CARBON BLACK MANUFACTURER AGREES TO SPEND $84 MILLION TO CONTROL AIR POLLUTION

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 19, 2013
Cabot Corporation Agrees to Spend Over $84 Million to Control Harmful Air Pollution at Louisiana and Texas Facilities

Boston-based Cabot Corporation, the second largest carbon black manufacturer in the United States, has agreed to pay a $975,000 civil penalty and spend an estimated $84 million on state of the art technology to control harmful air pollution, resolving alleged violations of the New Source Review (NSR) provisions of the Clean Air Act (CAA) at its three facilities in the towns of Franklin and Ville Platte, La., and Pampa, Texas, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.   This agreement is the first to result from a national enforcement initiative aimed at bringing carbon black manufacturers into compliance with the CAA’s NSR provisions.    

The state of Louisiana Department of Environmental Quality is a co-plaintiff in the case and will receive $292,500 of the penalty.

“By agreeing to pay an appropriate penalty and install state of the art technology to control harmful air pollution, Cabot Corp. is taking a positive step forward to address these alleged violations of the Clean Air Act,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division.  “This agreement will serve as a model for how the industry can come into compliance with the Clean Air Act by installing controls that prevent harmful pollution and improve air quality for surrounding communities.”

“With today’s commitment to invest in pollution controls, Cabot has raised the industry standard for environmental protection,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “These upgrades will have lasting, tangible impacts on improved respiratory health for local communities.  We expect others in the industry to take notice and realize their obligation to protect the communities in which they operate.”

“This is a huge win for the citizens of our district,” said U.S. Attorney Stephanie A. Finley.  “These harmful pollutants can cause serious, long term respiratory harm.  The United States Attorney’s Office is committed to the enforcement of the environmental laws and protection of the community.  This settlement promotes a healthier environment and an opportunity to allow the residents of the district to breathe cleaner air.”

At all three facilities, the settlement requires that Cabot optimize existing controls for particulate matter or soot, operate an “early warning” detection system that will alert facility operators to any particulate matter releases, and comply with a plan to control “fugitive emissions” which result from leaks or unintended releases of gases.   To address nitrogen oxide (NOx) pollution, Cabot must install selective catalytic reduction technology to significantly reduce emissions, install continuous monitoring, and comply with stringent limits.   At the two larger facilities in Louisiana, Cabot must address sulfur dioxide (SO2) pollution by installing wet gas scrubbers to control emissions, install continuous monitoring, and comply with stringent emissions limits.   In addition, the Texas facility is required to comply with a limit on the amount of sulfur in feedstock that is the lowest for any carbon black plant in the United States.

These measures are expected to reduce NOx emissions by approximately 1,975 tons per year, SO2 emissions by approximately 12,380 tons per year, and significantly improve existing particulate matter controls.  Exposure to NOx emissions can cause severe respiratory problems and contribute to childhood asthma.   SO2 and NOx can be converted to fine particulate matter once released in the air.  Fine particulates can be breathed in and lodged deep in the lungs, leading to a variety of health problems and even premature death.   The harmful health and environmental impacts from these pollutants can occur near the facilities as well as in communities far downwind from the plants.
       
In the complaint filed by DOJ on behalf of EPA, the government alleged that, between 2003 and 2009, Cabot made major modifications at its carbon black facilities without obtaining pre-construction permits and without installing and operating required pollution technology.  The complaint further alleges that these actions resulted in increased emissions of NOx and SO2, violating CAA requirements stating that companies must obtain the necessary permits prior to making modifications at a facility and must install and operate required pollution control equipment if those modifications will result in increases of certain pollutants.

Today’s action also requires that Cabot spend $450,000 on energy saving and pollution reduction projects that will benefit the communities surrounding the facilities in Franklin and Ville Platte, La., and in Pampa, Texas, such as upgrading air handling units at municipal buildings in the three communities to more efficient technology.  

Carbon black is a fine carbonaceous powder used as a structural support medium in tires and as a pigment in a variety of products such as plastic, rubber, inkjet toner and cosmetics.  It is produced by burning oil in a low oxygen environment; the oil is transformed into soot (carbon black), which is collected in a baghouse.  Because the oil used in the process is low value high sulfur oil, the manufacturing process creates significant amounts of SO2 and NOx, as well as particulate matter.

This settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions.  Since 2010, EPA has been focusing enforcement efforts on reducing emissions at carbon manufacturing plants in the United States.  Currently, none of the 15 carbon black manufacturing plants located in the United States have controls on emissions of SO2 and NOx or have continuous emissions monitors.

DEFUNCT COMPANY AND OWNER TO PAY OVER $300.000 TO SETTLE WHISTLEBLOWER LAWSUIT

FROM:  U.S. DEPARTMENT OF LABOR

Judge orders North Canton-based Star Air, Akron Reserve Ammunition,
owner to pay more than $300,000 to 2 terminated Ohio truck drivers
Consent judgment resolves lawsuit filed by Department of Labor
NORTH CANTON, Ohio — Under terms of a consent judgment, a now defunct North Canton, Ohio-based company, Star Air Inc., and owner Robert R. Custer, will pay two Ohio truck drivers $302,000 to resolve a lawsuit filed by the U.S. Department of Labor for terminating two of the company's drivers in violation of the 1982 Surface Transportation Assistance Act's whistleblower provisions. Akron Reserve Ammunition Inc., was also named a defendant in the lawsuit because the department alleges that the company, which is owned by Custer, is the successor to Star Air.

"These drivers were fired for trying to protect themselves and the driving public," said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. "No truck driver should be forced to drive while tired, sick or in violation of truck weight or hours-of-service requirements. OSHA will continue to defend America's truck drivers against unscrupulous employers who unlawfully retaliate against drivers who assert their right to drive safely."

The drivers were dismissed after one was stopped by West Virginia State Police and cited for: hauling an excess load without a commercial driver's license, operating an overweight trailer and driving without a logbook. The commercial vehicle also did not have the name of the company, its home base or its U.S. Department of Transportation number displayed. The driver who was cited informed another driver, who was also operating without the proper information displayed, and they refused to continue driving until these issues were resolved. Consequently, both were terminated.

Both drivers filed complaints with the Occupational Safety and Health Administration alleging that Star Air had discriminated against them in retaliation for activities protected by the STAA, and a Labor Department administrative law judge issued the order for reinstatement and back wages. Under automatic review provisions, the judge's decision then was referred to and upheld by the Administrative Review Board, which issues final decisions for the secretary of labor in cases arising under a wide range of worker protection laws.
The companies and Custer will pay the $302,000 agreed upon amount over a three-year period. If any party defaults on payments, the court can order the payment of the entire amount awarded in the judgment, which is $685,785.22. The U.S. District Court for the Northern District of Ohio, Eastern Division, in Akron made the ruling. The department is represented by its Regional Office of the Solicitor in Cleveland.

OSHA enforces the whistleblower provisions of the STAA and 21 other statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, motor vehicle safety, health-care reform, nuclear, pipeline, public transportation agency, railroad, maritime and securities laws.

Under the various whistleblower provisions enacted by Congress, employers are prohibited from retaliating against employees who raise various protected concerns or provide protected information to the employer or the government. Employees who believe that they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor for an investigation by OSHA's Whistleblower Protection Program.

NLRB Office of the General Counsel Authorizes Complaints against Walmart, Also Finds No Merit to Other Charges

NLRB Office of the General Counsel Authorizes Complaints against Walmart, Also Finds No Merit to Other Charges

FTC APPROVES MATTRESS SELLER SETTLEMENT REGARDING VOLATILE ORGANIC COMPOUNDS IN PRODUCTS

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Approves Final Consents Settling Charges That Mattress Sellers Lacked Scientific Evidence to Prove Products Were Free From Volatile Organic Compounds

Following a public comment period, the Federal Trade Commission has approved final consent orders in three cases involving allegedly deceptive environmental claims for mattresses. The FTC’s complaints, first announced in July, 2013, against Relief-Mart, Inc.; Esssentia Natural Memory Foam Company, Inc.; and Ecobaby Organics, Inc., charged the companies with making unsupported claims that the mattresses they sell are free of harmful volatile organic compounds (VOCs).

The FTC also charged that two of the companies made unsupported claims that their mattresses were chemical-free and odorless.  The FTC also challenged one company’s claim that its mattresses are made from 100 percent natural materials, and another company’s claim that its mattresses were certified by an organic mattress organization.

In settling the Commission’s charges, the companies have agreed not to make similar claims in the future, unless they have competent and reliable scientific evidence to prove they are true. In addition, Ecobaby is barred from making misrepresentations about certifications.

The Commission vote to approve the final orders and, in the cases of Essentia and EcoBaby, to send letters to the public commenters, was 4-0.  (FTC File Nos. 122-3128, Relief-Mart; 122-3129, Ecobaby Organics; 122-3130, Essentia Natural Memory Foam Company; the staff contact is Robin Moore, Bureau of Consumer Protection, 202-326-2167; see press release dated July 25, 2013)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

CALIFORNIA RESIDENT ORDERED TO PAY OVER $17 MILLION FOR ROLE IN FOREX FRAUD SCHEME

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION
Federal Court in Massachusetts Orders Lyndon Parrilla to Pay over $17 Million in Disgorgement, Restitution, and a Penalty in Forex Fraud Scheme

In a related criminal proceeding, Parrilla sentenced to 97 months in prison and ordered to pay restitution of more than $4.6 million

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order awarding restitution for defrauded customers, disgorgement, and a civil monetary penalty totaling more than $17 million against defendant Lyndon Parrilla, of California, in connection with an off-exchange foreign currency (forex) fraud scheme in which Parrilla and his company, Green Tree Capital (Green Tree), defrauded over 50 customers in the United States of over $4 million.

Judge Joseph L. Tauro of the U.S. District Court for the District of Massachusetts entered the final judgment and permanent injunction Order on October 24, 2013 (see Related Link), requiring Parrilla to pay restitution of $4,197,342 to defrauded customers, disgorgement of $3,353,925, and a $10 million civil monetary penalty. The Order also imposes permanent trading and registration bans against Parrilla and prohibits him from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

The Order stems from a CFTC Complaint filed on April 12, 2011, that charged Parrilla and Green Tree with fraud, misappropriation, and other CEA violations (see CFTC Press Release 6024-11). The court previously entered judgment against Green Tree on June 30, 2011.

The final judgment Order is based on the court’s findings set forth in an earlier Order, entered on September 30, 2013 (see Related Link), that finds that Parrilla and Green Tree fraudulently solicited over $4 million from at least 50 customers in the United States, from approximately October 2009 until April 2011, for the purported purpose of trading off-exchange forex contracts on a leveraged or margined basis in managed accounts.

In soliciting the funds, the Order finds that Parrilla, on behalf of Green Tree, misrepresented that Green Tree had a record of delivering consistently profitable returns when, in fact, it incurred trading losses since its inception, and almost 80 percent of customer funds was never traded or invested in any manner. In fact, according to the Order, Parrilla misappropriated over $3.3 million of customer funds to pay personal and entertainment expenses, including Las Vegas casino expenses, purchase automobiles and clothing, and ATM or cash withdrawals. To disguise these misrepresentations, trading losses, and misappropriations, Parrilla sent false Green Tree account statements to customers by email. Further, the Order finds that Parrilla misrepresented his experience and expertise, and failed to disclose that the National Futures Association (NFA) permanently barred him from NFA membership.

As a result of a parallel criminal action brought by the U.S. Attorney’s Office in November 2012, Parrilla was sentenced to, among other things, a term of 97 months imprisonment and ordered to pay restitution in the amount of $4,675,156.

The CFTC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the District of Massachusetts.

CFTC Division of Enforcement staff members responsible for this case are Alex C. Levine, David Chu, Lindsey Evans, Melissa Glasbrenner, Mary Beth Spear, Ava M. Gould, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.

JUSTICE ANNOUNCES OWNER OF MEDICAL CLINIC SENTENCED TO 15 YEARS IN PRISON FOR MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 12, 2013
Brooklyn Clinic Owner Sentenced for Role in $77 Million Medicare Fraud Scheme

The owner of a Brooklyn medical clinic was sentenced today to serve 15 years in prison for her leading role in a $77 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Irina Shelikhova, 50, of Brooklyn, was sentenced by U.S. District Judge Nina Gershon of the Eastern District of New York.  In addition to her prison term, Shelikhova was sentenced to serve three years of supervised release with a concurrent exclusion from Medicare, Medicaid and all Federal health programs, ordered to forfeit $36,241,545 and ordered to pay $50,943,386 in restitution.  Shelikhova has been in custody since her arrest at the John F. Kennedy International Airport on June 15, 2012, after living as a fugitive in Ukraine for nearly two years.  After serving her sentence, Shelikhova faces deportation from the United States.

Shelikhova pleaded guilty on Dec. 18, 2012, to one count of conspiracy to commit money laundering.  Including Shelikhova, 13 individuals have been convicted in this case.

Court documents state that from 2005 to 2010, Shelikhova owned and operated a clinic in Brooklyn that billed Medicare under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (collectively, Bay Medical clinic).  Shelikhova and her employees at the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary or never provided.  The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

According to trial testimony, Shelikhova masterminded the health care fraud at the Bay Medical clinic, which included hiring a medically unlicensed co-defendant to impersonate the clinic’s doctor and render medical care to patients.  Shelikhova also directed employees to create phony medical notes in an attempt to back up the false billing and to forge doctors’ names on prescriptions and charts.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, which showed conspirators paying cash kickbacks to corrupt Medicare beneficiaries.  The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010.  This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, Shelikhova directed the recruitment and operations of a network of external money launderers who cashed checks for the clinic.  Shelikhova wrote clinic checks payable to various shell companies controlled by the money launderers.  These checks did not represent payment for any legitimate service at or for the Bay Medical clinic, but rather were written to launder the clinic’s fraudulently obtained health care proceeds.  The money launderers cashed these checks and provided the cash back to the clinic.  Shelikhova used the cash to pay illegal cash kickbacks to the Bay Medical clinic’s purported patients.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  This case is being prosecuted by Trial Attorney Sarah M. Hall of the Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

CHECK CASHING COMPANY AND OWNER PLEAD GUILTY IN FRAUD CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 5, 2013
New York Check Cashing Company and Owner Plead Guilty for Roles in $19 Million Scheme

Belair Payroll Services Inc. (Belair), a multi-branch check cashing company in Flushing, N.Y., and its owner, Craig Panzera, 47, pleaded guilty today for failing to follow reporting and anti-money laundering requirements for more than $19 million in transactions, in violation of the Bank Secrecy Act (BSA).   Panzera also pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), and Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

As part of the guilty plea, Belair will forfeit $3,267,252.10, and Panzera will pay restitution in the amount of $946,841.17 to the IRS.  Sentencing for Belair and Panzera will be determined at a later date.

According to court records, from in or about June 2009 through June 2011, certain individuals presented to Belair’s manager and other employees checks to be cashed at Belair.  The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business.  The shell corporations and their corresponding bank accounts on which the checks were written were established in the names of foreign nationals, many of whom were no longer in the United States.

Belair accepted these checks and provided cash in excess of $10,000 to the individuals. Panzera and others at Belair never obtained any identification documents or information from those individuals.  Belair filed currency transaction reports (CTRs) that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair failed to indicate the full amount of cash provided to the individuals.  The individuals cashed more than $19 million through Belair during the course of the scheme.  Panzera and Belair willfully failed to maintain an effective anti-money laundering program by cashing these checks.

The charges in the indictment against Panzera’s and Belair’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

The cases are being investigated by agents from ICE Homeland Security Investigations and IRS-CI.  These cases are being prosecuted by Trial Attorneys Claiborne W. Porter and Kevin G. Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section’s (AFMLS) Money Laundering and Bank Integrity Unit, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit, and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The Unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.