FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, June 26, 2013
General Electric Aviation Systems to Pay U.S. $6.58 Million to Resolve False Claims Act Allegations
General Electric Aviation Systems (GEAS) has agreed to pay $6.58 million to settle allegations that it submitted false claims in connection with multiple Department of Defense contracts, the Justice Department announced today. GEAS, headquartered in Ohio, manufactures and sells integrated systems and components for commercial, corporate, military and marine aircraft.
"This case demonstrates the Department of Justice’s commitment to ensure that our military receives quality products to perform the important mission of protecting and defending our country," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. "The department will aggressively pursue those who put that mission at risk."
GEAS contracted to manufacture and deliver to the Navy external fuel tanks (EFTs) for use on the F/A-18 Hornet strike fighter jet. GEAS manufactured the EFTs at its plant in Santa Ana, California. In March 2008, a GEAS-manufactured EFT failed government testing, which led to a multi-year investigation by the local California offices of the Defense Contract Management Agency, the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Navy Criminal Investigative Service. As a result of that investigation, the United States alleged that GEAS knowingly failed to comply with contract specifications and failed to undertake proper quality control procedures in connection with 641 EFTs it delivered to the Navy between June 2005 and February 2008.
In addition, the settlement resolves allegations that, between June 2010 and June 2011, GEAS knew that it falsely represented to another government contractor that GEAS had performed a complete inspection of 228 drag beams to be used on Army UH-60 Blackhawk helicopters, and that those 228 drag beams conformed to all contract specifications.
"Defense contractors agree to provide the government with a quality product, and in doing so, they promise to follow strict manufacturing and testing protocols to ensure that our military receives only the best equipment," said André Birotte Jr., U.S. Attorney for the Central District of California. "In this case, some of the hardware sold to the government did not meet quality-control standards, and that failure could have put our service members at risk. This multimillion dollar settlement is designed to ensure that General Electric Aviation Systems does not engage in this type of misconduct in the future, and this case should serve as a warning to any government contractor who thinks it can cut corners."
Carter Stewart, U.S. Attorney for the Southern District of Ohio, added, "We are determined to protect the integrity of the system that provides goods and services to the men and women who serve in the armed forces. The False Claims Act is an effective and powerful tool to help us carry out our mission."
Allegations about GEAS’s misconduct at the Santa Ana facility were included in a lawsuit filed by former GEAS Santa Ana employee Jeffrey Adler under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals called "relators" to bring lawsuits for false claims on behalf of the United States, and to receive a portion of the proceeds of any settlement or judgment. Mr. Adler’s share of the settlement has not yet been determined.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Central District of California; the U.S. Attorney’s Office for the Southern District of Ohio; the Defense Contract Management Agency; the Defense Contract Audit Agency; the Defense Criminal Investigative Service; and the Navy Criminal Investigative Service in investigating and resolving the allegations.
Friday, July 5, 2013
Thursday, July 4, 2013
THE 78TH ANNIVERSARY OF THE NATIONAL LABOR RELATIONS ACT
FROM: NATIONAL LABOR RELATIONS BOARD
Statement of National Labor Relations Board Chairman Mark Gaston Pearce on the 78th Anniversary of the Signing of the National Labor Relations Act
"Seventy-eight years ago this week, President Franklin D. Roosevelt signed the National Labor Relations Act and declared that "a better relationship between labor and management is the high purpose of this Act." By guaranteeing the right of most of America’s workers to bargain collectively, FDR expressed his belief that the law would foster "the development of the employment contract on a sound and equitable basis."
"For 78 years, the National Labor Relations Board has worked to fulfill the promise made to working Americans by FDR and Congress when they enacted the National Labor Relations Act. Our job today, just as it has been since the Great Depression, is to ensure the right of millions of working men and women to organize and bargain collectively for better wages, benefits and working conditions, to protect companies from unfair labor practices and to resolve disputes by enforcing the law. We continue to play a vital role in defining the rules of the road, so that business owners and employees alike can prosper and improve the lives of their families, their communities and our country.
"The National Labor Relations Board is proud of our on-going work to guarantee democracy in the workplace and sustain a strong and expanding middle class. Across the country today, businesses and workers are pulling together to emerge from the worst economy since the 1930s. We look forward to continuing our work to help them resolve disputes and build an economy that works for every American family."
Statement of National Labor Relations Board Chairman Mark Gaston Pearce on the 78th Anniversary of the Signing of the National Labor Relations Act
"Seventy-eight years ago this week, President Franklin D. Roosevelt signed the National Labor Relations Act and declared that "a better relationship between labor and management is the high purpose of this Act." By guaranteeing the right of most of America’s workers to bargain collectively, FDR expressed his belief that the law would foster "the development of the employment contract on a sound and equitable basis."
"For 78 years, the National Labor Relations Board has worked to fulfill the promise made to working Americans by FDR and Congress when they enacted the National Labor Relations Act. Our job today, just as it has been since the Great Depression, is to ensure the right of millions of working men and women to organize and bargain collectively for better wages, benefits and working conditions, to protect companies from unfair labor practices and to resolve disputes by enforcing the law. We continue to play a vital role in defining the rules of the road, so that business owners and employees alike can prosper and improve the lives of their families, their communities and our country.
"The National Labor Relations Board is proud of our on-going work to guarantee democracy in the workplace and sustain a strong and expanding middle class. Across the country today, businesses and workers are pulling together to emerge from the worst economy since the 1930s. We look forward to continuing our work to help them resolve disputes and build an economy that works for every American family."
Wednesday, July 3, 2013
SUNCOKE ENERGY REACHES AGREEMENT WITH U.S. GOVERNMENT OVER CLEAN AIR ACT VIOLATIONS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, June 26, 2013
United States Reaches Agreement with Suncoke Energy Resolving Clean Air Violations at Plants in Illinois and Ohio
SunCoke Energy Inc. and two of its subsidiaries have agreed to pay $1.995 million to resolve alleged Clean Air Act violations of emission limits at the Gateway Energy and Coke plant in Granite City, Illinois, and the Haverhill Coke plant in Franklin Furnace, Ohio, announced the Justice Department and the U.S. Environmental Protection Agency.
The companies will also spend $255,000 on a lead abatement project in southern Illinois to reduce lead hazards in owner-occupied low income residences with priority given to families with young children or pregnant women. The companies will pay a penalty of $1.27 million to the United States, $575,000 to the State of Illinois, and $150,000 to the State of Ohio. Illinois and Ohio are co-plaintiffs in this case.
"This settlement is good news for communities in Illinois and Ohio, who will benefit from these substantial reductions in harmful air pollution and enjoy cleaner, healthier air to breathe for many years to come," said Acting Assistant Attorney General Robert G. Dreher. "It also reflects our continuing commitment to protecting the people and environment of the United States through the vigorous enforcement of the Clean Air Act."
"The substantial upgrades required by today’s settlement will reduce air pollution that can harm public health and the environment," said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. "EPA is committed to reducing toxic air pollution from sources that have an impact on the health of communities."
"This settlement provides a long-term solution to protect air quality and control emissions," said Ohio Attorney General Mike DeWine. "We will continue to work with other agencies to protect Ohio families from environmental harm."
"The facility upgrades and stricter emission limits mandated in this settlement will dramatically reduce harmful pollution levels and improve overall air quality in the communities surrounding these facilities," said Illinois Attorney General Lisa Madigan.
In addition, the companies will spend approximately $100 million at the two heat recovery coking facilities to install equipment known as heat recovery steam generators (HRSGs) to ensure that hot coking gases are routed to pollution control equipment and not vented directly into the atmosphere. If future emissions exceed the requisite threshold at a third facility, in Middletown, Ohio, then SunCoke will have to install an additional HRSG at that facility to prevent uncontrolled venting of coking gases. They will also spend an estimated $700,000 on equipment to continuously monitor sulfur dioxide (SO2) emissions at the Gateway and Haverhill facilities.
Further, the companies have agreed to accept more stringent emission limits than required in their current permits for SO2 and particulate matter and, in the case of the Gateway Facility, lead. SO2 contributes to acid rain and exacerbates respiratory illness, particularly in children and the elderly. Exposure to particulate pollution has been linked to health impacts that include decreased lung function, aggravated asthma and premature death in people with heart or lung disease.
The primary violations alleged relate to excessive bypass venting of hot coking gases directly to the atmosphere, resulting in excess SO2 and particulate matter emissions from the facilities’ waste heat and main stacks, in violation of applicable permit limits. Coke oven emissions are a known human carcinogen. Chronic (long-term) exposure in humans can result in conjunctivitis, severe dermatitis and lesions of the respiratory system and digestive system. The additional equipment installed at the facilities will result in estimated emissions reductions of over 1200 tons per year of SO2, over 130 tons per year of particulate matter, 252 tons per year of hydrochloric and sulfuric acid gases and over 1800 pounds per year of lead.
Both facilities are located in areas that do not meet federal health-based standards for soot. The Illinois facility is located in an area that also does not meet the federal air pollution standard for lead.
Reducing illegal emissions of toxic air pollutants at facilities that have a significant impact on air quality and health in communities is one of EPA’s national enforcement priorities. Excess emissions from chemical plants and other industries can result in releases of hazardous air pollutants, or air toxics that are known or suspected to cause cancer, birth defects, and seriously impact the environment.
Wednesday, June 26, 2013
United States Reaches Agreement with Suncoke Energy Resolving Clean Air Violations at Plants in Illinois and Ohio
SunCoke Energy Inc. and two of its subsidiaries have agreed to pay $1.995 million to resolve alleged Clean Air Act violations of emission limits at the Gateway Energy and Coke plant in Granite City, Illinois, and the Haverhill Coke plant in Franklin Furnace, Ohio, announced the Justice Department and the U.S. Environmental Protection Agency.
The companies will also spend $255,000 on a lead abatement project in southern Illinois to reduce lead hazards in owner-occupied low income residences with priority given to families with young children or pregnant women. The companies will pay a penalty of $1.27 million to the United States, $575,000 to the State of Illinois, and $150,000 to the State of Ohio. Illinois and Ohio are co-plaintiffs in this case.
"This settlement is good news for communities in Illinois and Ohio, who will benefit from these substantial reductions in harmful air pollution and enjoy cleaner, healthier air to breathe for many years to come," said Acting Assistant Attorney General Robert G. Dreher. "It also reflects our continuing commitment to protecting the people and environment of the United States through the vigorous enforcement of the Clean Air Act."
"The substantial upgrades required by today’s settlement will reduce air pollution that can harm public health and the environment," said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. "EPA is committed to reducing toxic air pollution from sources that have an impact on the health of communities."
"This settlement provides a long-term solution to protect air quality and control emissions," said Ohio Attorney General Mike DeWine. "We will continue to work with other agencies to protect Ohio families from environmental harm."
"The facility upgrades and stricter emission limits mandated in this settlement will dramatically reduce harmful pollution levels and improve overall air quality in the communities surrounding these facilities," said Illinois Attorney General Lisa Madigan.
In addition, the companies will spend approximately $100 million at the two heat recovery coking facilities to install equipment known as heat recovery steam generators (HRSGs) to ensure that hot coking gases are routed to pollution control equipment and not vented directly into the atmosphere. If future emissions exceed the requisite threshold at a third facility, in Middletown, Ohio, then SunCoke will have to install an additional HRSG at that facility to prevent uncontrolled venting of coking gases. They will also spend an estimated $700,000 on equipment to continuously monitor sulfur dioxide (SO2) emissions at the Gateway and Haverhill facilities.
Further, the companies have agreed to accept more stringent emission limits than required in their current permits for SO2 and particulate matter and, in the case of the Gateway Facility, lead. SO2 contributes to acid rain and exacerbates respiratory illness, particularly in children and the elderly. Exposure to particulate pollution has been linked to health impacts that include decreased lung function, aggravated asthma and premature death in people with heart or lung disease.
The primary violations alleged relate to excessive bypass venting of hot coking gases directly to the atmosphere, resulting in excess SO2 and particulate matter emissions from the facilities’ waste heat and main stacks, in violation of applicable permit limits. Coke oven emissions are a known human carcinogen. Chronic (long-term) exposure in humans can result in conjunctivitis, severe dermatitis and lesions of the respiratory system and digestive system. The additional equipment installed at the facilities will result in estimated emissions reductions of over 1200 tons per year of SO2, over 130 tons per year of particulate matter, 252 tons per year of hydrochloric and sulfuric acid gases and over 1800 pounds per year of lead.
Both facilities are located in areas that do not meet federal health-based standards for soot. The Illinois facility is located in an area that also does not meet the federal air pollution standard for lead.
Reducing illegal emissions of toxic air pollutants at facilities that have a significant impact on air quality and health in communities is one of EPA’s national enforcement priorities. Excess emissions from chemical plants and other industries can result in releases of hazardous air pollutants, or air toxics that are known or suspected to cause cancer, birth defects, and seriously impact the environment.
Tuesday, July 2, 2013
CFTC ACCUSES MF GLOBAL INC., MF GLOBAL HOLDINGS LTD., WITH UNLAWFUL USE OF CUSTOMER FUNDS.
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Charges MF Global Inc., MF Global Holdings Ltd., Former CEO Jon S. Corzine, and Former Employee Edith O’Brien for MF Global’s Unlawful Misuse of Nearly One Billion Dollars of Customer Funds and Related Violations
Settlement of charges against MF Global, subject to court approval, directs payment of all funds still owed to commodity customers and imposes a $100 million penalty against the company
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed an enforcement action in the United States District Court for the Southern District of New York against MF Global Inc. (MF Global), a registered futures commission merchant (FCM), MF Global Holdings Ltd. (Holdings), former Chief Executive Officer of MF Global and Holdings Jon S. Corzine, and former Assistant Treasurer of MF Global Edith O’Brien based on, among other violations, MF Global’s unlawful use of customer funds that harmed thousands of customers and violated fundamental customer protection laws on an unprecedented scale.
MF Global has agreed to settle all charges against it on terms set forth in a proposed order that is subject to court approval and includes 100% restitution of the approximately $1 billion lost by all commodity customers when the firm failed on October 31, 2011. Commissioner Jill Sommers stated, "I am pleased that the MF Global Trustee has agreed to settle the charges against the company. There is nothing more important than doing everything possible to make full restitution to all commodity customers. I am also proud of the members of the Division of Enforcement team, who have worked so hard on this case to bring us to where we are today."
According to the Complaint, Corzine, a former U.S. Senator and New Jersey Governor with more than twenty years of Wall Street experience, joined MF Global as CEO in March 2010 with a plan to transform the firm from a futures broker into a major investment bank. Corzine’s strategy called for making increasingly risky and larger investments of the firm’s money. In the summer and fall of 2011, as MF Global’s need for cash was rising and its sources of cash were diminishing, Corzine knew that the firm was relying more and more on proprietary funds that it held alongside customer funds in FCM customer accounts. During this time, Corzine did not enhance MF Global’s deficient systems and controls sufficiently to ensure that the firm’s increasing reliance on FCM cash did not result in unlawful uses of customer money. Ultimately, these failures contributed to the massive customer losses.
As alleged, during October 2011, MF Global was on the brink of failure and in desperate need of cash to survive. As Holdings’ Treasurer told Holdings’ CFO at that time, in one of many recorded phone calls obtained by the CFTC, the firm was "skating on the edge," without "much ice left." Corzine was warned about the firm’s liquidity stresses, and he knew that the firm violated its own policy that had been designed to protect customer funds. Holdings’ Treasurer recommended to Holdings’ CFO in a recorded call, "we have to tell Jon that enough is enough. We need to take the keys away from him."
In the last week of October 2011, with virtually no other sources of immediate cash to turn to, the firm repeatedly and unlawfully used customer funds for firm needs, ultimately leaving it nearly $1 billion short of customer funds. In that last week, Corzine is alleged to have been aware of the firm’s true low cash balance, even as he directed the firm to continue paying large obligations without inquiring how the firm could come up with the money to do so. Corzine is charged for the firm’s violations as an MF Global "control person" who, among other things, did not act in good faith and is also charged with violating his legal obligations to diligently supervise.
David Meister, the CFTC’s Enforcement Director, said, "Turning a profit is not the only job of the person at the top of a CFTC-regulated firm. Particularly in times of crisis, the person in control, like the CEO here, must do what’s necessary to prevent unlawful uses of customer money, so that customers’ money is still there if and when the music stops. The allegations in our Complaint serve as a stark reminder that we will enforce the law against responsible individuals at all levels of a firm to ensure that customer funds are properly safeguarded every minute of every day."
O’Brien, MF Global’s Assistant Treasurer, is charged with aiding and abetting the firm’s misuse of customer funds. According to the Complaint, she directed, approved, and/or caused improper transfers of hundreds of millions of dollars from customer accounts to help meet the firm’s needs during the final days of October 2011, while knowing that MF Global did not have sufficient proprietary funds available in those customer accounts for those transfers. The Complaint alleges that O’Brien remarked in a recorded telephone conversation that it "could be game over" from a regulatory perspective if funds were not returned to customer accounts on Friday, October 28, 2011, MF Global’s final business day.
With respect to the company defendants, in addition to the misuse of customer funds described above, the Complaint charges that MF Global (i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts; (ii) filed false reports with the CFTC that failed to show the deficits in the customer accounts; and (iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation; and that Holdings controlled the operations of MF Global and is therefore liable as a principal for MF Global’s violations of the Commodity Exchange Act and CFTC regulations.
If approved by the United States District Court and the United States Bankruptcy Court, the proposed settlement of all charges against MF Global will require 100% restitution of all remaining commodity customer claims. The proposed order also includes the imposition of a $100 million penalty, which can be paid to the extent MF Global has not fully exhausted all available funds and assets paying customers and then other creditors entitled to priority under bankruptcy law.
The CFTC also seeks full restitution and penalties against Holdings, Corzine, and O’Brien, in addition to trading and registration bans and injunctions against Corzine and O’Brien.
The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.
CFTC Division of Enforcement staff members responsible for this case are Candice Aloisi, Elizabeth Brennan, Patryk Chudy, Christopher Giglio, Sheila Marhamati, David W. Oakland, Joseph Rosenberg, Michael Berlowitz, Karin Roth, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, Stephen J. Obie, and Vincent McGonagle. Jeremy Christianson from the CFTC’s Office of Data and Technology also assisted in this matter, along with staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk.
CFTC Charges MF Global Inc., MF Global Holdings Ltd., Former CEO Jon S. Corzine, and Former Employee Edith O’Brien for MF Global’s Unlawful Misuse of Nearly One Billion Dollars of Customer Funds and Related Violations
Settlement of charges against MF Global, subject to court approval, directs payment of all funds still owed to commodity customers and imposes a $100 million penalty against the company
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed an enforcement action in the United States District Court for the Southern District of New York against MF Global Inc. (MF Global), a registered futures commission merchant (FCM), MF Global Holdings Ltd. (Holdings), former Chief Executive Officer of MF Global and Holdings Jon S. Corzine, and former Assistant Treasurer of MF Global Edith O’Brien based on, among other violations, MF Global’s unlawful use of customer funds that harmed thousands of customers and violated fundamental customer protection laws on an unprecedented scale.
MF Global has agreed to settle all charges against it on terms set forth in a proposed order that is subject to court approval and includes 100% restitution of the approximately $1 billion lost by all commodity customers when the firm failed on October 31, 2011. Commissioner Jill Sommers stated, "I am pleased that the MF Global Trustee has agreed to settle the charges against the company. There is nothing more important than doing everything possible to make full restitution to all commodity customers. I am also proud of the members of the Division of Enforcement team, who have worked so hard on this case to bring us to where we are today."
According to the Complaint, Corzine, a former U.S. Senator and New Jersey Governor with more than twenty years of Wall Street experience, joined MF Global as CEO in March 2010 with a plan to transform the firm from a futures broker into a major investment bank. Corzine’s strategy called for making increasingly risky and larger investments of the firm’s money. In the summer and fall of 2011, as MF Global’s need for cash was rising and its sources of cash were diminishing, Corzine knew that the firm was relying more and more on proprietary funds that it held alongside customer funds in FCM customer accounts. During this time, Corzine did not enhance MF Global’s deficient systems and controls sufficiently to ensure that the firm’s increasing reliance on FCM cash did not result in unlawful uses of customer money. Ultimately, these failures contributed to the massive customer losses.
As alleged, during October 2011, MF Global was on the brink of failure and in desperate need of cash to survive. As Holdings’ Treasurer told Holdings’ CFO at that time, in one of many recorded phone calls obtained by the CFTC, the firm was "skating on the edge," without "much ice left." Corzine was warned about the firm’s liquidity stresses, and he knew that the firm violated its own policy that had been designed to protect customer funds. Holdings’ Treasurer recommended to Holdings’ CFO in a recorded call, "we have to tell Jon that enough is enough. We need to take the keys away from him."
In the last week of October 2011, with virtually no other sources of immediate cash to turn to, the firm repeatedly and unlawfully used customer funds for firm needs, ultimately leaving it nearly $1 billion short of customer funds. In that last week, Corzine is alleged to have been aware of the firm’s true low cash balance, even as he directed the firm to continue paying large obligations without inquiring how the firm could come up with the money to do so. Corzine is charged for the firm’s violations as an MF Global "control person" who, among other things, did not act in good faith and is also charged with violating his legal obligations to diligently supervise.
David Meister, the CFTC’s Enforcement Director, said, "Turning a profit is not the only job of the person at the top of a CFTC-regulated firm. Particularly in times of crisis, the person in control, like the CEO here, must do what’s necessary to prevent unlawful uses of customer money, so that customers’ money is still there if and when the music stops. The allegations in our Complaint serve as a stark reminder that we will enforce the law against responsible individuals at all levels of a firm to ensure that customer funds are properly safeguarded every minute of every day."
O’Brien, MF Global’s Assistant Treasurer, is charged with aiding and abetting the firm’s misuse of customer funds. According to the Complaint, she directed, approved, and/or caused improper transfers of hundreds of millions of dollars from customer accounts to help meet the firm’s needs during the final days of October 2011, while knowing that MF Global did not have sufficient proprietary funds available in those customer accounts for those transfers. The Complaint alleges that O’Brien remarked in a recorded telephone conversation that it "could be game over" from a regulatory perspective if funds were not returned to customer accounts on Friday, October 28, 2011, MF Global’s final business day.
With respect to the company defendants, in addition to the misuse of customer funds described above, the Complaint charges that MF Global (i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts; (ii) filed false reports with the CFTC that failed to show the deficits in the customer accounts; and (iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation; and that Holdings controlled the operations of MF Global and is therefore liable as a principal for MF Global’s violations of the Commodity Exchange Act and CFTC regulations.
If approved by the United States District Court and the United States Bankruptcy Court, the proposed settlement of all charges against MF Global will require 100% restitution of all remaining commodity customer claims. The proposed order also includes the imposition of a $100 million penalty, which can be paid to the extent MF Global has not fully exhausted all available funds and assets paying customers and then other creditors entitled to priority under bankruptcy law.
The CFTC also seeks full restitution and penalties against Holdings, Corzine, and O’Brien, in addition to trading and registration bans and injunctions against Corzine and O’Brien.
The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.
CFTC Division of Enforcement staff members responsible for this case are Candice Aloisi, Elizabeth Brennan, Patryk Chudy, Christopher Giglio, Sheila Marhamati, David W. Oakland, Joseph Rosenberg, Michael Berlowitz, Karin Roth, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, Stephen J. Obie, and Vincent McGonagle. Jeremy Christianson from the CFTC’s Office of Data and Technology also assisted in this matter, along with staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk.
Monday, July 1, 2013
COURT AGREES WITH MSHA ON EMERGENCY LIFELINE STANDARD IN MINES
FROM: U.S. DEPARTMENT OF LABOR
D.C. Circuit Court upholds determination involving MSHA’s emergency lifeline standard
ARLINGTON, Va. — The U.S. Department of Labor's Mine Safety and Health Administration today applauded a decision by the U.S. Court of Appeals for the District of Columbia Circuit, which held that the failure to maintain emergency lifelines in a manner for miners to use effectively is a significant and substantial violation of the Federal Mine Safety and Health Act of 1977, regardless of the likelihood of a mine emergency actually occurring at the time of the violation.
The court unanimously upheld the secretary of labor's interpretation that, in evaluating the significant and substantial nature of violations of standards that come into play only in the event of an emergency, one must assume the occurrence of the emergency. The court agreed that "emergency safety standards are fundamentally different from non-emergency standards because they are designed to apply meaningfully only in times of emergency."
Under Section 104(d)(1) of the Mine Act, if the authorized representative finds that there has been a violation of a mandatory health or safety standard and also finds that the violation "is of such nature as could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard," then the inspector is to include that finding in the citation issued for the violation. Such a finding of a significant and substantial violation is a precondition for enhanced enforcement actions under the Mine Act.
In its June 7 ruling, the court upheld a determination by the Federal Mine Safety and Health Review Commission that a mining company's failures regarding emergency lifelines were in violation of the Federal Mine Safety and Health Act of 1977. The appeal involved Cumberland Coal Resources LP's Cumberland Mine in Greene County, Pa.
Cumberland argued that the commission applied the wrong standard when it reversed an administrative law judge's determination that the violations were not significant and substantial, and that even if it applied the correct standard, its findings were not supported by substantial evidence.
During a December 2007 inspection, an MSHA special investigator inspected four of Cumberland Mine's escapeways over a four-day period and issued a citation for each, alleging a violation of the lifeline requirement. The investigator designated each violation as significant and substantial, finding that, in the event of an emergency, requiring miners to use the lifeline and the location of the lifeline would have delayed miners' escape, and that the delay would have been reasonably likely to result in serious injury or death.
The regulation at issue in this case was implemented as a result of amendments to the Mine Act enacted in response to three multiple-fatality mine disasters in 2006 at Sago, Aracoma and Darby mines, in which miners who were unable to successfully evacuate mines died. Specifically, the Mine Improvement and New Emergency Response Act of 2006 (MINER Act) requires mine operators to provide flame resistant and directional lifelines in escapeways to enable evacuation. Also in response to the disasters, the secretary of labor promulgated an emergency temporary standard, which became final, requiring lifelines to be located in a manner for miners to use effectively to escape.
"Mine emergency protections need to be in place before an emergency occurs," said Joseph A. Main, assistant secretary of labor for mine safety and health. "The court recognized that the absence of such protections is a serious matter, to be taken seriously if miners are to have these protections when they need them the most."
D.C. Circuit Court upholds determination involving MSHA’s emergency lifeline standard
ARLINGTON, Va. — The U.S. Department of Labor's Mine Safety and Health Administration today applauded a decision by the U.S. Court of Appeals for the District of Columbia Circuit, which held that the failure to maintain emergency lifelines in a manner for miners to use effectively is a significant and substantial violation of the Federal Mine Safety and Health Act of 1977, regardless of the likelihood of a mine emergency actually occurring at the time of the violation.
The court unanimously upheld the secretary of labor's interpretation that, in evaluating the significant and substantial nature of violations of standards that come into play only in the event of an emergency, one must assume the occurrence of the emergency. The court agreed that "emergency safety standards are fundamentally different from non-emergency standards because they are designed to apply meaningfully only in times of emergency."
Under Section 104(d)(1) of the Mine Act, if the authorized representative finds that there has been a violation of a mandatory health or safety standard and also finds that the violation "is of such nature as could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard," then the inspector is to include that finding in the citation issued for the violation. Such a finding of a significant and substantial violation is a precondition for enhanced enforcement actions under the Mine Act.
In its June 7 ruling, the court upheld a determination by the Federal Mine Safety and Health Review Commission that a mining company's failures regarding emergency lifelines were in violation of the Federal Mine Safety and Health Act of 1977. The appeal involved Cumberland Coal Resources LP's Cumberland Mine in Greene County, Pa.
Cumberland argued that the commission applied the wrong standard when it reversed an administrative law judge's determination that the violations were not significant and substantial, and that even if it applied the correct standard, its findings were not supported by substantial evidence.
During a December 2007 inspection, an MSHA special investigator inspected four of Cumberland Mine's escapeways over a four-day period and issued a citation for each, alleging a violation of the lifeline requirement. The investigator designated each violation as significant and substantial, finding that, in the event of an emergency, requiring miners to use the lifeline and the location of the lifeline would have delayed miners' escape, and that the delay would have been reasonably likely to result in serious injury or death.
The regulation at issue in this case was implemented as a result of amendments to the Mine Act enacted in response to three multiple-fatality mine disasters in 2006 at Sago, Aracoma and Darby mines, in which miners who were unable to successfully evacuate mines died. Specifically, the Mine Improvement and New Emergency Response Act of 2006 (MINER Act) requires mine operators to provide flame resistant and directional lifelines in escapeways to enable evacuation. Also in response to the disasters, the secretary of labor promulgated an emergency temporary standard, which became final, requiring lifelines to be located in a manner for miners to use effectively to escape.
"Mine emergency protections need to be in place before an emergency occurs," said Joseph A. Main, assistant secretary of labor for mine safety and health. "The court recognized that the absence of such protections is a serious matter, to be taken seriously if miners are to have these protections when they need them the most."
Sunday, June 30, 2013
SINOVEL CORP. AND THREE INDIVIDUALS CHARGED WITH THEFT OF TRADE SECRETS
FROM: U.S. JUSTICE DEPARTMENT
Thursday, June 27, 2013
Sinovel Corporation and Three Individuals Charged in Wisconsin with Theft of Amsc Trade Secrets
Theft of Trade Secrets Allegedly Cheated Amsc of More Than $800 Million
A manufacturer and exporter of wind turbines based in the People’s Republic of China, two employees of that manufacturer and a former employee of a subsidiary of AMSC, a United States-based company formerly known as American Superconductor Inc., were charged today with stealing trade secrets from AMSC causing an alleged loss of more than $800 million to the company, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Wisconsin John W. Vaudreuil.
A federal grand jury in the Western District of Wisconsin returned an indictment charging Sinovel Wind Group Co. Ltd., dba Sinovel Wind Group (USA) Co. Ltd.; Su Liying, 36, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, 33, a technology manager for Sinovel; and Dejan Karabasevic, 40, a former employee of AMSC Windtec GmbH, a wholly-owned subsidiary of AMSC, with one count each of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud.
"Today, we announce charges against Sinovel and three individuals for stealing proprietary wind turbine technology from AMSC in order to produce their own turbines powered by stolen intellectual property," said Acting Assistant Attorney General Raman. "This charged IP theft caused significant harm to a domestic company that develops cutting edge technology and employs Americans throughout the country. Stamping out intellectual property theft is a top priority for this administration, and we will continue to work with our IP Task Force partners to ensure that American ingenuity is protected."
"The allegations in this indictment describe a well-planned attack on an American business by international defendants--nothing short of attempted corporate homicide," said U.S. Attorney Vaudreuil. "The Department of Justice and this office are committed to protecting American commerce and aggressively prosecuting those who seek to steal and use our intellectual property. I commend the efforts of the FBI and their Austrian counterparts in this long-term international investigation, and the assistance provided by the owners and operators of the Massachusetts turbines."
"The Sinovel case is a classic example of the growing insider threat facing our nation's corporations and their intellectual property," said FBI Executive Assistant Director Richard McFeely. "The FBI will not stand by and watch the hemorrhage of U.S. intellectual property to foreign countries who seek to gain an unfair advantage for their military and their industries. We are actively working with our private sector and government partners to disrupt and impact those who have made it their mission to steal U.S. military and corporate secrets. Since 2008, our economic espionage arrests have doubled; indictments have increased five-fold; and convictions have risen eight-fold."
Karabasevic headed the automation engineering department at AMSC Windtec in Klagenfurt, Austria. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria, but now lives in Serbia.
According to the indictment, AMSC developed and sold software and equipment to regulate the flow of electricity from wind turbines to electrical grids, and it considered the software and equipment to be trade secrets and proprietary information. The software that runs the PM3000, a part of AMSC’s wind turbine electrical control system, was developed in Wisconsin and was stored on a computer in AMSC’s office in Middleton, Wis. The PM3000 worked with other products, including AMSC’s Low Voltage Ride Through (LVRT) software. The LVRT system is designed to keep a wind turbine operational when there is a temporary sag or dip in flow of electricity in the electrical grid.
Sinovel purchased software and equipment from AMSC for the wind turbines that Sinovel manufactured, sold and serviced. According to the indictment, in March 2011, Sinovel owed AMSC more than $100 million for products and services previously delivered and had entered into contracts to purchase more than $700 million in products and services from AMSC in the future.
The indictment alleges that the four defendants conspired to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delivered products and services, thereby cheating AMSC out of more than $800 million.
The indictment alleges that Sinovel, through Su and Zhao, recruited Karabasevic to leave AMSC Windtec and join Sinovel, and to secretly copy intellectual property from the AMSC computer system. The four defendants are charged with stealing the PM3000 source code from AMSC on March 7, 2011, and transmitting it by downloading it from an AMSC computer in Wisconsin to a computer in Klagenfurt.
The indictment alleges that following the theft of AMSC’s intellectual property, Sinovel commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the software stolen from AMSC. The U.S.-based builders and operators of these Massachusetts turbines have cooperated in this investigation.
If convicted, Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, meaning Sinovel would face a fine for each count charged of up to twice the alleged loss of more than $800 million.
If convicted, Su, Zhao and Karabasevic each face a maximum penalty of five years in prison on the conspiracy charge, 10 years in prison for theft of a trade secret and 20 years in prison for wire fraud.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the Madison, Milwaukee and Boston offices of the FBI; the FBI Legal Attachés’ Offices in Vienna, Austria and Beijing; the FBI Criminal Investigative Division; the FBI Intellectual Property Rights Unit; the Bundeskriminalamt (Federal Criminal Intelligence Service) and the Bundesministerium Fuer Justiz (Federal Ministry of Justice) in Austria; the Landeskriminalamt - Klagenfurt and the Staatsanwaltschaft - Klagenfurt (Criminal Investigative Police and State Prosecutor's Office – Klagenfurt, Austria); and with the assistance of the Justice Department’s Office of International Affairs. The case is being prosecuted by Assistant U.S. Attorneys Timothy M. O’Shea and Munish Sharda, and Trial Attorney Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section.
Thursday, June 27, 2013
Sinovel Corporation and Three Individuals Charged in Wisconsin with Theft of Amsc Trade Secrets
Theft of Trade Secrets Allegedly Cheated Amsc of More Than $800 Million
A manufacturer and exporter of wind turbines based in the People’s Republic of China, two employees of that manufacturer and a former employee of a subsidiary of AMSC, a United States-based company formerly known as American Superconductor Inc., were charged today with stealing trade secrets from AMSC causing an alleged loss of more than $800 million to the company, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Wisconsin John W. Vaudreuil.
A federal grand jury in the Western District of Wisconsin returned an indictment charging Sinovel Wind Group Co. Ltd., dba Sinovel Wind Group (USA) Co. Ltd.; Su Liying, 36, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, 33, a technology manager for Sinovel; and Dejan Karabasevic, 40, a former employee of AMSC Windtec GmbH, a wholly-owned subsidiary of AMSC, with one count each of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud.
"Today, we announce charges against Sinovel and three individuals for stealing proprietary wind turbine technology from AMSC in order to produce their own turbines powered by stolen intellectual property," said Acting Assistant Attorney General Raman. "This charged IP theft caused significant harm to a domestic company that develops cutting edge technology and employs Americans throughout the country. Stamping out intellectual property theft is a top priority for this administration, and we will continue to work with our IP Task Force partners to ensure that American ingenuity is protected."
"The allegations in this indictment describe a well-planned attack on an American business by international defendants--nothing short of attempted corporate homicide," said U.S. Attorney Vaudreuil. "The Department of Justice and this office are committed to protecting American commerce and aggressively prosecuting those who seek to steal and use our intellectual property. I commend the efforts of the FBI and their Austrian counterparts in this long-term international investigation, and the assistance provided by the owners and operators of the Massachusetts turbines."
"The Sinovel case is a classic example of the growing insider threat facing our nation's corporations and their intellectual property," said FBI Executive Assistant Director Richard McFeely. "The FBI will not stand by and watch the hemorrhage of U.S. intellectual property to foreign countries who seek to gain an unfair advantage for their military and their industries. We are actively working with our private sector and government partners to disrupt and impact those who have made it their mission to steal U.S. military and corporate secrets. Since 2008, our economic espionage arrests have doubled; indictments have increased five-fold; and convictions have risen eight-fold."
Karabasevic headed the automation engineering department at AMSC Windtec in Klagenfurt, Austria. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria, but now lives in Serbia.
According to the indictment, AMSC developed and sold software and equipment to regulate the flow of electricity from wind turbines to electrical grids, and it considered the software and equipment to be trade secrets and proprietary information. The software that runs the PM3000, a part of AMSC’s wind turbine electrical control system, was developed in Wisconsin and was stored on a computer in AMSC’s office in Middleton, Wis. The PM3000 worked with other products, including AMSC’s Low Voltage Ride Through (LVRT) software. The LVRT system is designed to keep a wind turbine operational when there is a temporary sag or dip in flow of electricity in the electrical grid.
Sinovel purchased software and equipment from AMSC for the wind turbines that Sinovel manufactured, sold and serviced. According to the indictment, in March 2011, Sinovel owed AMSC more than $100 million for products and services previously delivered and had entered into contracts to purchase more than $700 million in products and services from AMSC in the future.
The indictment alleges that the four defendants conspired to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delivered products and services, thereby cheating AMSC out of more than $800 million.
The indictment alleges that Sinovel, through Su and Zhao, recruited Karabasevic to leave AMSC Windtec and join Sinovel, and to secretly copy intellectual property from the AMSC computer system. The four defendants are charged with stealing the PM3000 source code from AMSC on March 7, 2011, and transmitting it by downloading it from an AMSC computer in Wisconsin to a computer in Klagenfurt.
The indictment alleges that following the theft of AMSC’s intellectual property, Sinovel commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the software stolen from AMSC. The U.S.-based builders and operators of these Massachusetts turbines have cooperated in this investigation.
If convicted, Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, meaning Sinovel would face a fine for each count charged of up to twice the alleged loss of more than $800 million.
If convicted, Su, Zhao and Karabasevic each face a maximum penalty of five years in prison on the conspiracy charge, 10 years in prison for theft of a trade secret and 20 years in prison for wire fraud.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the Madison, Milwaukee and Boston offices of the FBI; the FBI Legal Attachés’ Offices in Vienna, Austria and Beijing; the FBI Criminal Investigative Division; the FBI Intellectual Property Rights Unit; the Bundeskriminalamt (Federal Criminal Intelligence Service) and the Bundesministerium Fuer Justiz (Federal Ministry of Justice) in Austria; the Landeskriminalamt - Klagenfurt and the Staatsanwaltschaft - Klagenfurt (Criminal Investigative Police and State Prosecutor's Office – Klagenfurt, Austria); and with the assistance of the Justice Department’s Office of International Affairs. The case is being prosecuted by Assistant U.S. Attorneys Timothy M. O’Shea and Munish Sharda, and Trial Attorney Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section.
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