and conspiring to use a destructive device in relation to a crime of violence.The evidence at trial established that the defendant and his accomplices were plotting to conduct an attack on a busy shopping mall located in the city center of Manchester, United Kingdom in April 2009.

• In March 2015, NSD announced the extradition of Minh Quang Pham, aka “Amin,” from the United Kingdom.Pham, a Vietnamese national, was indicted in 2012 on charges of providing material support to, and receiving military training from, al Qaeda in the Arabian Peninsula (AQAP), as well as possessing and using a firearm in furtherance of crimes of violence, and other violations.

• In February 2015, NSD announced the extraditions of international arms traffickers Cristian Vintila, 44, Massimo Romagnoli, 43, and Virgil Flaviu Georgescu, 42, all charged with conspiring to sell large quantities of military-grade weaponry to the Fuerzas Armadas Revolucionarias de Colombia (the FARC) – a designated foreign terrorist organization – to be used to kill officers and employees of the United States in Colombia.

• In February 2015, a criminal complaint was unsealed charging Abdurasul Hasanovich Juraboev, Akhror Saidakhmetov, and Abror Habibov with attempting and conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).

• In February 2015, Sohiel Omar Kabir, 37, a naturalized U.S. citizen who was born in Afghanistan, and Ralph Deleon, 26, of Ontario, were each sentenced to 300 months imprisonment for participating in plots to provide material support to terrorists and to kill American personnel.

• In February 2015, Hamza Naj Ahmed, 19, was indicted for conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL).Ahmed is also charged with attempting to provide material support to ISIL and for making a false statement in a terrorism investigation.

• In February 2015, Jesse William Korff, 20, of Labelle, Florida, was sentenced to 110 months imprisonment for producing and selling potentially deadly toxins for use as weapons, and conspiring to kill a woman in the United Kingdom.

• In February 2015, Reaz Qadir Khan, 50, a naturalized U.S. citizen residing in Portland, Oregon, pleaded guilty to the crime of accessory after the fact for providing assistance to individuals connected to the 2009 suicide bomb attack at the headquarters of Pakistan’s intelligence service that killed approximately 30 individuals and injured 300 more.
• In February 2015, Six Bosnians (Ramiz Zijad Hodzic, 40, his wife Sedina Unkic Hodzic, 35, and Armin Harcevic, 37, all of St. Louis County, Missouri; Nihad Rosic, 26, of Utica, New York; Mediha Medy Salkicevic, 34 of Schiller Park, Illinois; and Jasminka Ramic, 42, of Rockford, Illinois) were charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists.  Ramiz Zijad Hodzic and Nihad Rosic were also charged with conspiring to kill and maim persons in a foreign country.
• In February 2015, Adel Abdel Bary, aka “Adel Mohammed Abdul Almagid Abdel Bary,” aka “Abbas,” aka “Abu Dia,” aka “Adel” was sentenced in Manhattan federal court to 25 years in prison for his conviction on international terrorism charges in connection with Bary’s work on behalf of al Qaeda and the Egyptian Islamic Jihad.
• In February 2015, Abdinassir Mohamud Ibrahim was sentenced to 15 years in federal prison for conspiring to provide material support to Al-Shabaab, a designated foreign terrorist organization, and for making a false statement in an immigration matter.
• In January 2015, Faruq Khalil Muhammed ‘Isa, aka “Faruq Khalil Muhammad ‘Isa,” “Sayfildin Tahir Sharif,” and “Tahir Sharif Sayfildin,” will have his initial appearance at the federal courthouse in Brooklyn, New York, on charges of conspiring to kill Americans abroad; and providing material support to a terrorist conspiracy to kill Americans abroad.  ‘Isa was extradited to the United States from Canada.
• In January 2015, Christopher Lee Cornell, 20, of Green Township, Ohio, was charged with attempting to kill officers and employees of the United States, solicitation to commit a crime of violence and possession of a firearm in furtherance of a crime of violence in an indictment returned in Cincinnati.  Cornell was charged for his alleged plot to attack the U.S. Capitol and kill government officials.
• In January 2015, Wesam El-Hanafi was sentenced in Manhattan federal court to 15 years in prison for his extensive efforts to support al Qaeda – including financial support and facilitating surveillance of a New York City landmark for an attack – that spanned nearly three years.
• In January 2015, Saddiq Al-Abbadi, also known as “Sufiyan al-Yemeni” and “Sufwan,” and Ali Alvi, also known as “Issa al-Yemeni,” was charged with conspiracy to murder United States nationals abroad and providing material support to al-Qaeda.
• In January 2015, Alagie Barrow, 41, was charged for his role in a recent attempted coup in The Gambia.  Barrow is charged with conspiracy to violate the Neutrality Act by making an expedition against a friendly nation from the United States and conspiracy to possess a firearm in furtherance of a crime of violence.
• In January 2015, Mustafa Kamel Mustafa, aka “Abu Hamza,” aka “Abu Hamza al Masri,” was sentenced in Manhattan federal court to life imprisonment by U.S. District Judge Katherine B. Forrest for his participation in a hostage-taking in Yemen in 1998 that resulted in four deaths, conspiring to establish a terrorist training camp in Bly, Oregon, and sending a follower to train and fight with al Qaeda in Afghanistan in 2000.
• In January 2015, Mohammed Hamzah Khan, 19, a U.S. citizen, was charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL) in a single-count indictment.
• In December 2014, four Philippine nationals were indicted on conspiracy, hostage-taking, and weapons charges stemming from the kidnapping in the Philippines of a mother and her then 14-year-old son in July 2011.
• In November 2014, Diego Alfonso Navarrete Beltran, an accused member of the FARC terrorist organization, was extradited from Colombia to face hostage taking and terrorism charges in the United States.
• In November 2014, Irek Ilgiz Hamidullin was indicted for federal terrorism offenses arising from his alleged participation in an attack on U.S. troops and Afghan Border Police in the Khost Province of Afghanistan in November 2009.
• In October 2014, Donald Ray Morgan of North Carolina pleaded guilty to attempting to provide material support to a designated foreign terrorist organization.
• In October 2014, a jury convicted Robel Phillipos, a college friend of alleged Boston Marathon bomber, Dzhokhar Tsarnaev, for making false statements to investigators assigned to the FBI’s Joint Terrorism Task Force.
• In October 2014, Alexander Beltran Herrera a commander of the FARC terrorist organization, was sentenced to 27 years imprisonment on federal hostage-taking charges stemming from the 2003 capture of three U.S.citizens in Colombia.
• In October 2014, the Justice Department announced the extradition of Haroon Aswat from the United Kingdom to face charges of conspiring to provide and providing material support to al Qaeda, for attempting to establish a terrorist training camp in the United States.
• In October 2014, Akba Jihad Jordan of North Carolina, pleaded guilty for conspiring to provide material support to terrorists.
• In October 2014, Mohamed Osman Mohamud, convicted in 2013 of attempting to use a weapon of mass destruction in a plot to detonate a vehicle bomb at an annual Christmas tree lighting ceremony in Portland, was sentenced to 30 years imprisonment.
• In September 2014, Al Qaeda Spokesman Sulaiman Abu Ghayth was sentenced to life in prison for conspiring to kill Americans and providing material support to terrorists. Sulaiman appeared with Usama Bin Laden and Ayman Al-Zawahiri immediately after the September 11, 2001 attacks, threatening additional attacks against Americans.
• In September 2014, an international terrorism defendant “Bary” pleaded guilty in Manhattan federal court to international terrorism charges in connection with his work on behalf of al Qaeda and the Egyptian Islamic Jihad.
• In September 2014, a civilian defense contractor and retired lieutenant colonel in the U.S. Army was sentenced to serve 87 months imprisonment for willfully communicating classified national defense information to a person not authorized to receive it.
• In September 2014, Mufid A.Elfgeeh of Rochester was charged with three counts of attempting to provide material support and resources to the Islamic State of Iraq and the Levant (ISIL).
• In September 2014, a Colorado woman pleaded guilty to conspiring to provide material support to al-Qaeda and its affiliates.
• In September 2014, Jose Padilla was re-sentenced to 21 years imprisonment for conspiring to murder, kidnap and maim individuals in a foreign country; and providing material support to terrorists.
• In August 2014, a Florida man pleaded guilty to developing, producing, transferring, possessing, and smuggling toxins, as part of a plan to use the deadly toxins to kill a woman in the United Kingdom.
• In August 2014, Ahmad Ibrahim Al-Ahmad was brought to trial on federal terrorism offenses for his alleged participation in a conspiracy to use improvised explosive devices (IEDs) to attack U.S. military personnel in Iraq from approximately 2005 to 2010.
• In July 2014, three defendants were arrested on charges of providing material support to al-Shabaab, a designated foreign terrorist organization that is conducting a violent insurgency campaign in Somalia. Two additional defendants are fugitives in Kenya and Somalia.
• In June 2014, Ahmed Abu Khatallah was indicted by a federal grand jury for conspiring to provide material support and resources to terrorists, additional charges were brought in October.
• In May 2014, James Everett Dutschke of Tupelo, Mississippi was sentenced to 300 months imprisonment for developing and possessing the biological agent ricin and subsequently mailing ricin-laced, threatening letters including one that threatened bodily harm to the President of the United States.
• In May 2014, the Department of Justice announced that a grand jury in the Western District of Pennsylvania (WDPA) had indicted five Chinese military hackers for computer hacking, economic espionage and other offenses directed at six American victims in the U.S. nuclear power, metals and solar products industries.
• In April 2014, the Department of Justice announced that Li Fangwei, also known as "Karl Lee," had been charged with, among other things, violating the International Emergency Economic Powers Act (IEEPA) for his use of United States-based financial institutions to engage in millions of dollars of U.S. dollar transactions in violation of economic sanctions that prohibited such financial transactions.  Sanctions previously had been imposed on Lee because of his role in Iranian Weapons Proliferation activities.
• In March 2014, in the first ever federal jury conviction on charges brought under the Economic Espionage Act of 1996, a jury found Walter Liew, his company USA Performance Technology Inc.  (USAPTI), and Robert Maegerle guilty of economic espionage, theft of trade secrets, bankruptcy fraud, tax evasion, and obstruction of justice for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People's Republic of China (PRC). In July 2014, Walter Liew was sentenced to 180 months' imprisonment for his actions.
• In December 2013, Ming Suan Zhang, a Chinese citizen, was sentenced to 57 months imprisonmentfor attempting to export thousands of pounds of aerospace-grade, export-controlled carbon fiber worth over $4 million from the United States to China.  Such fiber can be used to manufacture fighter jets and other munitions.
• In July 2013, the Justice Department announced that Ahmed Muse Salad, Abukar Osman Beyle and Shani Nurani Shiekh Abrar, charged with multiple counts of piracy, hostage taking and violence against maritime navigation, were each sentenced to serve life in prison for their role in the hijacking of an American vessel sailing in the Indian Ocean and the resulting deaths of four American citizens on board.
• In May 2013, the Justice Department announced the sentencing of several al Shabaab defendants for their roles in providing material support to terrorists and obstructing the FBI's investigation.  These prosecutions were the result of the FBI's "Operation Rhino." For example, Mahamud Said Omar was sentenced to serve 20 years in prison for providing material support to al Shabaab and conspiracy to kill or maim overseas.  Omer Abdi Mohamed was also sentenced to serve 10 years in prison for his role in providing material support to al Shabaab.
• In May 2013, the Department ended the decades-long illicit trade activities of Hsien Tai Tsai, also known as "Alex Tsai," an OFAC designated proliferator of weapons of mass destruction and supplier of advanced weapons machinery to North Korea, when he was arrested along with his son, Yueh-Hsun Tsai, also known as "Gary Tsai."
• In May 2013, the Justice Department announced the sentencing of Amina Farah Ali and Hawo Mohamed Hassan to serve 20 years and 10 years in prison, respectively, for their roles in fundraising activities on behalf of al Shabaab under the pretense that monies were for the poor and needy.
• In February 2013, the Justice Department announced the sentencing of Basaaly Saeed Moalin, Mohamed Mohamud, Ahmed Nasir Taal Ail Mohamud and Issa Doreh for providing material support of al Shabaab in the form of housing for terrorists in Somalia.  They were also found guilty of conspiring to launder monetary instruments.  Moalin was sentenced to 18 years imprisonment and 3 years of supervised release, and Mohamud was sentenced to 13 years imprisonment and 3 years of supervised release.  Ahmed Nasir Taal Ail Mohamud and Issa Doreh are awaiting sentencing.
• In July 2013, the Justice Department announced that Ahmed Warsame, a former senior al-Shabaab commander and emissary to al-Qaeda in the Arabian Peninsula, pleaded guilty to all counts of a terrorism indictment against him.
• In 2013, David Coleman Headley, who admitted to his role in planning the deadly terrorist attacks in Mumbai, India, and later plotting a separate terrorist attack in Denmark, was sentenced to 35 years imprisonment after cooperating extensively with the government.
• In May 2013, Manssor Arbabsiar was sentenced to 25 years in prison for his role in a plot approved by members of the Iranian military to assassinate the Saudi Arabian Ambassador to the United States while the Ambassador was in the United States.
• In November 2012, Adis Medunjanin was sentenced to life imprisonment for his role in an al-Qaeda plot to bomb the New York City subway system in September 2009, and to commit a terrorist attack by crashing his car on the Whitestone Expressway in an effort to kill himself and others.
• In August 2012, Naser Jason Abdo was sentenced to life in prison in connection with his plot to carry out a bomb attack on soldiers from Fort Hood, Texas.
• In February 2012, Umar Farouk Abdulmutallab, also known as the "underwear bomber," was sentenced to life in prison for his attempted bombing of Northwest Airlines flight 253 on Christmas Day 2009.
• In 2012, Khalid Aldawsari was sentenced to life imprisonment for attempted use of a weapon of mass destruction stemming from his purchase of materials to make a bomb and his research of potential U.S. targets, including the Dallas home of former President George W.  Bush, as well as hydroelectric dams and nuclear power plants.
• In June 2010, Faisal Shahzad was sentenced to life imprisonment for attempting to detonate a car bomb in New York City's Times Square.

 

The Department of Justice has successfully executed ground-breaking counter intelligence operations. 

Since 2009, the Department has successfully dismantled several major espionage networks including:

• In January 2015, three Russians, Evgeny Buryakov, aka “Zhenya,” Igor Sporyshev and Victor Podobnyy, were charged in connection with Buryakov’s service as a covert intelligence agent on behalf of the Russian Federation (Russia) in New York City, without notifying the U.S. Attorney General of Buryakov’s status as an agent of Russia, as required by federal law.
• In January 2015, a West Palm Beach resident pleaded guilty to willful retention of classified national defense information pursuant to the Espionage Act, one count of computer intrusion pursuant to the Computer Fraud and Abuse Act, and one count of conspiracy to commit naturalization fraud, while employed as a computer systems administrator at a U.S. Military installation in Honduras.
• In October 2014, the Justice Department announced strategic changes within the National Security Division designed to put additional focus on the protection of national assets from the threat of state-sponsored economic espionage and proliferation, including through cyberspace, including new appointments within the NSD’s senior leadership, the creation of a new Deputy Assistant Attorney General Position focusing on protecting national assets and the re-designation of the Anti-Terrorism and Advisory Council (ATAC) Coordinator program as the National Security Coordinator/ATAC program
• In September 2014, Interpol Washington announced the formation of a dedicated Interpol Foreign Terrorist Fighter (FTF) program in partnership with the National Security Council (NSC), the Department of Justice (DOJ) and the Department of Homeland Security (DHS) to provide an unparalleled mechanism for addressing the threat from foreign terror fighters.
• In September 2014, the Justice Department launched a new series of pilot programs in cities across the country to bring together community representatives, public safety officials and religious leaders to counter violent extremism in partnership with the White House, the Department of Homeland Security, and the National Counterterrorism Center.
• In March 2013, Bryan Underwood, a former guard at a U.S. Consulate under construction in China, was sentenced to nine years in prison in connection with his efforts to sell classified photographs and information about the U.S. Consulate to China.
• In March 2012, Stewart Nozette, a former White House National Space Council member, was sentenced to 13 years in prison after pleading guilty to one count of attempted espionage.
• In January 2010, Noshir Gowadia, a former B-2 bomber engineer, was convicted on numerous criminal charges related to helping China design a stealthy cruise missile and was later sentenced to 32 years in prison.
• In January 2011, Glenn Shriver, a one-time CIA applicant, was sentenced to 48 months imprisonment for conspiring to provide classified information to Chinese intelligence officers.
• In 2010, in collaboration with partners across the government, the Department dismantled a network of Russian agents that had been operating clandestinely in the U.S. for several years.  The successful prosecution, exposure and removal of these individuals from the U.S. represented one of the most successful counterintelligence operations in modern U.S. history.
• In 2009, Walter Myers, a former State Department official, pleaded guilty in connection with a nearly 30-year conspiracy to provide classified information to Cuban intelligence agents and was later sentenced to life imprisonment.  His wife, Gwendolyn Myers, also pleaded guilty and was sentenced to 81 months imprisonment.

The Department of Justice has prevented U.S. military and strategic technologies from falling into the wrong hands.  In recent years, the Department has increased its multi-agency efforts to counter the ever-growing threat posed by the illegal foreign acquisition of controlled U.S. military and strategic technologies.  These efforts have resulted in hundreds of investigations, indictments and arrests, as well numerous successful extraditions and the disruption of major international procurement networks, particularly those seeking U.S. munitions and sensitive technology for Iran and China.  In recent years, roughly a third of the major export and embargo-related criminal prosecutions have involved the attempted transfer of controlled U.S. technology to Iran or China.

• In February 2015, Mozaffar Khazaee, 60, formerly of Manchester, Connecticut, pleaded guilty violating the Arms Export Control Act, in connection with his efforts to send to Iran sensitive, proprietary, trade secret and export controlled material relating to military jet engines for the U.S. Air Force’s F35 Joint Strike Fighter program and the F-22 Raptor program, which he had stolen from defense contractors where he had previously been employed.

• In October 2014, Dmitry Ustinov of Russia was sentenced to 18 months imprisonment for conspiring to export high-tech military technology to Russia.
• In October 2014, Robbins & Myers Belgium S.A., pleaded guilty to violating the International Emergency Economic Powers Act and the Export Administration Regulations for exporting drilling equipment to Syria.
• In September 2014, Harold Rinko of Pennsylvania pleaded guilty to conspiring to illegally export laboratory equipment, including items used to detect chemical warfare agents, from the United States to Syria.
• In July 2014, a Chinese national, pleaded guilty in the U.S. District Court for the District of New Mexico to violating the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) by scheming illegally to export defense articles with military application to the People’s Republic of China.
• In 2012, a Canadian subsidiary of a major U.S. defense contractor pleaded guilty to criminal charges for exporting U.S.-origin military software to China for use in the development of China’s first modern military attack helicopter.
• In October 2012, the Department disrupted a Russian procurement network in the United States that was illegally exporting U.S. microelectronics to Russian military and intelligence agencies.
• In July 2012, the Department disrupted an international network conspiring to illegally export to Iran U.S.-origin materials for the construction of gas centrifuges to enrich uranium.
• In 2011, Department efforts disrupted a network procuring U.S. components for illegal export to Iran, many of which later ended up in Improvised Explosive Devices in Iraq.

The Department of Justice has continued to identify and disrupt Narco-terrorist networks.  Since 2009, the Department has continued to combat drug trafficking by those who use the profits to fund terrorist activities with a particular focus in Afghanistan and Pakistan.

Examples include:

• In November 2013, DEA and foreign counterparts arrested Dino Bouterse, a citizen of Suriname, charged with attempting to provide material support and resources to Hezbollah.  Hezbollah has long been connected to drug trafficking and money laundering.  Bouterse is also the son of the current President of Suriname and was also previously charged with cocaine importation into the United States and brandishing a rocket launcher.  Bouterse used his position to assist individuals he believed were members of Hezbollah.  In exchange for a multimillion-dollar pay-off, Bouterse agreed to allow large numbers of purported Hezbollah operatives to use Suriname as a permanent base for, among other things, attacks on American targets.  In furtherance of his efforts to assist Hezbollah, Bouterse supplied a false Surinamese passport for the purpose of making clandestine travel easier, including travel to the United States; began determining which heavy weapons he might provide to Hezbollah; and indicated how Hezbollah operatives, supplied with a Surinamese cover story, might enter the United States.
• In April 2013, the Drug Enforcement Administration (DEA) led an operation targeting Guinea Bissau's top military official, Antonio Indjai, and four of his co-conspirators.  This criminal network conspired to provide aid to FARC by storing FARC-owned cocaine in West Africa and conspired to provide surface-to-air missiles to protect FARC cocaine processing operations in Colombia against U.S. military forces. 
• In addition to their trafficking ring, Indjai was also one of the main leaders in the April 2012 coup d'etat in Guinea Bissau.  DEA's operation led to their arrests in a West African country and they will face justice in the United States.
• DEA's global presence allowed us to infiltrate a major international criminal group led by a former U.S. military member who oversaw a contract murder-for-hire network.  Each of the three individuals arrested September 2012 and transferred to the United States had military experience either here or abroad.  In addition to the murder-for-hire contract work they oversaw, these individuals conspired to: import cocaine into the United States; conspired to murder a DEA agent and a person assisting a law enforcement agent; conspired to kill a person to prevent communications to law enforcement agents; conspired to possess a firearm in furtherance of a crime of violence; and conspired to distribute cocaine on board an aircraft.
• In December 2009, three al Qaeda associates were arrested in Ghana for conspiracy to commit acts of narco-terrorism and conspiracy to provide material support to a foreign terrorist organization.  This arrest marked the first time that associates of al Qaeda were charged with narco-terrorism offenses.
• The Department leads the Afghanistan Threat Finance Center, an interagency effort to identify, disrupt and interdict the sources of funding for insurgent and terrorist organizations operating in Afghanistan.
• The Department conducted a successful investigation that led to the arrest, extradition and conviction of Viktor Bout – one of the world's most notorious arms traffickers – for conspiring to sell weapons, including surface-to-air missile systems and armor piercing rocket launchers, to the Revolutionary Armed Forces of Colombia (FARC), a designated terrorist organization.

Protecting Taxpayer Dollars and Consumers Against Financial Fraud While Ensuring Competitive Markets

The Department has investigated and held accountable those responsible for financial fraud.  In 2009, President Obama created the Financial Fraud Enforcement Task Force to hold accountable those who helped bring about the last financial crisis.  Since its formation:

• Task Force members have charged a record number of mortgage fraud-related cases, trained more than 100,000 professionals responsible for awarding and overseeing Recovery Act funds, and held regional summits around the country to discuss strategies, resources and initiatives, as well as to meet with communities most affected by the financial crisis.
• In 2012, as part of the Task Force, the Attorney General launched the Consumer Protection Working Group, consisting of federal law enforcement and regulatory agencies, as well as state and local partners, to confront and combat, through prosecution and education, consumer-related fraud, including schemes targeting vulnerable populations, such as the unemployed, those in need of payday loans, and the elderly.  The working group also focuses on scams that exploit those in search of government grants and other federal assistance through telemarketing and use of third-party payment processors, which also can threaten the safety and soundness of our financial institutions, as well as active-duty military and veterans.
• In addition, the Department plays a leadership role in the Residential Mortgage-Backed Securities (“RMBS”) Working Group of the Task Force.  This Working Group has secured three record-breaking settlements in the last two years.  The settlements with Bank of America for $16.65 billion, Citigroup for $7 billion, and JPMorgan for $13 billion resolved federal and state civil claims against these institutions relating to the packaging, marketing, sale and issuance of RMBS.  In addition to penalties, the settlements require significant consumer relief commitments that will assist homeowners. 
• In FY 2014, the Department announced a series of settlements in financial fraud cases relating to mortgage origination and/or servicing practices of three large lenders – U.S. Bank, JPMorgan Chase, Metlife Bank, and SunTrust Mortgage, Inc.  These four settlements resulted in recoveries of over $1.9 billion to resolve federal and, in the latter matter, state claims.  In addition, the Department has filed suit against Wells Fargo Bank and Kurt Lofrano, a bank Vice President, for engaging in faulty underwriting.  The financial practices of these institutions caused significant losses for a Federal Housing Administration insurance fund.
• In February 2015, the Department announced a $1.375 billion settlement with Standard & Poor’s.  The groundbreaking, largest-of-its kind agreement resolved the Department’s 2013 lawsuit against S&P, along with parallel lawsuits filed by 19 states and the District of Columbia.  Each of the lawsuits alleged that investors incurred substantial losses on Residential Mortgage-Backed Securities and Collateralized Debt Obligations, financial instruments that were at the heart of the financial crisis, for which S&P issued inflated ratings.  Other allegations asserted that S&P falsely represented that its ratings were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities.
• On October 24, 2012, the Department filed a $1 billion civil mortgage fraud lawsuit against Bank of America Corporation and its predecessors Countrywide Financial Corporation and Countrywide Home Loans Inc. for engaging in a scheme to defraud the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), causing more than $1 billion in losses and countless foreclosures.  The case was tried to a jury in September and October of 2013.  The jury found for the United States, entering its verdict on November 15, 2013.  On July 30, 2014, after extensive post-trial briefing, the Court assessed a $1.2 billion civil penalty against the defendant companies under the Financial Institutions Reforms, Recovery and Enforcement Act (FIRREA) and a $1 million FIRREA civil penalty against Rebecca Mairone, the Chief Operating Officer of the bank’s Full Spectrum Lending division.  The bank is expected to appeal the decision.
• In criminal matters, members of the Task Force have, in the past three years alone, prosecuted and secured convictions of dozens of corporate and individual defendants involved in securities fraud and related investment fraud, mortgage fraud and Ponzi schemes.  These include, among others, the following:
  • Lloyds Banking Group plc, which entered into an agreement with the Department of Justice on July 28, 2014 to pay an $86 million penalty for manipulation of submissions for the London InterBank Offered Rate (LIBOR), a leading global benchmark interest rate.
  • RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS) that engages in investment banking operations with its principal place of business in Tokyo, Japan, which, on January 6, 2014, was sentenced to pay a $50 million fine for its role in manipulating the Japanese Yen LIBOR.  In addition, RBS plc, the Edinburgh, Scotland-based parent company of RBS Securities Japan, entered into a deferred prosecution agreement with the government requiring RBS plc to pay an additional $100 million penalty.
  • Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), which entered into an agreement with the Department of Justice on October 29, 2013 to pay a $325 million penalty to resolve violations arising from Rabobank's submissions for LIBOR and the Euro Interbank Offered Rate (Euribor).  A criminal information was filed in U.S. District Court for the District of Connecticut as part of a deferred prosecution agreement (DPA).  The information charged Rabobank with wire fraud for its role in manipulating LIBOR and Euribor.  In addition to the $325 million penalty, the DPA required the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts and required Rabobank's cooperation with the Justice Department in its ongoing investigation.  Together with approximately $740 million in criminal and regulatory penalties imposed by other agencies in actions arising out of the same conduct by Rabobank, the Justice Department's $325 million criminal penalty brought the total amount to be paid by Rabobank to more than $1 billion.
  • Former Rabobank Japanese Yen derivatives trader, Takayuki Yagami, who pleaded guilty on June 10, 2014 for his role in a conspiracy to commit wire and bank fraud by manipulating Rabobank’s Yen LIBOR submissions to benefit his trading positions.
  • Two Rabobank derivative traders, Anthony Allen and Anthony Conti, who, on October 16, 2014, were charged in a superseding indictment for their alleged roles in a scheme to manipulate the U.S.  Dollar and Yen LIBOR.  Additionally, former traders Tetsuya Motomura, Paul Thompson and Paul Robson, were charged in a prior indictment.  Robson pled guilty to one count of the indictment on August 18, 2014. 
  • UBS Securities Japan Co., Ltd., a wholly-owned subsidiary of UBS AG, which was sentenced on September 18, 2013 for its role in manipulating LIBOR.  UBS Securities Japan pleaded guilty on Dec. 19, 2012, to one count of engaging in a scheme to defraud counterparties to interest rate derivative trades by secretly manipulating LIBOR benchmark interest rates, and agreed, in connection with that plea, to pay a $100 million fine.  In addition, UBS AG, the Zurich-based parent company of UBS Securities Japan, agreed, as part of a  non-prosecution agreement, to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts, and to continue cooperating with the Justice Department in its ongoing investigation.  Together with approximately $1 billion in regulatory penalties and disgorgement, the Justice Department's criminal penalties brought the total amount of the resolution to more than $1.5 billion.
  • Two former derivatives brokers and a former cash broker employed by London-based brokerage firm ICAP, who were criminally charged on September 25, 2013.  Darrell Read, who resides in New Zealand, and Daniel Wilkinson and Colin Goodman, both of England, were charged with conspiracy to commit wire fraud and two counts of wire fraud in a criminal complaint in Manhattan federal court alleging that the three defendants executed a sustained and systematic scheme to move Japanese Yen LIBOR in a direction favorable to the trading positions of their trading desk's largest client, a senior trader at UBS AG in Tokyo.
  • Don Langford, the former senior vice president and chief credit officer of TierOne Bank, and James A. Laphen, the former president and chief operating officer, who pled guilty in September 2014 and December 2014, respectively, to defrauding TierOne’s shareholders and submitting false statements to TierOne’s regulators about the bank’s loan portfolio and other assets.  In addition, Gilbert G. Lundstrom, TierOne’s former CEO, was indicted in December 2014 for his role in the fraud.
  • Terry Kretz, the former chief executive officer of Hanover Financial, LLC (Hanover), who, in August 2014, was sentenced to 168 months in prison, and was ordered to both forfeit and pay restitution of $14.7 million following his guilty plea for his role in orchestrating a Ponzi scheme to defraud investors.  In addition, two co-defendants, Daryl Bornstein, a former salesman for Hanover, and Robert Haley, the former Hanover chief financial officer, were also convicted, and sentenced in January 2014 to 60 months and 70 months in prison, respectively.
  • ConvergEx Group, LLC, an institutional brokerage firm, which, in December 2013, agreed to pay $18 million, forfeit $12 million, and pay $12.7 million in restitution, for inflating commissions that were charged to customers when executing the orders, and then forging trading confirms and data to conceal the extent of the inflated commissions.
  • Jonathan Daspin, the head trader at CGM Limited, and Thomas Lekargeren, a sales trader at a ConvergEx broker-dealer subsidiary, who pleaded guilty in December 2013 for their roles in the ConvergEx fraud described above.
  • ArthroCare Corporation, a medical device manufacturer, which entered into an agreement with the Department to pay a $30 million penalty for engaging in a $750 million accounting fraud to manipulate the company’s revenue and earnings as reported to investors.  In addition, Michael Baker, ArthroCare’s former chief executive officer, and Michael Gluk, ArthroCare’s former chief financial officer, were convicted in June 2014 after a jury trial, and were sentenced in August 2014, to 20 years’ imprisonment and 10 years’ imprisonment, respectively.
  • Former UBS AG executives, Peter Ghavami, Gary Heinz and Michael Welty, who, on July 24, 2013, were sentenced to serve time in prison for their participation in frauds related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts.  Ghavami was sentenced to serve 18 months in prison and to pay a $1 million criminal fine; Heinz was sentenced to serve 27 months in prison and to pay a $400,000 criminal fine; and Welty was sentenced to serve 16 months in prison and to pay a $300,000 criminal fine.
  • Scott N. Powers, the former CEO of Arizona-based mortgage loan originator American Mortgage Specialists Inc. (AMS), and David McMaster, a former officer of AMS, who, on June 28, 2013, were sentenced to serve 96 and 188 months in prison, respectively, for their roles in a $28 million scheme to defraud North Dakota-based BNC National Bank. 
  • The CEO of Axius Inc. Roland Kaufmann, who was sentenced on June 14, 2013 to serve 16 months in prison and ordered to pay a fine of $450,000 for his role in a conspiracy to bribe purported stock brokers and manipulate the Axius stock.
  • Top executives at Virginia's Bank of the Commonwealth, including CEO and Board Chairman Edward Woodard, who were convicted on May 24, 2013 for masking non-performing assets at the bank for their personal benefit.  This long-running scheme contributed to the failure of the bank in 2011, which the Federal Deposit Insurance Corporation (FDIC) estimated would cost the FDIC deposit-insurance fund approximately $268 million.
  • Glen Alan Ward, a 12-year federal fugitive, who pleaded guilty on April 8, 2013 to aggravated identity theft and bankruptcy fraud in connection with leading a nearly 15-year foreclosure-rescue scam where he collected more than $1.2 million from more than 800 distressed homeowners and fraudulently postponed foreclosure sales for those homeowners.Rajat Gupta, chairman of an international consulting firm and member of the boards of directors at Goldman Sachs and Procter & Gamble, who was sentenced on October 24, 2012 to two years in prison for participating in an insider trading scheme in which he provided confidential information about Goldman Sachs to his business partner and friend, Raj Rajaratnam.
  • Shawn L. Portmann, a former senior vice president and loan officer at Pierce Commercial Bank in Washington, who pleaded guilty on September 18, 2012 to a mortgage fraud scheme that resulted in the collapse of the bank.
  • Former bank executive Joseph M. Braas, who was sentenced to 180 months in prison on September 11, 2012 for his role in a fraud conspiracy that caused the Bank of Lancaster County in Pennsylvania to cease its independent existence. 
  • Barclays Bank PLC, which agreed on June 27, 2012 to pay $160 million penalty to resolve violations arising from its false submissions for benchmark interest rates used in financial markets around the world.
  • Peter Madoff, brother of Bernard Madoff and the former Chief Compliance Officer and Senior Managing Director of Bernard L. Madoff Investment Securities LLC, who pleaded guilty on June 29, 2012 to securities fraud, tax fraud, mail fraud, falsifying records of an investment advisor and making false statements to investors, and was sentenced to the maximum term of 10 years in prison, as well as forfeiture in the amount of $143.1 billion.
  • Financier Robert Allen Stanford, who was sentenced on June 14, 2012 to 110 years in prison for orchestrating a $7 billion investment fraud scheme.
  • CEO Eric A. Bloom and head trader Charles K. Mosley of Illinois bankrupt Sentinel Management Group Inc., who were indicted on June 1, 2012 for allegedly defrauding more than 70 customers of more than $500 million before the firm collapsed in August 2007.  Bloom and Mosley were subsequently convicted and both were sentenced in January 2015 to 14 and 8 year prison terms, respectively.
  • Minor Vargas Calvo, president of Costa Rica based Provident Capital Indemnity Ltd., who was convicted on April 20, 2012 for carrying out a half-billion dollar fraud scheme that affected more than 2,000 victims in the United States and abroad.
  • Two managing directors and a vice president at Credit Suisse Group, who were charged in 2012 and subsequently convicted for their participation in a scheme to artificially increase the price of mortgage-backed bonds to create the false appearance of profitability, contributing to a $2.6B write-down in March 2008 in Credit Suisse's reported net income.

 

The Department has secured justice for victims of lending discrimination or fraud.  The Department of Justice has made ensuring a level playing field for all qualified borrowers – regardless of race, national origin, or other protected class status – a top priority.  In 2010, the Fair Lending Unit was created in the Civil Rights Division to focus on these issues.  Since then, the Department has filed or resolved 35 lending matters, including matters protecting the rights of servicemembers, and the settlements in these matters provide for approximately $1.2 billion in monetary relief for individual borrowers and impacted communities.

• In February 2015, the Department filed its first settlement of a case involving allegations of reverse redlining against two Charlotte-area buy here, pay here dealerships and their owner for intentionally targeting African-American customers for unfair and predatory credit practices in the financing of used car purchases.
• In June 2014, the Department filed the largest credit card discrimination settlement in history to resolve allegations that Synchrony Bank, formerly known as GE Capital Retail Bank, discriminated on the basis of national origin by excluding Hispanic borrowers from two of its credit card debt repayment programs.  The Department’s investigation was conducted jointly with the Consumer Financial Protection Bureau (CFPB).  The settlement provides $169 million in relief to approximately 108,000 borrowers in the form of monetary payments and the reduction, or complete waiver, of borrowers’ credit card balances.
• In December 2013, the Department announced the government’s largest-ever auto discrimination settlement with Ally Financial Inc.  and Ally Bank to resolve allegations that the lender discriminated against African-American, Hispanic, and Asian/Pacific Islander borrowers by charging them higher interest rates on auto loans as compared to white borrowers.  The Department’s investigation was conducted jointly with the CFPB.  Pursuant to the settlement, Ally will pay $80 million to minority victims of discrimination and an $18 million civil monetary penalty to the CFPB.  Ally also must refund discriminatory overcharges to borrowers for the next three years unless it significantly reduces disparities in unjustified interest rate markups.
• In July 2012, the Department filed the second-largest fair lending settlement in its history to resolve allegations that Wells Fargo Bank, the largest residential home mortgage originator in the United States, engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.  The settlement provides at least $184.3million in compensation for borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin.  Wells Fargo will also provide $50 million in direct down payment assistance to borrowers in communities around the country where the Department identified large numbers of discrimination victims and which were hard hit by the housing crisis.  As of February 2015, 98 percent of the settlement fund has been distributed to affected borrowers.
• In March 2012, the Department played a major role in securing the largest joint federal-state settlement ever - $25 billion – against the nation’s five largest mortgage servicers for robo-signing and other mortgage servicing abuses through substantial financial penalties and extensive consumer relief.
• In December 2011, the Department announced the largest-ever fair lending settlement - $335 million - with Countrywide Financial Corporation to resolve allegations that Countrywide and its subsidiaries engaged in a widespread pattern or practice of discrimination against more than 200,000 qualified African-American and Hispanic borrowers in mortgage lending from 2004 through 2008.  As of February 2015, 91 percent of the settlement fund has been distributed to affected borrowers.
• The process of victim identification, location, and compensation in the Department’s fair lending resolutions is ongoing.  Still, individual borrowers already have received checks for over 90 percent of the $550 million in fair lending settlements between 2011 and 2013.

 

The Department has vigorously enforced the Servicemembers Civil Relief Act (SCRA).  The SCRA serves to postpone, suspend, terminate or reduce the amount of certain civil obligations so that members of the armed forces can focus their full attention on their military or professional responsibilities without adverse consequences for themselves or their families.  Since May 2011, the Department has reached eight settlements with mortgage servicers for foreclosing on servicemembers in violation of the SCRA, including settlements with the five largest mortgage servicers in conjunction with the National Mortgage Settlement.  In most circumstances under these settlements, servicemembers who were foreclosed on in violation of the law will receive a minimum of $125,000 plus compensation for lost equity.  We expect the National Mortgage Settlement for illegal foreclosures and illegal interest rates under the SCRA will provide approximately $200 million in relief for servicemembers, and in January 2015, the Department announced that mortgage servicers were distributing $123 million to 952 servicemembers for non-judicial foreclosures that violated the SCRA.  In May 2014, the Department announced the government’s first SCRA case involving student loans -- a $60 million settlement with Sallie Mae for unlawfully failing to reduce the interest rate on servicemembers’ pre-service student loans to 6%.  This decree was entered by the court on September 29, 2014.

 

The Department launched innovative programs to stop fraud in the residential mortgage-backed securities market.  In 2012, the Attorney General launched the Residential Mortgage-Backed Securities (RMBS) Working Group to maximize the impact of parallel efforts between federal and state law enforcement agencies to focus on fraud in the packaging and sale of RMBS offerings. This working group collaborates on future and current investigations, pools resources and streamlines processes to ensure that when misconduct occurs, justice is sought for the victims. So far, RMBS Working Group members have announced several law enforcement actions including:

• On February 3, 2015, the Department of Justice announced a $1.375 billion settlement agreement with the rating agency Standard & Poor’s Financial Services LLC to resolve allegations that S&P had engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs).  The agreement resolves the department’s 2013 lawsuit against S&P, along with the suits of 19 states and the District of Columbia.  Each of the lawsuits allege that investors incurred substantial losses on RMBS and CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks.  Other allegations assert that S&P falsely represented that its ratings were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities.
• On August 21, 2014, the Department of Justice announced a $16.65 billion settlement with Bank of America Corporation – the largest civil settlement with a single entity in American history – to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness.
• In July 2014, the Department reached a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of RMBS between 2006 and 2007. The resolution included a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – and requires Citigroup to provide relief to underwater homeowners, distressed borrowers, and affected communities.
• On November 19, 2013, the Justice Department secured a record $13 billion global settlement with JPMorgan - the largest settlement with a single entity in American history – to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions. The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.
• In August 2013, the Justice Department, as part of the ongoing work of the RMBS Working Group, filed a civil lawsuit against Bank of America Corporation and certain of its affiliates (BOA) for defrauding investors in connection with the sale of more than $850 million of RMBS. The complaint alleges BOA lied to investors about the relative riskiness of the mortgage loans backing the RMBS, made false statements after intentionally not performing proper due diligence and filled the securitization with a disproportionate amount of risky mortgages originated through third party mortgage brokers.
• In November 2012, Working Group Co-Chair, New York Attorney General Eric Schneiderman filed a Martin Act complaint against Credit Suisse Securities (USA) LLC and its affiliates for making fraudulent misrepresentations and omissions to promote the sale of RMBS to investors.
• Also in November 2012, the Securities and Exchange Commission (SEC), a RMBS Working Group partner, charged J.P. Morgan Securities LLC with misleading investors in offerings of residential mortgage-backed securities.
• At the same time, the SEC also announced charges against Credit Suisse Securities (USA) LLC with misleading investors in offerings of residential mortgage-backed securities. SEC Acting Director of Enforcement George Canellos is an RMBS Working Group Co-Chair.
• Both JP Morgan and Credit Suisse agreed to settlements with the SEC in which they will pay more than $400 million combined, and the SEC plans to distribute the money to harmed investors.
• In October 2012, New York Attorney General Schneiderman filed a Martin Act lawsuit against J.P.  Morgan Securities LLC (formerly known as Bear Stearns & Co.  Inc.), JP Morgan Chase Bank N.A., and EMC Mortgage LLC (formerly known as EMC Mortgage Corporation) for making fraudulent misrepresentations and omissions to promote the sale of residential mortgage-backed securities to investors.

 

The Department has successfully prosecuted international cartels and domestic collusion conspiracies: The Department has prosecuted corporations and individuals engaged in price fixing, bid rigging, market and customer allocation, and other fraud that hurts the American consumer.  Since January 2009, 365 criminal cases have been filed and more than $4.9 billion in criminal fines have been obtained.  In the period 2010-2014, the average prison sentence in division cases was 25 months, up from 20 months in the period 2000-2009.  Charges were brought in a variety of important industries, including financial services, auto parts, liquid crystal display (LCD), air transportation, real estate, coastal shipping and environmental services.  Results include:

• As a result of the Antitrust Division’s ongoing investigation into price fixing and bid rigging in the auto parts industry, to date, 32 corporations and 48 executives have been charged resulting in more than $2.4 billion in criminal fines–including the second and third largest criminal fines ever and landmark prison sentences against the culpable executives.
• After a successful conviction of Taiwan-based AU Optronics, its Houston-based subsidiary, and former top executives for their involvement in a price-fixing conspiracy involving LCD panels, for the first time ever, a jury determined that the conspirators’ gain from their illegal conduct was at least $500 million, raising the potential fine for each company above the statutory maximum of $100 million.  AU Optronics was sentenced to pay a $500 million fine, matching the largest fine ever imposed against a company for violating the U.S. antitrust laws.  On July 10, 2014, the Ninth Circuit affirmed these convictions along with the $500 million fine.
• The division’s ongoing investigation into the municipal bond industry to date has resulted in charges against 20 former industry executives, and nearly $750 million in restitution, penalties and disgorgement to federal and state agencies was obtained through settlements with UBS, Wachovia Bank, JP Morgan Chase, GE Funding Capital, and Bank of America.  To date, 17 financial services executives and one corporation have been convicted, including three former UBS executives who were convicted at trial for their roles in conspiracies involving investment contracts for the proceeds of municipal bonds.
• As part of the division’s commitment to combat financial fraud, the investigation of collusion in the U.S. real estate market has resulted in charges against 100 individuals and three companies engaged in collusive schemes aimed at eliminating competition at real estate foreclosure auctions.  Following a four-week trial, the Division obtained convictions against Andrew B. Katakis and Donald M. Parker March 11, 2014.
• Additional efforts to root out financial fraud have led to charges against 16 individuals and five companies as part of an ongoing investigation into bid rigging and fraud related to municipal tax lien auctions in New Jersey.  To date, 12 individuals and three companies have pleaded guilty.
• The division’s ongoing investigation into conspiratorial conduct in the market for coastal water freight transportation services has resulted in three companies and six individuals pleading guilty or being convicted at trial and $46 million in criminal fines.  The individuals who pleaded guilty were sentenced to jail terms ranging from seven months to five years, the longest sentence ever imposed for a single count violation of the Sherman Act.   Trial against a seventh individual is scheduled for January 2015.
• In the LIBOR (London InterBank Offered Rate)/Euribor investigation, the Division, in conjunction with the Criminal Division, obtained a conviction against Rabobank, which agreed to pay $325 million in criminal penalties, and, more recently, a conviction against Lloyds Banking Group plc, which agreed to pay $86 million in criminal penalties The Division also filed criminal charges against eight former traders and three former brokers for their roles in manipulating LIBOR and/or Euribor benchmark interest rates.  In all, the Division has obtained $561 million in criminal fines and penalties in this ongoing investigation, and the total global criminal and regulatory fines, penalties, and disgorgement obtained by enforcement authorities is over $4 billion.  The broader investigation relating to LIBOR and other benchmark rates has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.
• The Antitrust Division achieved its first successfully litigated extradition on an antitrust charge.  Romano Pisciotti, an Italian national and a former manager of Parker ITR S.r.l.’s Oil & Gas Business Unit, a rubber hose manufacturer, was arrested in Germany and was extradited on April 3, 2014, for participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hose sold in the United States and elsewhere.  He pleaded guilty to a one-count felony indictment in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale and was sentenced to serve two years in prison and to pay a $50,000 criminal fine. 
• John Bennett, a Canadian national, was extradited from Canada on November 14, 2014 on a charge of participating in a conspiracy to pay kickbacks and commit fraud at the U.S. Environmental Protection Agency (EPA)-designated Superfund site Federal Creosote, located in Manville, New Jersey.  He was also charged with a related count for major fraud against the United States related to contracts obtained at site.  Bennett was the former Chief Executive Officer with Bennett Environmental Inc., a Canadian-based company that treated and disposed of contaminated soil.  According to the indictment, Bennett provided kickbacks to Gordon McDonald, the project manager at the Federal Creosote site, in order to influence the award of sub-contracts at the site and inflate the prices charged to the EPA by the prime contractor.  McDonald, a former project manager for a prime contractor at both Federal Creosote and Diamond Alkali, in Newark, was convicted of engaging in separate bid-rigging, kickback and fraud conspiracies with three subcontractors in return for kickbacks of more than $1.5 million.  He was also convicted of engaging in an international money laundering scheme, major fraud against the United States, committing two tax violations and obstruction of justice.  On March 3, 2014, McDonald, was sentenced to serve the longest prison sentence ever imposed involving an antitrust crime ­­-- 14 years in prison -- for participating in multiple bid-rigging, fraud and kickback schemes.

 

The Department has prevented anticompetitive mergers and preserved market competition: Since 2009, the Department has challenged 80 anticompetitive mergers, including transactions in the consumer goods, transportation, technology, and telecommunications industries, and challenged 29 civil non-merger matters, focusing on contracting practices that reduced competition in industries such as health care, credit card network services, e-books and high-tech employment.  Notable merger cases and issues include:

• Requiring US Airways and American Airlines to divest facilities at seven key airports to enhance system-wide competition and settle the department's merger challenge.  Divestitures at airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York and near Washington, D.C., open the door for competition resulting in more choices and more competitive airfares for consumers.
• Suing to challenge Bazaarvoice's consummated acquisition of PowerReviews, a transaction that combined the dominant commercial supplier of ratings and reviews platforms in the United States with its closest rival—the court found that the merger was likely to extinguish price competition and substantially diminish the pace of innovation in that market.  A settlement requiring Bazaarvoice to divest the assets it acquired from PowerReviews and adhere to other requirements to fully restore competition is pending with the court.
• Requiring ConAgra Foods, Cargill, CHS, and Horizon Milling to divest four competitively significant flour mills to Miller Milling in order to proceed with the formation of Ardent Mills, a flour milling joint venture, preserving flour milling competition in four regions of the country encompassing large cities such as Los Angeles, Dallas, Minneapolis, and the San Francisco/Oakland Bay Area.
• Informing the parties that the Antitrust Division would file a lawsuit seeking to block the planned acquisition by Louisiana-Pacific of Ainsworth Lumber, preserving competition in the market for the production of oriented strand board sold to customers in the Pacific Northwest and Upper Midwest regions of the United States.
• Requiring Anheuser-Busch InBev and Grupo Modelo to divest Modelo's entire U.S.  business – including licenses of Model brand beers, its most advanced brewery, Piedras Negras, its interest in Crown Imports LLC and other assets – to Constellation Brands Inc., in order to go forward with their merger.  The remedy maintains competition in the beer industry nationwide.
• Blocking the H&R Block Inc./TaxACT deal—the Antitrust Division's first merger case litigated to judgment successfully since 2003.
• Suing to block AT&T Inc.'s proposed acquisition of T-Mobile USA Inc.—the companies ultimately abandoned the proposed deal, resulting in a victory for consumers.
• Requiring structural and/or behavioral conditions on transactions, such as Ticketmaster/LiveNation, Google/ITA, International Paper/Temple-Inland, and Comcast/NBCU, remedying the competitive harm to consumers while allowing the companies to proceed with their transactions in a way that did not threaten competition.
• Obtaining full relief in the UTC/Goodrich merger, the largest aircraft industry merger ever.  This case featured close coordination with the European Commission.
• Requiring Humana and Arcadian Management Services to divest Arcadian's Medicare Advantage health insurance plans in 51 counties across Arizona, Arkansas, Louisiana, Oklahoma and Texas.  The divestitures preserve competition so that Medicare beneficiaries, primarily senior citizens, benefit from lower prices, better quality, and more innovative products for their health care needs.
• Challenging a tour bus joint venture, Twin America, formed by two companies that had competed head-to-head in the provision of "hop-on, hop-off" bus tour services in New York City.

Notable civil, non-merger cases and issues include:

• Lawsuit against American Express, MasterCard and Visa, challenging their rules restricting price competition.  The department reached a settlement with Visa and MasterCard, and trial against American Express began on July 7.
• Joint policy statement with the Federal Trade Commission issued in April 2014 makes clear that properly designed threat information sharing is not likely to raise antitrust concerns and can help secure the nation's networks of information and resources.  The policy statement is designed to reduce uncertainty for those who want to share information to prevent and combat cyberattacks.
• Lawsuit and resulting settlement reached with eBay that prevents the company from entering into or maintaining agreements with other companies restraining employee recruitment and hiring, substantially the settlement as those reached with Adobe, Apple, Google, Intel, and Pixar in September 2010, and with Lucasfilm in December 2010.
• Lawsuit and a three-week trial, after which a court found that Apple Inc.  violated Section 1 of the Sherman Act by conspiring to raise e-book prices and end e-book retailers' freedom to compete on price.  The department's remedy requires Apple to modify its agreements with five publishers – Hachette Book Group (USA), HarperCollins Publishers L.L.C., Simon & Schuster Inc., Penguin Group (USA) Inc.  and Holtzbrinck Publishers, LLC (which does business as Macmillan)–provides for a court-appointed external monitor, includes anti-retaliatory provisions to protect publishers and prohibits Apple from engaging in future anticompetitive conduct.
• Settlement reached with five book publishers–Hachette Book Group (USA), HarperCollins Publishers L.L.C., Simon & Schuster Inc., Penguin Group (USA) Inc.  and Holtzbrinck Publishers LLC (which does business as Macmillan)–for conspiring to end e-book retailers' freedom to compete on price, take control of pricing from e-book retailers and substantially increase the prices that consumers pay for e-books.
• Lawsuit and resulting settlement with United Regional Health Care System—the first case brought by the Department since 1999 challenging a monopolist with engaging in traditional anticompetitive unilateral conduct.
• Settlement with Morgan Stanley that requires it to pay $4.8 million for violating the antitrust laws by entering into an agreement with KeySpan Corporation that restrained competition in the New York City electricity capacity market.

 

The Department has established the most effective strike force in history to protect Medicare money: In 2009, the Attorney General and Health and Human Services (HHS) Secretary announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) and renewed their commitment to fighting health care fraud as a Cabinet-level priority at both Departments.

• Since announcing HEAT in May 2009, the Medicare Fraud Strike Forces have conducted seven nationwide takedowns resulting in charges against almost 700 individuals with schemes involving nearly $2.2 billion in fraudulent billings. Strike Force operations since their inception in 2007 have charged more than 2,000 defendants who collectively have falsely billed the Medicare program for more than $6 billion.

 

The Department has returned historic amounts of taxpayer dollars through the False Claims Act. Since 2009, the Department has recovered more than $23.7 billion from False Claims Act cases, with more than $15.2 billion of those recoveries from cases involving fraud against federal health care programs. False Claims Act recoveries return losses to the federal agency that was defrauded, replenishing federal funds, and send a message to potential scammers that ultimately they will be required to pay up to three times the amount of their fraud.  Total recoveries since January of 2009 are more than half of the recoveries obtained since Congress amended the False Claims Act 28 years ago to strengthen the statute.  Results of these efforts include:

• In FY 2014, the Department reported recoveries of $5.69 billion under the False Claims Act - the largest annual recovery of its type in history. In fiscal year 2014, the department recovered an unprecedented $3.1 billion from banks and other financial institutions involved in making false claims for federally insured mortgages and loans. False claims against federal health care programs such as Medicare and Medicaid accounted for another $2.3 billion.  These amounts reflect federal losses only. In many of these cases, the department was instrumental in recovering additional billions of dollars for consumers and state treasuries.
• The number of qui tam suits filed in FY 2014 2014 exceeded 700 for the second year in a row. This nearly doubles the number since 2009, when 433 such matters were filed with the Department.  In FY 2014, nearly $3 billion was recovered as a result of whistleblower suits, and since 2009, the Department’s total recoveries in such suits have climbed to more than $15.9 billion.
• In August 2014, Hewlett-Packard Co. (HP), a manufacturer and vendor of information technology products and services, agreed to pay $32.5 million to resolve allegations that it overcharged the U.S. Postal Service for products between October 2001 and December 2010; Community Health Systems Inc., the nation’s largest operator of acute care hospitals, agreed to pay $98.15 million to resolve multiple lawsuits alleging that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services; McKesson Corporation agreed to pay $18 million to resolve allegations that it improperly set temperature monitors used in shipping vaccines under its contract with the Centers for Disease Control and Prevention; and the United States intervened against defendants in two whistleblower lawsuits alleging Evercare Hospice and Palliative Care submitted false claims for the Medicare hospice benefit.
• In September 2014, Shire Pharmaceuticals LLC agreed to pay $56.5 million to resolve allegations that it improperly marketed and promoted several drugs it manufactures and sells.
• In October 2014: Extendicare Health Services Inc. and its subsidiary Progressive Step Corporation agreed to pay $38 million to the United States and eight states to resolve allegations that it billed Medicare and Medicaid for materially substandard nursing services, resulting in the largest failure-of-care settlement with a chain-wide skilled nursing facility in the department’s history; the Boeing Company, an aerospace and defense industry giant, paid $23 million to resolve allegations that it submitted false claims for labor charges on maintenance contracts with the U.S. Air Force; DaVita Healthcare Partners Inc., one of the nation’s leading dialysis services providers, agreed to pay $350 million to resolve claims that it paid kickbacks to induce the referral of patients to its dialysis clinics; Dignity Health agreed to pay the United States $37 million to settle allegations that 13 of its hospitals knowingly submitted false claims to Medicare and TRICARE. Dignity, formerly known as Catholic Healthcare West, is one of the five largest hospital systems in the nation with 39 hospitals in three states.
• In November 2014, CareAll Management LLC and its affiliated entities agreed to pay $25 million plus interest to the United States and the state of Tennessee to resolve allegations that it submitted false and upcoded home healthcare billings to the Medicare and Medicaid programs.
• In December 2014, Supreme Foodservice GmbH and Supreme Foodservice FZE pleaded guilty to major fraud against the United States and paid a criminal fine of $288.36 million, in connection with a contract to provide food and water to the U.S. troops serving in Afghanistan.  Supreme Group B.V. and several of its subsidiaries also agreed to pay an additional $146 million to resolve a related civil lawsuit, as well as two separate civil matters, alleging false billings to the Department of Defense.
• In January 2015, Daiichi Sankyo Inc., a global pharmaceutical company with its U.S. headquarters in New Jersey, paid $39 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce physicians to prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. In February 2015, Community Health Systems Professional Services Corporation and three affiliated New Mexico hospitals paid $75 million to settle allegations that they violated the False Claims Act by making illegal donations to county governments which were used to fund the state share of Medicaid payments to the hospitals.

Among the largest recoveries in the history of the False Claims Act have been those against companies alleged to have promoted pharmaceuticals for treatment of certain illnesses that had not been approved by the FDA.  These include:  

• In 2012, a record $3 billion False Claims Act recovery and Food, Drug, and Cosmetic Act criminal fine from global health care giant, GlaxoSmithKline, to resolve criminal and civil liability arising from allegations that it unlawfully promoted  the prescription drugs Paxil, Wellbutin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, and Valtrex; and  reported false prices;
• In 2013, a $2.2 billion recovery and Food, Drug, and Cosmetic Act criminal fine from global health care giant, Johnson & Johnson, to resolve criminal and civil liability arising from allegations that it unlawfully promoted the prescription drugs Risperdal, Invega, and Natrecor for uses not approved as safe and effective by the FDA.

 

The Department has vigorously protected the health, safety, and economic security of American consumers.   Operating through the Civil Division’s Consumer Protection Branch, the Department protects vulnerable consumers from unsafe food and medical products and from fraud and abuse, including financial fraud and telemarketing fraud.  It also defends the programs and initiatives of the major consumer protection agencies when they are challenged by regulated industry.  Examples of recent successes include:

• On January 27, 2015, Juan Alejandro Rodriguez Cuya was sentenced to 210 months in prison for his operation of Angeluz Florida Corporation in Miami and call centers in Peru that lied to and threatened Spanish-speaking victims into paying fraudulent settlements for nonexistent debts.  According to evidence presented at trial, Rodriguez Cuya’s employees in Peru used Internet-based telephone calls to Spanish-speaking victims in the United States, threatened lawsuits, arrest, deportation, and forfeiture of property for refusing delivery of certain products and claimed the victims owed thousands of dollars in fines.  In reality, the victims had never ordered these products and nothing had been delivered, but Rodriguez Cuya’s employees claimed that the consumers could resolve the threatened fines if they immediately paid a “settlement fee.” A phone room in Miami collected the fees from thousands of victims.  Rodriguez Cuya was convicted of twenty-six counts of conspiracy, mail fraud, wire fraud, and extortion following a two week trial in October.  Rodriguez Cuya’s co-defendant Maria Luzula pled guilty halfway through trial and was sentenced to serve 165 months in federal prison.

• On December 17, 2014, the Massachusetts U.S. Attorney’s Office and the Consumer Protection Branch unsealed a 14-defendant, 131-count criminal indictment in connection with the 2012 nationwide fungal meningitis outbreak.  The outbreak was caused by contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by New England Compounding Center (NECC), located in Framingham, Massachusetts.  The U.S. Centers for Disease Control and Prevention (CDC) reported that 751 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA.  Of those 751 patients, the CDC reported that 64 patients in nine states died.  In addition to producing the contaminated MPA, the investigation uncovered a wide range of criminal wrongdoing at NECC.  The charges include racketeering, mail fraud, conspiracy, contempt, structuring, and violations of the Food, Drug and Cosmetic Act.  Barry J. Cadden, part-owner and head pharmacist of NECC, and Glenn A. Chin, NECC’s supervising pharmacist, are charged with racketeering counts that include 25 predicate acts of second-degree murder under the state laws of Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee, and Virginia.  The indictment also charges twelve other individuals, all associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual. 

• On November 19, 2014, the United States filed civil complaints and  motions seeking a temporary restraining order and a preliminary injunction to immediately put a stop to two related multi-million dollar mail fraud schemes, known as Destiny Research Center and CLGE.  The defendants operate two mail fraud schemes in which they send solicitation letters purportedly written by world-renowned psychics to consumers through the U.S. mail.  In the letters, the psychics recount a vision revealing that the consumer has the opportunity to dramatically improve his or her financial circumstance.  The solicitation letters, targeted at the elderly, ill, and those in perilous financial condition, appear personalized but are actually identical, mass-produced form letters.  The solicitations urge victims to purchase various products and services in order to ensure that the foreseen good fortune comes to pass. 

• On September 19, 2014, a jury convicted two former Peanut Corporation of America (PCA) officials and a PCA broker on charges relating to the distribution of salmonella-tainted peanuts and peanut products following a two-month jury trial in Albany, Georgia. Stewart Parnell, the former President and Owner of PCA, and Michael Parnell, a former PCA food broker, were convicted of mail and wire fraud, the introduction of misbranded food into interstate commerce with the intent to defraud or mislead, and conspiracy. Stewart Parnell was also convicted of introducing adulterated food into interstate commerce, and both he and Mary Wilkerson, a former PCA Quality Assurance Manager, were convicted of obstruction of justice.

 

The Department has expanded efforts to combat corruption at home and abroad.  Since 2009, the FCPA Unit has pursued criminal cases against executives, agents, and other individuals engaged in bribery.  During that time, the Unit has convicted more than 50 individuals in FCPA and FCPA-related cases, and resolved criminal cases against more than 50 companies with penalties and forfeiture of approximately $3.7 billion, including nine of the top ten FCPA resolutions in history.  In 2010, the Asset Forfeiture and Money Laundering Section launched a Kleptocracy Asset Recovery Initiative to investigate and prosecute cases to forfeit the proceeds of foreign official corruption.  Results of these efforts include:

• Just since 2013, the Department has charged, resolved by plea, or unsealed cases against 25 individuals, and 12 corporations have resolved FCPA violations with combined penalties and forfeiture of more than $1.5 billion.
• The Kleptocracy Initiative has obtained orders that will result in the forfeiture of over $492 million in laundered corruption proceeds and continues to litigate publicly filed cases involving an additional approximately $530 million, including funds corrupt proceeds tied to a former Nigerian dictator, the family of the former president of Taiwan, the second vice president of Equatorial Guinea, and the former governor of Bayelsa.

 

The Department has made historic progress in combating the diversion of controlled pharmaceuticals.  Over the past five years, the Department has conducted significant enforcement operations nationwide in collaboration with federal, state and local law enforcement agencies to target those involved in illicit diversion of pharmaceuticals.  Significant accomplishments include:

• In 2010, the Department reached a landmark settlement with CVS Caremark Corporation over policies and practices that allowed customers to purchase significant quantities of pseudoephedrine, the main ingredient for making methamphetamine in clandestine labs.  The $77.6 million civil penalty was the largest-ever levied against a Drug Enforcement Administration (DEA) registrant for non-compliance.
• In February 2011, Operation Pill Nation I targeted rogue pain clinics in South Florida, an area that has emerged as the pill-mill capital of the U.S.  The initiative resulted in 47 arrests, including 27 doctors, the surrender of 92 DEA registrations, the closing of 40 clinics and the seizure of more than $18.9 million in assets.
• In October 2011, Operation Pill Nation II, resulted in the arrest of 57 individuals, including eight physicians and four pharmacists, the surrender of six DEA registrations, and the seizure of assets totaling approximately $311,995.
• In February2012, a physician was sentenced in U.S.  District Court for the Southern District of Ohio to more than four terms of life in federal prison for illegally prescribing and dispensing pain pills outside the scope of legitimate medical practice that resulted in the deaths of four people.
• In April 2012, a federal grand jury in the U.S.  District Court for the Southern District of Ohio indicted the owner of 3 pain clinics and 6 of the doctors he hired to satisfy the demand for the illegal diversion of controlled substances in central and southern Ohio, Kentucky, West Virginia, and Tennessee.
• In May 2012, the Department reached a settlement with Omnicare Inc., in which the company agreed to pay a $50 million penalty to resolve claims its pharmacies improperly dispensed controlled substances to patients at long-term care facilities around the country.
• In June 2012, the DEA arrested seven doctors and seven of the largest pill clinic owners in Florida as part of a state-wide initiative against illicit diversion of pharmaceutical drugs.  Roughly 59 bank accounts were seized and 13 search warrants were executed.
• The DEA's National Prescription Take-Back Initiative has resulted in the removal of more than 2.8 million pounds of prescription medications from circulation since the initiative began in 2010.

 

The Department has made historic efforts to investigate and prosecute offshore tax evasion.  For the last six years, the Department has spearheaded an historic effort to lift the veil on foreign bank secrecy by vigorously investigating and prosecuting U.S. taxpayers who illegally hide assets and income offshore, as well as the foreign banks, bankers and others who facilitate those crimes.  For example:

• In May 2013, the Department obtained a historic guilty plea and a total payment of $2 billion in restitution and a fine from Credit Suisse AG, the second largest bank in Switzerland, for assisting thousands of U.S. clients to evade their taxes by maintaining undeclared bank accounts for them and helping them conceal those undeclared accounts from the U.S. government through various means.  In November 2014, Credit Suisse AG was sentenced for conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service.  The district court ordered Credit Suisse to pay approximately 1.8 billion dollars to the United States in the form of a fine and restitution.

• In August 2013, the Department announced a Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks, under which Swiss banks that were not already under investigation had an opportunity to resolve potential criminal exposure in return for providing substantial cooperation to the Department, including submission of detailed information regarding those who may have committed tax and tax-related violations.

• In December 2014, the Department deferred prosecution of Bank Leumi Group, which included the Bank Leumi le-Israel, the oldest and largest of all bank trust companies in Israel, on charges of aiding and assisting U.S. taxpayers prepare and present false tax returns to the Internal Revenue Service by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.  The deferred prosecution agreement (DPA) required Bank Leumi Group to pay the United States a total of 270 million dollars and to provide the names of more than 1,500 of its U.S. account holders.  The unprecedented agreement marks the first time an Israeli bank has admitted to such criminal conduct which spanned for over a ten year period.

• In December 2014, the Department obtained a court order allowing the IRS to issue a John Doe summonses to eight institutions, including delivery services and banking institutions, for information related to taxpayers that used the services of Sovereign Management & Legal Ltd to establish, maintain or conceal foreign accounts, assets and entities.

Additional enforcement efforts by the Department and its law enforcement partners have resulted in:

• Participation by over 50,000 taxpayers to enter voluntary disclosure programs, resulting in the IRS collecting more than 7 billion dollars in taxes, interest and penalties

• Criminal charges against bankers, attorneys, investment advisors and account holders in connection with activities conducted by banks located in Switzerland, India, Israel and the Caribbean

• Negotiation of a DPA and civil summons settlement with UBS AG, Switzerland’s largest bank, under which the U.S. government obtained information related to U.S. taxpayers with undeclared accounts, as well as 780 million dollars in taxes, interest, penalties and disgorgement of illegal profits from the banks

• A groundbreaking guilty plea in January 2013 from Wegelin & Co., the oldest Swiss private bank and the first foreign bank to plead guilty to felony tax charges.

• Court orders permitting the IRS to issue John Doe summonses directing banks to produce records of correspondent accounts that will assist the IRS in identifying U.S. taxpayers who failed to declare their offshore accounts for U.S. tax purposes.

 

The Department has protected billions of dollars claimed in abusive tax claims.  The Tax Division plays a critical role in the government’s efforts to combat abusive tax shelters.  For example:

• In February 2013, the district court determined that the transactions engaged in by Dow Chemical Company through a partnership known as Chemtech lacked economic substance and that the Chemtech partnership should be disregarded because it had no purpose other than to create tax benefits.  Chemtech Royalty Assoc.  LLP v.  United States (M.D.La.2013).. The court also imposed penalties. The district court’s opinion was affirmed by the Fifth Circuit on September 2014, and remanded to the district court for determination of the applicability of the 40% penalty.

• In August 2013, the Department successfully defended a favorable district court decision in WFC Holdings Corp.  v. United States (8th Cir.2013), a case involving a contingent-liability tax shelter. The Eighth Circuit found that the literal language of the Internal Revenue Code supported WFC’s tax treatment of the transaction, but nonetheless disallowed WFC’s asserted tax loss and resulting $82 million tax refund because the transaction lacked economic substance.

• In September 2013, the Department prevailed in a case involving BB&T Corporation’s claim for more than $660 million in tax benefits based on a tax-shelter transaction known as Structured Trust Advantaged Repackaged Securities (STARS), which was designed and promoted to subvert the foreign tax credit rules and generate illicit tax benefits to be shared among the transaction’s participants. Salem Financial, Inc.  v. United States (Fed.Cl.2013).The court ruled that BB&T was not entitled to the claimed tax benefits and also imposed $112 million in penalties.

• December 2013, in a case involving a COBRA shelter, the Supreme Court reversed an adverse Fifth Circuit decision and held that the 40% gross valuation misstatement penalty is applicable when a taxpayer engages in an abusive tax shelter transaction that is disregarded in its entirety for lack of economic substance.  United States v.  Woods (Sup.Ct.2013).The decision also addressed a thorny partnership jurisdictional issue and held that the district court had jurisdiction to determine the applicability of the 40% penalty in a partnership-level proceeding, distinguishing between the “applicability” determination and the ultimate imposition of the penalty on partners. The Woods decision has favorably impacted several other tax shelter cases pending in various appellate courts.

 

The Department has saved taxpayers dollars by being more cost efficient.  The Attorney General’s Advisory Council for Savings and Efficiencies (SAVE Council) has realized more than $132.2 million in savings and expects to see additional savings through the end of the fiscal year.  The following are examples of SAVE Council actions:

• Centralization of IT security and the elimination of redundancy.
• Booking travel online, reducing administrative costs.
• Consolidation of wireless and IT contracts.
• Increased use of video conferencing, reducing travel costs.
• Permanent change of station.

 

The Department has found record efficiencies in its budget and operations.  Under the leadership of Attorney General Holder, the Department has identified more than $1.8 billion in savings, efficiencies and rescissions in its budget and operating plan.  For example:

• After receiving the fiscal year 2011, fiscal year 2012, and fiscal year 2013 appropriations, the Department identified $467 million, $422 million, and $921 million respectively, in operating plan savings and efficiencies and non-grant program reductions.  In FY 2013, the Department identified additional non-pay savings to mitigate the sequestration and avoid furloughs in FY 2013.
• In the fiscal year 2014 President’s Budget, the Department identified $561 million in savings and efficiencies and program savings.

The Department has renewed its commitment to Environmental Justice.  Over the past six years, the Department renewed its commitment to environmental justice, which is the fair treatment and meaningful involvement of all people regardless of race, color, national origin or income with respect to the development, implementation, and enforcement of environmental laws, regulations and policies.  This was done in many ways, including: by updating the Department’s Environmental Justice Strategy and Guidance which outline how the Department works to ensure all communities, regardless of their demographics or income, are protected from environmental harm; by working closely with other federal agencies to coordinate environmental justice efforts, by engaging communities to an unprecedented degree, and by achieving meaningful results for vulnerable communities in its cases.  For example:

• In the largest environmental enforcement recovery ever by the Department of Justice, on April 3, 2014, Deputy Attorney General James Cole announced a $5.15 billion settlement with the Kerr-McGee Corporation, certain affiliates, and parent company Anadarko Petroleum Corp. to remedy a fraudulent conveyance designed to evade environmental liabilities left by the Old Kerr-McGee Corp.  Under the settlement, approximately $4.4 billion of the total will be paid to fund environmental clean-up and for environmental claims at contaminated sites around the country, including radioactive uranium waste across the Navajo Nation; radioactive thorium in Chicago and West Chicago, Illinois; creosote waste in the Northeast, the Midwest, and the South; and perchlorate waste in Nevada. The settlement was approved by the court on November 10, 2014, and went into effect on January 21, 2015.  Anadarko paid $5.15 billion plus interest to the litigation trust on January 23, 2015.
• Under the Clean Water Act, the Department has reached agreements with more than 50 municipalities across the country to upgrade water and sanitary systems to reduce sewer overflows, which can present a significant threat to human health and the environment and have historically most affected low income and minority communities.  These reductions are accomplished by obtaining commitments from municipalities to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.
• For instance, a Clean Water Act settlement with the City of Columbia, South Carolina, approved in 2014, contains more robust public participation provisions than sanitary sewer overflow consent decrees have traditionally contained.  For example, as the city spends an estimated $750 million to assess and implement extensive improvements to its sanitary sewer system, it will, among other things, set up automatic e-mail notification to all interested parties prior to each deliverable being submitted to the Environmental Protection Agency and the South Carolina Department of Health and Environmental Control.  For key deliverables, the city will have a formal 30-day comment period.  The city will also spend $1 million on a supplemental environmental project to restore segments of three streams in areas with environmental justice concerns.  The extensive community outreach in this case helped direct the parties’ attention to environmental justice considerations that might otherwise have been overlooked.  Under a Clean Water Act settlement with the City of Chattanooga, Tennessee, approved in 2013, the city agreed to pay a $476,400 civil penalty and make improvements to its sewer systems, estimated by the city to cost approximately $250 million, in order to eliminate unauthorized overflows of untreated raw sewage.  The settlement followed a public outreach campaign including two well attended public meetings.  Approximately 60 percent of Chattanooga’s storm sewer overflows have occurred in areas with environmental justice concerns.  Under a similar settlement with the Metropolitan St.  Louis Sewer District in 2011, $4.7 billion will be spent over more than 23 years to make extensive improvements to sewer systems and treatment plants, to eliminate illegal overflows of untreated raw sewage, including basement backups and to reduce pollution As a result of a criminal enforcement action under the Clean Air Act, residents of a low-income community near a coke plant in Tonawanda, New York will breathe cleaner air.  For years, people living in the low-income community near the plant were forced to breathe air Tonawanda Coke Corporation caused to be contaminated with benzene and particulates.  In 2014, Tonawanda Coke was sentenced to pay a $12.5 million fine and make a $12.2 million community service payment.  The company was placed on a five-year term of probation during which it is to make its community service payment.  This money will be used to fund an epidemiological study and an air and soil study to help determine the extent of health and environmental impacts of the coke facility on the Tonawanda community.  The company’s environmental manager Mark Kamholz was sentenced to serve one year incarceration, followed by one year of supervised release.  He also will pay a $20,000 fine and perform 100 hours of community service levels in urban rivers and streams.
• Under a Clean Air Act settlement with the Suiza Dairy Corporation in 2012, thecorporation agreed to make significant upgrades (estimated at $3.75 million) to two dairy facilities in Puerto Rico, and conduct community emergency drills.  The case stemmed from violations involving Suiza’s use of anhydrous ammonia, an extremely hazardous substance, at both facilities.  The settlement was the product of extensive community outreach and will have significant health and safety benefits to the communities surrounding Suiza’s facilities.

• As part of a settlement reached with Flint Hills Resourcesthe company agreed to cut harmful air pollution in an overburdened community in Port Arthur, Texas. Under the consent decree, lodged on March 20, 2014, Flint Hills Resources will implement innovative technologies to control harmful air pollution from industrial flares and leaking equipment at the company’s chemical plant. This settlement is part of EPA’s national effort to advance environmental justice by protecting communities such as Port Arthur that have been disproportionately impacted by

• The United States also reached a settlement with three subsidiaries of the Potash Corporation of Saskatchewan (PCS), the world’s largest fertilizer producer, to resolve claims that they violated the Clean Air Act by modifying facilities in ways that released excess sulfur dioxide into surrounding communities.The settlement requires the companies to install, upgrade, and operate state-of-the-art pollution reduction measures at an estimated cost of $50 million, and pay a $1.3 million civil penalty.The settlement also includes a supplemental environmental project, estimated to cost between $2.5 and $4 million, to protect the community around a nitric acid plant in Geismar, Louisiana, and provides for the installation and operation of equipment at the plant to reduce emissions of nitrogen oxide and ammonia.

For more information the Department’s environmental justice efforts, visit www.justice.gov/ej/resources.html to view the annual Environmental Justice Implementation Progress Reports.

 

The Department has successfully defended the EPA’s authority to regulate greenhouse gases that contribute to climate change and secured significant penalties, and the forfeiture of wrongfully claimed greenhouse gas emissions, through enforcement action.  Over the past several years, EPA has developed a regulatory program under the Clean Air Act to regulate greenhouse gas emissions that contribute to global climate change.  In 2012, the Department obtained a groundbreaking victory in Coalition for Responsible Regulation v.  EPA, a large, consolidated Clean Air Act case in which the D.C. Circuit upheld EPA’s principal regulations setting greenhouse gas emission standards for motor vehicles and phasing-in greenhouse gas permit requirements for stationary sources.  In October 2013, the Supreme Court denied the lion’s share of nine separate petitions for certiorari seeking further review of the D.C.  Circuit’s decision.  And on June 23, 2014, the Supreme Court issued a decision upholding the EPA’s ability to regulate approximately 83 percent of all greenhouse gas emissions from stationary sources subject to the Act's permit program for new and modified sources. The Department has filed a pending motion with the court of appeals seeking a favorable resolution of this case. Additionally, in an enforcement action against Hyundai-Kia, the Department resolved claims that the companies sold close to 1.2 million vehicles in America that were uncertified, and that will emit approximately 4.75 million metric tons of greenhouse gases in excess of what the automakers certified to EPA.  Under the resulting consent decree, the automakers paid a $100 million civil penalty, the largest in Clean Air Act history, and will forfeit 4.75 million greenhouse gas emission credits that the companies previously claimed by underestimating the vehicles’ greenhouse gas emissions.  This will prevent the companies from using or selling these credits (estimated to be worth over $200 million), in the future.  Additionally, the companies will spend approximately $50 million on measures to prevent future violations. 

 

The Department has successfully defended two sets of important rules involving power plant emissions.  In April 2014, the Department obtained a victory in the D.C.  Circuit on EPA’s Mercury and Air Toxics rule, which is the first-ever rule limiting emissions of mercury and other hazardous air pollutants from the nation's coal and oil-fired electric power plants (the Supreme Court is scheduled to hear appeal on one discrete issue in the case, involving consideration of costs, on March 25, 2015, and the Solicitor General is expected to present argument on behalf of the EPA).  Later that same month, the Supreme Court upheld EPA’s Cross-State Air Pollution Rule, which limits emissions of nitrogen oxides and sulfur dioxide that contribute to the formation of ozone and particulate matter pollution that drifts from state-to-state.  The Supreme Court found that the rule reflected a “permissible, workable, and equitable” approach to this complex interstate pollution problem. On February 25, 2015, the Department will be representing EPA in a hearing before the D.C. Circuit to address the remaining challenges to this rule.

 

The Department is assisting in efforts to increase production of renewable energy on public lands.  A key element of President Obama’s efforts to reduce our nation’s dependence on foreign oil and the emission of greenhouse gases from the burning of fossil fuels is the expansion of cleaner domestic sources of renewable energy such as solar and wind power.  In fiscal year 2014, the Department continued its defense of lawsuits challenging permits and rights-of-way issued by federal agencies to promote the responsible development of renewable energy projects on, or adjacent to, public lands.  These projects have included wind, both on, and off-shore, and solar electric generation facilities and power transmission corridors to facilitate the distribution of renewable energy to the power grid. The vigorous defense of these lawsuits has allowed these projects to move forward enabling the delivery of cleaner energy to American homes and businesses while simultaneously spurring substantial economic activity.

 

The Department is committed to fighting the illegal trade in the world’s wildlife.  The Department of Justice co-chairs the multi-agency Task Force on Wildlife Trafficking that President Obama created to lead the federal government’s response to the deepening global crisis presented by poaching and other illegal wildlife trafficking.  Wildlife trafficking threatens security, hinders sustainable economic development, and threatens the rule of law.  The illicit trade in wildlife is decimating many species worldwide and threatens iconic species such as rhinoceroses, elephants, and tigers with extinction.  To counter this threat, the Task Force developed the National Strategy for Combating Wildlife Trafficking, which President Obama released on February 11, 2014.  The Task Force issued an Implementation Plan on February 11, 2105 that builds upon the Strategy and provides a robust, focused roadmap of steps to achieve three objectives that are key to stopping this pernicious trade: strengthening domestic and global enforcement, reducing demand for illegally traded wildlife, and expanding international cooperation.  The Justice Department plays a vital role in these efforts, both by enforcing our nation’s wildlife laws, like the Lacey Act and the Endangered Species Act, and by working closely with other federal agencies to build our foreign partners’ enforcement capacity and to support international enforcement efforts.  The Department has successfully prosecuted numerous cases of illicit wildlife smuggling involving trafficking of rhinoceros horns, elephant ivory, South African leopard, Asian and African tortoises and reptiles, and many other forms of protected wildlife and protected plant species.  Through enforcement efforts like “Operation Crash” – which is focused on the lucrative and often brutal trade in rhinoceros horn – we work to bring traffickers to justice.  This operation has resulted in more than two dozen arrests thus far, with those convicted sentenced to significant terms of imprisonment and the forfeiture of millions in cash, gold bars, rhino horn and luxury items, and we are continuing to unravel the international, sophisticated criminal networks that are involved in these crimes.

Last Updated: March 2015

Return to Top