Justice Department Recovers More Than $900 Million in Consumer Protection Cases in 2011

The Justice Department’s Consumer Protection Branch recovered more than $913 million in criminal and civil fines, penalties, and restitution in 2011, Tony West, Assistant Attorney General for the Civil Division, announced today. In addition, the branch secured convictions of 37 defendants, obtained prison sentences totaling more than 125 years against 32 individuals, and recorded a 95 percent conviction rate last year. Since 2009, the consumer protection efforts of the Civil Division, working with U.S. Attorneys’ Offices around the country, have led to recoveries of more than $3.72 billion, over 115 criminal convictions, and total prison sentences exceeding 295 years.

“These unprecedented results reflect the extraordinary determination and effort that this administration, and Attorney General Eric Holder in particular, have put into rooting out consumer fraud and protecting the integrity of the marketplace,” said Assistant Attorney General West. “All of us can be proud of the Consumer Protection Branch’s extraordinary work.”

Since taking office, Assistant Attorney General West has made protecting consumers a top priority. In 2010, the Attorney General and Congress approved his reorganization of the Civil Division to create the Consumer Protection Branch, which became a free-standing office in the Civil Division that reports to its own Deputy Assistant Attorney General. In 2011, the Division implemented that reorganization, empowering the branch to more effectively and comprehensively protect consumers from myriad forms of fraud and abuse. It sharpened its focus in traditional areas, such as ensuring the safety of drugs, medical devices, food and dietary supplements, and maintaining a level playing field for those seeking to purchase small business opportunities. The branch also expanded its footprint to cover areas like mortgage fraud, immigration services fraud, and new forms of telemarketing abuse, thus bringing its criminal and civil enforcement resources to bear against a wide range of practices that harm consumers.

“As scams targeting consumers grow and becomes more sophisticated, those in law enforcement charged with combating such schemes must do the same,” said Assistant Attorney General West.

Health care fraud and food safety cases were the sources of the Consumer Protection Branch’s largest recoveries in 2011. The branch brought enforcement actions in response to a number of violations, including unlawful promotion of pharmaceuticals, misleading statements made to the Food and Drug Administration (FDA) about medical devices, the sale of adulterated food and unsafe food, and drug manufacturing practices. The branch recovered more than $842 million in criminal fines and forfeiture and $40,372 in restitution, secured 12 convictions, and obtained sentences totaling 220 months in prison against 11 individuals. In addition, the branch recovered $35 million in civil penalties and won 14 civil injunctions against defendants that failed to manufacture food or drug products safely.

The Consumer Protection Branch has responded to the financial crisis by aggressively pursuing various forms of financial fraud, including the sale of bogus reverse mortgages to elderly homeowners, the sale of phony business franchises to budding entrepreneurs trying to earn an honest living and telemarketing operations that “cram” false charges on consumers’ telephone bills. In 2011, the branch secured 19 convictions, with prison sentences totaling more than 100 years, and recovered more than $30 million in civil penalties and restitution – including more than $22 million that went back to victims.

Operating largely through the Consumer Protection Branch, the Civil Division has taken a prominent role in the President’s Financial Fraud Enforcement Task Force. Assistant Attorney General West is a co-chair of three of the Task Force’s working groups, all of which bring together the government’s civil and criminal capabilities to enhance enforcement, prevention and outreach efforts.

The Mortgage Fraud Working Group’s work has led to unprecedented levels of cooperation between the federal government and state and local partners to address the housing crisis that has affected so many American families. The recently formed Residential Mortgage-Backed Securities Working Group brings together the Department of Justice, several state Attorneys General, and other federal agencies to investigate those responsible for misconduct contributing to the collapse of the housing market through the pooling and sale of residential mortgage-backed securities. The Civil Division is also a leader of the new Consumer Protection Working Group, which is charged with working with federal law enforcement and regulatory agencies and state and local partners to strengthen and expand existing efforts to combat consumer-related fraud schemes.

In 2011, the Consumer Protection Branch promoted product safety by prosecuting individuals and companies for making false statements concerning safety testing, illegally selling explosives (such as fireworks), and importing products that do not meet the nation’s safety standards. In addition, the branch investigated and prosecuted individuals who deceived used car buyers through odometer rollback scams. In these two areas, the branch won multiple criminal convictions, obtained prison sentences totaling more than 10 years, and recovered more than $5 million.

The Consumer Protection Branch complimented its affirmative criminal and civil enforcement work in 2011 by defending the decisions of government agencies charged with protecting consumers. The branch successfully defended cases involving, for example, the FDA’s rejection of an unsafe drug and approval of a generic drug to increase consumers’ market choices; the Federal Trade Commission’s (FTC) approval of a regulation to shield consumers from unfair business practices; and the Consumer Product Safety Commission’s (CPSC) recall of an unsafe product.

Assistant Attorney General West expressed his gratitude and appreciation for the dedicated public servants who contributed to the investigation and prosecution of these matters. These individuals include attorneys, investigators, auditors and other personnel throughout the Civil Division, the U.S. Attorneys’ Offices, the Department of Health and Human Services, the FDA, the FTC, the CSPC, and other federal and state agencies.