U.S. Attorney's Office for the District of Columbia Secures Over $462 Million in Financial Recoveries in Fiscal 2015
Office Has Collected More Than $2.6 Billion Over Past Six Fiscal Years
WASHINGTON - The U.S. Attorney’s Office for the District of Columbia collected more than $462.4 million in criminal and civil actions and asset forfeitures during the most recent fiscal year, U.S. Attorney Channing D. Phillips announced today.
All told, the U.S. Attorney’s Office for the District of Columbia has collected over $2.6 billion in criminal and civil actions and asset forfeitures over the past six fiscal years.
The totals for Fiscal Year 2015 include over $261.9 million collected in criminal actions and over $28.9 million in civil actions. Another $171.4 million was collected in criminal and civil asset forfeiture actions. Additionally, the U.S. Attorney’s Office for the District of Columbia worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect another $173.3 million in civil actions cases pursued jointly with these offices.
“Our enforcement efforts have restored over $2.6 billion in recent years to taxpayers and victims of crime,” said U.S. Attorney Phillips. “Those who break federal laws or who try to cheat the government contracting process should take note. Working with our law enforcement partners, we will continue to pursue criminal and civil actions to achieve justice.”
Attorney General Loretta E. Lynch earlier announced that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23.1 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.
Nationally, the largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.
Additionally, the U.S. Attorneys’ offices nationwide, working with partner agencies and divisions, collected over $5.3 billion in asset forfeiture actions in FY 2015.
The U.S. Attorneys’ offices, along with the department’s litigating divisions, are responsible for enforcing and collecting criminal and civil debts owed to the United States and criminal debts owed to federal crime victims. In the District of Columbia, the Financial Litigation Unit in the Civil Division of the U.S. Attorney’s Office aggressively handles these responsibilities. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Lynch, adding that the collections “demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
Collections in Civil Actions
The collections in civil actions by the U.S. Attorney’s Office for the District of Columbia included more than $94 million generated by a consent decree between auto manufacturers and the EPA for violation of the Clean Air Act. Defendants sold, offered for sale, introduced into commerce, delivered for introduction into commerce, or imported into the United States new 2012 and 2013 motor vehicles that failed to conform to the design specifications in their applications for Certificates of Conformity that purportedly covered these vehicles. In essence, defendants overstated fuel efficiency and greenhouse gas emissions levels.
The amount also included $58 million, plus interest, paid by the Volvo Truck Corporation, to resolve a District Court judgment and an appellate decision. The United States Court of Appeals for the District Of Columbia Circuit affirmed the District Court’s final judgment finding that Volvo Truck violated the stipulated consent decree for violating the Clean Air Act. On April 13, 2012, the District Court ordered Volvo Truck to pay the stipulated penalties. The defendant’s appeal of this decision was unsuccessful.
In another case, Children’s Hospital, Children’s National Medical Center Inc. and Children’s Research Institute, collectively Children’s National Medical Center (CNMC), paid $12.6 million to resolve allegations that they violated the False Claims Act by submitting false cost reports and other applications to the components and contractors of the Department of Health and Human Services (HHS), as well as to Virginia and District of Columbia Medicaid programs. The settlement resolved allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by a former employee of CNMC.
Collections in Criminal Actions
The collections in criminal actions by the U.S. Attorney’s Office for the District of Columbia included $155,138,904 paid in a criminal fine by Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd. This payment covered a portion of a $232,708,356 penalty that the company must pay the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan. The company pled guilty in March 2015 and the penalty was part of a plea agreement later approved by the Court. The monetary penalty also includes an additional payment of $77,569,452 in criminal forfeiture. The criminal fine represents the largest criminal fine in connection with an IEEPA prosecution.
The collections also included $7.3 million paid on restitution through forfeiture in an investigation that uncovered the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases. The lead defendant was an employee of the U.S. Army Corps of Engineers (USACE), a branch of the United States Army. As part of his official duties, Kerry Khan was responsible for placing orders for products and services for the USACE through federal government contracts and for certifying that products and services provided through government contracts were received by the USACE. From in or about the spring of 2007 through Oct. 4, 2011, Khan along with his co-conspirators devised schemes to obtain USACE contracts from corrupt contractors who paid bribes to receive government contracts. Khan and his co-conspirators defrauded over $30 million from the government. A total of 20 individuals and one corporation, Nova Datacom, LLC, have pled guilty to federal charges. All defendants consented to forfeit properties acquired from their ill-gotten gains. Khan is now serving a prison term of 19 years and seven months for his role in the scheme.
The amount also included $242,000 from defendant Gerry D. Mathews, who was a book keeper working at a law firm and had the responsibilities for managing certain partners’ professional corporations. Beginning in 1995 and continuing every year until May 2005, the defendant embezzled money from the partners and their professional corporations in a variety of ways. Mathews had pleaded guilty and was ordered to pay restitution in the amount of $312,260. The Financial Litigation Unit filed writs of garnishments to collect from her 401k, prior employment unused vacation leave and pension.
In another case, defendant Lindsay Branson III, a former background investigator for the U.S. Office of Personnel Management (OPM), paid $139,819 in restitution. Branson had pleaded guilty to making a false statement, stemming from his falsification of work on background investigations of federal employees and contractors. According to the government’s evidence, in 2010 and 2011, Branson represented that he had interviewed a source or reviewed a record regarding the subject of a background investigation. In fact, he had not conducted the interviews or obtained the records of interest. These reports were utilized and relied upon by federal agencies requesting background investigations to determine whether the subjects were suitable for positions having access to classified information, for positions impacting national security, or for receiving or retaining security clearances. This amount was collected from Branson’s Thrift Savings Plan account and through Treasury Offset Program collections.
Collections in Forfeiture Cases
The U.S. Attorney’s Office for the District of Columbia has emphasized the importance of asset forfeiture to fight crime and criminal organizations and to seek justice for victims. Asset forfeiture is a powerful tool that can deprive criminals and criminal organizations of illegal proceeds and instrumentalities of crimes, recover property that may be used to compensate victims, and deter crime. Federal law provides authority to seize and forfeit the proceeds of virtually all serious federal offenses. Forfeited assets are deposited into the Department of Justice Asset Forfeiture Fund and Department of Treasury Asset Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes.
In addition to the $77,569,452 in forfeiture collected in the case involving Schlumberger Oilfield Holdings Ltd., the Office’s Asset Forfeiture and Money Laundering Section collected $92 million in fiscal 2015 under a deferred prosecution agreement with Commerzbank AG, a global financial institution headquartered in Frankfurt, and its U.S. branch, Commerzbank AG New York Branch (Commerz New York). All told, Commerzbank agreed in March 2015 to forfeit a total of $563 million and pay a $79 million fine under the agreement with the Justice Department for violations of the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). According to admissions contained in the deferred prosecution agreement, from 2002 to 2008, Commerzbank knowingly and willfully moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese entities subject to U.S. economic sanctions. Commerzbank engaged in this criminal conduct using numerous schemes designed to conceal the true nature of the illicit transactions from U.S. regulators.