Civil Division Priorities
- $6.5 Million Settlement with Cardiologist and His Medical Practice for Paying Millions in Kickbacks for Referrals: In 2023, the Office filed and settled a civil fraud lawsuit against a cardiologist and his medical practice, Gramercy Cardiac Diagnostic Services P.C. (“Gramercy Cardiac”), alleging that he paid millions of dollars in kickbacks to physicians and their practices for patient referrals. The kickbacks took the form of inflated office “rental payments” and fees paid to contracted cardiologists.
- $678 Million Anti-Kickback Statute Settlement with Novartis Pharmaceuticals for Operating Sham Speaker Programs: In 2020, the Office reached a $678 million settlement of its healthcare fraud lawsuit against Novartis Pharmaceuticals Corporation (“Novartis”), resolving claims that Novartis violated the False Claims Act and Anti-Kickback Statute by providing doctors with cash payments, recreational outings, lavish meals, and expensive alcohol to induce them to prescribe Novartis’s cardiovascular and diabetes drugs, which were then reimbursed by federal healthcare programs. The Government alleged that Novartis organized tens of thousands of sham speaker events at high-end restaurants and other venues and paid exorbitant speaker fees to doctors who gave no meaningful presentations. When those doctors then prescribed Novartis’s drugs, federal healthcare programs paid hundreds of millions of dollars in reimbursements for these tainted prescriptions.
- Settlement of Civil Fraud Lawsuit Against Medical Device Company for Creating and Selling a Fake Medical Component That Was Implanted Into Patients: In 2023, the Office filed and settled a civil fraud lawsuit against Stimwave LLC (“Stimwave”), a Florida-based medical device company, alleging that Stimwave created and sold a non-functioning dummy medical device for implantation into patients suffering from chronic pain, resulting in millions of dollars in losses to federal healthcare programs. Under the civil settlement, Stimwave agreed to pay $8.6 million to the United States. Simultaneous with the resolution of the civil case, the SDNY’s Complex Frauds and Cybercrimes Unit announced the filing of criminal charges against the former CEO of Stimwave for her role in the fraudulent scheme.
- $49 Million Settlement with Biotech Testing Company for Fraudulent Billing and Kickback Practices: In 2020, the Office resolved claims against Progenity, Inc. (“Progenity”), a biotechnology company that provides molecular and diagnostic tests, for fraudulently billing federal healthcare programs for prenatal tests and providing kickbacks to physicians to induce them to order Progenity tests for their patients. As alleged in the lawsuit, Progenity fraudulently used a billing code that misrepresented the tests provided and provided illegal kickbacks in the form of excessive “draw fees” to physicians, meals and happy hours for physicians and their staff, and the improper reduction or waiver of patient coinsurance and deductible payments. Under the settlement, Progenity agreed to pay a total of $49 million to resolve various governmental claims.
- $40.5 Million Settlement with Durable Medical Equipment Provider for Fraudulent Billing Practices: In 2020, Apria Healthcare Group, Inc. and its affiliate, Apria Healthcare LLC (together, “Apria”) agreed to pay a total of $40.5 million to resolve governmental claims that, among other things, Apria submitted false claims to federal healthcare programs seeking reimbursement for the rental of costly non-invasive ventilators to program beneficiaries. As alleged, those beneficiaries were not using the non-invasive ventilators, such that the devices were not medically necessary; Apria admitted that it continued to seek reimbursement from federal programs after it had information that patients had stopped using their ventilators. In addition, the government’s lawsuit alleged that Apria improperly waived patient co-insurance payments for the devices.
- $7.85 Million Settlement with Skilled Nursing Facility for Fraudulently Switching Residents’ Healthcare Coverage to Boost Medicare Payments: In 2022, the Office settled a civil healthcare fraud lawsuit against Plaza Rehab and Nursing Center (“Plaza Rehab Center”) and Citadel Consulting Group LLC (“Citadel”), which alleged that Plaza Rehab Center, acting at the direction of Citadel, fraudulently switched the type of Medicare coverage in which elderly residents were enrolled in order to maximize the Medicare payments that Plaza Rehab Center would receive. The residents and their families often did not request, consent to, or know about the change to their healthcare coverage, which had the potential to impact their out-of-pocket payments, the scope of the services and care covered, and their drug coverage plan. As part of the settlement, the defendants agreed to pay a total of $7.85 million.
- Settlement of Lawsuit Alleging that Bronx Nursing Home Paid Kickbacks for Patient Referrals and Switched Residents’ Healthcare Coverage Without Their Consent: In 2023, the Office settled a civil fraud lawsuit against Morris Park Nursing Home (“Morris Park”), a skilled nursing facility located in the Bronx, New York, and individuals formerly associated with Morris Park. The government’s lawsuit alleged that the defendants engaged in two fraudulent and illegal schemes that violated the False Claims Act and the Anti-Kickback Statute. The first scheme involved cash payments made to a supervisor at a nearby hospital for patient referrals, and the second scheme involved switching residents’ Medicare coverage without their consent in order to increase the Medicare payments that Morris Park received. Under the settlements, the defendants agreed to pay a total of $3.46 million.
- $37 Million Medicare Part C Fraud Settlement with Cigna: In 2023, the Office reached a $37 million settlement of its healthcare fraud lawsuit against The Cigna Group (“Cigna”) and its subsidiary Medicare Advantage Organizations. The settlement resolved claims that Cigna submitted to the government false and invalid patient diagnosis codes to artificially inflate the payments it received for providing insurance coverage to its Medicare Advantage plan members. The government alleged that the invalid diagnosis codes were based solely on forms completed by vendors retained and paid by Cigna to conduct in-home assessments of plan members, and that the healthcare providers who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported.
- $269.2 Million Recoveries in Healthcare Fraud Settlements with Walgreens: In 2019, the Office filed and settled two healthcare fraud lawsuits against national pharmacy chain Walgreens Boots Alliance, Inc. (“Walgreens”) for a total of $269.2 million, relating to Walgreens’s improper billings to government healthcare programs. The lawsuit alleged that Walgreens improperly billed the government for insulin pens that patients did not need and made false representations to Medicare, Medicaid, and other programs in connection with that practice, and also that Walgreens sought and obtained reimbursement from Medicaid for prescription drugs at improperly inflated prices.
- $20 Million Dollar Settlement with Rochester Drug Cooperative for Failing to Report Suspicious Orders of Controlled Substances to the DEA: In 2019, Rochester Drug Cooperative (“RDC”), a wholesale drug distributor, agreed to pay a $20 million penalty to resolve a lawsuit brought by the Office under the Controlled Substances Act. The complaint alleged that between May 2012 and November 2016, RDC knowingly failed to comply with its legal obligation to report thousands of suspicious orders of controlled substances, such as Oxycodone and fentanyl, despite being aware that many of its largest pharmacy customers exhibited “red flags” associated with the diversion of such drugs. The Office’s investigation also ultimately led to a Deferred Prosecution Agreement with RDC and a first-of-its-kind felony conviction of RDC’s former CEO for conspiring to unlawfully distribute controlled substances and defrauding the DEA.
- $72.6 Million Settlement of Fraud Lawsuit Against Wells Fargo Bank for Overcharging Foreign Exchange Customers: In 2021, Wells Fargo Bank (“Wells Fargo”) agreed to pay a total of approximately $72.6 million to resolve claims brought under the Financial Institutions Reform Recovery and Enforcement Act, alleging that Wells Fargo fraudulently overcharged hundreds of commercial customers, many of them small and medium-sized businesses and federally-insured financial institutions, who used Wells Fargo’s foreign exchange (“FX”) service. The suit alleged that from 2010 through 2017, Wells Fargo FX sales specialists defrauded nearly 800 customers by systematically charging them higher markups on FX transactions than they represented Wells Fargo would charge and concealing those overcharges through various misrepresentations and deceptive practices.
- Settlement of Civil Fraud Lawsuit Against Former Hunter College Professor and Hunter College for Fraudulently Using Federal Research Funds: In 2023, the Office resolved claims under the False Claims Act against Jeffrey T. Parsons-Hietikko (“Parsons”), a former psychology professor at Hunter College (“Hunter”), and Hunter, for the fraudulent misuse of research grant funds provided by the National Institutes of Health (“NIH”). Parsons previously served as Director of Hunter’s Center for HIV Educational Studies (“CHEST”). Among other things, the government’s lawsuit alleged that for years, Parsons improperly invoiced personal expenses to NIH funds, including expenses relating to scuba diving trips, international flights for his family, and a tropical birthday celebration. The lawsuit further alleged that Hunter used NIH funds to pay Parsons tens of thousands of dollars in retention bonuses without disclosing those payments to NIH as required, and that Parsons and Hunter submitted false timekeeping records that resulted in the use of NIH grant funds to compensate CHEST staff for work performed for Parsons’s private clients. Under the settlement, Parsons and Hunter agreed to pay $375,000 and $200,000, respectively.
- Settlements in Civil Fraud Lawsuit Against Three Companies for False Statements About Disadvantaged Business Participation on Federal Construction Projects: In 2019 and 2021, the Office resolved claims against three companies for their roles in a scheme to make false statements about disadvantaged business participation on two federal construction projects. Under Disadvantaged Business Enterprise (“DBE”) rules, contracts for certain federally funded projects require the participation of businesses owned by women and minorities. The government’s lawsuit alleged that, in connection with federally funded steel painting projects to renovate the Brooklyn Bridge and Queens Plaza, Ahern Painting Contractors Co. misrepresented that Tower Maintenance Corp., a certified DBE, was solely performing millions of dollars of work on the two projects. In fact, much of that work was being performed by Spectrum Painting Corp., a non-DBE. Under the settlements, the three defendants agreed to pay over $3.5 million.
- $5.3 Million Settlement of Lawsuit Against New York City for Fraudulently Obtaining FEMA Funds Following Superstorm Sandy: In 2019, the Office filed and settled a civil fraud lawsuit against the City of New York (the “City”) alleging that the New York City Department of Transportation (“NYCDOT”) fraudulently obtained millions of dollars from the Federal Emergency Management Agency by falsely claiming that numerous NYCDOT vehicles were damaged during Superstorm Sandy. Under the settlement, the City agreed to pay $5.3 million.
- $22.8 Million Settlement of Customs Fraud Lawsuit Against Vitamin Importer for Underpaying Customs Duties Owed on Products Imported Into the United States: In 2023, the Office filed and settled a civil lawsuit against International Vitamins Corporation (“IVC”), a United States-based company that imports and sells vitamins and nutritional supplements from China. The government’s lawsuit alleged that for years, IVC defrauded the United States by misclassifying more than 30 of its products under the Harmonized Tariff Schedule in order to avoid paying customs duties, and by failing to pay back duties owed to the United States even after IVC finally corrected its longstanding misclassifications. Under the settlement, IVC agreed to pay $22.8 million.
- Settlement of Customs Fraud Suit Against Clothing Companies and Their Former CEO for Misrepresenting the Value of Goods to Avoid Paying Customs Duties: In 2021, the Office resolved a lawsuit against Stargate Apparel, Inc., Rivstar Apparel, Inc., and Joseph Bailey (the former CEO and owner of both companies), for employing a variety of schemes to defraud the United States of millions of dollars in customs duties, by submitting invoices to U.S. Customs and Border Protection that falsely understated the true value of the clothing they imported into the United States. Under the settlement, the defendants agreed to pay a total of $6 million. This civil settlement was in addition to a $1,661,617 forfeiture amount that Bailey was ordered to pay in parallel criminal proceedings handled by the Office’s Complex Frauds and Cybercrimes Unit.
- The Office has a number of ongoing investigations related to fraudulent conduct during the pandemic. With the assistance of our law enforcement partners, Civil Division AUSAs are investigating fraud related to the CARES Act’s Paycheck Protection Program and other government relief programs that were designed to help those in financial need, as well as pandemic-related health care fraud schemes involving false billings submitted to government programs.
- Justice Department Announces Investigation Of New York City Police Department’s Special Victims Division: Pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which prohibits state and local governments from engaging in a pattern or practice of conduct by law enforcement officers that deprives individuals of rights protected by the Constitution or federal law, on June 30, 2022, the Office announced a civil investigation into the Special Victims Division (“SVD”) of the New York City Police Department. The investigation will assess whether the SVD engages in a pattern or practice of gender-biased policing in violation of the Equal Protection Clause of the United States Constitution. This is the first federal investigation of a police department based solely on whether its policing practices are gender biased.
- United States Attorney Announces Investigation Of The Mount Vernon Police Department: On December 3, 2021, the Office announced a civil investigation into the Mount Vernon Police Department (“MVPD”), assessing whether MVPD engages in a pattern or practice of discriminatory policing, uses excessive force, and conducts unconstitutional strip and body cavity searches.
- Statement Of U.S. Attorney On Intention To File For Contempt and Seek A Court-Appointed Receiver To Address Conditions On Rikers Island: Since 2015, the Office has been enforcing a consent decree with the City of New York and its Department of Correction to address violations of the constitutional rights of incarcerated individuals at Rikers Island. In light of the City’s lack of progress in implementing changes, on July 17, 2023, the Office announced that it will seek a court-appointed receiver to address the deteriorating conditions at Rikers Island.
- Acting U.S. Attorney Announces Successful Conclusion Of Agreement With Westchester County Jail To remedy Constitutional Violations At The Jail: The Office successfully resolved findings that the Westchester County Jail engaged in a pattern and practice of constitutional violations regarding use of force against inmates, treatment of minors, and provision of health care to the Jail’s more than 1000 inmates. the Office worked closely with a federal monitor and public officials to bring the Jail into compliance; as a result, use of force incidents plummeted, and the Jail’s medical, mental health, and re-entry programs were nationally recognized.
- United States Attorney Implements Groundbreaking Settlement With Meta Platform, Inc., Formerly Known As Facebook, To Address Discrimination In The Delivery Of Housing Ads: On June 22, 2022, the Office filed a complaint and consent decree in United States v. Meta Platforms, Inc. f/k/a Facebook, Inc., the first algorithmic discrimination case brought by the United States under the Fair Housing Act. For the first time, Meta Platforms, Inc., formerly known as Facebook, Inc., agreed to change its delivery algorithm to correct for bias. This settlement affects millions of Facebook users and also marks the first time that Meta will be subject to court oversight for its ad targeting and delivery system.
- United States Settles Fair Housing Act Lawsuit Against Artimus Construction For Failure To Construct Apartments Accessible To Persons With Disabilities: On April 7, 2023, the Office settled a Fair Housing Act lawsuit against Artimus Construction for failure to construct apartments accessible to individuals with disabilities. Under the settlement, Artimus agreed to make retrofits at rental buildings in Harlem and Chelsea and establish a fund to compensate aggrieved persons. This is the 18th settlement reached by the Office with developers and architects to remedy inaccessible housing in this District, including settlements to resolve suits against The Durst Organization, Glenwood Management, Silverstein Properties, Related Companies, and Atlantic Development.
- Acting U.S. Attorney Announces Consent Decree Resolving Claims That Owner Of Manhattan Condominium Discriminated Against Tenant On The Basis Of Disability: The Office routinely initiates lawsuits on behalf of individuals with disabilities who have been denied housing because they seek to live with assistance animals. The Office has been uniformly successful in these matters, which result in the landlords providing compensation to the resident, changing their reasonable accommodation policies, and permitting the resident to live with an assistance animal.
- U.S. Attorney Announces Agreement With New York University To Increase Accessibility Of Student Housing Facilities: The Civil Rights Unit works to make sure that colleges and universities are accessible for individuals with disabilities. For example, in November 2022, the Office reached an agreement with New York University to increase the accessibility of NYU’s student housing facilities. The agreement covers all of NYU’s student housing facilities in the New York metropolitan area for a total of more than 4,000 student housing units. Similarly, the Office reached an agreement with the City University of New York (“CUNY”), requiring CUNY to provide individual relief to a student with a visual impairment who was excluded from full participation in CUNY’s academic courses and to implement systemwide policies to ensure future compliance with the ADA across CUNY’s 25 colleges in the five boroughs of New York City, which collectively serve 243,000 students.
- U.S. Attorney Files And Simultaneously Settles Lawsuit Against Jujamcyn Theaters LLC To Improve Accessibility At Five Of Broadway’s Most Historic Theaters: The Civil Rights Unit has a long history of ensuring that the most iconic New York City sites are accessible to people with disabilities. For example, the Office has ensured the accessibility of numerous Broadway theaters, having reached settlement agreements with the major Broadway theater organizations — Jujamcyn Theaters, the Shubert Theaters, and the Nederlander. The Office also reached settlement agreements with the owners and operators of Yankee Stadium, Radio City Music Hall, the Metropolitan Opera, Madison Square Garden, the Apollo, and the Vessel at Hudson Yards, among many others. This enforcement work is also pursued to ensure that local restaurants, libraries, movie theatres, and other places of public accommodation are compliant with the ADA.
- District Court Rules That MTA’ Renovation Of Subway Station Triggered MTA’s Obligation Under ADA To Install Elevators Unless Technically Infeasible: The Office obtained a major ruling against the Metropolitan Transit Authority (“MTA”) and New York City Transit Authority to increase the accessibility of the New York City subway system. The ruling effectively requires MTA to install elevators when conducting certain station renovations, without regard to cost, unless it is technically infeasible to do so. In the wake of the ruling, MTA has worked to dramatically increase the number of accessible stations throughout the City.
- The Office has entered into Voluntary Compliance Agreements with a number of summer camps, requiring them to implement policies to accommodate the needs of children with disabilities and train all personnel who may interact with prospective and enrolled campers and camp visitors.
- U.S. Attorney Resolves Employment Discrimination Suit With The Town/Village OF Harrison, New York, And Its Fire Department: In June 2023, the Office resolved a lawsuit alleging that the Town/Village of Harrison in Westchester County, along with its Fire Department, discriminated against a female firefighter on the basis of sex and retaliated against her in violation of Title VII of the Civil Rights Act of 1964. As part of the settlement, the Town of Harrison admitted that it did not take any disciplinary action against a male firefighter who ultimately pled guilty to harassing the female firefighter. The settlement also required the Town to implement comprehensive policy changes and provide significant compensation to the victim, resulting in one of the largest payments by a local government in an employment discrimination case brought by the United States on behalf of a single individual.
Environmental Protection and Health
The Office has a history of committing resources to the pursuit of environmental justice. As highlighted in the Department of Justice’s Comprehensive Environmental Justice Enforcement Strategy, disadvantaged communities “bear the effects of pollution disproportionately, resulting in greater rates of illness and death, developmental impairments in children, and a variety of economic harms.” The Office is committed to addressing this disproportionate burden through all the enforcement tools at its disposal.
- Environmental Justice for 400,000 Low-Income New Yorkers: The Office conducted a sweeping investigation of health and safety issues, including violations of lead paint safety regulations at the New York City Housing Authority (“NYCHA”), home to roughly 400,000 low-income New Yorkers. In January 2019, the Office and its partners at the U.S. Department of Housing and Urban Development (“HUD”) entered into a pathbreaking settlement with NYCHA and New York City to address these issues. The settlement imposes strict health and safety standards, puts in place a program of institutional reform, requires the City to provide more than $2 billion in additional funding for NYCHA, and appoints a federal monitor.
- Record-Setting Clean Air Act Settlement: In January 2021, the Office sued Toyota Motor Corporation on behalf of the U.S. Environmental Protection Agency (“EPA”) under the Clean Air Act for emission defect reporting violations. The Office simultaneously entered into a consent decree with Toyota that imposed a $180 million civil penalty — the largest ever for emission defect reporting violations — and injunctive relief that sets the standard for future compliance.
- Largest Recovery of Clean-Up Costs Ever, with More than $1 Billion for Clean-Up in Disadvantaged Communities: In the Tronox bankruptcy, after years of litigation and negotiation, the Office entered into a settlement recovering more than $4.4 billion from affiliates of Anadarko Petroleum Corporation for environmental claims and liabilities. More than $1 billion of this funding went to address contamination in communities with environmental justice concerns, including historic uranium mining waste on Navajo Nation and creosote chemical waste in communities in the South.
Environmental justice matters that have been handled by the Office include the NYCHA and Tronox cases described above, as well as numerous other matters, including the following:
- A September 2023 consent decree requiring the City of Mount Vernon to spend more than $150 million to upgrade its storm sewer system, protecting water quality and addressing the needs of its residents who are living with the unlawful discharge of sewage and illicit pollutants.
- A September 2023 consent decree with Apex Building Company, which had violated lead paint safety regulations in hundreds of renovations of low-income apartments. The consent decree included the second largest civil penalty ever imposed under the lead paint regulations, and required Apex to take steps to mitigate potential harms caused by its conduct.
- A June 2022 settlement with Tzumi Innovations, LLC, which had targeted lower-income individuals in the sale of unregistered antimicrobial products. The settlement required payment of a $1.5 million civil penalty, the largest civil penalty ever obtained in a judicial settlement under the governing statute, and barred Tzumi from future sale or distribution of unregistered antimicrobial products.
General Defensive Litigation
- The Office defends the Executive Office of the President, the Cabinet, other government officials, and most federal agencies and departments of the Executive Branch in civil actions challenging the legality of federal policies and programs. Much of the Civil Division’s work in this area involves high-profile lawsuits, novel issues of constitutional and administrative law, and important issues of public policy. This category includes cases brought against federal officials in both their individual and official capacity. Litigation can range from single-plaintiff actions to complex nationwide class actions. AUSAs handling these cases often must coordinate with the involved federal agencies, as well as with senior leadership within the Department of Justice.
- In its Constitutional Law practice, the Civil Division defends actions challenging the constitutionality of federal statutes, regulations, or policies, or the actions of individual federal employees. For example, the Civil Division recently intervened in People of the State of New York v. Arm or Ally, LLC, 22 Civ. 6124, to defend against a Second Amendment challenge to the Gun Control Act and a recent regulation enacted by the Bureau of Alcohol, Tobacco, Firearms and Explosives that makes clear the Act’s requirements apply to ghost guns. And Civil Division AUSAs are currently representing the United States Military Academy at West Point in a lawsuit seeking to enjoin the use of race as a factor in admissions, as a violation of Equal Protection (see Students for Fair Admissions v. United States Military Academy at West Point, 23 Civ. 8262).
- Many of these cases involve cutting edge First Amendment issues. The Civil Division is defending President Biden and senior White House officials in Berenson v. Biden, 23 Civ. 3048, alleging that the administration’s attempts to combat the spread of false information regarding COVID-19 vaccines on social media constituted a violation of the First Amendment. The Civil Division represented the government in a First Amendment challenge to provisions of the U.S. Leadership Against HIV/AIDS Act that required NGOs that received federal funding to adopt a policy against prostitution and sex trafficking (see Alliance for Open Society International v. USAID, 15-974 (2d Cir.)). And in Stagg, PC v. Department of State, 19-811 (2d Cir.), the Civil Division successfully handled a First Amendment challenge to regulations prohibiting the transfer of technical data required for the manufacture of certain munitions to foreign persons.
- The Civil Division also defends cases challenging government action or inaction under the Administrative Procedure Act (“APA”), many of which involve novel legal issues and consequential public interests. For example, Civil Division AUSAs recently successfully defended an APA action challenging hundreds of millions of dollars in federal funding for licensed home care service agencies located in New York. And SDNY AUSAs have defended a number of challenges to the authority of Administrative Law Judges on the grounds that they are inferior officers who were not properly appointed in accordance with Article II of the United States Constitution.
- The Civil Division represents the United States, including its officers and agencies, in employment discrimination cases brought under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, and the Religious Freedom Restoration Act of 1993. The Division also represents the United States in suits for monetary damages alleging negligent or wrongful acts. And Civil Division AUSAs represents the VA and other federally funded medical providers in lawsuits alleging malpractice. These matters, which frequently go to trial, often involve complex fact patterns and require engaging with experts on a wide range of topics.
National Security and Foreign Policy
- The Civil Division is involved in representing the foreign policy interests of the United States: Hamilton Reserve Bank Ltd. v. Democratic Socialist Republic of Sri Lanka, 22 Civ. 5199 (supporting a stay of litigation against Sri Lanka to recover on defaulted sovereign bonds, in order to advance U.S. foreign policy interest in orderly and consensual sovereign debt restructuring); Kunstler v. CIA, 22 Civ. 6913 (alleging that the CIA had unlawfully monitored Julian Assange’s meetings with third parties while he resided in the Ecuadorian Embassy in London); Tanvir v. Tanzin, 13 Civ. 6951, 23-738 (2d Cir.) (challenge under the First and Fifth Amendments, the Administrative Procedure Act, and the Religious Freedom Restoration Act to Plaintiffs’ alleged placement on the No Fly List, which they claimed was due to their refusal to become informants for the FBI).
- Civil Division AUSAs prepare submissions advising judges on issues related to foreign government immunities: Havlish v. The Taliban, 03 Civ. 9848 (statements of interest in actions brought by victims of the September 11 attack to seize funds of the Islamic Republic of Afghanistan’s central bank held by the Federal Reserve Bank of New York following the Taliban’s takeover of Afghanistan).
- Civil Division AUSAs handle matters involving the protection of national security information: In re Terrorist Attacks of September 11, 2001, 03 MDL 1570 (successfully asserting state secrets and law enforcement privileges to protect certain classified and otherwise sensitive information sought in discovery); New York Times Co. v. CIA, No. 18-2112 (2d Cir.) (litigation regarding refusal by CIA to confirm or deny whether it possessed records involving covert funding of rebel forces in Syria); American Civil Liberties Union v. CIA, No. 18-2265 (2d Cir.) (request for records cited in the publicly released executive summary of the Senate Select Committee on Intelligence’s Committee Study of the CIA’s Detention and Interrogation Program); Osen v. CENTCOM, 19 Civ. 6867 (withholding of photographs depicting improvised explosive device (IED) attacks on U.S. military vehicles in Iraq); Open Society Justice Initiative v. Department of State et al., 19 Civ. 234 (requests for records from multiple members of the U.S. Intelligence Community concerning the killing of journalist Jamal Khashoggi); Osen v. OFAC, 19 Civ. 405 (challenges to withholding of classified information in memoranda and associated intelligence reports that supported the Office of Foreign Asset Control’s sanction designations of three charities that were determined to be support nodes for Hamas).
Tax and Bankruptcy
Civil Division AUSAs represent the interests of the United States in bankruptcy cases filed in the Southern District of New York, including bankruptcies of cryptocurrency companies, major pharmaceutical companies (including recently Purdue Pharma and Endo Pharmaceuticals), major domestic and foreign airlines (including American Airlines), car manufacturers (including Chrysler and General Motors), and countless other major companies (including Sears, AIG, and Lehman Brothers). Examples include:
- In re Purdue Pharma L.P., No. 23-124 (S. Ct): The Office represents the interests of the United States in the bankruptcy proceeding of Purdue Pharma L.P. Our representation includes advocating on behalf of the Department of Justice, the Department of Health and Human Services, and the Department of Veterans Affairs. The Office has also opposed efforts to permit an involuntary third-party release of the Sackler family, who are not debtors in the bankruptcy case, arguing, among other things, that the Bankruptcy Code does not authorize the release of non-debtors from personal liability to other non-debtors. The legality of third-party releases is presently before the Supreme Court.
- In re Voyager Digital Holdings, Inc., No. 23 Civ. 2171: In the bankruptcy of a cryptocurrency investment company, the bankruptcy court included a so-called “exculpation” clause in the debtors’ plan, which purported to extinguish (among other things) civil and criminal liability for the debtors’ and various third parties’ future acts. The Office has argued that the Bankruptcy Code does not permit such exculpation and that courts may not involuntarily release the government’s civil, criminal, and administrative claims.
Civil Division AUSAs also handle a variety of complex civil tax cases, including bringing affirmative cases to collect unpaid income and employment taxes and penalties (including FBAR penalties for taxpayers’ failures to report their foreign accounts), litigating tax shelter cases to prevent sophisticated corporate entities from engaging in abusive transactions to shield their income from taxation, and seeking injunctions to put fraudulent tax preparers and tax-shelter promoters out of business. Examples include:
- New York v. Mnuchin, No. 19-3962 (2d Cir.): In this case the States of New York, New Jersey, Connecticut, and Maryland challenged the constitutionality of a provision in the Tax Cuts and Jobs Act of 2017 that limited the Internal Revenue Code’s state and local tax deduction for individuals to $10,000. The Office successfully defended the provision in the district court and the Second Circuit Court of Appeals. Those courts agreed with our arguments that principles of federalism did not constrain Congress’s ability to limit this deduction and that the provision at issue did not coerce the states to change their own tax systems.
- AIG v. United States, No. 09 Civ. 1871: This case involved seven cross-border financial transactions that the United States asserted were abusive tax shelters designed to generate bogus foreign tax credits that AIG improperly attempted to use to reduce its tax liabilities in the United States. The Office asserted that these transactions lacked any meaningful economic substance, were devoid of any legitimate business purpose, and instead were designed solely to manufacture hundreds of millions of dollars in tax benefits to which AIG was not entitled. According to the terms of the settlement reached in 2020, AIG agreed that all foreign tax credits that it claimed for the 1997 tax year and all later tax years for these same transactions, totaling more than $400 million, would be disallowed in their entirety. AIG further agreed to pay a 10% tax penalty.
- United States v. Alvarez, No. 21 Civ. 1930: The Office filed a civil complaint alleging that Rafael Alvarez and his tax-preparation business ATAX New York LLC had prepared and filed fraudulent tax returns on behalf of their clients in which they falsely reduced their clients’ tax liabilities and generated tax refunds to which those clients were not entitled. As part of a settlement in 2021, the defendants admitted that they prepared and filed many federal income tax returns that included claims of expenses, losses, or “head of household” status that lacked adequate supporting information or documentation, and that these unsupported entries caused the clients’ tax liabilities to be substantially understated. The defendants consented to a permanent injunction that, among other things, prevented them from acting as federal tax return preparers, and they agreed to pay disgorgement.