Appendix A:
Antitrust Division Selected Criminal Cases
April 1, 1996 through September 30, 1999

Vitamins

The vitamin cartel is the most pervasive and harmful criminal antitrust conspiracy ever uncovered by the Division. The members of the vitamin cartel reached agreements on everything from how much product each company would produce, to how much they would charge, to which customers they would sell. The victims of this conspiracy were the purchasers of the vitamins most commonly used as nutritional supplements or to enrich human food and animal feed. However, in the final analysis, the conspiratorial conduct of the cartel members affected the pocketbook of virtually every American consumer who took a daily vitamin supplement or who had a bowl of cereal in the morning.

The vitamin investigation has thus far resulted in convictions against Swiss, German, Canadian, and Japanese firms and over $875 million in criminal fines against the corporate defendants, including a $500 million fine imposed on F.  Hoffmann-La Roche Ltd. (HLR) and a $225 million fine imposed on BASF AG. The $500 million fine imposed against HLR is the largest fine ever imposed in any Department of Justice proceeding under any statute.

The Antitrust Division also has thus far prosecuted seven U. S. and foreign executives who participated in the vitamin cartel. All of these individuals, including the foreign defendants, are either already serving time in federal prison or are awaiting sentencing and face potential jail sentences as well as heavy fines. For example, Kuno Sommer, the former Director of Worldwide Marketing for Vitamins at HLR, and Roland Brönnimann, the former President of the Fine Chemical and Vitamin Division at HLR, were recently sent to prison and ordered to pay substantial fines for their roles in the vitamin cartel. Messrs. Sommer and Brönnimann are the first European nationals to serve time in a U. S. prison for engaging in cartel activity.

The vitamins cases brought thus far are as follows:

  • United States v. Lonza, AG, (N. D. Tex. 1998) (Swiss firm; defendant agreed to $10.5  million fine in plea agreement)
  • United States v. John Kennedy, (N. D. Tex. 1999) (U. S. citizen; 12 months incarceration; $20,000 fine)
  • United States v. Lindell Hilling, (N. D. Tex. 1999) (U. S. citizen; defendant agreed to incarceration for period of 12 months and $20,000 fine in plea agreement)
  • United States v. John L. “Pete” Fischer, (N. D. Tex. 1999) (U. S. citizen; defendant agreed to incarceration for period of 8 months and $20,000 fine in plea agreement)
  • United States v. Robert Samuelson, (N. D. Tex. 1999) (U. S. citizen; awaiting sentencing)
  • United States v. Antonio Felix, (N. D. Tex. 1999) (Mexican citizen; awaiting sentencing)
  • United States v. F. Hoffmann-La Roche, Ltd., (N. D. Tex. 1999) (Swiss firm; $500 million fine)
  • United States v. BASF AG, (N. D. Tex. 1999) (German firm; $225 million fine)
  • United States v. Dr. Kuno Sommer, (N. D. Tex. 1999) (Swiss citizen; 4  months incarceration, $100,000 fine)
  • United States v. Dr. Roland Brönnimann, (N. D. Tex. 1999) (Swiss citizen; defendant agreed to 5 months incarceration and $150,000 fine in plea agreement)
  • United States v. Daiichi Pharmaceutical Co., Ltd., (N. D. Tex. 1999) (Japanese firm; defendant agreed to $25 million fine in plea agreement)
  • United States v. Easai Co., Ltd., (N. D. Tex. 1999) (Japanese firm; defendant agreed to $40 million fine in plea agreement)
  • United States v. Takeda Chemical Industries, Ltd., (N. D. Tex. 1999) (Japanese firm; defendant agreed to $72  million fine in plea agreement)
  • United States v. Chinook Group Ltd., (N. D. Tex. 1999) (Canadian firm; defendant agreed to $5 million fine in plea agreement)

(Description of photograph: A large collection of pills, capsules, and tablets of various shapes and sizes.)

Graphite Electrodes

The Division cracked a conspiracy to fix the price and allocate market shares worldwide for graphite electrodes used in electric arc furnaces in steel mills to melt scrap steel. As a result of this conspiracy, steel makers, whose products are integral to a variety of business and consumer items, paid noncompetitive and higher prices for graphite electrodes used in the manufacturing process. Total sales of graphite electrodes in the United States during the term of the conspiracy were well over one billion dollars.

The graphite electrodes investigation was sparked by cooperation received from an applicant to the Division’s Corporate Leniency Policy, which led directly to the execution of search warrants. The investigation uncovered evidence that the members of the graphite electrodes cartel met in the United States, Far East, and Europe and agreed to fix prices and allocate volume on a region-by-region basis around the globe. In addition, the conspirators agreed to restrict capacity for producing graphite electrodes, to restrict non-conspirator companies’ access to graphite electrode manufacturing technology, and, further, to exchange sales and customer information to monitor and enforce the conspiracy.

An American, German, and two Japanese companies have pled guilty and agreed to cooperate with the Division’s ongoing investigation. Two of the companies, UCAR International and SGL Carbon AG, were fined $110 million and $135 million, respectively, for their participation in the conspiracy. In addition, two U. S. executives pled guilty and have agreed to pay fines of more than $1 million each and to serve prison terms of 9 months and 17 months, respectively, and a German executive was fined $10 million—the largest criminal antitrust fine ever imposed on an individual—for their roles in the international conspiracy.

The graphite electrodes cases brought thus far are as follows:

  • United States v. UCAR International, Inc., (E. D. Pa. 1998) (U. S. firm; $110  million fine)
  • United States v. Showa Denko Carbon, Inc., (E. D. Pa. 1998) (Japanese firm; $32.5 million fine)
  • United States v. Tokai Carbon Company, Ltd., (E. D. Pa. 1999) (Japanese firm; $6 million fine)
  • United States v. SGL Carbon AG and Robert Koehler, (E. D. Pa. 1999) (German firm; $135 million. German citizen; $10 million fine)
  • United States v. Robert J. Hart, (E. D. Pa. 1999) (U. S. citizen; defendant agreed to serve 9 months incarceration and to pay a $1 million fine in plea agreement)
  • United States v. Robert P. Krass, (E. D. Pa. 1999) (U. S. citizen; defendant agreed to serve 17 months incarceration and to pay a $1.25 million fine in plea agreement)

(Description of photograph: Smokestack from an industrial plant with white smoke billowing out of the top.)

Lysine

The lysine investigation broke up an international price-fixing and volume allocation agreement among the world’s major producers of lysine. Lysine, a feed additive used by farmers in livestock feeds, is a $600  million-a-year industry worldwide. The members of the lysine cartel reached agreements to carve up the world market by allocating sales volumes among themselves and agreeing on what prices would be charged to customers worldwide. As a result, prices went up about 70 percent in the first three months of the conspiracy alone.

Beginning with the first round of charges in August 1996, the investigation has resulted in the conviction of five companies, including two Japanese and two Korean companies, and six of their executives; it has also yielded nearly $100 million in criminal fines, including a $70 million fine against Archer Daniels Midland Company (ADM). (ADM was fined an additional $30 million for its participation in a separate conspiracy in the citric acid market and paid a total fine of $100 million.) The investigation culminated with the jury trial of three former highranking ADM executives for their participation in the lysine cartel. In September 1998, after a ten-week trial, a Chicago jury returned guilty verdicts against all three executives. The ADM executives were subsequently sentenced to serve lengthy prison sentences ranging from 24 to 30 months, and two of the executives were fined $350,000 each.

ADM’s $100 million fine, imposed in October 1996, represented the first time that the Division utilized the alternative fine provision in order to obtain a fine greater than the Sherman Act statutory maximum of $10 million. The alternative fine provision, found in 18 U. S. C. Section  3571(d), permits imposition of a fine equal to twice the gain to the cartel or twice the loss to the victims. As a result, the landscape for corporate antitrust fines has changed dramatically. Whereas prior to ADM’s sentencing there were no fines above the $10 million Sherman Act statutory cap, fines of $10 million or more are now common, and five defendants have been fined $100 million or more.

A list of all of the lysine cases follows:

  • United States v. Ajinomoto Co., Inc., (N. D. Ill. 1996) (Japanese firm, defendant agreed to $10 million fine in plea agreement)
  • United States v. Kyowa Hakko Kogyo Co. Ltd., (N. D. Ill. 1996) (Japanese firm, $10 million fine)
  • United States v. Sewon America, Inc., (N. D. Ill. 1996) (U. S. subsidiary of Korean company, $328,000 fine)
  • United States v. Kanji Mimoto, (N. D. Ill. 1996) (Japanese citizen, $75,000 fine)
  • United States v. Masaru Yamamoto, (N. D. Ill. 1996) (Japanese citizen, $50,000  fine)
  • United States v. Jhom Su Kim, (N. D. Ill. 1996) (Korean citizen, $75,000 fine)
  • United States v. Archer Daniels Midland, Co., (N. D. Ill. 1996) (U. S. firm, $100  million fine: $70 million fine for lysine and $30 million fine for citric acid)
  • United States v. Cheil Jedang, Ltd., (N. D. Ill. 1996) (Korean company, $1.25  million fine)
  • United States v. Michael D. Andreas; Mark E. Whitacre; Terrance S. Wilson; and Kazutoshi Yamada, (N. D. Ill. 1996) (Andreas, Whitacre and Wilson, all U. S. citizens, convicted at trial; Andreas and Wilson each sentenced to serve 24 months incarceration and to pay fines of $350,000; Whitacre sentenced to serve 30 months incarceration with 10 months to be served concurrently with a prison sentence he was already serving for another offense and 20 months to be served consecutively. Yamada, a Japanese citizen, did not appear at trial and remains a fugitive.)

(Description of photograph: Barn and silo in the background, wheat field in the foreground.)

Citric Acid

The Division’s investigation and prosecution of an international cartel among U. S. and European producers of citric acid put an end to one of the most sophisticated and sweeping anticompetitive schemes ever uncovered by the Division. Citric acid, a flavor additive and preservative in such products as soft drinks and processed foods, found in nearly every home in the United States, as well as in detergents, pharmaceuticals and cosmetic products, is a $1.2 billion-a-year industry worldwide. The conspirators agreed to fix prices and allocate sales volumes in the citric acid market worldwide. The conspirators also agreed on complex systems to monitor and enforce the agreements. For example, the conspirators devised a compensation system whereby the cartel members reviewed the sales of each conspirator at the end of the year, and any company that sold more than its precisely allotted share in one year was required in the following year to purchase the excess from another conspirator that had not reached its volume allocation target in that preceding year. As a result of the conspiracy, list prices for citric acid were raised by more than 30 percent to customers in the United States during the conspiracy period, resulting in well over $100 million in additional revenue to the members of the conspiracy.

Beginning with the first round of charges in October 1996, the citric acid investigation has resulted in convictions against five corporations, including U. S., German, Swiss, and Dutch firms, and four of their executives. In addition, over $100 million in criminal fines—including a $50 million fine imposed on Haarmann & Reimer Corporation, the U. S. subsidiary of the German pharmaceutical giant Bayer AG—have been obtained against the convicted defendants.

A list of all of the citric acid cases follows:

  • United States v. Archer Daniels Midland Co., (N. D. Cal. 1996) (U. S. firm, $100  million fine: $70 million fine for lysine and $30 million fine for citric acid)
  • United States v. Haarmann & Reimer Corp. and Hans Hartmann, (N. D.  Cal.  1997) (U. S. subsidiary of German company, $50  million fine; German citizen, $150,000 fine)
  • United States v. F. Hoffmann-La Roche. Ltd. and Udo Haas, (N. D. Cal. 1997) (Swiss firm, $14 million fine; Swiss citizen, $150,000 fine)
  • United States v. Jungbunzlauer International AG Rainer Bichlbauer, (N. D.  Cal.  1997) (Swiss firm, $11 million fine; Swiss citizen, $150,000  fine)
  • United States v. Cerestar Bioproducts BV and Sylvio Kluzer, (N. D. Cal. 1998) (Dutch firm, $400,000 fine; Italian citizen, $40,000 fine)

Sodium Gluconate

The Division’s investigation of an international conspiracy to suppress and eliminate competition in the worldwide sodium gluconate industry arose from information received from cooperating defendants in the lysine and citric acid investigations. Sodium gluconate is an industrial cleaner with many applications, such as food service and utensil cleaning, bottle washing, and paint removal. The Division’s investigation unraveled a conspiracy to fix prices and allocate sales volumes worldwide among the world’s major producers of sodium gluconate.

To date, the sodium gluconate investigation has led to criminal charges against Dutch, French, and Japanese companies and their foreign executives and has resulted in over $30 million in criminal fines. One of the industry leaders, Fujisawa Pharmaceutical Co., Ltd., a Japanese corporation, agreed to plead guilty and pay a fine of $20 million for its participation in the conspiracy.

A list of all of the sodium gluconate cases brought thus far follows:

  • United States v. Akzo Nobel Chemicals BV and Glucona BV, (N. D. Cal. 1997) (Dutch firms, $10 million fine)
  • United States v. Cornelis R. Nederveen, (N. D. Cal. 1997) (Dutch citizen, $100,000 fine)
  • United States v. Marcel Van Eekhout, (N. D. Cal. 1997) (Dutch citizen, $100,000 fine)
  • United States v. Fujisawa Pharmaceutical Co., Ltd. and Akira Nakao, (N. D. Cal. 1998) (Japanese firm, $20 million fine; Japanese citizen, $200,000 fine)
  • United States v. Roquette Freres and Bertrand Dufour, (N. D. Cal. 1997) (French  firm, $2.5 million fine; French citizen, $50,000 fine)

Sorbates

The Division’s investigation and prosecution of a seventeen-year international conspiracy among U. S., German, and Japanese producers of sorbates began as a matter transferred to the Division by the FTC. Sorbates (sorbic acid and potassium sorbate) are chemical preservatives used primarily to prevent mold in food products, such as cheese and baked goods. Sales are over $250 million a year worldwide. The Division’s investigation uncovered one of the longest-running and durable international cartels ever prosecuted, a conspiracy which affected over $1 billion in U. S. sales.

The sorbates conspirators agreed to fix sorbates prices and allocate the market shares of sorbates sold worldwide, including the United States. Meetings among the producers were held in Japan and Europe throughout the seventeen-year conspiracy. The producers established several levels of target prices in the U. S. market based on the size of the customers and agreed to announce price increases on different dates to avoid detection of collusion. To date, three corporations and two executives have pled guilty and have agreed to pay fines totaling over $68 million.

The sorbates cases brought thus far are as follows:

  • United States v. Eastman Chemical Company, (N. D. Cal. 1998) (U. S. firm, $11  million fine)
  • United States v. Hoechst AG, (N. D. Cal. 1999) (German firm, $36 million fine)
  • United States v. Bernd Romahn, (N. D. Cal. 1999) (German citizen, $250,000  fine)
  • United States v. Nippon Gohsei, (N. D. Cal. 1999) (Japanese firm, $21 million fine)
  • United States v. Hiromi Ito, (N. D. Cal. 1999) (Japanese citizen, $350,000 fine)

(Description of photograph: Man holding a test tube and using a glass rod to add a drop of liquid to the test tube. In the foreground: several glass beakers, a funnel, and other containers.)

Marine Construction And Transportation

In December 1997, the Division charged a company from The Netherlands and one of its foreign executives with participating in an international cartel in marine construction services and a company from Belgium, its U. S. subsidiary, and two of its foreign executives with participating in a separate international cartel in marine transportation services. The three related firms, which have a common parent, agreed to plead guilty and to pay a total of $65 million in criminal fines.

In the marine construction cartel, the conspirators reached an agreement to allocate customers and agree on pricing for heavy-lift derrick barge and related marine construction services in the major oil and gas production regions of the world. Heavy-lift derrick barges are floating crane vessels with a capacity to lift heavy structures, such as the decks of offshore oil and gas drilling and production platforms, in a marine environment. The conspirators originally targeted marine construction contracts in the North Sea. The conspiracy then grew to include projects in the Gulf of Mexico and next expanded to include the Far East. Members of the cartel met in the United States, The Netherlands, Italy, Turkey, and elsewhere to carry out their conspiracy. Worldwide revenues on the fixed contracts were in excess of $1 billion.

In the marine transportation cartel, the conspirators colluded on semisubmersible heavy-lift transport services to customers in the United States and throughout the world. Semisubmersible heavy-lift transport ships are oceangoing vessels that partially submerge to carry extremely large cargo, most commonly oil rigs and other ships, across long distances in the open ocean. Its customers include drilling contractors and the U. S. Navy. The conspirators met in a number of locations in Europe, the United States, and elsewhere and agreed to share information about upcoming jobs, prices quoted to customers, fleet positions, and other aspects of their internal operations. The parties then would agree on which jobs each would service, pool the revenues from all customers, and then divide up the profits according to a complex formula developed by the cartel. Bids on contracts let by the U. S. Navy were rigged by the conspirators as part of their agreement, and these contracts were included in the pool of revenues and profits divided by the cartel. In connection with the guilty pleas, the U. S. Navy was paid civil damages for the rigged contracts.

The marine construction and transportation cases brought thus far are as follows:

  • United States v. HeereMac, v. o. f. and Jan Meek, (N. D.  Ill. 1997) (Dutch firm, $49 million fine; Dutch citizen, $100,000 fine)
  • United States v. Dockwise, N. V., Dockwise U. S. A. Inc., Christiaan Bernardus van der Zwan, and Bastiaan Albertus de Jong, (N. D. Ill. 1997) (Belgian firm, $15 million fine; U. S. subsidiary of Belgian firm, $1 million fine; Dutch citizen, $150,000 fine; Dutch citizen, $75,000  fine)
  • United States v. Vincent Oliveri, (S. D. Tex. 1999) (Italian citizen, trial pending)
  • United States v. Littleton E. Walker, (S. D. Tex. 1999) (U. S. citizen, awaiting sentencing)

(Description of photograph: A tugboat pushing five barges through the water.)

Explosives

This investigation of regional and national conspiracies to fix prices for certain commercial explosives, such as dynamite, ammonium nitrate, and blasting agents, has resulted in guilty pleas by 14 corporations and 3 individuals and total fines of nearly $40 million. The commercial explosives subject to these conspiracies are those used in coal and metal mining, quarry operations, construction, and oil and gas production and account for about $1 billion in sales annually. (An asterisk after the case name denotes prosecutions filed prior to the reporting period.)

  • United States v. ICI Explosives USA, Inc., (N. D. Tex. 1995) ($10 million fine)*
  • United States v. Withers Waller Caldwell, (N. D. Tex. 1995) ($50,000 fine)*
  • United States v. Dyno Nobel, Inc., (N. D. Tex. 1995) ($15 million fine)*
  • United States v. Mine Equipment and Mill Supply, Inc., (N. D. Tex. 1995) ($1.9 million fine)*
  • United States v. Explosives Technologies International, Inc., (N. D. Tex. 1996) ($950,000 fine)*
  • United States v. Amos Dolby Co., (W. D. Pa. 1996) ($90,000 fine)
  • United States v. DC Guelich Explosive Co., (W. D. Pa. 1996) ($200,000  fine)
  • United States v. Douglas Explosive, Inc., (W. D. Pa. 1996) ($70,000  fine)
  • United States v. Hilltop Energy, Inc., (W. D. Pa. 1996) ($330,000 fine)
  • United States v. Kesco, Inc., (W. D. Pa. 1996) ($100,000 fine)
  • United States v. Ren-Loi, Inc., (W. D. Pa. 1996) ($112,000 fine)
  • United States v. Austin Powder Co., (N. D. Tex. 1996) ($7 million fine)
  • United States v. Thomas Mechtenberg, (N. D. Tex. 1996) ($20,000 fine)
  • United States v. LaRoche Industries, Inc., (W. D. Pa. 1997) ($1.5  million fine)
  • United States v. Donald J. Westmaas, (N. D. Tex. 1997) ($44,580 fine)
  • United States v. Nutrite Corporation, (W. D. Pa. 1997) ($1.5 million fine)
  • United States v. David P. True, (W. D. Ky. 1997) (acquitted at trial)
  • United States v. Joseph H. Longmire, (W. D. Ky. 1997) ($50,000 fine, 4 months house arrest)

Point-of-Purchase Display Materials

The Division’s New York and Chicago Field Offices are conducting parallel investigations and prosecutions of bid-rigging by suppliers of point-of-purchase (POP) display materials, such as plastic and neon signs, lamps, lights, or other promotional equipment used in bars, liquor stores, and restaurants. In addition to the bid-rigging offenses, the investigations have uncovered commercial bribery, income tax evasion, fraud, and money laundering violations. (An asterisk after the case name denotes prosecutions filed prior to the reporting period.)

New York. The New York Field Office investigation thus far has resulted in the filing of 29 cases against 24 individuals and 9 corporations. Seventeen individuals and seven  corporations have been sentenced to date resulting in fines totaling over $5 million, courtordered restitution in excess of $1 million, and individual jail sentences of up to 30 months. In addition, roughly $5 million in back taxes have been recovered and private restitution agreements have totaled over $10 million. The investigation, which is being conducted in cooperation with the United States Attorney’s Office for the Southern District of New York and with substantial assistance from agents of the FBI and the IRS, is continuing.

Chicago. The Division’s Chicago Field Office, with the assistance of the FBI, has filed six criminal cases against two corporate and five individual defendants arising out of an investigation of antitrust and related federal offenses in the sale of point-of-purchase displays to two U. S. breweries, Anheuser-Busch Co., Inc. and Miller Brewing Company. The Chicago investigation exposed two conspiracies to fix prices, rig bids, and allocate customers involving three of the four major producers of point-of-purchase display materials beginning in the mid-1980s and ending in 1996. The volume of commerce affected by these long-running illegal agreements exceeded $75 million. The largest of the conspiring POP producers, Everbrite, Inc., pled guilty to participating in both conspiracies and paid a $9 million fine. Two Everbrite executives also pled guilty and were sentenced to 12  months and 13 months incarceration, respectively. In addition, two of the four individual defendants were sentenced to pay the statutory maximum fine of $350,000. The investigation also uncovered a conspiracy to defraud Miller Brewing Company by one of its purchasing agents who received kickbacks from POP display vendors over a multiyear period. The purchasing agent pled guilty to conspiring to commit wire fraud in connection with the request and receipt of those payments.

New York Cases

  • United States v. Jomar Displays, Inc., (S. D. N. Y. 1993) ($175,000 fine)*
  • United States v. Louis Cappelli, (S. D. N. Y. 1994) (6 months incarceration, 6  months community confinement, $296,000 fine)*
  • United States v. Bert Levine, (S. D. N. Y. 1994) (6 months incarceration, $5,000  fine)*
  • United States v. Richard T. Billies and Sidney Rothenberg, (S. D. N. Y. 1994) (6  months house arrest each, $100,000 fine each)*
  • United States v. Robert Berger, (S. D. N. Y. 1994) (10 months house arrest, $3,000  fine)*
  • United States v. John Clemence, (S. D. N. Y. 1995) (4 months house arrest, $100,000 fine)*
  • United States v. Eugene Veltri, (S. D. N. Y. 1995) (3 months house arrest)*
  • United States v. Richard Sanislo, (S. D. N. Y. 1995) ($2,500 fine)*
  • United States v. Richard Rituno and Consumer Displays, Inc., (S. D. N. Y. 1995) (Rituno: 6 months incarceration, $10,000 fine; Consumer Displays: $175,000 fine)*
  • United States v. Harvey Shayew, (S. D. N. Y. 1995) (4 months house arrest, $75,000 fine)*
  • United States v. Southern Container Corp., (S. D. N. Y. 1996) ($ 2.5 million fine)
  • United States v. Dani Siegel, Visart M& F Corp., and Genetra Affil., (S. D. N. Y. 1996) (awaiting sentencing)
  • United States v. Michael Heinrich, (S. D. N. Y. 1996) (6 months house arrest)
  • United States v. Winko, Inc., (S. D. N. Y. 1996) ($1.1 million fine)
  • United States v. Manufacturers Corrugated Box Co., (S. D. N. Y. 1996) ($400,000  fine)
  • United States v. Irwin Englander, (S. D. N. Y. 1997) (awaiting sentencing)
  • United States v. Leslie Sutorius, (S. D. N. Y. 1997) (2 months house arrest, $5,000  fine)
  • United States v. Grinnell Lithographic Co., (S. D. N. Y. 1997) ($55,000 fine)
  • United States v. Gabriel Sagaz, (S. D. N. Y. 1998) (awaiting sentencing)
  • United States v. Peter Zanone, (S. D. N. Y. 1998) (4 months incarceration)
  • United States v. Brian McCormack, (S. D. N. Y. 1998) (30 months incarceration, $750,000 restitution)
  • United States v. Target Graphics, Inc., (S. D. N. Y. 1998) ($100,000 fine)
  • United States v. Bruce Schwartz, (S. D. N. Y. 1998) (12 months incarceration)
  • United States v. Edward Lundberg, (S. D. N. Y. 1999) (12 months incarceration)
  • United States v. Mary Burke, (S. D. N. Y. 1999) (9 months home confinement, $275,000 restitution)
  • United States v. John Mavros, (S. D. N. Y. 1999) (awaiting sentencing)
  • United States v. Peter Lanigan, (S. D. N. Y. 1999) (awaiting sentencing)
  • United States v. Leslie Schneiderman, (S. D. N. Y. 1999) (awaiting sentencing)
  • United States v. Martin Cohen, (S. D. N. Y. 1999) (awaiting sentencing)

Chicago Cases

  • United States v. Ronald Harrison, (E. D. Wis. 1996) (5 months house arrest, $2,500 fine)
  • United States v. Zelman Levine, (E. D. Wis. 1996) (4 months house arrest, $350,000 fine)
  • United States v. Schutz International, Inc. and Richard Machas, (E. D. Wis. 1997) (Schutz: $500,000 fine; Machas: 4 months house arrest, $150,000 fine)
  • United States v. Everbrite, Inc., (E. D. Wis. 1997) ($9 million fine)
  • United States v. Jon S. Wamser, (E. D. Wis. 1997) (13 months incarceration, $350,000 fine)
  • United States v. Henry C. Zeni, (E. D. Wis. 1997) (12 months incarceration, $180,000 fine)

Real Estate Foreclosure Auctions

The Division’s New York Field Office and Litigation I Section in Washington, D. C. helped crack separate bid-rigging conspiracies designed to artificially lower public auction prices at real estate foreclosure auctions in Queens, New York, and Northern Virginia, respectively. The conspiracies, both of which existed for at least a decade, operated in a similar fashion. Real estate brokers and investors secretly agreed not to compete against each other at real estate foreclosure auctions. Instead, one member of a conspiracy would bid the lowest price possible to win the property. Then, after the formal auction, the conspirators would hold a second private or “knockout” auction at which the conspirators would actively bid against each other for the foreclosed property. The winner of this second, secret auction would make illicit “commission” or “premium” payoffs to the others to compensate them for not bidding at the public auction. The Queens conspirators often used harassment, intimidation, and distraction tactics to scare off outside bidders, thus ensuring that they would get the lowest possible price for the property. Among the victims of these conspiracies were many lower-middle-class individuals who had lost their homes and were denied competitive bidding for their homes at the foreclosure auction. (An asterisk after the case name denotes prosecutions filed prior to the reporting period.)

Queens, New York. The prosecution of the Queens bid-rigging conspiracy has been jointly conducted by the Division’s New York Field Office and the U. S. Attorney’s Office for the Eastern District of New York, with substantial assistance provided by FBI and IRS agents. The investigation uncovered a conspiracy beginning in the mid-1980s and continuing until search warrants were executed in February 1997. Over 400 properties were affected by this conspiracy. The investigation thus far has resulted in the filing of cases against 35 individuals, including 26 cases filed on the same day. Most of the defendants were charged with felony tax offenses in addition to the bid-rigging counts. All 35 defendants pled guilty. Over half of the defendants sentenced to date received some period of incarceration. As a result of this investigation, public foreclosure auctions in Queens are now conducted in a courtroom inside the Queens County Courthouse with strict rules governing the auction process. Moreover, it has been reported that there are more bidders today than ever and that houses are being auctioned off at record high prices. The investigation also provided leads to a similar bidrigging scheme in Brooklyn, New York, which has already led to 14 additional cases.

Northern Virginia. Eight individuals have pled guilty and three individuals have been convicted at jury trials thus far in the Northern Virginia investigation. The crimes charged against the conspirators have included bid-rigging, wire fraud, bank fraud, conspiracy to defraud the United States, and mail fraud. Eight of the individuals have been sentenced to date, with jail sentences ranging from 7 months to 60  months incarceration. The convictions of two of the defendants have been upheld by the Fourth Circuit, and the Supreme Court recently denied their petition for certiorari. The continuing investigation is being conducted with the assistance of the FBI.

Queens, New York Cases

  • United States v. Danny Abrishamian, (E. D. N. Y. 1998) (12 month probation, $20,000 fine)
  • United States v. Ted Adeli, (E. D. N. Y. 1998) (24 months probation, $5,000 fine)
  • United States v. Joseph Attarian, (E. D. N. Y. 1998) (3 months incarceration, 3 months house arrest, $20,000 fine)
  • United States v. Albert Babajanian, (E. D. N. Y. 1998) (1 month incarceration, 3 months house arrest, $5,000 fine)
  • United States v. Glen Bakhshi, (E. D. N. Y. 1998) (3 months incarceration, 3 months house arrest, $20,000 fine)
  • United States v. Ramin Baratian, (E. D. N. Y. 1998) (1 month incarceration, $20,000 fine)
  • United States v. Steve Bloor, (E. D. N. Y. 1998) (3 months incarceration, 3 months house arrest, $20,000 fine)
  • United States v. Yoram Eliyahu, (E. D. N. Y. 1998) (24 months probation, $20,000  fine)
  • United States v. Farshad Haghi, (E. D. N. Y. 1998) (24 months probation, $20,000  fine)
  • United States v. Henry Khani, (E. D. N. Y. 1998) (2 months incarceration, 2 months house arrest, $5,000 fine)
  • United States v. John Khani, (E. D. N. Y. 1998) (4 months incarceration, 4 months house arrest, $20,000 fine)
  • United States v. Kevin Khani, (E. D. N. Y. 1998) (2 months incarceration, 2 months house arrest, $5,000 fine)
  • United States v. Daniel Kimia, (E. D. N. Y. 1998) (2 months incarceration, 2 months house arrest, $20,000 fine)
  • United States v. Maurice Kohan, (E. D. N. Y. 1998) (4 months house arrest, $20,000 fine)
  • United States v. Joseph Makhani, (E. D. N. Y. 1998) (2 months incarceration, 2 months house arrest, $20,000 fine)
  • United States v. Mike Makhani, (E. D. N. Y. 1998) (3 months incarceration, 3 months house arrest, $20,000 fine)
  • United States v. David Manesh, (E. D. N. Y. 1998) (4 months incarceration, 4 months house arrest, $20,000 fine)
  • United States v. Steve Manesh, (E. D. N. Y. 1998) (24 months probation, $20,000 fine)
  • United States v. Cyrus Niknamfard, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)
  • United States v. Lisa Parvin, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)
  • United States v. Joseph Rastegar, (E. D. N. Y. 1998) (1 month incarceration, 2 months house arrest, $20,000 fine)
  • United States v. Kamran Shahkohi, (E. D. N. Y. 1998) (4 months house arrest, $20,000 fine)
  • United States v. Firooz Tehranchipour, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)
  • United States v. Akbar Yasrabi, (E. D. N. Y. 1998) (3 months house arrest, $20,000 fine)
  • United States v. Itzchak Zivari, (E. D. N. Y. 1998) (3 months house arrest, $20,000  fine)
  • United States v. Alfred Basal, (E. D. N. Y. 1998) (awaiting sentencing)
  • United States v. David Dilmanian, (E. D. N. Y. 1998) (awaiting sentencing)
  • United States v. Albert Basal, (E. D. N. Y. 1998) (awaiting sentencing)
  • United States v. Joseph Davoudzadeh, (E. D. N. Y. 1998) (awaiting sentencing)
  • United States v. Allen Shahipour, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)
  • United States v. Mansour Mehizadeh, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)
  • United States v. Nicholas Cola, (E. D. N. Y. 1998) (12 months probation, $20,000 fine)

Northern Virginia Cases

  • United States v. Alexander Giap, (E. D. Va. 1995) (60 months incarceration, $100,000 restitution)*
  • United States v. Donald Kotowicz, (E. D. Va. 1995) (7 months incarceration, $20,000 fine, $15,000 restitution)*
  • United States v. Leo Gulley, (E. D. Va. 1995) (7 months incarceration, $20,000 fine, $12,000 restitution)*
  • United States v. Frank Stinnett, (E. D. Va. 1996) (36 months probation)
  • United States v. Mija Romer, (E. D. Va. 1997) (18 months incarceration, $20,000 fine, $7,200 restitution)
  • United States v. Khem Batra, (E. D. Va. 1997) (6 months house arrest, $8,377 restitution)
  • United States v. Patricia Remele, (E. D. Va. 1998) ($16,800 restitution, 12 months probation)
  • United States v. Lawrence Rosen, (E. D. Va. 1998) (4 months incarceration, 4 months house arrest; $20,000 fine, $33,978 restitution)
  • United States v. Alan Shams, (E. D. Va. 1999) (4 months house arrest, $20,000 fine, $3,682 restitution)
  • United States v. Kenneth Arnold, (E. D. Va. 1999) (5 months incarceration, 5 months house arrest, $20,000 fine, $54,624 restitution)
  • United States v. Edgar C. Dove, Jr., (E. D. Va. 1999) (awaiting sentencing)

Metal Buildings Installation

The Division, with the assistance of the FBI, uncovered a conspiracy to fix prices on insulation sold to metal building contractors and manufacturers. At the heart of the conspiracy was an agreement among national and regional insulation companies to adhere to a series of published price increases. Metal buildings are widely used for schools, churches, and synagogues, as well as for commercial structures, including factories and warehouses. To date, the Division has obtained convictions in five of the six cases in this investigation, including a guilty verdict after trial of one of the leaders of the conspiracy for price fixing and conspiracy to commit wire fraud. This individual received a sentence of 30 months incarceration and a $30,000 fine.

The metal buildings installation cases brought thus far are as follows:

  • United States v. Huber Wallace Rhodes, Jr., (S. D. Tex. 1996) (defendant agreed to sentence of 4 months incarceration in plea agreement)
  • United States v. Jerrold Warren Killingsworth, (S. D. Tex. 1996) (awaiting sentencing)
  • United States v. Yun Lung Yueh a/k/a Peter Yueh, (S. D. Tex. 1996) (awaiting sentencing)
  • United States v. Hiplax International Corp. d/ b/a Brite Insulation (S. D. Tex. 1996) (defendant agreed to $100,000 fine in plea agreement)
  • United States v. Mark Albert Maloof, (S. D. Tex. 1997) (convicted at trial; sentenced to 30 months incarceration, $30,000 fine)
  • United States v. Danny Two-Sheng Fong, (S. D. Tex. 1999) (acquitted at trial)